-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, NmenQWzH2bKWmOSUb9sGvwU2sayzbRfQfqqQ9WorREldS5jEOoSau4HK339zKF8/ zhcsRLNyCfFUK+3hPP/QXA== 0000950152-98-001976.txt : 19980317 0000950152-98-001976.hdr.sgml : 19980317 ACCESSION NUMBER: 0000950152-98-001976 CONFORMED SUBMISSION TYPE: DEF 14A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19980428 FILED AS OF DATE: 19980313 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: RUBBERMAID INC CENTRAL INDEX KEY: 0000085627 STANDARD INDUSTRIAL CLASSIFICATION: PLASTICS PRODUCTS, NEC [3089] IRS NUMBER: 340628700 STATE OF INCORPORATION: OH FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: DEF 14A SEC ACT: SEC FILE NUMBER: 001-04188 FILM NUMBER: 98565566 BUSINESS ADDRESS: STREET 1: 1147 AKRON RD CITY: WOOSTER STATE: OH ZIP: 44691-6000 BUSINESS PHONE: 2162646464 MAIL ADDRESS: STREET 1: 1147 AKRON RD CITY: WOOSTER STATE: OH ZIP: 44691-6000 DEF 14A 1 RUBBERMAID INCORPORATED 1 ================================================================================ SCHEDULE 14A (RULE 14a) INFORMATION REQUIRED IN PROXY STATEMENT SCHEDULE 14A INFORMATION PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES EXCHANGE ACT OF 1934 (AMENDMENT NO. ) Filed by the Registrant [X] Filed by a Party other than the Registrant [ ] Check the appropriate box: [ ] Preliminary Proxy Statement [ ] CONFIDENTIAL, FOR USE OF THE COMMISSION ONLY (AS PERMITTED BY RULE 14A-6(e)(2)) [X] Definitive Proxy Statement [ ] Definitive Additional Materials [ ] Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
RUBBERMAID INCORPORATED (NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) RUBBERMAID INCORPORATED (NAME OF PERSON(S) FILING PROXY STATEMENT, IF OTHER THAN THE REGISTRANT) Payment of Filing Fee (Check the appropriate box): [X] No fee required. [ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11. (1) Title of each class of securities to which transaction applies: (2) Aggregate number of securities to which transaction applies: (3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is calculated and state how it was determined): (4) Proposed maximum aggregate value of transaction: (5) Total fee paid: [ ] Fee paid previously with preliminary materials. [ ] Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. (1) Amount Previously Paid: (2) Form, Schedule or Registration Statement No.: (3) Filing Party: (4) Date Filed: ================================================================================ 2 Rubbermaid Logo RUBBERMAID INCORPORATED 1147 AKRON ROAD WOOSTER, OHIO 44691 - --------- Dear Shareholder: You are cordially invited to attend the Annual Meeting of Shareholders to be held at Fisher Auditorium, Ohio Agricultural Research and Development Center, Wooster, Ohio at 10:30 a.m., on April 28, 1998. The Notice of Annual Meeting of Shareholders and the Proxy Statement describe the matters to be acted upon at the meeting. Regardless of the number of shares you own, your vote on these matters is important. Whether or not you plan to attend the meeting, we urge you to mark your choices on the enclosed proxy card and to sign and return it in the envelope provided. If you later decide to vote in person at the meeting, you will have an opportunity to revoke your proxy and vote by ballot. Admission to the meeting will only be by admission ticket which you will find attached to the enclosed proxy card. If you do plan to attend, please so indicate by checking the appropriate box on the proxy card. If you are a stockholder whose shares are not registered in your own name please write the Corporate Secretary, 1147 Akron Road, Wooster, Ohio 44691 to request an admission ticket furnishing proof of shareholder status, such as a bank or brokerage firm account number. We look forward to seeing you at the meeting. Sincerely yours, /s/ Wolfgang R. Schmitt WOLFGANG R. SCHMITT Chairman of the Board and Chief Executive Officer 3 Rubbermaid Logo RUBBERMAID INCORPORATED 1147 AKRON ROAD WOOSTER, OHIO 44691 - --------- Notice of Annual Meeting of Shareholders -- April 28, 1998 The Annual Meeting of the Shareholders of Rubbermaid Incorporated will be held at the Fisher Auditorium, Ohio Agricultural Research and Development Center, Wooster, Ohio, at 10:30 a.m., April 28, 1998, for the following purposes: 1. To elect Directors. 2. To transact such other business as may properly come before the meeting and any adjournments or postponements thereof. Shareholders of record at the close of business on February 27, 1998, will be entitled to vote at the Annual Meeting and any adjournments thereof. By order of the Board of Directors. JAMES A. MORGAN Secretary Wooster, Ohio March 13, 1998 Approximate date of mailing to shareholders 4 Rubbermaid Logo RUBBERMAID INCORPORATED PROXY STATEMENT March 13, 1998 - --------- Solicitation and Revocation of Proxies This Proxy Statement and the accompanying Proxy is being furnished commencing on March 13, 1998 in connection with the solicitation by the Board of Directors of proxies for use at the Annual Meeting of Shareholders to be held on April 28, 1998 and all postponements and adjournments thereof. A Proxy may be revoked by the maker by notice to the Company in writing or in open meeting without affecting any vote previously taken. A Proxy is not revoked by the death or incompetency of the maker unless, before the authority granted thereunder is exercised, written notice of such death or incompetency is received by the Company from the executor or administrator of the estate or from a fiduciary having control of the shares represented by such Proxy. The expense of solicitation of proxies will be borne by the Company. Solicitation will be made only by mail, except that, if necessary, shareholder relations employees of the Company without additional compensation therefor may make solicitation by telephone or telecopy. The Company has also engaged a professional proxy solicitation firm, Corporate Investor Communications, Inc., to aid in the solicitation of proxies, for whose services the Company will pay a fee of not more than $7,000, plus expenses. The matters to be considered and acted upon at the Annual Meeting are referred to in the preceding Notice. If the enclosed Proxy is properly executed and returned to the Company, all shares represented thereby will be voted as indicated thereon. If no indication is made the Proxy will be voted for Director Nominees. - --------- Annual Report The Annual Report of the Company for the year ended December 31, 1997, is being mailed to shareholders with this Proxy Statement. - --------- Voting Securities As of February 27, 1998, there were outstanding 149,799,579 Common Shares of the Company, which is the only class of stock outstanding and entitled to vote at the Annual Meeting or any adjournment thereof. The holders of such shares will be entitled to cast one vote for each share held of record as of the record date. A quorum for the transaction of business at the Annual Meeting requires representation, in person or by proxy, of a majority of the issued and outstanding shares entitled to vote. Abstentions and, unless a broker's authority to vote on a particular matter is limited, broker non-votes are tabulated in determining the votes present at a meeting. A broker's authority to vote is not limited as to the election of directors. If notice in writing shall be given by any shareholder to the President, a Vice President, or the Secretary, not less than 48 hours before the time fixed for the holding of the meeting, that such shareholder desires 1 5 that the voting for Directors be cumulative, and if an announcement of the giving of such notice is made upon the convening of the meeting by the President or Secretary or by or on behalf of the shareholder giving such notice, each shareholder shall have the right to cumulate such voting power as the shareholder possesses at such election and to give one candidate as many votes as the number of Directors to be elected, multiplied by the number of such votes, equals, or to distribute the votes on the same principle among two or more candidates, as the shareholder sees fit. The accompanying proxy solicits the discretionary authority for the Proxy Committee to cumulate votes should cumulative voting be effective for this meeting. - --------- Election of Directors The Board is divided into three classes of Directors. At each Annual Meeting of Shareholders, members of one of the classes, on a rotating basis, are elected for a three year term. The terms of five incumbent Directors, Messrs. Barrett, Carroll, Ebert, Falk and Minter expire at the forthcoming Annual Meeting of Shareholders. Mr. Ebert will be retiring from the Board