University of Delaware
Date of Document: 3/14/91
[SOURCE PAGE H1]
THE GILLETTE COMPANY
Prudential Tower Building
Boston, Massachusetts 02199
Notice of Annual Meeting of Stockholders
The 1991 Annual Meeting of the stockholders of The Gillette Company will
be held at the Company's Andover Manufacturing Center, 30 Burtt Road,
Andover, Massachusetts, on Thursday, April 18, 1991, at 10:00 a.m. for
the following purposes:
1. To elect four directors for terms to expire at the 1994 Annual
Meeting of the stockholders.
2. In connection with a proposed 2-for-1 stock split, in the form of a
100% common stock dividend, to vote on the approval of an amendment to
the Certificate of Incorporation to increase the authorized $1 par value
common stock from 290,000,000 shares to 580,000,000 shares, as described
in the accompanying proxy statement.
3. To vote on the approval of the appointment of auditors for the year
1991.
4. To vote on two stockholder proposals, numbered 4 and 5 and described
in the accompanying proxy statement, if the proposals are presented at
the meeting.
5. To transact such other business as may properly come before the
meeting and any and all adjournments thereof.
The Board of Directors has fixed the close of business on March 4, 1991,
as the record date for the determination of the stockholders entitled to
notice of and to vote at the meeting.
Stockholders are invited to attend the meeting. Whether or not you
expect to attend, WE URGE YOU TO SIGN, DATE AND RETURN THE ENCLOSED
PROXY CARD IN THE ENCLOSED POSTAGE PREPAID ENVELOPE. If you attend the
meeting, you may vote your shares in person, which will revoke any
previously executed proxy.
If your shares are held of record by a broker, bank or other nominee and
you wish to attend the meeting, you must obtain a letter from the
broker, bank or other nominee confirming your beneficial ownership of
the shares and bring it to the meeting. In order to vote your shares at
the meeting, you must obtain from the record holder a proxy issued in
your name.
Directions to the Andover Manufacturing Center may be obtained from the
Secretary, The Gillette Company, Prudential Tower Building, Boston,
Massachusetts 02199, telephone (617) 421-7788.
Regardless of how many shares you own, your vote is very important.
Please SIGN, DATE AND RETURN THE ENCLOSED PROXY CARD TODAY.
By order of the Board of Directors
Kathryn E. DeMoss, Secretary
Boston, Massachusetts
March 14, 1991
[SOURCE PAGE 1]
THE GILLETTE COMPANY
Prudential Tower Building
Boston, Massachusetts 02199
Proxy Statement
March 14, 1991
Introduction
This proxy statement is furnished in connection with the solicitation of
proxies on behalf of the Board of Directors for the 1991 Annual Meeting
of the stockholders of the Company on April 18, 1991. The Notice of
Annual Meeting, this proxy statement and the accompanying proxy are
being mailed to stockholders on or about March 14, 1991. You can ensure
that your shares are voted at the meeting by signing and returning the
enclosed proxy in the envelope provided. Sending in a signed proxy will
not affect your right to attend the meeting and vote in person. You may
revoke your proxy at any time before it is voted by notifying the
Company's Transfer Agent. The First National Bank of Boston, P.O. Box
1439, Boston, Massachusetts 02104-9903 in writing, or by executing a
subsequent proxy, which revokes your previously executed proxy.
Voting of Proxies
Proxies will be voted as specified by the stockholders. Where specific
choices are not indicated, proxies will be voted for proposals 1, 2 and
3 and against proposals 4 and 5. A plurality of the votes properly cast
for the election of directors by the stockholders attending the meeting
in person or by proxy will elect directors to office. An affirmative
majority of the votes entitled to be cast at the meeting in person or by
proxy is required for approval of proposal 2. An affirmative majority
of the votes properly cast at the meeting in person or by proxy is
required for approval of proposals 3, 4 and 5.
1. Election of Directors
At the meeting, four directors are to be elected to serve for terms that
expire at the 1994 Annual Meeting of the stockholders. Until his
unexpected death on January 25, 1991, Colman M. Mockler, Jr., who had
served as a director since 1971 and as Chairman and Chief Executive
Officer of the Company since 1976, was to stand for election with the
class of directors to be elected at the 1991 Annual Meeting. Alexander
B. Trowbridge, who currently serves with the class of directors whose
term expires at the 1993 Annual Meeting of the stockholders, is standing
for election at the 1991 Annual Meeting to fill the vacancy in the class
resulting from Mr. Mockler's death. Information regarding the Board's
four nominees for directors is set forth on page 2. Information
regarding the six directors whose terms expire in 1992 and 1993 is set
forth on pages 3 and 4.
The accompanying proxy will be voted for the election of the Board's
nominees unless contrary instructions are given. If any Board nominee
is unable to serve, which is not anticipated, the persons named as
proxies intend to vote for the remaining Board nominees and, unless the
number of such nominees is reduced by the Board of Directors, for such
other person as the Board of Directors may designate.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF DIRECTORS,
WHICH IS DESIGNATED AS PROPOSAL NO. 1 ON THE ENCLOSED PROXY CARD.
[SOURCE PAGE 2]
Nominees for election to the Board of Directors for Three-Year Terms to
Expire at the 1994 Annual Meeting of Stockholders
Lawrence E. Fouraker
Director since 1973
Mr. Fouraker, 67 years of age, is George F. Baker Professor, Emeritus of
the Graduate School of Business Administration, Harvard University. He
joined the Business School faculty in 1961 and served as Dean from 1970
to 1980 and as a Professor through October 1983. He was a Fellow of the
JFK School of Government, Harvard University, from 1983 through 1990.
Mr. Fouraker is a director of Citicorp; Enserch Corporation; General
Electric Company; Ionics, Incorporated; New England Mutual Life
Insurance Company and Alcan Aluminum Ltd. He is also a trustee of the
Boston Museum of Fine Arts and Chairman of the Board of Resources for
the Future Chairman of Executive Committee and member of Personnel
Committee.
Herbert H. Jacobi
Director since 1981
Mr. Jacobi, 56 years of age, is Chairman of the Managing Partners of
Trinkaus & Burkhardt, a West German bank. The Bank is affiliated with
Britain's Midland Bank plc, of which Mr. Jacobi is a member of the
senior executive management. He was a managing partner of Berliner
Handels-und Frankfurter Bank from 1977 until 1981 and an Executive Vice
President of Chase Manhattan Bank from 1975 to 1977. Mr. Jacobi also
served as Chairman of the Board of Midland Bank France S. A. from May
1982 to June 1983. He is a director of Amtrol, Inc. and Braun AG, a
Gillette subsidiary, and an advisory director of Ambase Corporation. He
is President of the Northrhine-Westfalia Stock Exchange in Dusseldorf.
Chairman of Finance Committee and member of Audit Committee.
