SCHEDULE 14A
(RULE 14A-101)
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:
[X] Preliminary Proxy Statement
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material pursuant to Rule 14a-11(c) or Rule
14a-12
[ ] Confidential, for use of the Commission only (as permitted
by Rule 14a-6(e)(2))
WOLVERINE WORLD WIDE, INC.
___________________________________________________________________________
(Name of Registrant as Specified in Its Charter)
___________________________________________________________________________
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the Appropriate Box):
[X] $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2),
or Item 22(a)(2) of Schedule 14A.
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[ ] 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
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(1) Amount previously paid:
____________________________________________________________________
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____________________________________________________________________
(4) Date filed:
____________________________________________________________________
[WOLVERINE WORLD WIDE LOGO]
9341 Courtland Drive, N.E.
Rockford, Michigan 49351
NOTICE OF ANNUAL MEETING
TO OUR STOCKHOLDERS:
The annual meeting of stockholders of Wolverine World Wide, Inc. will
be held at the Amway Grand Plaza Hotel, 187 Monroe Avenue, N.W., Grand
Rapids, Michigan, on Wednesday, April 17, 1996, at 10 a.m. local time, for
the following purposes:
(1) Election of two directors for three-year terms expiring in
1999.
(2) Approval of an amendment to the Certificate of Incorporation
to increase the number of authorized shares of Common Stock.
(3) Ratification of the Board of Directors' appointment of Ernst
& Young LLP as independent auditors for the current fiscal
year.
(4) Transaction of such other business as may properly come
before the meeting.
Stockholders of record at the close of business March 1, 1996, are
entitled to notice of and to vote at the meeting or any adjournment of the
meeting. A list of stockholders entitled to receive notice of and vote at
the annual meeting of stockholders will be available for examination by
Wolverine stockholders at the offices of Warner Norcross & Judd LLP, 900
Old Kent Building, 111 Lyon Street, N.W., Grand Rapids, Michigan 49503,
during ordinary business hours for the ten-day period before the meeting.
A copy of the Annual Report to Stockholders for the year ended
December 30, 1995, is enclosed with this Notice. The following Proxy
Statement and enclosed Proxy are being furnished to stockholders on and
after March 15, 1996.
March 15, 1996 By Order of the Board of Directors
Blake W. Krueger, General Counsel and Secretary
YOUR VOTE IS IMPORTANT. EVEN IF YOU PLAN TO ATTEND THE MEETING,
PLEASE SIGN, DATE AND RETURN THE ENCLOSED PROXY PROMPTLY.
ANNUAL MEETING OF STOCKHOLDERS
WOLVERINE WORLD WIDE, INC.
9341 COURTLAND DRIVE, N.E.
ROCKFORD, MICHIGAN 49351
APRIL 17, 1996
PROXY STATEMENT
This Proxy Statement and the enclosed Proxy are being furnished to
holders of Common Stock, $1.00 par value, of Wolverine World Wide, Inc.
("Wolverine" or the "Company") on and after March 15, 1996, in connection
with the solicitation by the Wolverine Board of Directors of proxies for
use at the annual meeting of stockholders to be held on April 17, 1996, and
at any adjournment of that meeting. The annual meeting will be held at the
Amway Grand Plaza Hotel, 187 Monroe Avenue, N.W., Grand Rapids, Michigan,
at 10 a.m. local time.
The purpose of the annual meeting is to consider and vote upon: (i)
the election of two directors for three-year terms expiring in 1999; (ii)
approval of an amendment to the Company's Certificate of Incorporation to
increase the number of authorized shares of Common Stock; and (iii)
ratification of the appointment of Ernst & Young LLP as independent
auditors for the Company for the current fiscal year. If a proxy in the
enclosed form is properly executed and returned to Wolverine, the shares
represented by the proxy will be voted at the annual meeting and any
adjournment of that meeting. If a stockholder specifies a choice, the
proxy will be voted as specified. If no choice is specified, the shares
represented by the proxy will be voted for the election of all nominees
named in this Proxy Statement, for approval of the amendment to the
Company's Certificate of Incorporation, for ratification of the appointment
of Ernst & Young LLP as independent auditors for the Company for its
current fiscal year, and in accordance with the judgment of the persons
named as proxies with respect to any other matter that may come before the
meeting or any adjournment. For purposes of determining the presence or
absence of a quorum for the transaction of business at the meeting, all
shares for which a proxy or vote is received, including abstentions and
shares represented by a broker vote on any matter, will be counted as
present and represented at the meeting.
A proxy may be revoked at any time before it is exercised by written
notice delivered to the Secretary of the Company or by attending and voting
at the annual meeting.
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ELECTION OF DIRECTORS
In accordance with the recommendation of the Governance Committee, the
Board of Directors has nominated the following two nominees for election as
directors for three-year terms expiring at the 1999 annual meeting:
Daniel T. Carroll
Phillip D. Matthews
A plurality of the shares present in person or represented by proxy
and entitled to vote on the election of directors is required to elect
directors. For purposes of counting votes on the election of directors,
abstentions, broker non-votes and other shares not voted will not be
counted as shares voted, and the number of shares of which a plurality is
required will be reduced by the number of shares not voted.
Both nominees are presently directors of the Company whose terms will
expire at the meeting. The proposed nominees are willing to be elected and
to serve. In the event that either nominee is unable to serve or is
otherwise unavailable for election, which is not contemplated, the
incumbent Wolverine Board of Directors may or may not select a substitute
nominee. If a substitute nominee is selected, all proxies will be voted
for the substitute nominee designated by the Board of Directors. If a
substitute nominee is not selected, all proxies will be voted for the
remaining nominee. Proxies will not be voted for a greater number of
persons than the number of nominees named above.
YOUR BOARD OF DIRECTORS RECOMMENDS THAT YOU
VOTE FOR ELECTION OF ALL NOMINEES AS DIRECTORS
AMENDMENT OF THE CERTIFICATE OF INCORPORATION
The Board of Directors proposes to amend the Fourth Article of the
Company's Certificate of Incorporation to increase the Company's authorized
capital stock from 27,000,000 shares, of which 25,000,000 are shares of
common stock, $1.00 par value per share ("Common Stock"), to 42,000,000
shares, of which 40,000,000 would be shares of Common Stock. The purpose
of the amendment is to provide additional shares for possible future
issuance.
As of March 1, 1996, there were 18,362,912 authorized shares of Common
Stock issued and outstanding, excluding 547,913 shares of treasury stock.
The Board of Directors believes that it is advisable to have
additional authorized shares of Common Stock available for possible future
stock splits and dividends, public or private offerings of Common Stock or
securities convertible into Common Stock, employee benefit plans, equity-
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based acquisitions, and other corporate purposes that might be proposed.
For example, the Company currently does not have enough authorized capital
stock for the Board of Directors to declare a three-for-two stock split.
Authorized but unissued shares of Common Stock, or funds raised in a public
or private offering of shares, may also be used for acquisition
opportunities. Except for shares to be issued under the Company's stock
plans, the Company does not have any present plans to issue additional
shares of Common Stock.
All of the additional shares resulting from the increase in the
Company's authorized Common Stock would be of the same class, with the same
dividend, voting and liquidation rights, as the shares of Common Stock
presently outstanding. The Company's authorized capital also includes, and
will continue to include without increase, 2,000,000 shares of preferred
stock, none of which is currently outstanding. Stockholders have no
preemptive rights to acquire shares issued by the Company under its
Certificate of Incorporation, and stockholders would not acquire any such
rights with respect to such additional shares under the proposed amendment
to the Company's Certificate of Incorporation. Under some circumstances,
the issuance of additional shares of Common Stock could dilute the voting
rights, equity and earnings per share of existing stockholders.
If the proposed amendment is adopted, the newly authorized shares
would be unreserved and available for issuance. No further stockholder
authorization would be required prior to the issuance of such shares by the
Company.
This increase in authorized but unissued Common Stock could be
considered an anti-takeover measure because the additional authorized but
unissued shares of Common Stock could be used by the Board of Directors to
make a change in control of the Corporation more difficult. The Board of
Directors' purpose in recommending this proposal is not as an anti-takeover
measure, but for the reasons discussed above.
The first paragraph of the Fourth Article of the Company's Certificate
of Incorporation, as amended, would read as follows:
FOURTH: The total number of shares that the corporation
shall have authority to issue and have outstanding is Forty-two
Million (42,000,000) shares, of which Two Million (2,000,000)
shares shall be Preferred Stock, par value One Dollar ($1.00) per
share, and Forty Million (40,000,000) shares shall be Common
Stock, par value One Dollar ($1.00) per share.
The affirmative vote of holders of a majority of shares entitled to
vote at the annual meeting of stockholders is required to approve the
proposed amendment to the Company's Certificate of Incorporation. For the
purpose of counting votes on this proposal, abstentions, broker non-votes,
and other shares not voted have the same effect as a vote against the
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proposal. The New York Stock Exchange has advised the Company that this
proposal is deemed to be a routine matter. Therefore, shares of Common
Stock held by New York Stock Exchange member organizations, or their
nominees, may be voted without specific instructions from the beneficial
owners of such shares.
YOUR BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR
APPROVAL OF THE AMENDMENT TO THE COMPANY'S
CERTIFICATE OF INCORPORATION
VOTING SECURITIES
Holders of record of Common Stock, at the close of business on March
1, 1996, will be entitled to notice of and to vote at the annual meeting
and any adjournment of the meeting. As of March 1, 1996, there were
18,362,912 shares of Common Stock outstanding (excluding 547,913 shares of
treasury stock), each having one vote on each matter presented for
stockholder action. Shares cannot be voted unless the stockholder is
present at the meeting or represented by proxy.
OWNERSHIP OF COMMON STOCK
The following table sets forth information as to each entity known to
the Company to have been the beneficial owner of more than 5% of the
Company's outstanding shares of Common Stock as of March 1, 1996:
AMOUNT AND NATURE OF
BENEFICIAL OWNERSHIP OF COMMON STOCK
SOLE VOTING SHARED VOTING
NAME AND ADDRESS AND DISPOSITIVE OR DISPOSITIVE PERCENT
OF BENEFICIAL OWNER POWER POWER OF CLASS
The Kaufmann Fund, Inc.
140 East 45th Street
43rd Floor
New York, New York 10017 1,250,000 -- 6.8%
Metropolitan Life Insurance Company
One Madison Avenue
New York, New York 10010 933,400 -- 5.1%
Putnam Investments, Inc.
One Post Office Square
Boston, Massachusetts 02109 -- 1,138,858 6.2%
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State Street Research & Management Company
One Financial Center
30th Floor
Boston, Massachusetts 02111-2690 932,300 -- 5.1%
___________________________
Based on information set forth in Amendment No. 4 to Schedule 13G
dated February 8, 1996. The Schedule 13G indicates that The Kaufmann
Fund, Inc. is a registered investment company.
Based on information set forth in Schedule 13G dated February 9, 1996.
The Schedule 13G indicates that Metropolitan Life Insurance Company is
the sole parent company of State Street Research & Management Company.
Based on information set forth in Schedule 13G dated January 29, 1996.
The Schedule 13G indicates that Putnam Investment Management, Inc. and
The Putnam Advisory Company, Inc. are registered investment advisers
and (together with their parent corporations, Putnam Investments, Inc.
and Marsh & McLennan Companies, Inc.) are considered beneficial owners
in the aggregate of 1,138,858 shares of the Company's Common Stock and
that such shares were acquired for investment purposes by such
investment managers for certain of their advisory clients. The
Schedule 13G indicates that such investment managers have shared
voting power over an aggregate of 375,743 shares of Common Stock and
shared dispositive power over an aggregate of 1,138,858 shares of
Common Stock.
Based on Schedule 13G dated February 13, 1996. The Schedule 13G
indicates that State Street Research & Management Company ("State
Street") is a registered investment adviser and wholly owned
subsidiary of Metropolitan Life Insurance Company. The Schedule 13G
indicates that such shares were acquired for certain State Street
advisory clients.