at the Annual Meeting of Shareholders in accordance with the Board's retirement policy. The Board wishes to thank him for his guidance and support over his 22 years of service. There are no current plans to fill the vacancy created by Mr. Ebert's retirement. Pursuant to the Code of Regulations, the Board has the authority to determine the number of Directors within a range of 10 to 14 (currently 13). Accordingly, the Board at its meeting on January 16, 1998 determined, pursuant to the Code of Regulations, to decrease the size of the Board from 13 to 12 effective with the Annual Meeting of Shareholders. Messrs. Barrett, Carroll, Falk and Minter are nominees for election to the class of Directors whose terms expire in 2001. It is intended that proxies for the Board of Directors containing no designation to the contrary will be voted for the election of Messrs. Barrett, Carroll, Falk and Minter to the class of Directors whose terms will expire in 2001. Pursuant to the Company's Code of Regulations, the nominees receiving the greatest number of votes at the Annual Meeting will be elected. If for any reason any nominee is not available when the election occurs, the Proxy Committee will vote in accordance with its best judgment. The Board of Directors has no reason to believe that any nominee will not be available. - --------- Information as to Board of Directors and Nominees TOM H. BARRETT Age: 67 [Tom H. Barrett Photo] Director Since 1984 Expiration of Proposed Term: 2001 Partner, American Industrial Partners, an investment partnership. Former Chairman and Chief Executive Officer, The Goodyear Tire & Rubber Company, Akron, OH (1989-1991), manufacturer of tires, chemicals, plastic film and other rubber products. Previously from 1988, President and Chief Executive Officer. Prior thereto and from 1982 President and Chief Operating Officer. Also Director of Air Products and Chemicals Inc., Mutual Life Insurance Company of New York and A. O. Smith Corporation. ----------------------------------------------------------------------------------------------
2 6 CHARLES A. CARROLL Age: 48 Director Since 1993 Expiration of Proposed Term: 2001 President and Chief Operating Officer of the Company since September 1993. From 1990 until May 1994 he served as President of the Home Products Division. Prior thereto and from 1988, he was President of Rubbermaid Specialty Products. He has been employed by the Company in various sales and management capacities since 1971. [Charles A. Carroll Photo] ----------------------------------------------------------------------------------------------------------------- SCOTT S. COWEN Age: 51 [Scott S. Cowen Photo] Director Since 1997 Expiration of Present Term: 1999 Dean & Albert J. Weatherhead, III Professor of Management, Weatherhead School of Management, Case Western Reserve University since 1984. He has been associated with the University in various capacities since 1976. He is currently a Director of American Greetings Corp., Forest City Enterprises and Fabri-Centers of America. ----------------------------------------------------------------------------------------------------------------- THOMAS J. FALK Age: 39 [Thomas J. Falk Photo] Director Since 1997 Expiration of Proposed Term: 2001 Group President, North American Tissue, Pulp and Paper of Kimberly-Clark Corporation since January of 1996. Prior thereto and from 1993 he was respec- tively Group President Infant and Child Care Products, Group President NA Consumer Products and Group President NA Tissue Products. He has been with Kimberly-Clark since 1983 and has served in numerous management, financial and administrative roles. ----------------------------------------------------------------------------------------------------------------- ROBERT M. GERRITY Age: 60 [Robert M. Gerrity Photo] Director Since 1993 Expiration of Present Term: 1999 Corporate Director and Chairman and Chief Executive Officer of Antrium Group Inc., a technology company. Previously from 1994-1996, Senior Advisor, Invest- ment Banking to Everen Securities Inc., Chicago, IL. Former Vice Chairman (1991-1993) of New Holland, n.v., London, England, a worldwide manufacturer of agricultural and industrial equipment which was formed by Fiat Geotech and Ford New Holland Inc., of which Mr. Gerrity was President and Chief Executive Officer from 1987. He had been associated with Ford Motor Company since 1965 spending much of his career in international operations in Latin America and Europe. Also a Director of Harnischfeger Industries Inc., Libralter Plastics Inc. and Standard Motor Products Inc. -----------------------------------------------------------------------------------------------------------------
3 7 KAREN N. HORN Age: 54 Director Since 1987 Expiration of Present Term: 2000 Senior Managing Director, Bankers Trust Company, New York, NY since October 1996. Previously Chairman, Bank One, Cleveland, N.A., Cleveland, OH, 1987-1996, Prior thereto and from 1982, President, Federal Reserve Bank of Cleveland. Also a director of British Petroleum Company P.L.C., Eli Lilly and Company and TRW Inc. [Karen N. Horn Photo] ------------------------------------------------------------------------------------------------------------------- WILLIAM D. MAROHN Age: 57 [William D. Marohn Photo] Director Since 1993 Expiration of Present Term: 2000 Vice Chairman of the Board, Whirlpool Corporation since February 1997, a manufacturer and marketer of major home appliances. Previously President and Chief Operating Officer from October 1992 and from January 1992, President and Chief Executive Officer, Whirlpool Europe, B.V. Prior thereto, Executive Vice President, North American Appliance Group from 1989 and previously President Kenmore Appliance Group from 1988. He has been associated with Whirlpool since 1964. ------------------------------------------------------------------------------------------------------------------- STEVEN A. MINTER Age: 59 [Steven A. Minter Photo] Director Since 1990 Expiration of Proposed Term: 2001 Executive Director and President, The Cleveland Foundation since 1984. Also a director of Consolidated Natural Gas Company, The Goodyear Tire & Rubber Company and KeyCorp. ------------------------------------------------------------------------------------------------------------------- JAN NICHOLSON Age: 52 [Jan Nicholson Photo] Director Since 1992 Expiration of Present Term: 2000 Managing Director, MBIA Insurance Corporation since February 1998, a bond insurance company, who acquired Capital Markets Assurance Corporation where she had been Managing Director since 1994. Previously Vice President, Citibank from 1981 and from 1991 to 1994, Senior Credit Officer and head of the Northeast Department of Citicorp Real Estate. Also a director of Ball Corporation. ------------------------------------------------------------------------------------------------------------------- PAUL G. SCHLOEMER Age: 69 [Paul G. Schloemer Photo] Director Since 1989 Expiration of Present Term: 1999 Retired President and Chief Executive Officer of Parker Hannifin Corporation, Cleveland, Ohio (1984-1993), a manufacturer of motion control systems and components for the industrial aviation, space and marine markets. Also director of Parker Hannifin Corporation, AMP Inc. and Esterline Technologies. -------------------------------------------------------------------------------------------------------------------
4 8 WOLFGANG R. SCHMITT Age: 53 Director Since 1987 Expiration of Present Term: 2000 Chairman (since September 1993) and Chief Executive Officer (since November 1992) of the Company. From May 1991, President and Chief Operating Officer, Executive Vice President (1987-1991) and President of the Home Products Divi- sion (1984-1990). Employed by the Company in various marketing and research and development assignments since 1966. Also director of Kimberly Clark Corpo- ration and Parker Hannifin Corporation. [Wolfgang R. Schmitt Photo] ---------------------------------------------------------------------------------------------------------------- GORDON R. SULLIVAN Age: 60 [Gordon R. Sullivan Photo] Director Since 1995 Expiration of Present Term: 1999 President, Association of the United States Army (since February 1998). Previously from 1995-1997 Corporate Vice President, Coleman Research Corporation, a systems engineering company and a subsidiary of Thermo Electron Corporation. From 1991 until 1995, Chief of Staff of the United States Army and prior thereto, Vice Chief of Staff and Deputy Chief of Staff for Operations and Plans. Also a director of Shell Oil Company, General Dynamics Corporation and Army National Bank.