Alexander B. Trowbridge
Elected December 1990
Mr. Trowbridge, 61 years of age, is President of Trowbridge Partners
Inc., a management consulting firm. He was President of the National
Association of Manufacturers, a trade organization, from 1980 through
1989. He was Vice Chairman of Allied Chemical Corporation (now
Allied-Signal Corporation) from 1976 to 1980, President of The
Conference Board, Inc. from 1970 to 1976, President of the American
Management Association from 1968 to 1970 and U.S. Secretary of Commerce
from 1967 to 1968. Mr. Trowbridge is a director of Harris Corporation;
New England Mutual Life Insurance Company; PHH Corporation; The Rouse
Company; The Sun Company, Inc.; SunResorts International N.A. Ltd.; E.M.
Warburg Pincus Counsellors Funds; and Waste Management, Inc., and is a
charter trustee of Phillips Academy, Andover.
Joseph F. Turley
Director since 1980
Mr. Turley, 65 years of age, was President and Chief Operating Officer
of the Company until his retirement in 1988. He joined the Company in
1960 and served as General Manager of the Gillette subsidiary in Spain,
as President of Gillette Canada and, from 1971 to 1976, as President of
the Safety Razor Division. He was Executive Vice President in charge of
Gillette North America from 1976 to February 1981, when he became
President and Chief Operating Officer. Mr. Turley is a director of
Copley Properties, Inc. and EG&G, Inc., and is a trustee of five groups
of mutual funds sponsored by New England Mutual Life Insurance Company.
Member of Executive and Personnel Committees.
[PHOTOS OMITTED]
[SOURCE PAGE 3]
Members of the Board of Directors Continuing in Office Terms Expire at
the 1992 Annual Meeting of Stockholders
Richard R. Pivirotto
Director since 1980
Mr. Pivirotto, 60 years of age, is President of Richard R. Pivirotto
Co., Inc., a management consulting firm. He served as President of
Associated Dry Goods Corporation, a retail department store chain, from
1972 to 1976 and as Chairman of its Board of Directors from 1976 to
February 1981. He is a director of Chemical Banking Corporation;
Chemical Bank; General American Investors Company, Inc.; New York Life
Insurance Company; and Westinghouse Electric Corporation.
Chairman of Personnel Committee and member of Executive Committee.
Juan M. Steta
Director since 1987
Mr. Steta, 64 years of age, is a partner in the law firm of Santamaria y
Steta, Mexico City, which is engaged in a general business practice. He
joined the firm in 1949 and was elected a partner in 1956. He serves as
Chairman of the Board of Materiales Moldables and Quimicos y Derivados
and as a director of several other Mexican corporations, including
General Motors de Mexico, and Group IDESA. He is a director of Barnes
Group Inc., in Bristol, Connecticut.
Chairman of Audit Committee and member of Finance Committee.
Alfred M. Zeien
Director since 1980
Mr. Zeien, 61 years of age, is Chairman of the Board of and Chief
Executive Officer, having been elected in February 1991. He joined the
Company in 1968, served as Chairman of the Board of Management of Braun
AG, a Gillette subsidiary, from 1976 to 1978 and as Senior Vice
President, Technical Operations, from 1978 to 1981. He was elected a
Vice Chairman of the Board in 1981. In that capacity, he served as the
Company's senior technical officer and headed the new business
development group. He was elected Vice Chairman-Gillette
International/Diversified Companies in November 1987 and President and
Chief Operating Officer effective January 1, 1991. Mr. Zeien is a
director of Polaroid Corporation, Repligen Corporation and Square D
Company.
Ex officio member of Executive Committee.
[PHOTOS OMITTED]
[SOURCE PAGE 4]
Members of the Board of Directors Continuing in Office Terms Expire at
the 1993 Annual Meeting of Stockholders
Warren E. Buffett
Director since 1989
Mr. Buffett, 60 years of age, is Chairman of the Board and Chief
Executive Officer of Berkshire Hathaway, Inc., a company engaged in a
number of diverse business activities, the most important of which is
the property and casualty insurance business. Prior to assuming those
positions in 1970, he was a general partner of Buffett Partnership, Ltd.
He is a director of Capital Cities/ABC, Inc., The Coca-Cola Company and
Salomon Inc.
Member of Finance Committee.
Carol R. Goldberg
Director since 1990
Mrs. Goldberg, 59 years of age, is President of The Avcar Group, Ltd., a
management consulting firm. She was President and Chief Operating
Officer of The Stop & Shop Companies, Inc., a retail store chain, from
1985 to November 1989. Having joined Stop & Shop in 1959, she served in
various management positions prior to her election as Executive Vice
President and Chief Operating Officer in 1982. She served as a director
of that Company from 1972 to 1989. She serves as a director of AlCorp,
Inc., as a trustee and a director of Putnam Funds Group and as a
director of the Kennedy Library Foundation.
Member of Audit and Finance Committees.
Joseph E. Mullaney
Elected November 1990
Mr. Mullaney, 57 years of age, is Vice Chairman of the Board. He joined
Gillette in 1972 as Associate General Counsel and was elected General
Counsel in 1973, a Vice President in 1975, Senior Vice President in 1977
with responsibilities for legal and governmental affairs and Vice
Chairman in 1990. He serves as a Vice Chairman and a director of Boston
Municipal Research Bureau and as a director of Greater Boston Legal
Services Corporation, Greater Boston Chamber of Commerce, New England
Legal Foundation, World Affairs Council of Boston, and Park Street
Corporation.
Committees of the Board - Board Meetings
The Board of Directors has the following standing committees, which are
composed entirely of directors who are not employees of the Company,
except that the Chief Executive Officer is an ex officio member of the
Executive Committee.
Audit Committee
The members are Mr. Steta (Chairman), Mrs. Goldberg and Mr. Jacobi.
The Committee recommends the appointment of the Company's independent
auditors, meets with the auditors to review their report on the
financial operations of the business, and approves the audit services
and any other services to be provided. It reviews the Company's
internal audit function and the performance and adequacy of the
Company's benefit plan fund managers. It also reviews compliance with
the Company's statement of policy as to the conduct its business. Three
meetings of the Committee were held in 1990.
[PHOTOS OMITTED]
[SOURCE PAGE 5]
Executive Committee
The members are Mr. Fouraker (Chairman), Mr. Pivirotto, Mr. Turley and
Mr. Zeien (ex officio).
The Executive Committee, acting with the Finance Committee, reviews and
makes recommendations on capital investment proposals. It is also
available to review and make recommendations to the Board with respect
to the nature of the business, plans for future growth, senior
management succession and stockholder relations. The Committee has the
added functions of reviewing the composition and responsibilities of the
Board and its committees and recommending to the Board nominees for
election as directors. It will consider nominations by stockholders,
which should be submitted in writing to the Chairman of the Committee in
care of the Secretary of the Company. Ten meetings of the Committee
were held in 1990.