These numbers include 932,300 shares of Common Stock held by State
Street Research & Management Company.
SECURITIES OWNERSHIP OF MANAGEMENT
The following table sets forth the number of shares of Common Stock
beneficially owned as of March 1, 1996 by each of Wolverine's directors and
nominees for director, each of the named executive officers, and all of
Wolverine's directors and executive officers as a group:
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AMOUNT AND NATURE OF BENEFICIAL
OWNERSHIP OF COMMON STOCK
TOTAL
NAME OF SOLE VOTING AND SHARED VOTING OR BENEFICIAL PERCENT
BENEFICIAL OWNER DISPOSITIVE POWER DISPOSITIVE POWER OWNERSHIP OF CLASS
Geoffrey B. Bloom 252,525 -- 252,525 1.4%
Daniel T. Carroll 18,000 -- 18,000
Steven M. Duffy 32,997 -- 32,997
V. Dean Estes 77,638 -- 77,638
Thomas D. Gleason 229,945 333 230,278 1.3%
Alberto L. Grimoldi 8,436 -- 8,436
Stephen L. Gulis, Jr. 37,245 -- 37,245
David T. Kollat 22,500 -- 22,500
Phillip D. Matthews 37,500 12,000 49,500
David P. Mehney 41,250 -- 41,250
Stuart J. Northrop 14,175 -- 14,175
Timothy J. O'Donovan 169,299 8,212 177,511 1.0%
Joseph A. Parini 6,975 8,740 15,715
Joan Parker 15,750 -- 15,750
Elizabeth A. Sanders 9,937 -- 9,937
All directors and executive
officers as a group 1,040,200 31,967 1,072,167 5.7%
___________________________
Less than 1%.
The numbers of shares stated are based on information provided by each
person listed and include shares personally owned of record by the
person and shares which, under applicable regulations, are considered
to be otherwise beneficially owned by the person.
These numbers include shares that may be acquired through the exercise
of stock options granted under the 1988 Stock Option Plan, the
Directors Stock Option Plan (1988), the 1993 Stock Incentive Plan, the
1994 Directors' Stock Option Plan and the 1995 Stock Incentive Plan
within 60 days after March 1, 1996. The number of shares subject to
stock options for each listed person is shown below:
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Mr. Bloom 117,040
Mr. Carroll 14,625
Mr. Duffy 14,440
Mr. Estes 43,875
Mr. Gleason 15,000
Mr. Grimoldi 1,687
Mr. Gulis 20,029
Mr. Kollat 11,250
Mr. Matthews 22,500
Mr. Mehney 15,750
Mr. Northrop 12,375
Mr. O'Donovan 74,640
Mr. Parini 4,500
Ms. Parker 5,625
Ms. Sanders 8,437
All directors and executive
officers as a group 419,261
These numbers include shares over which the listed person is legally
entitled to share voting or dispositive power by reason of joint
ownership, trust, or other contract or property right, and shares held
by spouses, children or other relatives over whom the listed person
may have substantial influence by reason of relationship.
BOARD OF DIRECTORS
The Company's Board of Directors currently consists of twelve
directors, two of whom are standing for reelection. Mr. Gleason and Mr.
Northrop are retiring from the Board of Directors at the close of the
annual meeting of stockholders and are not standing for reelection. The
Board of Directors has determined to reduce the size of the Board of
Directors to ten members effective at the close of the annual meeting of
stockholders. Wolverine's Amended and Restated Bylaws provide that the
Board of Directors shall be divided into three classes, with each class to
be as nearly equal in number as possible. The Board of Directors intends
in future years as the terms of the incumbent directors end to adjust the
number of directors in each class to again make each class as nearly equal
in number as possible. Each class of directors serves a term of office of
three years, with the term of one class expiring at the annual meeting of
stockholders in each successive year.
Biographical information as of December 31, 1995, is presented below
for each person who either is nominated for election as a director at the
annual meeting of stockholders or is continuing as an incumbent director.
Except as indicated, all have had the same principal positions and
employment for over five years.
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NOMINEES FOR ELECTION TO TERMS EXPIRING IN 1999
DANIEL T. CARROLL (age 69) has been a director since 1979. Mr.
Carroll is Chairman of the Board and President of The Carroll Group, Inc.,
a management consulting firm. Mr. Carroll is also a director of American
Woodmark Corp.; A.M. Castle & Co.; Aon Corporation; Comshare, Inc.;
Diebold, Incorporated; Woodhead Industries, Inc.; DeSoto, Inc.; and Oshkosh
Truck Corporation.
PHILLIP D. MATTHEWS (age 57) has been a director since 1981. Mr.
Matthews is Chairman of the Board and Chairman of the Executive Committee
of the Company. In his capacity as Chairman, Mr. Matthews is an officer of
the Board of Directors and is responsible for Board of Directors governance
issues and provides assistance in defining strategic direction for the
Company. Mr. Matthews is primarily engaged in other business activities
and is not involved in the day-to-day operations of the Company. Mr.
Matthews is also Chairman of Reliable Company, a coin-operated laundry
equipment company servicing the multi-unit housing industry. Mr. Matthews
is also a director of H.F. Ahmanson, and Bell Sports Corp. From 1981 until
1989, Mr. Matthews was Chairman, Chief Executive Officer and Owner of Bell
Helmets, Inc., a predecessor of Bell Sports Corp.
INCUMBENT DIRECTORS - TERMS EXPIRING IN 1998
GEOFFREY B. BLOOM (age 54) has been a director since 1987. Mr. Bloom
is President and Chief Executive Officer of the Company. Formerly, Mr.
Bloom was Chief Operating Officer of the Company from 1987 until 1993. Mr.
Bloom is also a director of Comshare, Inc.
DAVID T. KOLLAT (age 57) has been a director since 1992. Mr. Kollat
is President and Chairman of 22, Inc., a company specializing in research
and management consulting for retailers and consumer goods manufacturers.
Mr. Kollat is also a director of The Limited, Inc.; Cooker Restaurant
Corporation; and Consolidated Stores.
DAVID P. MEHNEY (age 56) has been a director since 1977. Mr. Mehney
is President of The KMW Group, Inc., a distributor of medical and marine
products.
TIMOTHY J. O'DONOVAN (age 50) has been a director since 1993. Mr.
O'Donovan is Executive Vice President of the Company.
INCUMBENT DIRECTORS - TERMS EXPIRING IN 1997
ALBERTO L. GRIMOLDI (age 54) was appointed to the Board of Directors
in 1994. Mr. Grimoldi is Chairman of Grimoldi, S.A., a shoe manufacturer
and retailer in Argentina. He has held that position since 1986. Mr.
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Grimoldi is also a founding member and has been Vice Chairman of Banco
Privado de Inversiones, S.A., an Argentinean investment adviser, since
1994. Mr. Grimoldi is also a founding member and director of INFUPA S.A., a
diversified Argentinean financial services firm; a director of Bonafide
S.A., a chocolate and coffee manufacturer, distributor and retailer; and an
advisory director of Autolatina, an automobile joint venture between the
Ford Motor Company and Volkswagen AG. Mr. Grimoldi has also held various
positions in the Argentinean government.
JOSEPH A. PARINI (age 64) has been a director since 1987. He is
President and Chief Executive Officer of Elbit Systems, Inc., a designer,
manufacturer and marketer of infrared instrumentation, electronics for
telecommunications, defense products and medical instrumentation. He has
held that position since 1990. Formerly, Mr. Parini was President of
Inframetrics, Inc., a manufacturer of infrared instrumentation, from 1990
until 1994, and President and Chief Executive Officer of Rospatch
Corporation (now Ameriwood Industries International, Corp.), a manufacturer
of wood products, from 1980 until 1990. Mr. Parini is also a director of
Foremost Corporation of America.
JOAN PARKER (age 60) has been a director since 1981. Ms. Parker is a
Senior Partner with J. Walter Thompson, an international advertising firm.
From September 1995 until December 1995, Ms. Parker was the sole proprietor
of Parker & Associates, an advertising firm. From 1994 until September
1995, she was Executive Vice President and Director of N. W. Ayer &
Partners, an international advertising firm, and Executive Vice President
and Managing Director of the Ayer Public Relations Division of N.W. Ayer &
Partners. Formerly, Ms. Parker was Senior Vice President and Managing
Director of the Ayer Public Relations Division.
ELIZABETH A. SANDERS (age 50) was appointed to the Board of Directors
in 1994. Ms. Sanders is a principal partner in The Sanders Partnership, a
management consulting firm. Ms. Sanders has held that position since 1990.
Formerly, Ms. Sanders was Vice President of Nordstrom, Inc., a retailer.
Ms. Sanders is also a director of Wal*Mart Stores, Inc.; H.F. Ahmanson; and
Flagstar, Inc.
BOARD COMMITTEES AND MEETINGS
The Company's Board of Directors has four standing committees: the
Audit Committee, the Compensation Committee, the Executive Committee and
the Governance Committee.
AUDIT COMMITTEE. The Audit Committee recommends to the Board of
Directors the selection of independent accountants; approves the
nature and scope of services to be performed by the independent
accountants and reviews the range of fees for such services; confers
with the independent accountants and reviews the results of the annual
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audit; reviews with the independent accountants the Company's internal
auditing, accounting and financial controls; and reviews policies and
practices regarding compliance with laws and conflicts of interest.
Messrs. Grimoldi, Kollat, Northrop and Parini and Ms. Parker currently
serve on the Audit Committee. Mr. Parini is Chairman of the Audit
Committee. During 1995, the Audit Committee held three meetings.
COMPENSATION COMMITTEE. The Compensation Committee is
responsible for reviewing and recommending to the Board of Directors
the timing and amount of compensation for the Chief Executive Officer
and other key employees, including salaries, bonuses and other
benefits. The Compensation Committee also is responsible for
administering the Company's stock option and other equity-based
incentive plans, recommending retainer and attendance fees for
directors who are not employees of the Company or any of its
subsidiaries ("Non-Employee Directors"), reviewing compensation plans
and awards as they relate to the Chief Executive Officer and other key
employees, and administering the Company's pension plans and 401(k)
savings plan. Messrs. Carroll, Mehney and Parini and Ms. Sanders
currently serve on the Compensation Committee. Mr. Carroll is
Chairman of the Compensation Committee. During 1995, the Compensation
Committee held four meetings.
EXECUTIVE COMMITTEE. The Executive Committee is responsible for
and may exercise all powers and authority of the Board of Directors in
the management of the business and affairs of the Company except to
the extent that delegation is prohibited by law. The Executive
Committee may consider or act upon matters requiring Board action
during periods between Board meetings. Messrs. Bloom, Carroll,
Gleason, Matthews, and Northrop currently serve on the Executive
Committee. Mr. Matthews is Chairman of the Executive Committee. The
Executive Committee met once during 1995.
GOVERNANCE COMMITTEE. The Governance Committee is responsible
for: (i) recommending to the Board of Directors suitable candidates
for nomination for positions on the Board of Directors; (ii) reviewing
with the Board of Directors the appropriate skills and characteristics
of Board members; (iii) reviewing and evaluating each director's
performance on the Board; and (iv) reviewing and reporting to the
Board on all matters generally relating to corporate governance. The
Governance Committee also recommends the officers of the Company for
election by the Board of Directors. Messrs. Gleason, Kollat, Matthews
and Mehney and Ms. Parker currently serve on the Governance Committee.
Mr. Mehney is Chairman of the Governance Committee. During 1995, the
Governance Committee held two meetings. The Governance Committee will
consider nominees for election to the Board of Directors submitted by
stockholders. The Amended and Restated Bylaws of the Company provide
that nominations for the election of directors may be made by a
stockholder entitled to vote for the election of directors if, and
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only if, the stockholder submits advance notice of the proposed
nomination and the notice is received by the Secretary of the Company
not less than 50 nor more than 75 days before the annual meeting.