- --------- Additional Information Concerning the Board of Directors BOARD COMMITTEES The Audit and Environmental Committee currently composed of Ms. Nicholson (Chair) and Messrs. Cowen, Ebert, Falk, Minter and Sullivan held two meetings during 1997. This Committee reviews with the independent auditors the scope and results of audits, their other activities for the Company as well as their fees and selection; reviews the activities of the internal audit staff; the adequacy of internal accounting and control procedures of the Company; environmental issues; and the administration of the retirement funds of the Company. The Compensation and Management Development Committee comprised of Messrs. Marohn (Chair), Cowen, Gerrity, Sullivan and Ms. Horn held seven meetings during 1997. The Committee reviews policies and programs for the development of management personnel; approves the election as well as the compensation of the officers and key employees of the Company, and executes the functions of the Committees specified in the bonus and stock incentive plans of the Company, the 1993 Deferred Compensation Plan and the Supplemental Executive Retirement Plan. The Nominating and Directors' Activity Committee currently comprised of Mr. Barrett (Chair) and Messrs. Ebert, Minter, Schloemer and Ms. Horn held three meetings during 1997. The Committee reviews and recommends to the Board candidates for election to the Board of Directors, the types and functions of Board committees and assignment of Directors thereto, the structure of the Board and Directors' compensation. In carrying out its functions in regard to Board membership, the Committee will consider nominees recommended by shareholders upon written submission of pertinent data to the attention of the Corporate Secretary. Such data should include complete information as to the identity of the proposed nominee, including name, address, present and prior business and/or professional affiliations, education and experience, particular field or fields of expertise, and reasons why, in the opinion of the recommending shareholder, the proposed nominee is qualified and suited to be a Director of the Company as well as what particular contribution to the success of the Company such person could be expected to make. In addition to the committee meetings set out above, the Board of Directors held seven meetings during 1997. 5 9 Because the date of a Board Meeting was changed, resulting in a scheduling conflict for Mr. Minter, he missed one Board meeting and two committee meetings scheduled around that meeting, and one additional committee meeting during 1997. All of the other Directors attended 75% or more of the Board and Committee meetings they were eligible to attend during 1997. - --------- Remuneration of Directors The Board of Directors, based on Committee recommendations, establishes the fees paid to Directors and Board Committee members for services in those capacities. The current schedule of Director fees is as follows: (1) For service as a member of the Board, $27,000 per annum, payable quarterly, plus $1,100 for attendance at each meeting of the Board; (2) For service as a Board Committee member, $1,100 for attendance at each Committee meeting held on a date other than a date on which the Board of Directors meets or $550 for attendance at any additional Committee meeting held on such date or a Committee meeting held on the same date on which the Board of Directors meets; (3) For service as Chairman of a Committee of the Board, a fee of $3,000 per annum, payable quarterly. (4) The Board has adopted a policy which requires that a minimum of 50% of the fees earned by a Director be deferred into the Rubbermaid Stock Account of the 1993 Deferred Compensation Plan. Pursuant to the Plan, Rubbermaid Common Shares credited to a Directors account are distributed following termination of service as a Director. These fees are payable only to non-management Directors. Management Directors receive no additional compensation for service as a Director. All Directors receive reimbursement from the Company for expenses incurred in connection with service in that capacity. The Company has a Charitable Award Plan for Directors pursuant to which it will contribute a total of $500,000 in a Director's name, after death, to not more than two educational institutions recommended by the Director. The contributions will be paid with the proceeds of insurance on the lives of Directors participating in the Plan. The insurance is purchased and owned by the Company which is also the beneficiary thereof. New Directors are required to serve three years to become eligible for this program. All current Directors except Messrs. Cowen, Falk and Sullivan are participants in the Plan. The Company also provides non-management Directors with accidental death and dismemberment insurance of up to $250,000 for a covered loss. 6 10 - --------- Security Ownership of Certain Beneficial Owners The following tabulation presents information derived from Schedules 13-G filed with the Securities and Exchange Commission by persons beneficially owning more than five percent of the Company's Common Shares outstanding as of December 31, 1997.