Finance Committee
The members are Mr. Jacobi (Chairman), Mr. Buffett, Mrs. Goldberg and
Mr. Steta.
The Finance Committee reviews and makes recommendations with respect to
the Company's financial policies, including cash flow, borrowing and
dividend policy and the financial terms of acquisitions and
dispositions. Acting with the Executive Committee, it reviews and makes
recommendations on capital investment proposals. Eleven meetings of the
Committee were held in 1990.
Personnel Committee
The members are Mr. Pivirotto (Chairman), Mr. Fouraker and Mr. Turley.
The Committee reviews and makes recommendations to the management or
Board on personnel policies and plans or practices relating to
compensation. It also administers the Company's executive incentive
compensation plans and approves the compensation of all officers and
certain other senior executives. Nine meetings of the Committee were
held in 1990.
The Board of Directors held nine meetings in 1990.
Stock Ownership of Certain Beneficial Owners and Management
As of March 4, 1991, Berkshire Hathaway Inc., located at 1440 Kiewit
Plaza, Omaha, Nebraska 68131, beneficially owned, through six insurance
subsidiaries, 600,000 shares of Series B Cumulative Convertible
Preferred Stock of the Company, entitling it to a total of 12,000,000
votes, which constitute 10.8% of the votes entitled to be cast by the
holders of the outstanding voting securities of the Company. One of the
six Berkshire Hathaway Inc. subsidiaries, National Indemnity Company,
3024 Harney Street, Omaha, Nebraska 68131, owned directly 375,000 of the
600,000 Series B Cumulative Convertible Preferred shares issued,
entitling it to 7,500,000 votes or 6.8% of the votes entitled to be cast
by the holders of the outstanding voting securities of the Company. The
capital stock of Berkshire Hathaway Inc. is beneficially owned
approximately 41.8% by Mr. Buffett and a trust of which he is trustee
but in which he has no economic interest and 3.23% by his wife, Susan T.
Buffett.
State Street Bank and Trust Company, P.O. Box 5259, Boston,
Massachusetts 02101 ("State Street"), has reported in a Schedule 13G
dated February 12, 1991, filed with the Securities and Exchange
Commission, that, as of December 31, 1990, it held the following shares:
(1) as Trustee of The Gillette Company Employees' Savings Plan and the
1983-1986 Payroll Employee Stock Ownership Plan on behalf of plan
participants, a total of 4,717,264 common shares, over which it
exercised shared voting and dispositive power; (2) as Trustee of The
Gillette Company 1990 Employee Stock Ownership Plan on behalf of plan
participants, 165,872 shares of Series C ESOP Convertible Preferred
Stock, which are entitled to ten votes per share, over which it
exercised shared voting and dispositive power; and (3) as Trustee of
various collective investment funds for employee benefit plans and
co-trustee for various personal trust accounts, a total of 344,299
common shares, as to which it had no voting power with respect to
160,242 shares; sole voting power with respect to 142,294 shares; and
shared voting power with respect to the remaining 41,763 shares, and as
to which it exercised no dispositive power with respect to 179,566
shares; sole dispositive power with respect to 142,293 shares; and
shared dispositive power with respect to 22,440 shares.
[SOURCE PAGE 6]
As of December 31, 1990, the common shares owned by State Street: (1)
as Trustee under The Gillette Company Employees' Savings Plan and
1983-1986 Payroll Employee Stock Ownership Plan represented 4.3% of the
Company's outstanding voting securities and 4.8% of the outstanding
common stock; and (2) as Trustee of various collective investment funds
and co-trustee for personal Trust accounts represented .3% of the
Company's outstanding voting securities and .4% of the outstanding
common stock.
As of March 4, 1991, State Street as Trustee of The Gillette Company
1990 Employee Stock Ownership Plan held 165,815 shares of Series C ESOP
preferred stock on behalf of plan participants, which represented 1.5%
of the Company's outstanding voting securities and 100% of that class.
The following table sets forth the number of Gillette shares
beneficially owned on March 4, 1991, by each director and by all
directors and officers as a group. All the individuals listed in the
table have sole voting and investment power over the shares reported as
owned, except as otherwise stated.
Option Shares
Exercisable
Title Shares Within 60 days
Name of Class Owned (1) (1)
Warren E. Buffet Series B Pfd. 600,000 (2) -
Lawrence E. Fouraker Common 3,000 (3) -
Carol R. Goldberg Common 500 -
Herbert H. Jacobi Common 400 -
Joseph E. Mullaney Series C Pfd. 2 -
Common 17,172 (4) 32,664
Richard R. Pivirotto Common 800 -
Juan M. Steta Common 2,100 -
Alexander B.
Trowbridge Common 100 -
Joseph F. Turley Common 70,877 -
Alfred M. Zeien Series C Pfd. 2 -
Common 109,189 (4) 103,000
All directors and Series B Pfd. 600,000 (2) -
officers as a Series C Pfd. 51 -
group Common 467,580 (4) 462,364
(1) Except as indicated in note (2) below, the total number of shares
beneficially owned in each class constitutes less than 1% of the
outstanding shares in that class.
(2) Owned by insurance subsidiaries of Berkshire Hathaway Inc., a
company which Mr. Buffett may be deemed to control. Mr. Buffett shares
voting and investment power over the 600,000 Series B Cumulative
Convertible Preferred shares, which represent 100% of the issued
securities of that class. Each share is entitled to vote as if
converted to twenty common shares, a total of 12,000,000 votes, which
constitutes 10.8% of the total votes entitled to be cast by the holders
of the Company's outstanding voting securities.
(3) Mr. Fouraker shares voting and investment power over 1,000 of the
shares reported as owned.
(4) Includes common shares held under the Company's savings plans and
1983-1986 Payroll Employee Stock Ownership Plan, as follows: Mr.
Mullaney 6,962; Mr. Zeien 40,289; all employee directors and officers as
a group 188,749. Mr. Mullaney shares voting and investment power over
300 of the common shares reported as owned. Certain officers have
shared voting and investment power over 14,025 of the total number of
common shares reported as owned by the group and have disclaimed
beneficial ownership with respect to 1,223 of the total number of common
shares reported as owned by the group.
[SOURCE PAGE 7]
Certain Transactions with Directors and Officers
On July 20, 1989, the Company issued 600,000 shares of 8 3/4% Series B
Cumulative Convertible Preferred Stock, without par value, at $1,000 per
share, for a total purchase price of $600,000,000, to six insurance
subsidiaries of Berkshire Hathaway Inc. ("Berkshire Hathaway"). By its
terms, until July 20, 1991, the Series B preferred stock is redeemable
by Gillette at its issue price upon 30 to 60 days notice given within 5
trading days after the closing price of Gillette common stock exceeds
$62.50 for at least 20 consecutive trading days. Dividends on the
Series B stock are payable to the date of conversion or redemption.