However, if fewer than 65 days' notice of the meeting or prior public
disclosure is given to stockholders, the notice of the proposed
nomination must be received not later than the close of business on
the 15th day after the day on which the notice of the date of the
meeting was mailed or the public disclosure was made, whichever first
occurs. Each notice submitted by a stockholder must set forth the
name, age, business address, residence address, principal occupation
and employment of, the class and number of shares of the Company's
stock beneficially owned by, and any other information concerning each
nominee as would be required to be included in a proxy statement
soliciting proxies for the election of the nominee under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and,
as to the stockholder giving the notice, the name, record address and
the class and number of shares of the Company's stock beneficially
owned by the stockholder. If the chairman of the meeting determines
that a nomination was not made in accordance with these procedures, he
or she must announce that determination at the meeting and the
nomination will be disregarded.
During the Company's last fiscal year, the Board of Directors held
five regular meetings and two special meetings. Each of the directors
attended 75% or more of the aggregate of (i) the total number of meetings
of the Board of Directors, and (ii) the total number of meetings held by
all committees of the Board of Directors on which he or she served (during
the periods that he or she served).
COMPENSATION OF DIRECTORS
Non-Employee Directors receive a $8,000 annual retainer fee plus
compensation in accordance with the following schedule: $1,000 per day for
attendance at each regular meeting of the Board of Directors; $900 for
attendance at each Executive Committee meeting when such committee
functions in place of the Board; $500 per day for attendance at each
special meeting of the Board of Directors; and $250 per day for attendance
at each committee meeting. In addition, the chairman of each of the Audit,
Compensation and Governance Committees receives annual fees of $2,000.
Directors who are also employees of the Company or any of its subsidiaries
receive no annual retainer and are not compensated for attendance at Board
or committee meetings. The Company also reimburses directors for expenses
associated with attending Board of Director and committee meetings.
Under the Directors Stock Option Plan adopted and approved by the
stockholders in 1988 (the "1988 Directors' Plan"), each Non-Employee
Director has been granted an option to purchase 6,750 shares of Common
Stock (as adjusted for stock splits) on the date of his or her initial
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appointment or election as a director and an option to purchase 1,125
shares (as adjusted for stock splits) annually on a specified date after
his or her appointment or election. The per share exercise price of
options granted under the 1988 Directors' Plan was 100% of the market value
of Common Stock on the date each option was granted. The term of each
option could not exceed 10 years. The 1994 Directors' Stock Option Plan
(the "1994 Directors' Plan") discussed below was adopted and approved by
the stockholders to supplement and replace the 1988 Directors' Plan, under
which all available option stock has been granted.
The 1994 Directors' Plan was adopted and approved by the stockholders
at the 1994 annual meeting of stockholders. The 1994 Directors' Plan
supplemented and replaced the 1988 Directors' Plan. Options are granted
under the 1994 Directors' Plan in amounts and on terms substantially
identical to those set forth in the 1988 Directors' Plan on the date of
election or appointment to the Board and annually on the date of each
annual meeting, except that annual grants under the 1994 Directors' Plan
are for 1,687 shares (as adjusted for stock splits) rather than 1,125
shares under the 1988 Directors' Plan. Options were granted under the 1994
Directors' Plan to all Non-Employee Directors on April 19, 1995. Options
to purchase a maximum of 120,000 shares of Common Stock may be granted
under the 1994 Directors' Plan.
In 1990, the Company adopted a Director Retirement Plan. Under this
plan, each Non-Employee Director who has served on the Board of Directors a
minimum of five years will receive an annual benefit after the later of
attaining age 65 or termination of service as a director. The benefit
received will depend upon the number of each director's years of service,
but may not exceed a maximum of 80% of the director's final annual
retainer. Directors are also entitled to receive an actuarially reduced
benefit if they would like payments of these benefits to begin after
retirement or termination of service as a director, but before attaining
age 65. The annual benefit is payable to each director for the shorter of
10 years or the number of years the director served on the Board.
On April 27, 1993, Mr. Matthews was elected to serve as Chairman of
the Board of Directors of the Company. In connection with his service as
Chairman, the Company entered into a supplemental director's fee agreement
with Mr. Matthews during 1995 (the "Fee Agreement") which replaced an
earlier agreement that contained substantially similar terms. Under the
Fee Agreement, Mr. Matthews agreed to serve as Chairman of the Board (as an
officer of the Board and not as an executive officer of the Company) for an
initial term of two years. The Fee Agreement automatically renews each
year after the initial term for an additional one year term unless and
until the Company delivers to Mr. Matthews a notice of non-renewal. Under
the Fee Agreement, the Company agreed to pay to Mr. Matthews an annual
supplemental director's fee, in addition to any standard retainer and Board
meeting fees (but not committee meeting fees) to which all Non-Employee
Directors may be entitled, equal to $75,000 for the first year, $50,000 for
-13-
the second year, and an amount to be agreed upon by Mr. Matthews and the
Company not to exceed $50,000 for any renewal term. The Company also
agreed to reimburse Mr. Matthews for office, clerical and related expenses
incurred in connection with his service not to exceed $12,000 for the first
year and $8,000 for the second year. During 1995, the Company reimbursed
Mr. Matthews for such expenses in the amount of $6,600. In addition, the
Company granted Mr. Matthews an award for 15,000 (post-split) shares of
Common Stock subject to certain restrictions set forth in a restricted
stock agreement. The restrictions lapsed with respect to one-third of the
shares on March 27, 1995, one-third of the shares on January 1, 1996, and
will lapse with respect to the remaining one-third of the shares on January
1, 1997. The Fee Agreement may be terminated by the Company or Mr.
Matthews. If the Fee Agreement is terminated by the Company other than for
Cause (as defined in the Fee Agreement), compensation under the Fee
Agreement would continue until the end of the term of the Fee Agreement.
If the Agreement is not renewed by the Company following a Change in
Control (as defined in the Fee Agreement), Mr. Matthews will receive a lump
sum payment of $50,000 in addition to the compensation discussed above
prorated through the date he receives the lump sum payment. Upon any
termination of the Fee Agreement, Mr. Matthews will again be entitled to
receive the standard retainer and fees for Board and committee meeting
attendance paid to all other Non-Employee Directors.
The Company entered into an amended and restated employment and
transition agreement with Mr. Gleason which extended through January 31,
1996 (the "Agreement"). Under the Agreement, Mr. Gleason and the Company
agreed to terminate Mr. Gleason's prior employment agreement which extended
through August 31, 1996. Under the Agreement, Mr. Gleason retired on
January 31, 1996 from all positions with the Company (except for his
director position with the Company). Mr. Gleason is retiring as a director
of the Company at the close of the annual meeting of stockholders.
Mr. Gleason received an annual base salary of $250,000 (effective
January 1, 1995) through January 31, 1996. In connection with the
execution of the Agreement, the Company's interest in the cash value of an
insurance policy (on which the Company continues to pay premiums) was
transferred to Mr. Gleason. Mr. Gleason's annual benefit under the
Company's pension plan will be at least $122,500 (subject to the social
security offset provisions of the pension plan). Mr. Gleason was also
entitled to participate in all other plans and to receive other benefits
normally provided by the Company to top-level executives, except that Mr.
Gleason's bonus under each of the Company's annual bonus plan and long-term
bonus plan could not exceed $50,000 annually. In addition to his salary,
Mr. Gleason received bonuses and other benefits totaling $100,000 in 1995.
In the Agreement, Mr. Gleason granted the Company a covenant not to
compete (and certain related restrictive covenants) that generally extended
to January 31, 1996.
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Mr. Gleason participates in the former deferred compensation plan of
the Company. The deferred compensation plan provides participants with
deferred compensation beginning upon retirement from the Company at normal
or early retirement age. The plan also provides benefits in the event of
death and reduced benefits upon disability. The Company has purchased
insurance on the participants' lives payable to the Company in amounts
which, if the assumptions made as to mortality experience, policy dividends
and other factors are realized, will cover all the Company's payments for
the insurance and all deferred compensation obligations, and will provide
an additional amount for use of the Company's money. Mr. Gleason's
anticipated annual benefits from the deferred compensation plan upon
retirement at normal retirement age and continuing for 18 years are
$180,000 for the first five years and $154,000 for the following thirteen
years. Mr. Gleason's deferred compensation agreement provides for benefits
payable for 18 years after attaining age 55, if he elects, or otherwise
upon attaining age 60. An election to receive benefits before age 60
triggers a reduction in the benefits. Mr. Gleason is fully vested with
respect to benefits under his deferred compensation agreement.
Mr. Gleason also participated in the Company's employee stock option
loan program described on page ___ of this Proxy Statement during 1995. As
of March 1, 1996, Mr. Gleason had outstanding loan balances of $646,472,
which was also Mr. Gleason's largest outstanding balance under all of these
loans since January 1, 1995.
STOCK PRICE PERFORMANCE GRAPH
The following graph compares the cumulative total stockholder return
on Wolverine Common Stock to the Standard & Poor's 500 Stock Index and two
indices of peer companies that produce non-athletic footwear, assuming an
investment of $100.00 at the beginning of the period indicated. The
Standard & Poor's 500 Stock Index is a broad equity market index published
by Standard & Poor's. The indices of peer companies were constructed by
the Company and include the companies listed in the footnotes to the graph
below. The index identified as "Old Peer Index"(1) below was used in the
Stock Price Performance Graph in the Company's 1995 Proxy Statement. The
Company anticipates using the index identified as "New Peer Index"(2) below
in future proxy statements. The Company believes the modest change in peer
groups is appropriate to reflect the results of consolidations and
acquisitions that occurred in the footwear industry after the original peer
group was constructed and to include newer companies for which historical
information necessary to prepare an index was not available at the time the
original peer group was constructed. In constructing the peer indices, the
return of each component company was weighted according to its respective
stock market capitalization at the beginning of each period indicated.
Cumulative total stockholder return is measured by dividing (i) the sum of:
(a) the cumulative amount of dividends for the measurement period, assuming
dividend reinvestment; and (b) the difference between the share price at
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the end and the beginning of the measurement period, by (ii) the share
price at the beginning of the measurement period.
COMPARISON OF FIVE YEAR CUMULATIVE
TOTAL STOCKHOLDER RETURN
[GRAPH]
_______________
(1) The Old Peer Index includes J. Baker, Inc.; R.G. Barry; Brown Group,
Inc.; Candies, Inc.; Daniel Green; Genesco, Inc.; Interco, Inc.(3);
Justin Industries; Penobscot Shoe; Sam & Libby, Inc.; Stride Rite
Corporation; Wellco Enterprises; and Weyco Group, Inc. The Old Peer
Index also included U.S. Shoe, Corp. During 1995, U.S. Shoe, Corp.
was acquired by Luxottica Group SpA. The information necessary to
include U.S. Shoe, Corp. in the Old Peer Index is no longer available.
(2) The New Peer Index includes J. Baker, Inc.; R.G. Barry; Brown Group,
Inc.; Candies, Inc.; Daniel Green; Genesco, Inc.; Interco, Inc.(3);
Justin Industries; Kenneth Cole Products; Lacrosse Footwear; Nine West
Group; Penobscot Shoe; Rocky Shoes and Boots; Sam & Libby, Inc.;
Stride Rite Corporation; Timberland Company; Wellco Enterprises; and
Weyco Group, Inc.
(3) Interco, Inc. filed a petition for relief under Chapter 11 of the
United States Bankruptcy Code on January 24, 1991. As part of the
bankruptcy reorganization, all outstanding capital stock of Interco,
Inc. was canceled on June 26, 1992, and the company was completely
recapitalized with new stock issued to the creditors of Interco, Inc.
Interco, Inc. is accounted for in the stock performance graph as a new
company effective in 1992.