NAME AND ADDRESS OF AMOUNT AND NATURE OF PERCENT BENEFICIAL OWNER BENEFICIAL OWNERSHIP OF CLASS ------------------- -------------------- -------- FMR Corp. and Affiliated Entities 11,991,703* 8.0 82 Devonshire St. (Indirect) Boston, Massachusetts 02109 State Farm Mutual Automobile 10,652,200 7.1 Insurance Company and (Direct) Related Entities 3 One State Farm Plaza Bloomington, Illinois 61710
----------------------- *Fidelity Management & Research Company, a registered investment adviser and a wholly-owned subsidiary of FMR Corp., is the beneficial owner of 11,991,703 Common Shares of Rubbermaid Incorporated (sole power to dispose or direct the disposition of 11,991,703 shares and sole power to vote or direct the vote of 1,330,903 shares) as a result of acting as investment adviser to various investment companies, none of which individually owns more than five percent of the total outstanding shares. - --------- Ownership By Management of Common Shares The following table sets forth information as of January 31, 1998, with respect to the beneficial ownership of the Company's Common Shares by Directors, nominees, and certain executive officers and as a group, all directors, nominees and executive officers:
AMOUNT PERCENT BENEFICIALLY OF NAME OWNED CLASS ---- ------------ ------- Directors Tom H. Barrett (a)(b)............................ 26,140 * Scott S. Cowen (b)............................... 1,016 * Robert O. Ebert (a)(b)........................... 1,241,607 * Thomas J. Falk (b)............................... 1,772 * Robert M. Gerrity (b)............................ 6,142 * Karen N. Horn (b)................................ 2,509 * William D. Marohn (b)............................ 4,329 * Steven A. Minter (b)............................. 8,066 * Jan Nicholson (b)................................ 1,000,646 * Paul G. Schloemer (b)............................ 9,490 * Gordon R. Sullivan (b)........................... 1,907 * Executive Officers Wolfgang R. Schmitt (a)(c)....................... 250,877 * Charles A. Carroll (a)(c)........................ 97,966 * Joseph M. Ramos (b)(c)........................... 36,585 * Derial H. Sanders (c)............................ 2,525 * David T. Gibbons (c)............................. 11,275 * All of the above and other Executive Officers as a Group....................................... 2,937,822 1.96
7 11 ----------------------- * Less than 1% (a) Does not include shares held by members of the immediate families of Messrs. Barrett (78), Ebert (3,650), Schmitt (23,023), and Carroll (230) as to which beneficial ownership is disclaimed. (b) Includes shares held under trust agreements -- Ebert (sole investment power 861,902, shared investment power 213,199, voting power only 165,757), Horn (977) and Schmitt (4,000) as to which beneficial ownership is disclaimed. Includes shares held by the Rubbermaid Incorporated 1993 Deferred Compensation Plan the trustee of which has sole voting power-Barrett (19,122), Cowen (516), Ebert (1,754), Falk (273), Gerrity (1,842), Horn (1,836), Marohn (3,129), Minter (6,806), Nicholson (1,872), Ramos (12,806), Schloemer (8,290) and Sullivan (1,907). (c) Includes performance based shares issued pursuant to the Company's Stock Incentive Plan as follows-Schmitt (111,631), Carroll (62,310), Ramos (16,900), Sanders (2,500) and Gibbons (11,275).
- --------- Executive Compensation-Report of Compensation Committee In 1997 the Company made significant changes to its executive officer compensation program. The revised program has simplified and strengthened the company's long-standing and strongly held belief in the principle of performance-oriented compensation. This report discusses the implementation of that incentive compensation program for 1997. COMPENSATION PHILOSOPHY The design and operation of the Company's executive compensation plans are based upon three premises: - Compensation must reward value creation, innovation, and growth. Rubbermaid's success depends on its ability to create lasting value and develop, market, and sell innovative new products. When value is created, it should be rewarded. - Compensation programs must encourage and reward appropriate behaviors. Compensation must support behaviors that enhance Rubbermaid's strategic vision. Superior performance should be rewarded, the lack of performance should not. - Rubbermaid must competitively reward performance. In order to attract and retain high-performing people Rubbermaid must offer total cash opportunities that are competitive with similarly sized, high-performing consumer products companies. COMPENSATION ELEMENTS BASE SALARY Following a detailed analysis of the Company's compensation structure, a new compensation program more aligned to the competitive marketplace was developed and implemented in 1997. The revised structure represents a shift in the mix of compensation elements, including an increase in base salaries and a commensurate reduction in short term incentive compensation such that the total cash compensation (base salary and target bonus) remains unchanged. Base salaries are targeted for executive officer positions at 10% below the 50th percentile of the competitive marketplace for comparable positions in similar sized high performing consumer products companies. ANNUAL INCENTIVE COMPENSATION Following shareholder approval of the 1997 Management Incentive Plan ("1997 Plan"), the plan was implemented in conjunction with the changes in base salary for executive officers. Under the new plan, 8 12 annual incentive payments for executive officer positions are targeted as a percentage of base pay (50%-105%) established by reference to incentive payments for similar positions in the competitive marketplace. The actual bonus earned by executive officers can range from 0% to 200% (300% in the case of certain senior executive participants) of the targeted amount, depending on the achievement of annual performance targets established by the Committee. For 1997, the performance measures were change in Economic Value Added (EVA) and Corporate/Division Global sales growth. EVA is a method used to measure the value Rubbermaid produces for its shareholders and is the amount remaining after deducting a capital charge (average capital employed in the business times the cost of capital) from net operating profit after taxes. Value for shareholders is provided by producing a positive and growing EVA. Empirical studies have shown a high positive correlation of improvement in EVA to improvements in share price. Performance for 1997 varied substantially among the business units of the Company since individual objectives are set for each business unit and they are subject to different competitive dynamics. In 1997 executive officers were given the opportunity to exchange short term incentive compensation earned under the plan for an additional stock option grant. The exchange of cash incentive compensation for stock options was based upon a Black Scholes valuation methodology. This 10-year non-qualified option vests upon grant and is exercisable regardless of employment status with the Company. The value of these options is dependent upon the future price appreciation of the company's stock which aligns with shareholder interests. LONG-TERM INCENTIVE COMPENSATION In 1994 the Company began to incorporate stock option grants into its long-term incentive compensation program in the belief that stock options more closely aligns the interests of management and shareholders. In 1997 the granting of performance based restricted stock was discontinued and a mix of performance shares and stock options was granted instead. Under the revised long-term incentive plan, all participants except corporate and division senior executives receive stock options rather than performance based restricted stock. The program is designed to increase the competitiveness of the Company's long term compensation program, to more closely align long-term executive compensation with shareholder interests, and to build executives' equity interest in the Company. The new plan targets long-term compensation at the 50th percentile, except for executive officers who are targeted at the 75th percentile of the comparator companies. Stock option grants will have a duration of ten years and will vest over a three (3) year period at a rate of 33% per year. The size of stock option grants is established by salary band and reference to the comparator companies. For corporate and division senior executives, the weighting of long-term compensation is 70% stock options and 30% performance shares, which again reflects the competitive marketplace. A performance share award, established by salary band and reference to comparator companies, is made each year and the actual number of shares earned will vary from 0% to 200% of the shares initially awarded based on