The closing price of Gillette common stock exceeded $62.50 for 20
consecutive trading days from January 30 through February 27, 1991.
Accordingly, the Company, on February 28, 1991, issued a notice of
redemption of the $600,000,000 of Series B preferred stock held by
Berkshire Hathaway, with a redemption date of April 3, 1991. As a
result of this action by the Company, Berkshire Hathaway has the right,
under the terms of the Series B stock, to convert each $1,000 Series B
preferred share into 20 shares of Gillette common stock at the
conversion price of $50 per share of common stock at any time through
April 1, 1991.
If the Series B stock were not converted, the redemption price of $1,000
per share plus accrued dividends to April 3, 1991 would be payable on
that date. Conversion of all $600,000,000 worth of Series B preferred
stock will result in the issuance of 12,000,000 shares of Gillette
common stock. The 12,000,000 common shares will represent about 10.8%
of the total voting securities outstanding after conversion, a
percentage identical to the current voting power of the Series B stock,
which has voting rights as if it were converted.
On February 21, 1991, the Company and Berkshire Hathaway entered into an
agreement intended to facilitate the anticipated conversion of the
Series B stock. The agreement provided that, in the event the closing
price of Gillette common stock exceeded $62.50 per share for a period of
twenty consecutive trading days ending February 27, 1991, and the
Company issued a notice of redemption for the Series B preferred stock
in accordance with its terms, the Company would in that notice provide a
redemption date of April 3, 1991 and Berkshire Hathaway would present
its Series B preferred stock to the Company on April 1, 1991 for
conversion into Gillette common shares in accordance with its terms,
rather than allowing the stock to be redeemed for payment in cash.
The agreement enabled Gillette to eliminate any uncertainty as to
whether the Series B stock would be converted into common stock in the
event of the notice of redemption, thereby ensuring the addition of the
$600,000,000 to the equity of the Company rather than to its debt.
Following conversion of the Series B stock, Berkshire Hathaway and the
Company continue to be subject to their original agreement of July 20,
1989. That agreement provides that, without the approval of the
Company's Board of Directors, until July 20, 1999, Berkshire Hathaway
will not acquire shares giving it a total of more than 14.1% of the
voting power of the Company (other than through the exercise of rights,
warrants or convertible securities received by Berkshire Hathaway with
respect to its common stock) or become a participant in a proxy
solicitation or a member of another group within the meaning of Section
13(d) of the Securities Exchange Act of 1934 with respect to the
Company. Berkshire Hathaway also remains subject to its agreement to
use its best efforts not to knowingly sell more than 3% of the Company's
voting securities to any one entity or group except in certain specified
circumstances related to a change in control of the Company, and to give
the Company certain rights of first refusal in the event of sales of the
Company's voting securities by Berkshire Hathaway.
If the Company does not exercise its right of first refusal, Berkshire
Hathaway has the right to have the Company register, either in its
entirety or in increments of $100,000,000 or more from time to time, one
or more public offerings of the Gillette common stock held by Berkshire
Hathaway following conversion of the Series B stock.
While Berkshire Hathaway owns at least 5% of the voting power of the
Company's securities, the Company's directors will also continue to be
subject to their agreement to use their best efforts to secure the
election to the Board by the shareholders of Mr. Buffett, or such other
individual reasonably acceptable to the Company as Berkshire Hathaway
might nominate.
[SOURCE PAGE 8]
Conversion of the Series B preferred stock leaves the Series C ESOP
preferred stock as the sole outstanding preferred stock of the Company.
Conversion of the Series B preferred stock will also shift the face
amount of the Series B stock converted, which now ranks in parity with
the Series C ESOP preferred stock, into common stock equity which is
junior to the Series C ESOP preferred stock.
During 1990 the Company's Mexican subsidiaries retained the law firm of
Santamarina y Steta, of which Mr. Steta is a partner, and paid the firm
a total of $164,432 for its services. It is expected that Mr. Steta's
firm will continue to provide legal services to the subsidiaries in
Mexico during 1991.
Mr. Rossi became a Vice President on June 21, 1990. At that time, he
had outstanding two interest-free loans aggregating $101,369 under the
Company's relocation and stock purchase programs. As of March 1, 1991,
these loans had been reduced to an aggregate balance of $62,067.
Compensation of Directors
Directors who are not employees of the Company or its subsidiaries are
paid an annual retainer of $20,000 plus a fee of $750 for attendance at
each meeting of the Board of Directors or of its committees. Committee
Chairmen receive an additional retainer of $3,000 a year. The directors
may defer payment of all or any portion of these retainers or fees until
after retirement or resignation from the Board or until an earlier
change in control. Deferred amounts accrue interest equivalents. Upon
the death of a director, any unpaid amounts become payable in a lump
sum.
Directors who are not employees of the Company or its subsidiaries also
may be paid for service as directors of Company subsidiaries. During
1990 Mr. Jacobi received attendance fees totaling $5,169 for his
services as a director of Braun AG, and, prior to his retirement from
the Board in April 1990, Dr. Joseph J. Sisco received fees totaling
$1,000 for his services as a director of Gillette Capital Corporation.
A director who has attained age 70 cannot stand for reelection to the
Board. Directors who have served as Board members for five or more
years receive an annual retirement benefit, which is equal to the annual
retainer in effect when they leave the Board and is payable for a period
equal to their years of service. No credit is given for service as a
director while an employee of the Company. Payment of the benefit
commences when service ends, or at age 65 if a director leaves the Board
at an earlier age. Upon the death of a director, the present value of
any unpaid amount becomes payable in a lump sum. In the event of a
change in control, a director leaving the Board would be entitled to
receive immediate payment of the present value of the full retirement
benefit. A director who at any time acts in a manner contrary to the
best interests of the Company risks forfeiture of the future retirement
benefit.
Legal Proceedings Relating to Officers and Directors
The Company and certain of its officers and directors are named
defendants in three pending lawsuits filed as derivative and putative
class actions relating to certain actions by Gillette during and after
the proxy contest in 1988 for the election of directors. Equitable and
monetary relief is sought. Management, after review and consultation
with counsel, considers that any liability from all of these pending
lawsuits and claims would not materially affect the consolidated
financial position of the Company.
[SOURCE PAGE 9]
Compensation of Executive Officers
The following table sets forth all cash compensation paid to (i) each of
the most highly compensated executive officers of the Company and (ii)
all officers as a group for services rendered in all capacities to the
Company and its subsidiaries during 1990. As indicated below, the table
includes the compensation of Colman M. Mockler, Jr., who served as the
Company's Chairman and Chief Executive Officer until his death on
January 25, 1991.