The dollar values for total stockholder return plotted in the
graph above are shown in the table below:
FISCAL
YEAR-END WOLVERINE S & P 500 OLD PEER INDEX NEW PEER INDEX
1990 $100.00 $100.00 $100.00 $100.00
1991 139.91 130.47 160.92 160.84
1992 188.56 140.41 169.71 179.60
1993 381.42 154.56 160.48 198.06
1994 488.33 156.60 118.99 151.24
1995 901.16 215.45 98.83 151.18
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EXECUTIVE COMPENSATION
COMPENSATION SUMMARY
The following Summary Compensation Table shows certain information
concerning the compensation earned during each of the three fiscal years in
the period ended December 30, 1995, of the Chief Executive Officer of the
Company during the last completed fiscal year, and each of Wolverine's four
most highly compensated executive officers who served in positions other
than Chief Executive Officer at the end of the last completed fiscal year.
The numbers of shares subject to awards of stock options have been adjusted
to reflect stock splits.
SUMMARY COMPENSATION TABLE
LONG-TERM COMPENSATION
ANNUAL COMPENSATION AWARDS PAYOUTS
NUMBER OF
OTHER RESTRICTED SHARES
NAME AND ANNUAL STOCK UNDERLYING LTIP ALL OTHER
PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION AWARDS OPTIONS PAYOUTS COMPENSATION
Geoffrey B. Bloom 1995 $ 391,923 $ 335,989 $ 37,119 $ 203,438 40,200 $ 321,114 $ 12,703
President, Chief 1994 357,692 285,939 -- 179,688 33,750 183,053 117,314
Executive Officer 1993 320,769 276,449 -- 90,000 33,750 -- 127,248
and Director
Steven M. Duffy 1995 $ 185,797 $ 99,530 $ -- $ 54,250 8,250 $ 71,407 $ 9,918
Vice President 1994 156,287 82,952 -- 44,922 8,437 35,000 6,626
1993 135,255 87,954 -- 22,500 8,437 -- 5,511
V. Dean Estes 1995 $ 188,640 $ 85,391 $ -- $ 81,375 15,000 $ 58,244 $ 7,500
Vice President 1994 172,248 82,892 -- 71,875 11,250 30,933 7,500
1993 135,903 84,745 -- 22,500 8,437 -- 8,699
Stephen L. Gulis, Jr. 1995 $ 169,678 $ 90,895 $ -- $ 54,250 8,250 $ 48,469 $ 8,627
Vice President and 1994 143,594 76,761 -- 44,922 8,437 21,648 4,877
Chief Financial
Officer 1993 101,315 57,195 -- 18,000 6,750 -- 3,233
Timothy J. 1995 $ 233,423 $ 98,138 $ -- $ 122,063 22,500 $ 107,924 $ 10,873
O'Donovan, 1994 199,577 107,392 -- 107,813 20,250 49,424 7,123
Executive Vice 1993 173,128 114,132 -- 36,000 13,500 -- 7,026
President and
Director
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___________________________
The values of restricted stock awards reported in this column are
calculated using the closing market price of Common Stock on the date
of grant. As of the end of Wolverine's 1995 fiscal year, each of the
named executive officers held shares of restricted stock. Dividends
will be paid on shares of restricted stock at the same rate dividends
are paid on Common Stock. The number of shares of restricted stock
held by each named individual and the aggregate value of those shares
(as represented by the closing price of Common Stock on December 29,
1995) at the end of the Company's 1995 fiscal year, without giving
effect to the diminution of value attributable to the restrictions on
the stock, are set forth below:
NUMBER AGGREGATE
OF SHARES VALUE
Mr. Bloom 45,674 $ 1,427,722
Mr. Duffy 13,405 418,457
Mr. Estes 13,837 433,236
Mr. Gulis 9,467 296,403
Mr. O'Donovan 22,218 695,215
These numbers do not include the number or value of shares of
restricted stock awarded during 1996 in connection with the Company's
Long-Term Incentive Plan (1993-1995), the values of which are included
in the amounts reported in the "LTIP Payout" column for each listed
individual in this table.
Under the Company's Long-Term Incentive Plan (1993-1995), amounts
payable under the plan are paid (i) in cash equal to 50% of the amount
payable, and (ii) in shares of restricted stock that have a market
value, on the date the cash payment is made, equal to 140% of the
remaining 50% payable under the plan. The dollar amounts reported in
this column for 1995 reflect the cash payment and the market value of
the shares of restricted stock on the date of payment. Shares of
restricted stock are granted under the Company's existing plans that
provide for such awards. The restrictions lapse with respect to one-
third of the shares on each anniversary of the date of grant over a
three-year period. Pursuant to the plan, the Company granted 25,158
shares of restricted stock to key management employees with respect to
amounts payable under the plan for the three-year performance period
ended December 30, 1995.
Except for additional amounts separately noted for some individuals,
the compensation listed in this column for 1995 consisted of: (i)
Company contributions to the accounts of the named executive officers
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under Wolverine's 401(k) Savings Plan as follows: $7,500 for Mr.
Bloom; $7,500 for Mr. Duffy; $7,500 for Mr. Estes; $7,500 for Mr.
Gulis; and $7,500 for Mr. O'Donovan; and (ii) payments made by
Wolverine for the premiums on certain life insurance policies as
follows: $5,203 for Mr. Bloom; $2,418 for Mr. Duffy; $1,127 for Mr.
Gulis; and $3,373 for Mr. O'Donovan. No payments of insurance
premiums were made on behalf of Mr. Estes.
Includes one-third of the outstanding principal balance ($34,330) of a
three-year, interest-free loan made to Mr. Bloom pursuant to his
amended and restated employment agreement which was forgiven by the
Company because the Company achieved its targeted performance goals
under the annual bonus plan.
Includes imputed income from a three-year, interest-free loan made to
Mr. Bloom pursuant to his amended and restated employment agreement
($8,516) and, because the Company achieved the performance goals
necessary to permit payment of the maximum amount under the annual
bonus plan during 1995, an amount to satisfy Mr. Bloom's tax liability
($28,603) associated with the forgiveness by the Company of one-third
of the principal balance of such loan.
As stipulated in Mr. Bloom's amended and restated employment
agreement, the Company forgave the remaining principal balance
($105,465) of a loan made to Mr. Bloom to permit him to purchase
shares of Common Stock, plus all accrued but unpaid interest ($2,896)
associated with the principal balance forgiven. See the discussion of
Mr. Bloom's amended and restated employment agreement on page __ of
this Proxy Statement.
As stipulated in Mr. Bloom's amended and restated employment
agreement, the Company forgave one-half of the principal balance
($105,465) of a loan made to Mr. Bloom to permit him to purchase
shares of Common Stock, plus all accrued but unpaid interest ($12,443)
associated with the principal balance forgiven. See the discussion of
Mr. Bloom's amended and restated employment agreement on page __ of
this Proxy Statement.
STOCK OPTIONS
The Company's stock option plans are administered by the Compensation
Committee of the Board of Directors which has authority to determine the
individuals to whom and the terms upon which options will be granted, the
number of shares to be subject to each option and the form of consideration
that may be paid upon the exercise of an option.
The following tables set forth information regarding stock options
granted to and exercised by the named executive officers during the fiscal
year ended December 30, 1995:
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OPTION GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANTS
PERCENT OF
TOTAL MARKET
NUMBER OF OPTIONS PRICE
SECURITIES GRANTED TO PER SHARE POTENTIAL REALIZABLE VALUE AT
UNDERLYING EMPLOYEES EXERCISE ON ASSUMED ANNUAL RATES OF STOCK
OPTIONS IN FISCAL PRICE GRANT EXPIRATION PRICE APPRECIATION FOR OPTION TERM
NAME GRANTED YEAR PER SHARE DATE DATE 0% 5% 10%
Geoffrey B. Bloom 6,450 2% $14.71 $ 18.00 2/28/05 $ 21,231 $ 94,221 $206,186
33,750 12 18.08 18.08 3/8/05 -- 383,689 972,268
Steven M. Duffy 8,250 3 18.08 18.08 3/8/05 -- 93,791 237,665
V. Dean Estes 15,000 5 18.08 18.08 3/8/05 -- 170,529 432,119
Stephen L. Gulis, Jr. 8,250 3 18.08 18.08 3/8/05 -- 93,791 237,665
Timothy J. O'Donovan 2,250 1 14.71 18.00 2/28/05 7,406 32,868 71,925
20,250 7 18.08 18.08 3/8/05 -- 230,214 583,361
________________________
All options granted during 1995 are exercisable with respect to
25% of the shares on the date of grant, and become exercisable in
cumulative 25% installments on each anniversary date thereafter
with full vesting occurring on the third anniversary date of the
grant. Vesting may be accelerated upon certain events relating
to a change in control of the Company. All options were granted
for a term of ten years. Options terminate, with certain limited
exercise provisions, in the event of death, retirement or other
termination of employment. All options permit the option price
to be paid by delivery of cash or, with the consent of the
Compensation Committee, shares of the Company's Common Stock.
-20-
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
NUMBER OF VALUE OF
SECURITIES UNDERLYING UNEXERCISED
NUMBER OF UNEXERCISED IN-THE-MONEY
SHARES OPTIONS AT OPTIONS AT
ACQUIRED ON FISCAL YEAR-END FISCAL YEAR-END
NAME EXERCISE VALUE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
Geoffrey B. Bloom 88,612 $ 1,612,101 82,615 55,460 $ 1,808,683 $ 874,177
Steven M. Duffy 5,568 77,765 6,284 12,514 92,413 196,502
V. Dean Estes 1,875 29,115 33,329 18,983 757,934 285,454
Stephen L. Gulis, Jr. 1,712 26,259 12,295 12,092 237,713 186,638
Timothy J. O'Donovan 7,125 100,542 56,327 30,373 1,285,647 464,806
The Company's employee loan program provides that an employee may
borrow from the Company up to 95% of the option price to exercise
options acquired under the Company's stock option plans. These loans
bear interest at a rate equal to the greater of 6 1/2% per annum or
the interest rate imputed by the Internal Revenue Service with
interest payable quarterly. Principal is payable quarterly at the
rate of 15% per annum, beginning five years after the date on which
the option to which the loan relates is exercised. All loans are
secured by a pledge of the Common Stock obtained upon exercise of the
applicable option. Outstanding loan balances as of March 1, 1996,
and, if higher, the maximum amount outstanding since January 1, 1995
(indicated in parentheses), for each of the named executive officers
of the Company were as follows: Mr. Bloom, $0 ($83,600); Mr. Duffy,
$22,655; Mr. Estes, $44,285 ($45,277); Mr. Gulis, $14,378; and Mr.
O'Donovan, $77,932 ($79,810).
LONG-TERM INCENTIVE AWARDS
The Company has established the Long-Term Incentive Plan (1995-1997)
pursuant to which the Company may award cash and shares of
restricted stock to plan participants conditioned upon the achievement
of certain corporate performance goals over a three-year performance
period.
The following table sets forth certain information concerning
awards of long-term incentive compensation to the named individuals
during the last fiscal year:
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LONG-TERM INCENTIVE PLANS--AWARDS IN LAST FISCAL YEAR
PERFORMANCE
OR OTHER ESTIMATED FUTURE PAYOUTS
NUMBER OF SHARES, PERIOD UNTIL UNDER NON-STOCK-PRICE-BASED PLANS
UNITS OR MATURATION
NAME OTHER RIGHTS OR PAYOUT THRESHOLD TARGET MAXIMUM
Geoffrey B. Bloom 50 3 years $ 123,553 $ 247,108 $ 370,661
Steven M. Duffy 25 3 years 30,084 60,168 90,252
V. Dean Estes 25 3 years 29,734 59,468 89,202
Stephen L. Gulis, Jr. 25 3 years 26,746 53,491 80,237
Timothy J. O'Donovan 35 3 years 51,511 103,021 154,532
_____________________
Under the Company's Long-Term Incentive Plan (1995-1997), key
management employees may earn incentive compensation based upon
achievement of specified earnings per share ("EPS") over a three-
year performance period. The numbers reported in the column
under the heading "Number of Shares, Units or Other Rights"
represent the percentage of each officer's average base salary
during the three-year period that the officer will receive as
bonus compensation under the plan if the specified EPS are
achieved. These amounts were determined by the Compensation
Committee. If higher or lower actual EPS are attained during the
three-year performance period, the percentage of base salary to
be received as bonus compensation by each officer will be
correspondingly higher or lower. Bonuses are conditioned upon
achieving a minimum or "threshold" EPS. Bonuses are also capped
at a maximum amount and may not exceed 150% of the percentage of
base salary reported under the heading "Number of Shares, Units
or Other Rights" with respect to each participant. EPS goals
were established by the Compensation Committee at the beginning
of 1995 for the period ending on the last day of the Company's
1997 fiscal year. EPS goals are expressed as net earnings per
share after taxes. For any bonuses to be paid, EPS in the third
year of the performance period must equal at least 20% of the
total EPS goal for the entire period.