the Company's EVA performance over a three (3) year period as established by the Committee. During such period the shares will be held in escrow, dividends are paid and the shares can be voted by the holder. In this respect they are similar to the previous performance based restricted stock. In late 1997, executive officers voluntarily exchanged all or a portion of the performance shares previously granted to them for stock options which the Committee believes more aligns with shareholder interests since the value creation depends upon an increasing share price. This 10-year non-qualified option vests upon grant and is exercisable regardless of employment status with the company. From 1979 until their use was discontinued in 1997, the Company's long-term incentive compensation programs utilized performance based restricted stock which was tied to the financial performance of the Company as measured only by RONA. 9 13 On an annual basis, three and five-year restricted stock grants were made to Company executive officers and other key management personnel. The number of shares ultimately received from awards under the plan depended entirely on the extent to which after-tax average RONA targets measured over periods ranging from three to five years were achieved. All shares were forfeited if the Company's RONA did not average 6% over the performance period. Between 6% and the 12.5% target RONA, a pro rata formula determined the number of shares to be received, with all shares being received if the target was achieved. If the 12.5% target RONA was exceeded, supplemental cash awards, not to exceed 83% of the value of the shares originally awarded were paid. The average RONA for the 5-year cycle ending in 1997 exceeded the target and during 1998 will result in lapse of restrictions for all of the shares in that cycle and payment of a cash award of $8.32 per share. The RONA performance for the 3-year cycle ending in 1997 was below the target and will result in the lapse of restrictions on 86.6% of the shares originally awarded. The remaining 13.4% of the shares originally granted will be forfeited and no cash award is payable on the three year cycle. Award cycles ending after 1997 will be similarly impacted unless RONA improves. CHIEF EXECUTIVE OFFICER COMPENSATION The compensation program for Mr. Schmitt, including salary, annual bonus, performance shares and stock options, was determined for 1997 using the criteria stated above for executive officers. The specifics of Mr. Schmitt's compensation package, like that of other executive officers, is determined, in the case of salary, by reference to national marketplace data for similar positions. Under the Company's previous compensation plan design the chief executive's base salary was substantially below the competitive marketplace and the target for short term incentive compensation was above the market. The mix of Mr. Schmitt's compensation, like other executive officers, was changed in 1997 such that his base salary was increased and his target bonus was decreased but his total cash compensation potential (base salary and target bonus) remained unchanged. His base salary for 1997 was established at 10% below the 50th percentile and his long term compensation is targeted at the 75th percentile for comparable positions in the marketplace. A major portion of Mr. Schmitt's compensation opportunity is in the form of stock incentives which will not result in value to him unless the financial performance of the Company improves and is reflected in a higher price for the Company's stock. The annual and long-term target incentive awards for Mr. Schmitt are based upon a comparison of his position to the competitive marketplace. The actual payments to Mr. Schmitt are based upon the company's achievement of EVA and sales growth targets and achievement of individual objectives established by the Committee. A cash bonus of 28% of target was earned by Mr. Schmitt for 1997 based upon the corporation's EVA and global sales growth performance against target. Mr. Schmitt has forgone the payment of any cash bonus for 1997 and like other executive officers has received stock options in an amount equal to the cash bonus that otherwise would have been paid to him. This 10-year non qualified option vests upon grant and is exercisable regardless of employment status with the company. Unlike a cash bonus which is payable immediately, the value of which is known and certain, the option grant has no value to Mr. Schmitt until and unless the price of Rubbermaid stock increases in the future. As discussed above, no cash bonus was paid to Mr. Schmitt in 1997 and he further agreed to forgo the annual accrual to his supplemental retirement plan account in exchange for stock options on the same basis as was discussed previously. In addition, Mr. Schmitt voluntarily exchanged the performance shares which were granted to him in January of 1997 in exchange for stock options. In summary, Mr. Schmitt has relinquished his annual cash bonus, the annual accrual to his supplemental retirement plan and his previously granted performance share award in exchange for stock options. By so doing Mr. Schmitt has forgone current cash compensation for stock options, the ultimate value of which depends upon growth in the Company's stock price. 10 14 A portion of the cash compensation received by Mr. Schmitt in 1997 reflects the conclusion of performance based restricted stock cycles which began in 1992 and 1994. These plan cycles concluded on December 31, 1996 and the payments provided for under their terms was made in 1997. The payment reflected the Company's performance from 1992-1996 and 1994-1996 rather than the performance of the Company in 1997. The Committee has previously established, and will retain, executive share-ownership guidelines that establish minimum values of Rubbermaid stock (a multiple of base salary) each executive officer is expected to hold (Chief Executive Officer-5 times; Chief Operating Officer-3 times; other Executive Officers-2 times). These holding requirements are exclusive of shares in existing restricted stock and performance share awards and unvested or vested but unexercised stock options. The Internal Revenue Code, as amended by the Omnibus Budget Reconciliation Act of 1993, limits the deductibility of "nonperformance-based" compensation to certain persons shown in the Summary Compensation Table to $1 million. To qualify as "performance-based" compensation, payments must be made from a plan that meets several criteria. The Committee intends for all performance based compensation to meet the criteria for deductibility. THE COMPENSATION AND MANAGEMENT DEVELOPMENT COMMITTEE William D. Marohn (Chair) Karen N. Horn Scott S. Cowen Gordon R. Sullivan Robert M. Gerrity
11 15 - --------- Summary Compensation Table The following table sets forth the compensation received for the three years ended December 31, 1997 by the persons who were at December 31, 1997 the Company's Chief Executive Officer and the four other most highly paid Executive Officers.
LONG TERM ANNUAL COMPENSATION COMPENSATION AWARDS -------------------------------------- ------------------------ OTHER RESTRICTED SECURITIES ANNUAL STOCK UNDERLYING NAME AND SALARY(1) BONUS(2) COMPENSATION(3) AWARDS(2,4) OPTIONS(2) PRINCIPAL POSITION YEAR ($) ($) ($) ($) (#) ------------------ ---- --------- -------- --------------- ----------- ---------- WOLFGANG R. SCHMITT......... 1997 621,343 -- 97,517 781,869 319,997 Chairman of the Board....... 1996 448,265 434,368 471,333 867,402 40,000 and Chief Executive......... 1995 427,440 365,461 431,580 863,156 33,000 Officer CHARLES A. CARROLL.......... 1997 417,086 -- 51,300 462,216 154,231 President and Chief......... 1996 302,107 256,791 182,368 541,624 20,000 Operating Officer........... 1995 286,203 233,542 100,741 486,984 16,500 JOSEPH M. RAMOS............. 1997 252,405 -- 17,391 116,214 84,005 President and COO,.......... 1996 183,943 179,344 23,289 132,924 4,500 Rubbermaid Commercial....... 1995 178,073 164,718 8,455 79,650 4,000 DERIAL H. SANDERS........... 1997 246,410 -- -- -- 49,944 President & COO, Graco...... 1996 78,258 -- -- -- -- Children's Products DAVID T. GIBBONS............ 1997 271,578 -- -- 87,197 58,954 President & GM,............. 1996 277,081 181,665 -- 51,937 5,000 Rubbermaid, Europe.......... 1995 25,962 -- -- -- -- ALL OTHER NAME AND COMPENSATION(2,5) PRINCIPAL POSITION ($) ------------------ ----------------- WOLFGANG R. SCHMITT......... 54,676 Chairman of the Board....... 289,172 and Chief Executive......... 269,725 Officer CHARLES A. CARROLL.......... 23,636 President and Chief......... 157,839 Operating Officer........... 150,781 JOSEPH M. RAMOS............. 15,020 President and COO,.......... 68,451 Rubbermaid Commercial....... 61,370 DERIAL H. SANDERS........... -- President & COO, Graco...... 1,178 Children's Products DAVID T. GIBBONS............ 12,544 President & GM,............. 66,295 Rubbermaid, Europe.......... 39