(A) (B) (C)
Cash Compensation
(*)
(C-1)
Name of individual or Capacities in which Salary plus
number in group served bonus
Colman M. Mockler, Jr. Chairman of the Board and $1,267,500
Chief Executive Officer
Derwyn F. Phillips Vice Chairman of the 675,000
Board
Alfred M. Zeien Vice Chairman of the 785,000
Board
Gaston R. Levy Executive Vice President 532,917
John W. Symons Executive Vice President 668,620
Lorne R. Waxlax Executive Vice President 575,833
All officers as a group
(30 in number) $10,998,373
(TABLE CONTINUED)
(A) (C)
Cash Compensation (*)
(C-2) (C-3)
Name of individual or Other
number in group compensation Total
Colman M. Mockler, Jr. $0 $1,267,500
Derwyn F. Phillips 159,675 834,675
Alfred M. Zeien 0 785,000
Gaston R. Levy 139,604 672,521
John W. Symons 211,224 879,844
Lorne R. Waxlax 141,626 717,459
All officers as a group
(30 in number) $2,899,373 $13,898,337
(*) The amounts in column C-1 are comprised of salaries, including
portions deferred under the Employees' Savings Plan pursuant to Section
401(k) of the Internal Revenue Code, and bonuses. Included in column
C-2 are: (1) savings plan equivalents credited on 1990 bonus amounts
deferred under the Incentive Bonus Plan, (2) payments related to
expatriate assignments and (3) Stock Equivalent Unit Plan amounts paid
or deferred with respect to 1990. Also paid or deferred in 1990 were
the following Stock Equivalent Unit Plan amounts attributable to
deferrals in prior years and not previously disclosed in the
compensation table: Mr. Phillips $19,501; Mr. Levy $16,314; Mr. Symons
$13,456; all officers as a group $213,149.
Mr. Phillips retired from his positions as a Vice Chairman of the Board
and a director on November 30, 1990. Pursuant to a three-year
noncompetition agreement ending January 31, 1994, he will continue to be
employed by the Company for a twenty-five month period ending January
31, 1993, during which he will receive annual compensation approximating
$657,000 and participate in Company benefits.
Mr. Symons retired from his position as Executive Vice President on
November 19, 1990. Pursuant to a three-year noncompetition agreement
ending December 31, 1993, he will continue to be employed by Gillette
U.K. Limited ("Gillette U.K.") for a two-year period ending December 31,
1992, and will receive compensation which approximates [L]375,000
annually. During his employment, Mr. Symons will continue to
participate in benefits applicable to Gillette U.K. senior officers
generally, including the pension and life insurance plans and the
automobile program.
In the event of a change in control of the Company, compensation payable
under Mr. Phillips' and Mr. Symons' agreements would become immediately
payable in a lump sum.
The Board of Directors has adopted a severance pay and benefit
arrangement to become effective in the event of a change in control. The
arrangement would obligate any acquirer to continue long-standing
Gillette practice regarding severance payments to terminated employees.
Severance payments to U.S. employees whose employment is terminated
under certain circumstances after a change in control would, as under
present practice, be based on seniority and position level, subject to a
minimum for certain key employees,
[SOURCE PAGE 10]
including certain officers. Severance payments to employees in foreign
countries would comply with local law and follow past Gillette practice.
The maximum amount payable under the severance pay arrangement,
including any benefit plan payments resulting from a change in control,
is 2.99 times average annual compensation for the five-year period
preceding termination of employment. For most employees, including the
named officers, it is unlikely that payments would reach the maximum.
The estimated aggregate of severance pay, excluding benefit plan
payments, to all officers as a group on December 31, 1990, in the event
of a change in control on that date, would have been $13,768,924, or
approximately 2 times the amount of their base salary on that date. In
general, benefit plan payments resulting from a change in control are
dependent upon salary, but vary with seniority and position level.
A change in control is defined in the Company's Retirement Plan and, in
general, means those events by which control of the Company passes to
another person or corporation. These events include a purchase of the
Company's stock pursuant to a tender offer, the acquisition of 20% or
more of the Company's stock by a person or group, a merger, or a sale of
substantially all of the assets of the Company. In addition, a change
in control would occur if, during any two-year period, the individuals
who were serving on the Board of Directors of the Company at the
beginning of the period or who were nominated for election or elected to
the Board during the period with the affirmative vote of at least
two-thirds of such individuals still in office, ceased to constitute a
majority of the Board. For a description of certain benefit plan
provisions applicable in the event of a change in control of the
Company, see the plan summaries appearing under the heading "Benefit and
Incentive Plans" below.
Benefits generally comparable to those applicable in the event of a
change in control of the Company have been extended to employees,
including officers, whose employment terminates pursuant to the
Company's 1987 Restructuring Plan or the reorganization of its
toiletries business announced in December 1989.
Benefit and Incentive Plans
The following are summaries of the Company's benefit and incentive plans
pursuant to which compensation was paid or accrued during 1990 or is
proposed to be paid or accrued in the future for the benefit of the
officers named in the compensation table and all officers as a group.
Employees' Savings Plan
Under the Employees' Savings Plan, for each dollar up to a maximum of
10% of compensation saved by eligible domestic employees, including
officers, the Company contributes 50 cents. Employees also may
contribute up to 5% of their compensation not matched by any Company
contribution, either in lieu of or in addition to the percentage of
compensation that is matched by the Company.
As permitted under Section 401(k) of the Internal Revenue Code, up to
the lesser of 10% of an employee's compensation or an annual maximum
($8,475 in 1991) may be contributed on a tax-deferred basis.
Company-matched contributions are split equally between after-tax and
tax-deferred savings. Employees may elect to have their contributions
invested in bond, guaranteed or interest income and equity funds or in
Gillette common stock, as provided under the Plan. Contributions made
by the Company are invested in Gillette common stock but, under certain
limited circumstances, may be transferred to the guaranteed fund. In
general, all Company contributions vest immediately for all employees
after two years of Plan participation or earlier in the event of a
change in control.
Distributions under the Plan generally are made when the employment of a
participant ceases, unless the participant elects to defer receipt of
payment to a later date. However, in all cases, a participant must
commence receiving distributions within a prescribed period after
attaining age 70 1/2. The participant may elect to receive the
distribution in a lump sum or in installments. Withdrawals may be made
during employment subject to certain forfeiture and participation rules
and tax penalties, except that withdrawals of Section 401(k) savings
prior to age 59 1/2 are restricted to hardship situations.
[SOURCE PAGE 11]
Participants may instruct the Trustee in confidence how to vote their
vested and unvested shares and whether or not to accept an offer for
their shares. The Company's contributions pursuant to its savings plans
during 1990 for the accounts of the following persons and all officers
as a group were: Mr. Mockler $41,438; Mr. Phillips $23,250; Mr. Zeien
$34,250; Mr. Levy $17,896; Mr. Waxlax $27,042; all participating
officers as a group $421,265.