Under the plan, amounts earned as bonus compensation are
calculated based on each participant's average annual base salary
during the three-year performance period. For purposes of this
table, the "Threshold," "Target" and "Maximum" amounts have been
calculated using each named individual's base salary for 1995 as
reported in the Summary Compensation Table, adjusted for cost of
living increases in each successive year in the performance
period which average 5.0% per year. Amounts payable under the
-22-
plan are paid (i) in cash equal to 50% of the amount payable, and
(ii) in shares of restricted stock that have a market value, on
the date the cash payment is made, equal to 140% of the remaining
50% payable under the plan. The dollar amounts reported under
the headings "Threshold," "Target" and "Maximum" reflect the
value of the cash payment and the market value of restricted
stock to be received on the date of payment. Shares of
restricted stock are granted under the Company's existing plans
that provide for such awards. The restrictions lapse with
respect to one-third of the shares on each anniversary of the
date of grant over a three-year period.
PENSION PLAN
The Company has established a qualified pension plan covering
most of the Company's salaried employees. The Internal Revenue Code
of 1986, as amended (the "Code"), imposes certain limitations on the
maximum amount of pension benefits payable under qualified plans. The
Code also imposes a cap of $150,000 (subject to certain grandfather
provisions for earnings accrued before January 1, 1994) on the amount
of earnings which may be taken into account in determining benefits
payable under qualified plans.
The following table illustrates the estimated annual benefits
payable under the pension plan for Wolverine's executive officers if
they retire at age 65 at the annual levels of average remuneration and
years of service indicated (computed on a straight life annuity basis
without the reduction required by the plan for the Social Security
Allowance received by participants in the plan and without regard to
any accrued grandfathered benefit for earnings before January 1,
1994):
PENSION PLAN TABLE
YEARS OF SERVICE
AVERAGE REMUNERATION 10 15 20 25 30 OR MORE
$150,000 $ 36,000 $ 54,000 $ 72,000 $ 90,000 $ 108,000
Subject to the limitations imposed by the Code, the pension plan
provides monthly benefits at normal retirement in an amount equal to
the greater of: (i) $16.00 (increased from $15.00 effective January
1, 1996) times the participant's number of years of service up to 30
years; (ii) 1.6% of final average monthly remuneration times the
participant's number of years of service up to 30 years; or (iii) for
certain designated participants, 2.4% (for all individuals listed in
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the Summary Compensation Table) or 2.0% of final average monthly
remuneration times the participant's number of years of service up to
30 years. Benefits are reduced by the Social Security Allowance as
defined in the plan. Under the plan, benefits may be based upon an
employee's "final average pay," which is defined as the average of the
48 highest consecutive months of employee earnings within the latest
120 calendar months. Except for the $150,000 cap imposed by the Code,
the remuneration covered by the plan for an employee would be
essentially equivalent to the sum of the amounts reported under the
heading "Annual Compensation" in the Summary Compensation Table above.
The pension plan provides that if the pension plan is terminated
during any period beginning on a Restricted Date and ending two years
later, surplus plan assets will be used to purchase retiree medical
and life insurance in satisfaction of the Company's then outstanding
obligations, if any, and will be paid pro rata to increase the
benefits of plan participants, subject to legal limitations. If the
pension plan is merged with, or the assets of the plan are transferred
to, another plan, then (i) benefits will be fully vested; (ii)
benefits will be increased as if the plan had been terminated; and
(iii) benefits will be satisfied through the purchase of a guaranteed
annuity contract. A Restricted Date is defined as the date any person
or group acquires more than 50% of the voting stock of the Company in
a transaction not approved by the Board of Directors, or the date
during any two-year period on which individuals who at the beginning
of the period constituted the Board of Directors (including any new
director whose nomination or election was approved by two-thirds of
the directors who were directors at the beginning of the period) cease
for any reason to constitute a majority of the Board.
As of December 31, 1995, the persons listed in the Summary
Compensation Table had the following years of credited service under
the plan: Mr. Bloom, 9 years; Mr. Duffy, 7 years; Mr. Estes, 20
years; Mr. Gulis, 10 years; and Mr. O'Donovan, 26 years.
SUPPLEMENT EXECUTIVE RETIREMENT PLAN
In 1995, the Company adopted a new Supplemental Executive
Retirement Plan ("SERP") to replace the deferred compensation
agreements entered into between the Company and certain key employees,
including those listed in the Summary Compensation Table, except that
an executive covered by a deferred compensation agreement will always
be entitled to a benefit under the SERP at least equal to what he or
she would have received under the deferred compensation agreement.
Under the SERP, a participating executive will be eligible for an
annual supplemental benefit once he or she has completed five years of
service after becoming a participant in the SERP (or, for those
executives already covered by a deferred compensation agreement, five
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years after entering into the deferred compensation agreement);
alternatively, a participating executive will be eligible for a
benefit with less than five years of service if he or she retires at
or after age 65. The supplemental benefit is equal to the difference
between the executive's retirement benefit under the Company's
qualified pension plan and an amount equal to a designated percentage
of the executive's average compensation multiplied by the executive's
years of service with the Company (up to 25 years). The designated
percentage is either 2.4% for each year of service (including all of
the individuals listed in the Summary Compensation Table), or 2% per
year of service. "Average Compensation" is the average of the
executive's annual compensation for the four consecutive highest
compensation years out of the last ten years of the executive's
employment. Average Compensation does not include payments under the
long-term (three-year) incentive bonus plan or severance payments.
For this purpose, Average Compensation does not vary significantly
from the amounts shown under the caption "Annual Compensation" in the
Summary Compensation Table above.
A retired participating executive may draw the full benefit
beginning at age 65. A participating executive who has ten years of
service may elect to begin receiving a reduced benefit at or after age
55. The reduction factor is 4% for each year prior to age 60, and 2%
for each year between age 60 and age 65. The SERP provides for a
disability benefit equal to 60% of the supplemental retirement benefit
(based on the executive's years of service at the date of disability).
A disabled executive is still eligible for a supplemental retirement
benefit beginning at age 65, based on all years of service (including
years during which the executive was receiving a disability benefit).
The SERP also provides for a death benefit to the executive's
designated beneficiary if the executive dies before retiring. The
death benefit is a lump sum equal to the present value of the benefit
the executive could have received beginning at age 65, based on his or
her years of service up to the date of death.
Benefits under the plan are subject to forfeiture if the
executive's employment is terminated for serious misconduct, if the
executive competes with the Company, or if the Company cannot collect
under an insurance policy purchased to fund plan benefits for certain
reasons. If, within two or three (for all individuals listed in the
Summary Compensation Table) years after a "change in control" the
executive resigns for "good reason," or is terminated by the Company
(other than for "cause," or due to death or "disability" as defined in
the SERP) the executive will be entitled to a lump sum payment equal
to 125% of the present value of the benefit payments for which the
executive would have been eligible if the executive had retired at age
55 (or at his or her actual age, if greater than age 55), without the
2%/4% early retirement reduction factors, but based on years of
service at the actual date of termination. For purposes of the SERP,
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"change in control" is defined as (i) the failure of the individuals
who were directors at the time the SERP was adopted and those whose
election or nomination to the Board of Directors was approved by a
three-quarters vote of the directors then still in office who were
directors at the time the SERP was adopted, or whose election or
nomination was so approved, to constitute a majority of the Board of
Directors; (ii) the acquisition by certain persons or groups of 20% or
more of the Company's Common Stock or combined outstanding voting
power (excluding certain transactions); (iii) the approval by the
stockholders of a reorganization, merger or consolidation (excluding
certain permitted transactions); or (iv) the approval by the
stockholders of a complete liquidation or dissolution of the Company
or the sale or disposition of all or substantially all of the assets
of the Company (excluding certain permitted transactions).
The Company may terminate the plan or stop further accrual of
plan benefits for a participating executive at any time, but
termination does not affect already accrued benefits.
EMPLOYMENT AGREEMENTS, TERMINATION OF EMPLOYMENT
AND CHANGE IN CONTROL ARRANGEMENTS
MR. BLOOM'S AGREEMENT. On April 27, 1993, the Company entered
into an amended and restated employment agreement (the "Employment
Agreement") with Mr. Bloom to employ him as President and Chief
Executive Officer until April 30, 1997, with a provision for automatic
renewal until April 30, 2000, unless a one-year prior notice of non-
renewal is given by the Company. Under the Employment Agreement, Mr.
Bloom is to receive a salary of not less than $330,000 per year, a
leased vehicle, the benefits of a term life insurance policy in the
amount of $500,000 and other benefits normally provided by the Company
to top-level executives. Because Mr. Bloom did not terminate his
employment before January 1, 1994, the Company on January 1, 1994,
forgave one-half of the principal balance ($105,465) of a loan, plus
accrued interest on that balance ($12,443), made to Mr. Bloom to
permit him to exercise an option to purchase shares of Common Stock.
Because Mr. Bloom did not voluntarily terminate his employment prior
to May 8, 1994, the Company forgave the remainder of the total
outstanding principal balance ($105,465), plus accrued interest
($2,896). Under the Employment Agreement, the Company was required to
provide to Mr. Bloom a three-year, interest-free loan in an amount
equal to the federal and state withholding taxes resulting from each
forgiveness. The Compensation Committee approved a bonus plan for Mr.
Bloom in 1995 under which one-third of the principal balance of this
loan will be forgiven in 1996, 1997 and 1998 if the Company achieves
its targeted performance goals under the annual bonus plan in 1995,
1996 and 1997, respectively, and the Company will pay Mr. Bloom an
amount to satisfy Mr. Bloom's tax liability with respect to each such
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forgiveness if the Company achieves the performance goals necessary to
permit payment of the maximum amount under the annual bonus plan in
1995, 1996 and 1997, respectively. The total principal balance
outstanding under this loan at March 1, 1996 was $68,661 (excluding
the amount the Company is required to forgive because the target
performance goals were achieved in 1995 as reported in the Summary
Compensation Table) and the largest aggregate amount outstanding under
this loan since January 1, 1995 was $102,991.
If the Employment Agreement is not renewed or Mr. Bloom is
terminated other than for Cause (as defined in the Employment
Agreement), the Employment Agreement requires Wolverine to pay to Mr.
Bloom, in addition to normal salary and bonuses through the date of
termination or non-renewal, a lump sum equal to two times Mr. Bloom's
then current salary. In addition, Mr. Bloom will be credited with
three additional years of benefit service for purposes of computing
his benefits under the pension plan. Mr. Bloom may elect to commence
payments of the pension benefits upon attaining age 58. If Mr. Bloom
is terminated other than for Cause, then Mr. Bloom will be entitled to
up to twelve months' benefits under all employee benefit programs.
Payments described in this paragraph are not subject to mitigation
under the Employment Agreement.
In addition, if Mr. Bloom's employment is terminated by the
Company other than for Cause, Retirement or Disability, or by Mr.