----------------------- (1) As a part of a new compensation plan aligned to the competitive marketplace, base salaries were increased in 1997 to more competitive levels. Commensurate reduction in short term bonus targets were likewise made so that total cash compensation (salary and target bonus) remains unchanged. (2) At the end of 1997, pursuant to a new program approved by the Compensation Committee, each of the named executive officers elected to receive grants of additional stock options in exchange for and in lieu of (a) his 1997 annual cash bonus, (b) the performance shares granted to him in January of 1997 that otherwise were subject to vesting over time, and (c) the 1997 accrual that would otherwise have been made on his account in the Company's non-qualified Supplemental Retirement Plan (the "SRP"). The additional options are 10-year non-qualified stock options that are fully vested upon grant and are exercisable throughout their term without regard to the optionee's employment status with the Company. The additional options were granted at an exchange rate determined by using a Black Scholes valuation methodology. Options in exchange for performance shares and the accrual to the SRP were granted on December 31, 1997 with an exercise price equal to the fair market value of the shares on that date. Options in exchange for 1997 bonuses were granted on February 27, 1998 (the date the bonuses would have been paid in cash) with an exercise price equal to the fair market value of the shares on that date. The dollar amounts of cash bonus, value of performance shares, and 1997 accrual to the SRP so exchanged by each of the named executive officers are, respectively: Schmitt -- $189,210, $551,375, and $228,396; Carroll -- $108,860, $250,625, and $132,020; Ramos -- $293,801, $50,125, and $59,657; Sanders -- $139,419, $50,125, and $19,891; and Gibbons -- $20,335, $80,200, and $105,000. The aggregate number of additional options received pursuant to these exchanges for 1997 by each of the named executive officers, all of which are reflected in the "Securities Underlying Options" column of the above table, was, respectively, Schmitt -- 170,146, Carroll -- 86,370, Ramos -- 70,945, Sanders -- 36,744, and Gibbons -- 36,061. The dollar amounts of cash bonus, value of performance shares, and 12 16 1997 accruals to the SRP that were exchanged for these options are not reflected in the body of the above table. (3) This column reflects a cash award paid in 1997 at the conclusion of five and three-year performance based restricted stock cycles which began in 1992 and 1994 respectively, concluded at the end of 1996, and the payment for which was made in 1997. The payment reflects the Company's performance from 1992-1996 and 1994-1996, and not 1997 performance. The value of perquisites and other personal benefits is not included since the value of such compensation is below minimum required disclosure thresholds. (4) The amounts shown in this column reflect the value of shares awarded for three- and five-year performance based restricted stock cycles under a plan which was discontinued in 1997 as part of the Company's revised compensation program, which is detailed in the Report of the Compensation Committee. Shares and any cash ultimately received after the award cycles are completed depends upon achievement of pre-determined financial objectives over such period. Dividends are paid on restricted stock at the same rate as unrestricted shares. Year end 1997 restricted stock holdings and the value thereof based on the year-end closing price of Rubbermaid stock is as follows: Schmitt -- 89,631 shares ($2,240,775); Carroll -- 52,310 shares ($1,307,750); Ramos -- 14,400 shares ($360,000), and Gibbons -- 8,395 shares ($209,875). Shares which will vest in under three years, assuming achievement of financial objectives, are as follows: Schmitt (24,229-1998; 32,791-1999); Carroll (15,483-1998; 19,385-1999); Ramos (2,912-1998; 4,874-1999); and Gibbons (3,657-1999). Unless the Company's RONA performance improves the number of shares received at the conclusion of the respective cycles will be less than the number initially awarded and there will be no cash award. (5) The amounts disclosed in this column include: (a) Company paid premiums for excess group term life insurance on behalf of Schmitt (1997-$1,089, 1996-$823, 1995-$1,981); Carroll (1997-$771, 1996-$583, 1995-$774); Ramos (1997- $514, 1996- $407, 1995-$1,133); Sanders(1997-$504); and Gibbons (1997-$544, 1996-$472, 1995-$39). (b) Contributions or accruals pursuant to the defined contribution retirement plans on behalf of Schmitt, (1997-$12,000, 1996-$241,126, 1995-$220,586); Carroll,(1997-$12,000, 1996-$144,750, 1995-$137,405); Ramos,(1997-$12,000, 1996-$65,551, 1995-$58,022); Sanders (1997-$4,750, 1996-$4,725), and Gibbons, (1997-$12,000, 1996-$65,823). Vesting is on a graduated schedule commencing after three years of service with 100% vesting after seven years. (c) Interest accrued on deferred compensation in excess of a "fair market rate" established by S.E.C. rules (120% of applicable federal long-term rate, which for 1997 was 8.129%; 1996-8.128%; 1995-8.690% on behalf of Schmitt (1997-$41,587, 1996-$47,226, 1995-$47,158); Carroll (1997-$10,865, 1996-$12,506; 1995-$12,602); and Ramos (1997-$2,506, 1996-$2,493, 1995-$2,215).
13 17 - --------- Option Grants in Last Fiscal Year
INDIVIDUAL GRANTS --------------------------------------- POTENTIAL REALIZABLE VALUE % OF TOTAL AT ASSUMED ANNUAL RATES NUMBER OF OPTIONS OF STOCK PRICE APPRECIATION SECURITIES GRANTED TO FOR OPTION TERM UNDERLYING EMPLOYEES EXERCISE OR --------------------------- OPTIONS IN FISCAL BASE PRICE EXPIRATION NAME GRANTED(#) YEAR ($/SH) DATE 5%($) 10%($) ---- ---------- ------------ ----------- ---------- ------------ ------------ Mr. Schmitt.......... 150,000 9.2% 22.9375 01/16/2007 5,608,219 8,911,219 136,803 8.4% 25.0625 12/31/2007 5,588,659 8,880,139 33,343 2.0% 28.9063 02/27/2008 1,542,116 2,496,301 Mr. Carroll.......... 68,000 4.2% 22.9375 01/16/2007 2,542,392 4,039,753 67,132 4.2% 25.0625 12/31/2007 2,742,468 4,357,664 19,248 1.2% 28.9063 02/27/2008 890,222 1,441,046 Mr. Ramos............ 13,200 0.8% 22.8125 01/01/2007 481,800 779,914 19,261 1.2% 25.0625 12/31/2007 772,366 125,067 51,715 3.2% 28.9063 02/27/2008 2,381,823 3,871,763 Mr. Sanders.......... 13,200 0.8% 22.8125 01/01/2007 481,800 779,914 12,284 0.8% 25.0625 12/31/2007 492,588 797,378 24,460 1.5% 28.9063 02/27/2008 1,131,279 1,831,255 Mr. Gibbons.......... 22,000 1.4% 22.8125 01/01/2007 803,000 129,986 10,000 0.6% 24.8750 04/22/2007 401,980 650,705 23,386 1.4% 25.0625 12/31/2007 937,779 151,803 14,132 0.9% 28.9063 02/27/2008 653,606 1,058,025
All options are granted at the fair market price of Rubbermaid Common Shares on the grant date and expire ten years from the grant date. Options vest over a three year period with one-third of the shares becoming exercisable on each of the first three anniversaries of the grant date with the exception of options granted pursuant to a special option exchange program in December 1997 which is described in the Report of the Compensation Committee and footnote 2 to the Summary Compensation Table. Such options are fully exercisable at the date of grant. The dollar amounts under the potential realizable value column are the result of calculations of assumed annual compound rates of appreciation over the ten-year life of the options in accordance with the proxy regulations of the Securities and Exchange Commission and are not intended to forecast possible future appreciation, if any, of the Company's Common Shares. The actual value, if any, an executive may realize will depend on the excess of the market price of the shares over the exercise price on the date the option is exercised. 14 18 - --------- Option Exercises and Values This table presents information regarding options exercised for the Company's Common Shares during fiscal 1997 and the value of unexercised options held at December 31, 1997. There were no options exercised by the named executives and no SARs outstanding during fiscal 1997. AGGREGATED OPTION EXERCISES IN FISCAL 1997 AND 1997 FISCAL YEAR-END OPTION VALUES
NUMBER OF SECURITIES VALUE OF UNEXERCISED UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS OPTIONS AT FY-END AT FY-END SHARES ACQUIRED VALUE (#) ($)(2) ON EXERCISE REALIZED ------------------------- ------------------------- (#) ($)(1) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE --------------- -------- ------------------------- ------------------------- Mr. Schmitt.............. 0 0 401,479/187,667 0/309,375 Mr. Carroll.............. 0 0 164,546/86,834 0/140,250 Mr. Ramos................ 0 0 79,342/17,534 0/28,875 Mr. Sanders.............. 0 0 36,744/13,200 0/28,875 Mr. Gibbons.............. 0 0 34,007/35,334 0/49,375