Mr. Symons is an employee of Gillette U.K. and is not eligible to
participate in the Employees' Savings Plan. Mr. Phillips and two other
officers of the Company, all of whom are former employees of the
Gillette subsidiary in Canada, participated in a similar plan maintained
by that subsidiary and will receive a distribution of their account
balances in that plan in the future.
Retirement Plan
The Company's Retirement Plan provides benefits upon retirement or
disability to domestic employees covered by the Plan, including
officers, who meet certain age and service requirements. In general,
the benefit upon retirement at age 65 with 25 years of service is equal
to 50% of the employee's average annual compensation (salary plus bonus,
if any) during the five calendar years of highest compensation included
in the last ten calendar years of employment, minus 75% of primary
social security benefits. An employee who does not retire under the
Plan, but whose employment is terminated after completing at least five
years of credited service, has a vested right to the pension accrued
prior to the date employment was terminated. The Plan is wholly paid
for by the Company.
Provisions of the Tax Reform Act of 1986 effective January 1, 1989, may
require that certain changes be made to the Plan's method of calculating
benefits; however, as permitted by law, the Company has elected to
implement any such changes at a later date, retroactive to January 1,
1989.
The Plan prohibits any reduction after a change in control in the
benefits accrued for employees who meet the age and service requirements
for retirement. An early retirement benefit is provided for employees
who, as of the date of a change in control or as of the date of the
termination of their employment within a one-year period thereafter,
are, after any applicable severance period, within five years of
qualifying for an early retirement benefit. A vested right retirement
benefit is provided for employees who, as of the date of a change in
control or as of the date of the termination of their employment within
a one-year period thereafter, are, after any applicable severance
period, within one year of qualifying for a vested right benefit. Any
excess assets held in the Plan's trust following any change in control
would be used to increase the benefits payable to covered employees.
The table below shows annual pensions upon retirement at age 65 before
social security reduction.
Annual Pension
Average Annual Compensation 25 Years or
Used as Basis for 15 Years of 20 Years of More
Computing Pension Service Service of Service
$100,000 $30,000 $40,000 $50,000
200,000 60,000 80,000 100,000
300,000 90,000 120,000 150,000
400,000 120,000 160,000 200,000
500,000 150,000 200,000 250,000
600,000 180,000 240,000 300,000
700,000 210,000 280,000 350,000
800,000 240,000 320,000 400,000
900,000 270,000 360,000 450,000
1,000,000 300,000 400,000 500,000
1,100,000 330,000 440,000 550,000
1,200,000 360,000 480,000 600,000
As of December 31, 1990, the officers named in the compensation table on
page 9 had the following years of service under the Retirement Plan:
Mr. Mockler, 34 years; Mr. Zeien, 23 years; Mr. Levy, 32 years; Mr.
Waxlax, 33 years. On January 31, 1993, Mr. Phillips' planned retirement
date, he will have 25 years of service.
[SOURCE PAGE 12]
Mr. Symons participates in the Gillette U.K. Pension Plan, which
provides benefits upon retirement or disability to U.K. employees
covered by the Plan, including officers, who meet certain age and
service requirements. The Plan provided for employee contributions at
the rate of 3% of compensation until October 1976 and 5% thereafter
through January 1987, at which time employee contributions were
discontinued. In general, the benefit upon retirement at age 60 with 30
years of service is equal to 70% of an employee's average annual
compensation (salary plus bonus, if any) during the three consecutive
years of highest compensation included in the last ten years of
employment prior to retirement, minus the average of the U.K. social
security basic pension over the three years prior to retirement. In
general, under the Plan, credited service of less than 30 years results
in a proportionately reduced pension. Benefits are adjusted annually
for inflation. Like its U.S. counterpart, the U.K. Plan contains
provisions designed to protect the rights of participants in the event
of a change in control. On Mr. Symons' planned retirement date,
December 31, 1992, he will be entitled to an annual benefit of
approximately [L] 227,062 under the U.K. Plan.
Certain limitations on the amount of benefits under tax-qualified plans,
such as the Employees' Savings Plan and the Retirement Plan, were
imposed by the Employee Retirement Income Security Act of 1974, the Tax
Equity and Fiscal Responsibility Act of 1982 and the Tax Reform Act of
1986. The Company has adopted supplemental plans, as permitted by law,
for the payment of amounts to employees who may be affected by those
limitations, so that, in general, total benefits will continue to be
calculated as before on the basis approved by the stockholders.
1990 Employee Stock Ownership Plan ("ESOP")
The ESOP was adopted on January 17, 1990, as part of the Company's
modified U.S. retiree medical benefit program. All regular U.S.
employees with at least one year of service, except those covered by
collective bargaining agreements, participate in the Plan.
The ESOP trust borrowed $100,000,000 to purchase 165,872 shares of the
Company's Series C ESOP Convertible Preferred Stock. The ESOP trust is
obligated to repay the loan in periodic installments over a ten-year
period, with interest on the unpaid balance at 8.1% per year. The
Company guaranteed these payments. The ESOP trust will make the
payments by applying the 8% per annum quarterly dividends on the
preferred stock held by the ESOP trust and by additional Company
contributions.
As the loan is repaid, the Series C ESOP shares held in the trust are
allocated to participant accounts. To the extent that loan repayments
are made with dividends paid on shares standing in participant accounts,
those dividends are replaced with additional shares. Except for such
dividends attributable to shares previously allocated to participant
accounts, allocations are made on an equal basis to the account of each
participant who is employed on the last business day of the calendar
quarter for which the allocation is made. Allocations to participant
accounts were made as of September 30 and December 31, 1990. The
account of each eligible participant employed on those dates, including
each of the named officers other than Mr. Symons, received in total 2
Series C ESOP shares. The accounts of all officers as a group received
55 Series C ESOP shares in total.
In general, participant accounts vest after five years of service under
the ESOP or upon retirement, permanent disability, death, permanent
layoff or a change in control of the Company. For employees retiring
after January 1, 1992, who elect to participate in the Company's Retiree
Medical Program, their account balances will be used toward the payment
of retiree medical premiums. In all other cases, distributions will be
made when the employment of a participant ceases unless the participant
elects to defer receipt of payment to a date no later than the year the
participant reaches age 70 1/2.
On distribution, the participant may elect to receive the fair market
value of the shares in the participant's account in cash or common
stock, in a lump sum or in installments. Each share of Series C ESOP
preferred stock was purchased by the ESOP trust for $602.875 and is
convertible into ten shares of common stock at $60.2875 per share. No
Series C ESOP preferred share will be distributed to any participant.
Instead, the Series C ESOP preferred shares will either be converted
into common shares or repurchased by the Company for their original
purchase price, whichever will yield greater value to the participant.