Bloom for Good Reason (all as defined in the Employment Agreement),
then Mr. Bloom will receive upon termination, in addition to normal
salary and bonuses earned through the date of termination: (i) cash
equal to the present value of his then current salary (plus bonus)
which would have been payable through April 30, 1997; (ii) a lump sum
in cash equal to 150% of the value of the difference between the
market price of Common Stock (or, if higher, the highest price paid in
connection with any change in control of the Company) and the exercise
prices of options (other than incentive stock options granted after
May 8, 1992) then held by Mr. Bloom, whether or not fully exercisable,
and 100% of the difference between the market price and exercise
prices of any incentive stock options granted after May 8, 1992, that
are or would be exercisable by Mr. Bloom before April 30, 1997; (iii)
reimbursement for relocation expenses and legal fees, and indemnity
against loss in the sale of Mr. Bloom's principal residence; (iv) a
cash payment at Mr. Bloom's retirement age equal to the actuarial
value of the retirement pension to which Mr. Bloom would have been
entitled (without regard to vesting requirements) had he accrued three
additional years of service with the Company, plus the amount awarded
to Mr. Bloom during the year most recently ended reduced by the single
sum actuarial equivalent of any amounts to which he is entitled under
the normal retirement plans and programs of the Company; and (v)
outplacement services paid for by the Company. Although the Company
believes that none of these payments would constitute "parachute
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payments" under Section 280G of the Code, the payments will be reduced
and/or deferred to the extent they constitute "parachute payments."
Except as described above, the Employment Agreement requires Mr.
Bloom to mitigate payments under the agreement in accordance with law.
However, Mr. Bloom need not actively seek employment, accept
employment outside the West Michigan area, or accept employment which
is not substantially equivalent in all material respects to his
position with the Company in connection with his obligation to
mitigate payments.
SEVERANCE AGREEMENTS. Pursuant to individual agreements with the
Company, Messrs. Duffy, Estes, Gulis and O'Donovan, and certain other
executive officers, will receive compensation in the event of
termination of their employment following a change in control of the
Company, unless: (i) the termination of the officer is due to death
or retirement in accordance with Company policy or as otherwise
agreed; (ii) the termination is by the Company for cause or
disability; or (iii) the termination is by resignation of the officer
for other than Good Reason. Good Reason is defined in the agreements
to include, among other things, the assignment of duties inconsistent
with the officer's status as a senior executive officer of the Company
or the duties performed by the officer immediately before a change in
control, a reduction in the officer's annual base salary, or
relocation of the officer.
The compensation payable in the event of such a termination after
a change in control includes: (i) cash equal to two times the
officer's annual salary, including bonus; (ii) cash equal to 150% of
the difference between the market price of Common Stock (or, if
higher, the highest price paid in connection with any change in
control of the Company) and the exercise prices of unexercised stock
options granted to the officer (other than incentive stock options
granted after the date of the officer's agreement), and 100% of the
difference between the market price and exercise prices of incentive
stock options granted to the officer after the date of the agreement
which are then exercisable; (iii) relocation expenses, legal fees and
indemnity against loss in the sale of the officer's principal
residence; (iv) up to two years' benefits under all employee benefit
programs; (v) a cash payment at the officer's retirement age equal to
the actuarial value of the retirement pension to which the officer
would have been entitled (without regard to vesting requirements) had
he or she accrued three additional years of service with the Company,
plus the amount awarded to the officer during the year most recently
ended reduced by the single sum actuarial equivalent of any amounts to
which the officer is entitled under the normal retirement plans and
programs of the Company; and (vi) outplacement services paid for by
the Company. In all of the severance agreements, the officer has no
requirement to mitigate the payments by seeking employment, but the
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compensation to be paid during the fourth and later months after
termination will be reduced to the extent of any compensation earned
by the officer during the applicable period. The agreements contain a
clause limiting payments to those that are deductible by the Company
under the Code.
A change in control is defined in the agreements to include a
change in control as set forth in the proxy rules issued under the
Exchange Act, the acquisition of 25% or more of the Common Stock of
the Company by any person or group of persons acting together, or a
change during any two-year period in a majority of the Board of
Directors of the Company unless each new director was approved by a
vote of at least two-thirds of the directors then still in office who
were directors at the beginning of the period.
STOCK PLAN PROVISIONS. The Company has granted certain stock
options and awarded shares of restricted stock that are subject to
accelerated vesting upon a change in control of the Company. The
options include options issued under the Company's 1988 Stock Option
Plan (the "1988 Plan"), 1993 Stock Incentive Plan (the "1993 Plan"),
and 1995 Stock Incentive Plan (the "1995 Plan"), and the shares of
restricted stock include shares awarded under the 1984 Executive
Incentive Stock Purchase Plan (the "1984 Plan"), the 1993 Plan and the
1995 Plan.
Under the stock option agreements entered into between the
Company and participants in the 1988 Plan, the 1993 Plan and the 1995
Plan, 25% of each option generally becomes exercisable on the date of
grant, and the remainder becomes exercisable at the rate of 25% of the
option per year following the date of grant. However, the stock
option agreements also provide that all options granted under the 1988
Plan become immediately exercisable in the event of a change in
control of the Company.
The 1984 Plan, the 1993 Plan and the 1995 Plan provide for
restricted stock awards. Except for shares awarded in connection with
payment of bonuses under the long-term (three-year) incentive bonus
plan, the restrictions on 25% of the shares received pursuant to an
award normally lapse on the third anniversary of the date of the
award, with an additional 25% of the restrictions lapsing on the
fourth anniversary and the remaining restrictions lapsing on the fifth
anniversary. With respect to shares awarded in connection with the
long-term (three-year) incentive bonus plan, the restrictions on one-
third of the shares received pursuant to an award lapse on each
anniversary of the date of the award over a three-year period. The
restricted stock agreements entered into with employees under these
plans provide that all restrictions on restricted stock will lapse
upon certain terminations of employment within a five-year period
after a change in control.
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A change in control is defined in the agreements under the 1984
and 1988 Plans to include a change of control as set forth in the
proxy rules issued under the Exchange Act, the acquisition of 25% or
more of the Common Stock of the Company by any person or group of
persons acting together, or a change during any two-year period in a
majority of the Board of Directors of the Company unless each new
director was approved by a vote of at least two-thirds of the
directors then still in office who were directors at the beginning of
the period. The definition of change in control under the 1993 Plan
differs from the definition of that term in the agreements under the
1984 and 1988 Plans in that a change in control is considered to have
occurred upon the acquisition of 20% or more (rather than 25%) of the
Company's Common Stock, and the definition includes the sale, lease,
exchange or other transfer of substantially all of the Company's
assets to, or the merger or consolidation of the Company with, a
corporation that is not controlled by the Company. Under the 1995
Plan, a change in control is defined as (i) the failure of the
individuals who were directors at the time the 1995 Plan was adopted
and those whose election or nomination to the Board of Directors was
approved by a two-thirds vote of the directors then still in office
who were directors at the time the 1995 Plan was adopted to constitute
a majority of the Board of Directors; (ii) the acquisition by certain
persons or groups of 20% or more of the Company's Common Stock; (iii)
the approval by the stockholders of a reorganization, merger or
consolidation (except with certain permitted entities); or (iv) the
approval by the stockholders of a complete liquidation or dissolution
of the Company or the sale or disposition of all or substantially all
of the assets of the Company, other than to certain permitted
entities.
Severance agreements with various executive officers (described
above) provide for cash payments in lieu of outstanding options if a
change in control of the Company occurs. In addition, the SERP
(described above) provides for certain benefits and payments if a
change in control of the Company occurs.
BENEFIT TRUST AGREEMENT. In May, 1987, the Company established a
Benefit Trust (the "Trust") to assure that payments to employees under
the employment agreements and severance agreements described above and
deferred compensation agreements with certain employees (collectively,
the "Agreements") will not be improperly withheld after a change in
control of the Company as defined in the agreement establishing the
Trust. Under the Trust, upon the occurrence of a Potential Change in
Control (as defined in the Trust agreement), the Company will deliver
to the trustee, to be held in trust, cash, marketable securities or
insurance equal to an amount determined by the Company to have a fair
market value, together with any existing amounts in the trust, equal
to the value of the benefits due to employees under the Agreements
given certain assumptions set forth in the Trust. Additional terms of
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the Trust provide for the return of the property to the Company upon
written request before a change in control or automatically if no
change in control has occurred within six months after funding upon a
Potential Change in Control. The Company has transferred to the Trust
insurance policies on the lives of certain key employees.
INDEMNITY AGREEMENTS. The Company has entered into indemnity
agreements with Messrs. Bloom, Duffy, Estes, Gulis and O'Donovan, and
with each director and officer of the Company (collectively,
"Executives"). The indemnity agreements indemnify each Executive
against all expenses incurred in connection with any action or
investigation involving the Executive by reason of his or her position
with the Company (or with another entity at the Company's request).
The Executives will also be indemnified for costs, including
judgments, fines and penalties, indemnifiable under Delaware law or
under the terms of any current or future liability insurance policy
maintained by the Company that covers the Executives. An Executive
involved in a derivative suit will be indemnified for expenses and
amounts paid in settlement. Indemnification is dependent in every
instance on the Executive meeting the standards of conduct set forth
in the indemnity agreements. If a potential change in control occurs,
the Company will fund a trust to satisfy its anticipated
indemnification obligations.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors (the
"Committee") develops and recommends to the Board of Directors the
executive compensation policies of the Company. The Committee also
administers the Company's compensation plans and recommends for
approval by the Board of Directors the compensation to be paid to the
Chief Executive Officer and, with the advice of the Chief Executive
Officer, the other executive officers of the Company. The Committee
consists of four directors, none of whom is a current or former
employee of the Company or its subsidiaries.
The Company has engaged an independent compensation consulting
firm to assist the Committee in formulating Wolverine's compensation
policies and to provide advice to the Committee concerning specific
compensation packages and appropriate levels of executive
compensation. The firm was also retained to provide specific advice
concerning the employment and transition agreement with Mr. Gleason
and the employment agreement with Mr. Bloom.
The basic compensation philosophy of the Committee and the
Company is to provide competitive salaries as well as incentives to
achieve superior financial performance. The Company's executive
compensation policies are designed to achieve four primary objectives:
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- Attract and retain well-qualified executives who will lead
the Company and achieve and inspire superior performance;
- Provide incentives for achievement of specific short-term
individual, business unit and corporate goals;
- Provide incentives for achievement of longer-term financial
goals; and
- Align the interests of management with those of the
stockholders to encourage achievement of continuing
increases in stockholder value.
Executive compensation at Wolverine consists primarily of four
components: base salary and benefits; amounts paid (if any) under the
annual bonus plan; amounts paid (if any) under the long-term (three-year)
incentive bonus plan; and participation in the Company's stock
option and equity-based incentive plans. Each component of
compensation is designed to accomplish one or more of the four
compensation objectives.
The participation of specific executive officers and other key
employees in the annual bonus plan, the long-term (three-year)
incentive bonus plan and the stock option and equity-based incentive
plans of the Company is recommended by management, and all
recommendations (including the level of participation) are reviewed,
modified (to the extent appropriate) and approved by the Committee.
Senior executive officers are normally eligible to receive a greater
percentage of their compensation in the form of awards under these
incentive plans to reflect the Committee's belief that the percentage
of an executive's total compensation that is "at risk" should increase
as the executive's corporate responsibilities increase.
Section 162(m) of the Code provides that publicly held companies
may not deduct compensation paid to certain executive officers in
excess of $1 million annually, with certain exemptions. The Committee
plans to review the Company's compensation policies during 1996, and
to propose appropriate modifications, if any, to the Company's
compensation plans and policies with a view toward implementing the
Company's compensation policy in a manner that reflects due
consideration of Section 162(m) and recently adopted Internal Revenue
Service regulations. The Committee and the Board of Directors view
Section 162(m) as a consideration but not a constraint on compensation
policy.