----------------------- (1) Value Realized is calculated as follows: [(Per Share Closing Sale Price on Date of Exercise)-(Per Share Exercise Price)] x Number of Shares for Which the Option was Exercised. (2) Value of Unexercised, In-the-Money Options at December 31, 1997 is calculated as follows: [(Per Share Closing Sale Price on 12/31/97)--(Per Share Exercise Price)] x Number of Shares subject to Unexercised Options. The per share closing sale price on December 31, 1997 was $25.00. - --------- Defined Benefit Retirement Plans SALARIED EMPLOYEES' RETIREMENT PLAN The following table shows the estimated annual retirement benefit payable to participants in the Rubbermaid Incorporated Salaried Employees' Retirement Plan at age 65 for 120 months, irrespective of how long the participant lives. Other actuarially equivalent value of forms of pension income may be requested. Only employees hired prior to October 1, 1972, are participants in this Plan. ESTIMATED ANNUAL BENEFITS - DEFINED BENEFIT PENSION PLAN
YEARS OF SERVICE ANNUAL ----------------------------------- BASE SALARY 10 15 20 25 ----------- ------- ------- ------- -------- 400,000 40,000 60,000 80,000 100,000 450,000 45,000 67,500 90,000 112,500 500,000 50,000 75,000 100,000 125,000 550,000 55,000 82,500 110,000 137,500 600,000 60,000 90,000 120,000 150,000 650,000 65,000 97,500 130,000 162,500 700,000 70,000 105,000 140,000 175,000 750,000 75,000 112,500 150,000 187,500
Benefits are based on a formula which provides for payment of 1% of base salary for each year of service, to a maximum of 25 years. Messrs. Schmitt and Carroll are participants in the Plan with 32 and 27 years of credited years respectively, however, benefit accruals (salary increases and years of service) for them have 15 19 been suspended since 1989 because of government regulations affecting "highly compensated employees". As a result, they will receive a significantly reduced benefit from the Plan. SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN The following table shows the benefit which would be received by a participant in the Rubbermaid Supplemental Executive Retirement Plan with at least five years of service and election of a single life annuity, which benefit is reduced by (1) any benefits provided under any other retirement plans (including defined contribution retirement plans) of the Company; (2) primary Social Security benefits; and (3) amounts payable from any prior employer retirement plans.
ESTIMATED ANNUAL COMBINED BENEFIT PAYABLE AT FINAL AVERAGE ---------------------------------------------- COMPENSATION AGE 55 AGE 60 AGE 65 ------------- ------------ -------------- -------------- $1,000,000 $495,000 $ 522,500 $ 550,000 1,200,000 594,000 627,000 660,000 1,400,000 693,000 731,500 770,000 1,600,000 792,000 836,000 880,000 1,800,000 891,000 940,500 990,000 2,000,000 990,000 1,045,000 1,100,000
----------------------- * Salary, bonus and performance share award value. Benefits under the Rubbermaid Incorporated Supplemental Executive Retirement Plan are payable for life, equal to 55% of the average of salary, bonus and five-year restricted stock award value earned during the highest five years of the final ten years of employment, less payments from other Company retirement plans, social security and prior employer plans. Covered compensation includes annual salary and bonus, including, with respect to the latter, any amount of bonus paid in the form of restricted stock awards with vesting schedules less than three years. Mr. Schmitt is a participant in the Plan with 32 years of credited service. Participants may retire, with reduced benefits, at age 60 or prior thereto beginning at age 55 with the approval of the Chief Executive Officer. In 1988, pursuant to a Plan amendment providing for the funding of benefits for vested participants, the Company adopted the practice of purchasing annuities on behalf of vested Plan participants which will provide the after-tax equivalent of the required benefit. Death benefits are provided to the surviving spouse of a participant age 55 or older with five years' service. This age requirement has been waived for Mr. Schmitt. Plan benefits are not vested in the event of termination of employment prior to qualification for normal, early, or disability retirement except in the event of change of control of the Company when special vesting occurs. With regard to Mr. Schmitt, provision has been made for voluntary retirement at any time after age 50 with benefits, 55% of covered compensation (highest three years average), reduced 2% for each year retirement is prior to age 60. In the event of involuntary termination of employment after age 50, but before age 60, benefits would commence at age 60 based upon 55% of covered compensation at the time of involuntary termination of employment. If retirement or termination of employment occurs on or after age 60 the benefit increases to 60% and increases 1% per year thereafter. - --------- Executive Officer Contracts The Company's Executive Officers have employment agreements with the Company which become effective only in the event any person becomes the beneficial owner, directly or indirectly, of 15% or more of the outstanding shares of the Company, the Company is merged or substantially all of its assets are sold and Rubbermaid shareholders do not retain at least two-thirds of the voting power in the new corporation or a majority of the Company's Board of Directors is replaced. The agreements provide for continuing such executives in the employment of the Company for a period of five years following such a change of control or until attainment of normal retirement age, whichever first occurs. During such five year period, the executive will receive salary, bonus and benefits no less than those in effect at the time of a change of 16 20 control. The employment of such executives may however be terminated, voluntarily or involuntarily, within two years of such change of control in which event they would receive a severance award equal to the value of three years salary, bonus and stock awards and the continuation of benefits for three years, and would be indemnified by the Company for any excise tax imposed on such award. Following such two year period the executives may be terminated only for cause and/or they have the right to terminate employment in the event their duties are materially changed or their salaries or benefits, etc., are reduced. In either such event they would be entitled to receive a severance amount equal to that described above. The Board of Directors has provided for the following severance arrangement for Mr. Carroll in the event of his involuntary termination of employment for reasons other than cause -- two years of base pay and target bonus with continued health insurance coverage and vesting of any unvested stock options with a two year exercise period as well as vesting of any outstanding performance stock grants subject to achievement of previously established performance targets. The Company has an employment agreement with Mr. Gibbons which in the event of his involuntary termination of employment other than for cause provides for up to three years of base salary severance payments determined by the number of months worked subsequent to September 1, 1997 and his EVA center performance. After July 1, 2001 the maximum severance arrangement is 18 months reduced by one month for each month worked thereafter until the severance arrangement reaches a level consistent with that for other Company executives at his level. Mr. Gibbon's base salary will be no less than $285,200 per year, his target annual incentive bonus will be no less than 65% of his base salary, annual grants of performance shares and stock options will not be less than 3,200 and 23,000 shares respectively and $105,000 will be allocated to his Supplemental Retirement Plan Account for 1997, 1998 and 1999 after which allocations will revert to the normal formula. The performance requirements attached to a 10,000 stock option award made to Mr. Gibbons in 1997 have been waived, and upon retirement or earlier termination of employment any unvested stock options will become vested with a two year exercise period and any outstanding performance stock grants will likewise vest subject to achievement of previously established performance targets. - --------- Rubbermaid Stock Performance Following is a graph which compares the five year cumulative return from investing $100 at the end of 1992 in Rubbermaid Common Shares, the S&P 500 index of companies and the S&P Industrials index of companies, with dividends assumed to be reinvested when received. The S&P Industrials index includes a broad range of manufacturers.