[SOURCE PAGE 13]
Participants may instruct the Trustee in confidence with respect to the
voting of ESOP shares in whether or not to accept an offer for ESOP
shares.
The ESOP preferred shares are redeemable upon the occurrence of certain
change in control or other events, at the option of the Company or the
holder, depending on the event, at varying prices not less than the
purchase price plus accrued dividends.
1983-1986 Payroll Employee Stock Ownership Plan
The Plan was established in 1982, and contributions were made with
respect to the tax years 1983 through 1986. As a result of the Tax
Reform Act of 1986, tax credits for employer contributions attributable
to tax years after 1986 were eliminated; therefore, no further
contributions to the Plan were made.
Under the Plan, the Company contributed cash or Gillette common shares
in amounts equivalent to certain payroll-related tax credits to a trust
fund comprised of Gillette common shares and held on behalf of eligible
domestic employees, including officers. These tax credits amounted to
1/2 of 1% of covered payroll for the tax years 1983 through 1986. Each
year shares were allocated to the account of eligible employees
essentially on an equal basis. At total of 34 shares was allocated to
the accounts of each employee who was an eligible participant during
that entire period. Dividends earned on these shares are used to
purchase additional shares of Company common stock, which are allocated
to participant accounts. Distributions equal to the then-current value
of the common shares and earned dividends, in the form of either cash or
Gillette common stock, are made only upon termination of employment.
The Company's contributions under the Plan represented no direct cost to
the Company since they were offset by a corresponding reduction in the
Company's tax liability.
Participants may instruct the Trustee in confidence how to vote their
shares and whether or not to accept an offer for their shares.
Stock Equivalent Unit Plan
Awards of basic stock units may be made under the Plan to selected key
employees of the Company and its subsidiaries. No awards are made to
officers who also serve as directors. With respect to certain grants
made after 1983, all or any portion of an award may, by its terms, be
contingent upon achievement of future performance goals.
Each basic stock unit is treated as equivalent to one share of the
Company's common stock, although in no case does the employee receive
the original market value of the basic units awarded. Instead, the
employee's account is credited with appreciation, if any, in the market
value of the Company's common stock and with dividend equivalent units
as dividends are paid on the stock. Amounts credited for appreciation
on basic stock units are limited to 100% of the market value of the
stock on the date of the award.
Awards made after 1983 accrue benefits over seven years, vesting and
becoming payable in segments over the third through the seventh years of
that period. Awards made prior to 1984 accrue benefits over ten years,
vesting and becoming payable in segments over the fourth through the
tenth years of that period. Each award is revalued annually until the
award becomes fully vested and the value becomes fixed and payable.
Before each vesting, the employee may elect to defer the amounts
becoming payable. In general, awards become fully vested upon the
retirement, death or disability of the employee and, in the case of
retirement or disability, payment may be deferred by employee election
to future years. If a deferred amount represents the final value of a
fully vested award, the amount accrues interest equivalents until paid.
The Plan provides that, upon a change in control, all
performance-related contingency provisions of awards would be removed,
awards of employees whose employment is terminated under certain
circumstances as described in the Plan would become fully vested, and,
in the event of a related liquidation, merger or consolidation of the
Company, all awards either would become fully vested or would be
replaced by the surviving corporation.
[SOURCE PAGE 14]
1971 Stock Option Plan
Options on shares of the Company's common stock may be awarded by the
Personnel Committee to selected key employees of the Company and its
subsidiaries, including those who may also serve as officers or
directors.
The Committee may designate options granted under the Plan as incentive
stock options ("ISO's"), a type of option authorized under the 1981
amendments to the Internal Revenue Code. Options are granted at not
less than the fair market value of the Company's common stock on the
date of grant and are exercisable as determined by the Committee, except
that options must be exercised within ten years from the date of grant.
All outstanding options have ten-year terms and are exercisable one year
from the date of grant, provided the optionee is still an employee.
Officers are required to pay the full purchase price, in cash or shares,
upon exercise of an option.
Options generally remain exercisable for a limited period following the
termination of employment of the optionee. The period for
post-retirement exercise of non-incentive stock options is two years
unless a shorter period is designated by the Personnel Committee. The
period for ISO's is three months. If the termination of employment
occurs within one year after a change in control, any options held by
the optionee that were not otherwise exercisable when employment ceased
would become immediately exercisable.
The following table presents information on stock option transactions
during 1990 of the persons named and of all officers as a group. During
1990, Mr. Mockler was granted options on 27,500 shares at $59.38 per
share. These options had not become exercisable on the date of his
death and have been cancelled.
Options Granted Options Exercised
1/1/90-12/31/90 1/1/90-12/3-1/90
Average
Number per Share
of Option Net
Shares Price Value (*)
Derwyn F. Phillips 20,000 $59.38 $1,469,989
Alfred M. Zeien 45,000 58.37 1,153,198
Gaston R. Levy 10,000 59.38 289,012
John W. Symons 12,000 59.38 1,335,200
Lorne R. Waxlax 11,000 59.38 120,075
All officers as a group 259,800 $58.99 $8,104,860
(*) Aggregate market value on date of exercise less aggregate option
price.
Incentive Bonus Plan
Under the Plan, a bonus pool is earned if goals relating to profit from
operations, return on assets and sales growth are achieved. The goals
are determined each year by the Personnel Committee. In order for any
bonus pool to be earned, the minimum profit from operations goal must be
met. A reserve equivalent to no more than 25% (35% for incentive years
after 1990) of the amount of the projected bonus pool may be established
by the Committee each year from which bonuses will be awarded, if no
bonus pool is earned for that year, to employees in operating units that
have achieved assigned objectives.
The Plan provides that key management employees, including officers, may
receive awards ranging from 5% to 50% (5% to 60% for incentive years
after 1990) of their salary for the year. Based on recommendations of
senior management and evaluations of performance against goals assigned
for the year, the Chairman and the President approve bonus awards to
individual recipients other than themselves. Awards to officers and
certain senior executives are subject to approval by the Personnel
Committee. The Committee determines the amount of any bonus awards to
the Chairman or the President. Before being selected to receive a
bonus, participants have the option to defer payment of all or a part of
any bonus that may be awarded to any year until their retirement or
until an earlier change in control. Prior to retirement, participants
may elect to further defer bonus amounts beyond their date of retirement
or until an earlier change in control. All deferred amounts accrue
interest equivalents. Under certain circumstances following a change in
control, otherwise
[SOURCE PAGE 15]
eligible employees terminated during the year the change in control
occurred would remain eligible for consideration for a bonus award.