BASE SALARY
To attract and retain well-qualified executives, it is the
Committee's policy to establish base salaries at levels and provide
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benefit packages that are considered to be competitive. Base salaries
of senior executives are determined by the Committee by comparing each
executive's position with similar positions in companies of similar
type, size and financial performance. The Committee uses surveys
provided by the compensation consulting firm to make this comparison.
Although some of the companies included in the peer indices used in
the graph of cumulative total stockholder return are among the
companies included in the surveys, the surveys are not limited to
those companies since the Company competes for talent with a wide
range of corporations. In general, the Committee has targeted
salaries to be at the median of base salaries paid for comparable
positions by companies included in the surveys provided by the
compensation consulting firm. Other factors considered by the
Committee are the executive's performance, the executive's current
compensation, the competitive marketplace, and the Company's or the
applicable business unit's performance (determined by reference to
pre-tax levels of profit and levels of sales). Although the Committee
does not give specific weight to any particular factor, the most
weight is given to the executive's performance (in determining whether
to adjust significantly above or below the current salary level) and a
significant but lesser weight is generally given to the comparative
survey data. In general, base salaries for the Company's executive
officers during 1995 were equal to or slightly below the median of
salaries paid by companies included in the surveys. The 1995 average
base salary of senior executives increased 12.9% over the previous
year's level as a result of a combination of factors, including
improved individual performance, improved or continued excellent
performance by the applicable business unit (and Company), promotions,
increased responsibilities and adjustments obligated by employment
agreements.
ANNUAL BONUS PLAN
To provide incentives and rewards for achievement of short-term
individual and business unit goals, the annual bonus plan is designed
to provide key employees with the opportunity for bonuses based on
each employee's performance and the performance of the business unit
to which the employee is assigned. In the case of senior executive
officers, the bonus is based on the achievement of individual
performance goals (30% weighting) and the performance of the Company
and/or the applicable operating unit as a whole (70% weighting).
Individual performance goals for senior executive officers are
tailored to each individual's position and duties, and vary in terms
of number, scope and substance among the eligible executives.
Individual performance goals for senior executive officers are
recommended by management, are reviewed, modified (to the extent
appropriate) and approved by the Committee, and are then reviewed with
each employee. The performance goals for each business unit and the
Company as a whole relate to the achievement of predetermined pre-tax
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levels of profit (70% to 100% weighting for a business unit and 80%
weighting for the Company), sales (0% to 20% weighting for a business
unit and 20% weighting for the Company) and, with respect to a
business unit, other specified goals (0% to 10% weighting). Company
and business unit goals are established before the start of each year
and are reviewed and approved by the Committee. Awards under the
annual bonus plan are based on a percentage of earned salary. Bonuses
are conditioned on achieving minimum or "threshold" goals. Bonuses
are also capped at a maximum amount (200% of target) and may not
exceed specified levels. The two primary measures of corporate
performance, pre-tax levels of profit (which is given much more weight
than any other factor) and levels of sales, both significantly
exceeded the targeted levels for 1995. During fiscal year 1995,
executive officers were targeted to receive from 20% to 40% of their
annual salaries in bonus compensation. In determining these
percentages, the Committee considered each executive's position,
competitive incentives, and the executive's aggregate incentive
compensation potential under all of the Company's plans. The
percentages are generally higher for more senior executives to reflect
their greater influence on profits and to put a larger percentage of
their total potential cash compensation "at risk." Because the two
primary measures of corporate performance under the plan significantly
exceeded the targeted levels for 1995, senior executives generally
received bonuses at levels that were at or near the upper end of the
range established by the Committee.
LONG-TERM (THREE-YEAR) INCENTIVE BONUS PLAN
To provide incentives and rewards for longer-term planning and
decision making and the achievement of longer-term corporate
performance goals, the long-term (three-year) incentive bonus plan
provides the opportunity for additional compensation based upon the
achievement of aggressive Company financial performance goals over a
three-year period. The primary purposes of this plan are to provide a
significant incentive to substantially improve the longer-term
earnings performance of the Company and to foster cooperation among
all business units. The target financial performance goals are
ambitious in nature since they are set above budget and generally
provide a significant challenge to management. Goals are recommended
by management and reviewed, modified (to the extent appropriate) and
approved by the Committee prior to the start of each performance
period. Performance periods begin every fiscal year and end three
full fiscal years later. For the 1995-1997 performance period and
prior periods, the Company used earnings per share ("EPS") goals.
Awards under this plan are based on a percentage of average base
salary during the three-year period. If higher or lower actual EPS
are achieved during the three-year performance period, the percentage
of base salary to be received as bonus compensation by each officer
-34-
will be correspondingly higher or lower. Bonuses are conditioned upon
achieving a minimum or "threshold" EPS. Bonuses are also capped at a
maximum amount and may not exceed 150% of the targeted percentage of
base salary with respect to each executive. For the 1995-1997
performance period, executive officers are targeted to receive from
20% to 50% of their base salaries in bonus compensation. In
determining the percentages, the Committee considered the factors
discussed above in connection with the annual bonus plan and each
executive's capacity to affect the long-term performance of the
Company. Because EPS significantly exceeded the targeted levels for
the 1993-1995 performance period, senior executives generally received
bonuses at levels that were at or near the upper end of the range
established by the Committee.
Under the Company's long-term (three-year) incentive bonus plan,
amounts payable under the plan are paid (i) in cash equal to 50% of
the amount payable, and (ii) in shares of restricted stock that have a
market value, on the date the cash payment is made, equal to 140% of
the remaining 50% payable under the plan. Shares of restricted stock
are granted under the Company's existing plans that provide for such
awards. The restrictions lapse with respect to one-third of the
shares on each anniversary of the date of grant over a three-year
period. Pursuant to the plan, the Company granted 25,158 shares of
restricted stock to key management employees with respect to amounts
payable under the plan for the three-year performance period ended
December 30, 1995.
STOCK OPTIONS AND EQUITY-BASED INCENTIVE PLANS
Awards under the Company's stock option and equity-based
incentive plans are designed to encourage long-term investment in the
Company by participating executives, more closely align executive and
stockholder interests, and reward executives and other key employees
for building stockholder value. The Committee believes stock
ownership by management is beneficial; stock awards have been granted
by the Company to executives and other key employees pursuant to
various equity-based plans for several decades. The Committee
administers all aspects of these plans and reviews, modifies (to the
extent appropriate) and approves management's recommendations for
awards.
Under the Company's plans that provide for awards of restricted
stock, all of which have been previously approved by the stockholders,
the Committee may grant to executives and other key employees shares
of restricted stock or rights to purchase stock at a minimum price
equal to the par value of the stock. These shares are subject to
certain restrictions that, except for shares awarded in connection
with the long-term (three-year) incentive bonus plan described above,
generally lapse over a period of five years from the date of grant.
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Under the Company's stock option plans, all of which have been
previously approved by the stockholders, the Committee may grant to
executives and other key employees options to purchase shares of
stock, as well as stock appreciation rights and tax benefit rights.
The Company has never granted stock appreciation rights or tax benefit
rights under its existing plans and has no present intent of so doing.
The Committee reviews, modifies (to the extent appropriate) and
approves the recommendations of management as to the key employees to
be granted options and the amount, timing, price and other terms of
the options. Most of the options granted have been "incentive stock
options" within the meaning of the Code, with an exercise price equal
to the market price of Common Stock on the date of the grant. The
Committee may, however, grant options with an exercise price above or
below the market price on the date of grant.
In determining the number of shares of restricted stock and/or
the number of options to be awarded to an executive, the Committee
considers a formula recommended by the compensation consulting firm
which takes into consideration the levels of responsibility and
compensation. The Committee also considers the recommendations of
management (except for awards to the Chief Executive Officer), the
individual performance of the executive, and the number of shares or
other compensation awarded to executives at other companies.
Generally, both the number of shares granted and their proportion
relative to the total number of shares granted increase corresponding
to the level of an executive's responsibility. Although the Committee
may also consider the number of shares of restricted stock and/or
options already held by an executive, this factor is not considered to
be particularly important by the Committee in determining the amounts
of awards.
CHIEF EXECUTIVE OFFICER
The Chief Executive Officer's compensation is based upon the
policies and objectives discussed above. The Chief Executive Officer,
however, has a higher percentage of total cash compensation "at risk"
because a larger percentage of potential cash compensation is based
upon the annual bonus and long-term (three-year) incentive bonus plans
described above.
Effective April 27, 1993, the Company executed an amended and
restated employment agreement (the "Employment Agreement") with Mr.
Bloom which provides for his continued service to the Company through
April 30, 1997, as President and Chief Executive Officer. The
Agreement is also described on page ___ of this Proxy Statement under
the heading "Employment Agreements, Termination of Employment and
Change in Control Arrangements."
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Under the Employment Agreement, Mr. Bloom will receive an annual
base salary of at least $330,000 effective April 27, 1993, through
April 30, 1997, and if the Employment Agreement is renewed thereafter,
through April 30, 2000. Mr. Bloom will be entitled to participate in
the pension plan and the annual bonus and long-term (three-year)
incentive bonus plans, and to receive fringe benefits similar to those
provided to senior executives of the Company through the term of the
Agreement and any renewal period.
Mr. Bloom's 1995 base salary was established consistent with the
Employment Agreement. In setting Mr. Bloom's base salary and total
annual cash compensation, the Committee was advised by the
compensation consulting firm and compared Mr. Bloom's cash
compensation with that of chief executive officers in companies of
similar general type and size. Mr. Bloom's base salary is generally
targeted by the Committee to be approximately equal to the median of
salaries paid to chief executive officers by companies included in the
survey group. Mr. Bloom's base salary for 1995 increased 9.6% above
his 1994 level, primarily due to the exceptional performance of the
Company during the past year which the Committee believed was
significantly due to his leadership.
Mr. Bloom's annual incentive bonus under the annual bonus plan is
based upon corporate performance goals (80% weighting) and individual
performance goals (20% weighting). The target annual bonus award for
Mr. Bloom was 40% of base salary. Mr. Bloom's annual bonus was
subject to achievement of minimum goals, and his threshold bonus at
this level would have been 20% of base salary. Mr. Bloom's bonus was
also capped at 80% of base salary. Corporate performance goals in
1995 were based on the Company's achievement of predetermined pre-tax
levels of profit (approximately 64% weighting) and sales (16%
weighting). Pre-tax earnings from continuing operations for the 1995
fiscal year increased by 34.2% over the 1994 fiscal year. Sales also
increased substantially for the 1995 fiscal year over 1994 levels. As
to his individual performance goals, Mr. Bloom was rated extremely
high by the Committee. Because of these increases and factors, the
annual bonus paid to Mr. Bloom was at the upper end of the possible
range.
As required by the Employment Agreement, because Mr. Bloom did
not terminate his employment before January 1, 1994, the Company on
January 1, 1994, forgave one-half of the principal balance ($105,465)
of a loan, plus accrued interest on that balance ($12,443), made to
Mr. Bloom to permit him to exercise an option to purchase shares of
Common Stock. Also as required by the Employment Agreement, because
Mr. Bloom did not voluntarily terminate his employment prior to May 8,
1994, the Company forgave the remainder of the total outstanding
principal balance ($105,465) under that loan, plus accrued interest
($2,896). Under the Employment Agreement, the Company was required to
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provide to Mr. Bloom a three-year, interest-free loan in an amount
equal to the federal and state withholding taxes resulting from each
forgiveness. The Committee approved a bonus plan for Mr. Bloom in
1995 under which one-third of the principal balance of this loan will
be forgiven in 1996, 1997 and 1998 if the Company achieves its
targeted performance goals under the annual bonus plan in 1995, 1996
and 1997, respectively, and the Company will pay Mr. Bloom an amount
to satisfy Mr. Bloom's tax liability with respect to each such
forgiveness if the Company achieves the performance goals necessary to
permit payment of the maximum amount under the annual bonus plan in
1995, 1996 and 1997, respectively. The Company is required to forgive
one-third of this balance because the target performance goals were
achieved in 1995.