Measurement Period Rubbermaid S&P (Fiscal Year Covered) Inc. S&P 500 Industrials 1992 100.00 100.00 100.00 1993 110.81 110.08 109.03 1994 93.18 111.53 113.19 1995 84.08 153.45 152.34 1996 76.22 188.68 187.39 1997 86.27 251.63 245.51
Assumes $100 invested on December 31, 1991 and reinvestment of dividends. 17 21 - --------- Independent Auditors As recommended by the Audit Committee, the Board of Directors appointed KPMG Peat Marwick LLP as the independent auditors to audit the books and records of the Company for the year ending December 31, 1998. This firm has been the independent auditors of record continuously since 1934. It is expected that a representative of Peat Marwick will be in attendance at the Annual Meeting to respond to appropriate oral questions of shareholders and to make such statement as may be desired. - --------- 1999 Proposals of Security Holders Pursuant to rules of the Securities and Exchange Commission, a shareholder may present a proposal to be voted on at the 1999 Annual Meeting of Shareholders; and, provided such proposal meets all of the requirements of the rules and is received by the Company prior to November 13, 1998, it will be included in the proxy statement and form of proxy relating to such meeting. - --------- Other Business The Annual Meeting is called for the purposes set forth in the Notice. The Board of Directors does not know of any matter for action by the shareholders at the meeting other than the matters described in the Notice. However, the enclosed Proxy confers discretionary authority with respect to matters which are not known to the Board at the date of printing hereof and which may properly come before the meeting. It is the intention of the persons named in the Proxy to vote the Proxy in accordance with their best judgment on any such matter. By order of the Board of Directors. JAMES A. MORGAN Secretary 18 22 3350-PS-98 23 (RUBBERMAID LOGO) RUBBERMAID INCORPORATED 1147 Akron Road Wooster, OH 44691 USA ADMISSION TICKET ANNUAL MEETING OF SHAREHOLDERS Tuesday, April 28, 1998 10:30 a.m. EDT OARDC, Fisher Auditorium 1680 Madison Avenue Wooster, Ohio 44691 You are cordially invited to attend the Annual Meeting of Shareholders on Tuesday, April 28, 1998 at the Ohio Agricultural Research and Development Center, Fisher Auditorium, 1680 Madison Avenue, Wooster, Ohio. The meeting will begin at 10:30 a.m. EDT. Admission is limited to shareholders and one guest, their proxies, and guests of the Company. To avoid delay at the entrance to the meeting, please present this ticket. Admittance will be based upon availability of seating. See reverse for map of area. - -------------------------------------------------------------------------------- PROXY CARD INSTRUCTIONS Please mark the box on the proxy card to indicate how your shares should be voted. Sign, date and return your proxy as soon as possible in the enclosed postage paid envelope. Votes are tallied by Boston EquiServe, our transfer agent. Any comments noted on the proxy card or an attachment will be forwarded by Boston EquiServe to Rubbermaid. If you plan to attend the meeting, please mark the box provided on the proxy card. Advance indications of attendance are helpful to us in making arrangements for the meeting. DETACH CARD BEFORE MAILING - --------------------------------------------------------------------------------
[ ] [X] PLEASE MARK VOTES AS IN THIS EXAMPLE. [ ] A vote FOR is recommended by the Board of Directors: WITHHELD 1. Election of Directors For ALL FOR ALL Nominees: Nominees Nominees Tom H. Barrett [ ] [ ] Charles A. Carroll Thomas J. Falk Steven A. Minter ------------------------------------------ For all nominees except as noted above [ ] [ ] Signature_________________________ Date___________1998 I plan to attend the annual meeting [ ] I have made comments on this card or [ ] attachment. Discontinue duplicate annual report. [ ] Mark here for address change and note [ ] at left. Note: Please sign exactly as name appears hereon. Joint owners should each sign. When signing as attorney, executor, administrator, trustee, or guardian, please give full name and title as such. Signature_________________________ Date___________ 1998 PLEASE SIGN THIS PROXY AS NAME(S) APPEAR ABOVE.
24 LOCATOR MAP FISHER AUDITORIUM OHIO AGRICULTURAL RESEARCH AND DEVELOPMENT CENTER WOOSTER, OHIO [GRAPHIC MAP] DETACH CARD BEFORE MAILING - -------------------------------------------------------------------------------- RUBBERMAID INCORPORATED BOARD OF DIRECTORS PROXY FOR ANNUAL MEETING, APRIL 28, 1998 The undersigned, having received the Notice of Meeting and Proxy Statement, hereby makes, constitutes, and appoints Robert M. Gerrity, Jan Nicholson and Paul G. Schloemer, and each of them (with full power of substitution respectively), true and lawful attorneys and proxies for the undersigned to attend the Annual Meeting to be held April 28, 1998, at Wooster, Ohio, and all postponements and adjournments thereof. P THE PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER R DIRECTED; IF NO DIRECTION IS MADE THIS PROXY WILL BE VOTED FOR DIRECTOR O NOMINEES. IN THEIR DISCRETION THE PARTIES ARE ALSO AUTHORIZED TO VOTE X UPON SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE THE MEETING. Y YOU ARE ENCOURAGED TO SPECIFY YOUR CHOICE BY MARKING THE APPROPRIATE BOXES, SEE REVERSE SIDE, BUT YOU NEED NOT MARK ANY BOXES IF YOU WISH TO VOTE IN ACCORDANCE WITH THE BOARD OF DIRECTORS RECOMMENDATIONS. YOUR SHARES CANNOT BE VOTED UNLESS YOU SIGN AND RETURN THIS CARD. ---------------- SEE REVERSE CONTINUED AND TO BE SIGNED ON REVERSE SIDE SIDE ---------------- -----END PRIVACY-ENHANCED MESSAGE-----