Mr. Bloom's long-term (three-year) incentive bonus award is based
upon ambitious financial performance goals for the Company expressed
in terms of targeted earnings per share. The target bonus for Mr.
Bloom was 50% of average annual base salary for the 1995-1997 plan
period. The bonus payout for Mr. Bloom can range from 0% - 150% of
the target bonus. The Company paid $321,114 to Mr. Bloom pursuant to
the 1993-1995 long-term (three-year) incentive bonus plan since the
Company did achieve its financial performance goals for the bonus
period. The dollar value of this payment reflects cash paid to Mr.
Bloom for 50% of the amount payable under the plan and the market
value of shares of restricted stock granted in payment of the
remaining 50% payable under the plan.
In 1995, Mr. Bloom was awarded 11,250 shares of restricted stock
(excluding shares awarded in connection with the 1993-1995 long-term
(three-year) incentive bonus plan discussed above) and options to
purchase an additional 40,200 shares of Common Stock. The amounts of
these awards were determined by the Committee considering the formula
and factors discussed above.
During 1995, Mr. Bloom's base salary was slightly below the
median of base salaries paid by companies included in the survey group
to chief executive officers. Had the Company only achieved targeted
performance goals for 1995, Mr. Bloom's salary combined with his
targeted bonus would have been slightly below the median of salary and
bonus paid by companies included in the survey group. Because the
Company had an exceptional year and significantly exceeded targeted
performance during 1995, Mr. Bloom's salary and bonus in the aggregate
were above the median. Mr. Bloom's total compensation for 1995
(salary, bonus and long-term incentives combined) exceeded the median
paid by companies included in the survey group primarily due to the
strong performance of the Company.
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All recommendations of the Committee attributable to 1995
compensation were unanimous and were approved and adopted by the Board
of Directors without modification.
Respectfully submitted,
Daniel T. Carroll, Chairman
David P. Mehney
Joseph A. Parini
Elizabeth A. Sanders
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
During 1995, the Company engaged N. W. Ayer & Partners to perform
public relations and marketing and advertising services. The Company
paid $1,110,065 to N. W. Ayer & Partners representing fees and
expenses. The Company also paid $3,891,823 to N. W. Ayer & Partners
in its capacity as paying agent in connection with the placement of
certain advertising, which was then disbursed by N. W. Ayer & Partners
to various media. Ms. Joan Parker, a director of the Company, was
Executive Vice President and a director of N. W. Ayer & Partners and
Executive Vice President and Managing Director of the Ayer Public
Relations Division of N. W. Ayer & Partners until September, 1995.
The Company engaged Parker & Associates, a firm in which Ms. Parker
was the sole proprietor, to perform public relations and marketing
services upon her departure from N. W. Ayer & Partners. During 1995,
the Company paid $67,281 to Parker & Associates representing fees and
expenses for these services. After Ms. Parker joined J. Walter
Thompson, an international advertising agency, the Company engaged J.
Walter Thompson to perform public relations and marketing and
advertising services. The Company anticipates that during the 1996
fiscal year it will make payments to J. Walter Thompson of
approximately $505,000 representing fees and expenses for these
services.
In 1989, Wolverine entered into a license agreement with
Grimoldi, S.A., an Argentinean corporation of which Mr. Grimoldi, a
director of Wolverine, is a large shareholder, to renew a licensing
relationship that had existed for approximately 10 years. The license
agreement grants to Grimoldi, S.A. the right to manufacture and the
exclusive rights to distribute and sell HUSH PUPPIES[REGISTERED] brand
footwear products in Argentina under Wolverine's standard terms and
conditions for all international licenses. In 1994, Wolverine and
Grimoldi, S.A. executed a similar license agreement that grants
similar rights with respect to Brazil. Under these licenses,
Grimoldi, S.A. pays to Wolverine royalties and certain sublicense fees
-39-
based on Grimoldi, S.A.'s sales of HUSH PUPPIES[REGISTERED] brand
footwear products in Argentina and Brazil. The royalties and
sublicense fees due to Wolverine on Grimoldi, S.A.'s 1995 sales of
HUSH PUPPIES[REGISTERED] brand footwear products totaled $1,151,366
and have been invoiced or paid in accordance with Wolverine's
customary terms and practices.
In August 1994, Wolverine and Grimoldi, S.A. entered into a
license agreement that grants to Grimoldi, S.A. similar rights with
respect to WOLVERINE[REGISTERED] and WOLVERINE WILDERNESS[REGISTERED]
brand footwear products in Argentina. Under this footwear license,
Grimoldi, S.A. pays to Wolverine royalties based on the factory cost
of products purchased from Wolverine or a third party manufacturer, or
Grimoldi, S.A.'s sales in the case of footwear products manufactured
by Grimoldi, S.A. Also in August 1994, Wolverine entered into a
distribution agreement with Grimoldi, S.A. appointing Grimoldi, S.A.
to serve as Wolverine's exclusive distributor for
CATERPILLAR[REGISTERED] brand footwear products in Argentina. Under
the distribution agreement, Grimoldi, S.A. pays to Wolverine a service
fee based on the cost of each pair of CATERPILLAR[REGISTERED] brand
footwear products purchased by Grimoldi, S.A. Under this agreement,
Grimoldi, S.A. paid service fees in 1995 to Wolverine totaling
$138,186. These agreements were made under standard terms and
conditions applicable to all international licenses and distributors,
respectively, and all payments due under these agreements were
invoiced or paid in accordance with Wolverine's customary terms and
practices.
In the ordinary course of their business, Wolverine and its
subsidiaries sell footwear for resale, samples, components of footwear
products (such as leather and shoe soles), advertising materials and
miscellaneous items to licensees, distributors and customers. In
1995, purchases of such items by Grimoldi, S.A. totaled $290,902
(including any applicable sublicense fees for products containing
licensed proprietary technology). All of these purchases were made
pursuant to Wolverine's customary trade terms and were invoiced or
paid in accordance with Wolverine's customary payment terms and
schedules applicable to all licensees, distributors and customers.
All of the transactions described above occurred pursuant to
continuing contractual arrangements between Wolverine and Grimoldi,
S.A. Wolverine expects similar transactions to occur between
Grimoldi, S.A. and Wolverine and its subsidiaries during 1996.
SECTION 16(a) REPORTING DELINQUENCIES
Section 16(a) of the Exchange Act requires Wolverine's directors
and officers and persons who beneficially own more than 10% of the
-40-
outstanding shares of Common Stock to file reports of ownership and
changes in ownership of shares of Common Stock with the Securities and
Exchange Commission. Directors, officers and greater than 10% owners
are required by Securities and Exchange Commission regulations to
furnish the Company with copies of all Section 16(a) reports they
file. Based on its review of the copies of such reports received by
it, or written representations from certain reporting persons that no
reports on Form 5 were required for those persons for the 1995 fiscal
year, Wolverine believes that its directors and officers complied with
all applicable filing requirements during the Company's last fiscal
year, except that one report for Mr. Duffy covering one transaction
was filed late.
SELECTION OF AUDITORS
Subject to the approval of stockholders, the Board of Directors
has reappointed the firm of Ernst & Young LLP as independent auditors
of the Company for the current fiscal year.
Ernst & Young LLP, certified public accountants, has audited the
financial statements of the Company and its subsidiaries for the
fiscal year ended December 30, 1995. Representatives of Ernst & Young
LLP are expected to be present at the annual meeting, will have an
opportunity to make a statement if they desire to do so and are
expected to be available to respond to appropriate questions from
stockholders.
YOUR BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR
RATIFICATION OF THE REAPPOINTMENT OF ERNST & YOUNG LLP.
STOCKHOLDER PROPOSALS
Stockholder proposals intended to be presented at the 1997 annual
meeting of stockholders must be received by the Company not later than
November 15, 1996, to be considered for inclusion in the proxy
statement and form of proxy relating to that meeting. Proposals of
stockholders should be made in accordance with Securities and Exchange
Commission Rule 14a-8 and should be addressed to the attention of the
Secretary of the Company, 9341 Courtland Drive, N.E., Rockford,
Michigan 49351.
SOLICITATION OF PROXIES
Solicitation of proxies will be made initially by mail. In
addition, directors, officers and employees of the Company and its
-41-
subsidiaries may solicit proxies by telephone, facsimile or personally
without additional compensation. Proxies may be solicited by nominees
and other fiduciaries who may mail materials to or otherwise
communicate with the beneficial owners of shares held by them. The
Company will bear all costs of the preparation and solicitation of
proxies, including the charges and expenses of brokerage firms, banks,
trustees or other nominees for forwarding proxy material to beneficial
owners. Wolverine has engaged Corporate Investor Communications, Inc.
at an estimated cost of $8,000, plus expenses and disbursements, to
assist in solicitation of proxies.
By Order of the Board of Directors
Blake W. Krueger, General Counsel and Secretary
March 15, 1996
-42-
[FRONT]
PROXY PROXY
WOLVERINE WORLD WIDE, INC.
9341 COURTLAND DRIVE, N.E.
ROCKFORD, MICHIGAN 49351
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned stockholder hereby appoints Geoffrey B. Bloom,
Daniel T. Carroll and Phillip D. Matthews, and each of them, each with
full power of substitution, proxies to represent the stockholder
listed on the reverse side of this Proxy and to vote all shares of
Common Stock of Wolverine World Wide, Inc. that the stockholder would
be entitled to vote on all matters which come before the Annual
Meeting of Stockholders to be held at the Amway Grand Plaza Hotel, 187
Monroe Avenue, N.W., Grand Rapids, Michigan, on Wednesday, April 17,
1996, at 10 a.m., and any adjournment of that meeting.
IF THIS PROXY IS PROPERLY EXECUTED, THE SHARES REPRESENTED BY
THIS PROXY WILL BE VOTED AS SPECIFIED. IF NO SPECIFICATION IS MADE,
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED FOR THE ELECTION OF
ALL NOMINEES NAMED ON THIS PROXY AS DIRECTORS AND FOR APPROVAL OF EACH
PROPOSAL IDENTIFIED ON THIS PROXY. THE SHARES REPRESENTED BY THIS
PROXY WILL BE VOTED IN THE DISCRETION OF THE PROXIES ON ANY OTHER
MATTERS THAT MAY COME BEFORE THE MEETING.
PLEASE MARK, SIGN, DATE AND RETURN THIS
PROXY PROMPTLY USING THE ENCLOSED ENVELOPE.
(CONTINUED AND TO BE SIGNED ON REVERSE SIDE)
[BACK]
WOLVERINE WORLD WIDE, INC.
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY.
1. ELECTION OF DIRECTORS- For All
Nominees: Daniel T. Carroll, For Withhold Except
Phillip D. Matthews
[ ] [ ] [ ]
(INSTRUCTION: TO WITHHOLD
AUTHORITY TO VOTE FOR ANY
INDIVIDUAL NOMINEE, STRIKE
THROUGH THAT NOMINEE'S NAME
IN THE LIST ABOVE.)
Your Board of Directors
Recommends that You Vote
FOR ALL NOMINEES
2. Proposal to approve the Amend- For Against Abstain
ment to the Certificate of
Incorporation to Increase the [ ] [ ] [ ]
Number of Authorized Shares of
Common Stock
Your Board of Directors Recommends
that You Vote FOR this Proposal
For Against Abstain
3. Proposal to ratify the appointment
of Ernst & Young LLP as independent [ ] [ ] [ ]
auditors for the current fiscal
year.
Your Board of Directors Recommends
that You Vote FOR this Proposal
Dated: _______________, 1996
____________________________
____________________________
Signature of Stockholder(s)
IMPORTANT -- Please sign
exactly as your name(s)
appears on this Proxy. When
signing on behalf of a
corporation, partnership,
estate or trust, indicate
title or capacity of person
signing. IF SHARES ARE HELD
JOINTLY, EACH HOLDER SHOULD
SIGN.