Life Insurance Program
Certain executives, including officers of the Company, may participate
in a life insurance program that provides coverage during employment
equal to four times annual salary, subject to a $600,000 minimum and a
$2,000,000 maximum amount of coverage with the participant paying the
premium for coverage equal to two times salary or $200,000, whichever is
less. After retirement, a Company-paid death benefit equal to annual
salary, subject to a $150,000 minimum and a $500,000 maximum, continues
in effect for the life of the participant.
Prior to June 1990, the minimum amount of coverage provided during
employment was $400,000 and the maximum was $1,000,000. After
retirement, the minimum was $100,000 and the maximum was $250,000.
Mr. Symons participates in a life insurance program maintained by
Gillette U.K. that provides all employees with coverage during
employment equal to four times annual salary plus bonus, if any. In
addition, certain key employees of the U.K. subsidiary, including Mr.
Symons, participate in a life insurance program that provides accidental
death benefits equal to three times annual salary. Participation in
these programs ends upon retirement.
2. Amendment to Article 4 of the Certificate of Incorporation
Additional Common Stock - Stock Split in the form of a 100% Common Stock
Dividend
The Board of Directors unanimously recommends an amendment to the
Certificate of Incorporation which would increase the authorized $1 par
value common stock from 290,000,000 shares to 580,000,000. Subject to
the approval of this amendment by the stockholders, the Board has
authorized the issuance to stockholders of record on May 1, 1991, of one
additional $1 par value share of common stock as a dividend on each
issued common share. The Board of Directors believes that this
proposal, including the stock split in the form of a 100% common stock
dividend, is in the best interest of the stockholders, because it will
place the market price of the common stock in a range more attractive to
investors, particularly individuals, and may result in a broader market
for the stock and more widespread ownership of the Company.
The authorized common stock was last increased in 1987, when the
stockholders approved an amendment to the Certificate of Incorporation
increasing the authorized common stock by 145,000,000 shares to the
present 290,000,000 shares, with the authorized preferred stock
remaining at the present 5,000,000 shares. As of March 4, 1991, of the
authorized preferred stock 400,000 shares were reserved for issuance as
Series A Junior Convertible Preferred Shares in connection with the
Corporation's Preferred Stock Purchase Rights Plan; 600,000 were the
Series B Convertible Preferred Shares described on page 7 under Certain
Transactions with Directors and Officers; 165,815 were the Series C ESOP
Convertible Preferred Shares described on page 12; and the remaining
3,834,185 authorized preferred shares were uncommitted. Of the
authorized common stock, 134,418,321 shares were uncommitted as shown
below:
Common Stock
As of
March 4, 1991 Pro Forma
Before After
Amendment Amendment
Authorized 290,000,000 580,000,000
Issued and Outstanding (97,238,848) (194,477,696)
Held in Treasury (40,864,517) (81,729,034)
Reserved for issuance:
Stock Option Plan (3,667,764) (7,335,528)
Stock Purchase Plan (152,400) (304,800)
Series B Convertible
Preferred Stock (12,000,000) (24,000,000)
Series C ESOP Convertible
Preferred Stock (1,658,150) (3,316,300)
Unissued and unreserved 134,418,321 268,836,642
[SOURCE PAGE 16]
The number of common shares reserved for issuance upon the conversion of
the Company's convertible preferred shares and under the Stock Option
and Stock Purchase Plans, will be adjusted as appropriate to reflect the
stock split in the form of a 100% stock dividend, if the amendment is
approved. Otherwise, no specific transaction is now contemplated which
would result in the issuance of additional shares. However, it is the
Company's policy to explore on a continuing basis favorable acquisition
and financing possibilities which could at any time lead to the issuance
of shares of the Company's stock. In addition, it is desirable to have
a authorized stock available for possible additional future stock
dividends or stock splits or for other corporate purposes.
Accordingly, it is proposed to amend the first paragraph of Article 4 of
the Company's Certificate of Incorporation to read as follows:
"4. The total number of shares of all classes of stock which the
corporation shall have authority to issue is Five Hundred Eighty-Five
Million (585,000,000) shares, of which Five Million (5,000,000) shares
shall be shares of the class of Preferred Stock without par value
(hereinafter called `Preferred Stock'), and Five Hundred Eighty Million
(580,000,000) shares shall be shares of the class of Common Stock with
the par value of $1 per share (hereinafter called `Common Stock')."
The Board of Directors would have sole discretion to issue the
additional shares of common stock from time to time for any corporate
purpose, including in reaction to any unsolicited proposal, without
further action by the stockholders. The terms of any one or more
additional series of preferred stock, including dividend rates,
conversion prices, voting rights, redemption prices, maturity dates and
similar matters would also be determined solely by the Board of
Directors. Any preferred stock issued would be senior to common stock
with respect to dividends, liquidation rights and other attributes.
Holders of stock of the Company are not now and will not be entitled to
preemptive rights.
In connection with the stock split in the form of a 100% stock dividend,
a transfer of $1 for each additional share of common stock issued, or
approximately $138,100,000, will be made from the Company's additional
paid-in capital account to its common stock account as of May 1, 1991,
the date on which stockholders of record will be entitled to the
additional shares, so that the additional shares to be issued will be
fully paid. The amounts so transferred will no longer be legally
available for distribution to stockholders as dividends; however, it is
estimated that the amount of surplus which will be legally available for
dividends after this transfer will be exceed $500,000,000.
Following the increase of capital in the common stock account becoming
effective, certificates representing the additional shares will be
distributed by the Corporation to stockholders of record as of May 1,
1991, without any further action by the stockholders.
The Corporation will apply for listing on the New York Stock Exchange
and other exchanges on which the Company's shares are listed of the
additional shares of common stock to be issued. As a result of the
proposed stock split in the from of a 100% stock dividend, brokerage
commissions and transfer taxes on any subsequent trades of the stock may
increase.
In the opinion of counsel for the Company, the adoption of the proposed
amendment and the issuance of the additional shares in connection with
the 100% stock dividend will result in no gain or loss or any other form
of taxable income for United States federal income tax purposes. The
laws of jurisdictions other than the United States may impose income
taxes on the issuance of the additional shares in connection with the
100% stock dividend, and stockholders subject to those laws are urged to
consult their tax advisors.
Recommendation of the Board of Directors
An affirmative majority of the votes entitled to be cast at the meeting
is required for approval of the proposed amendment to Article 4 of the
Certificate of Incorporation.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE AMENDMENT
TO ARTICLE 4 OF THE CERTIFICATE OF INCORPORATION, WHICH IS DESIGNATED AS
PROPOSAL 2 ON THE ENCLOSED PROXY CARD.
[SOURCE PAGE 17]
3. Appointment of Auditors
On the recommendation of the Audit Committee of the Board of Directors,
the Board has appointed KPMG Peat Marwick as auditors for the year 1991,
subject to approval by the stockholders. KPMG Peat Marwick has audited
the books of the Company for many years.
Representatives of KPMG Peat Marwick will attend the 1991 Annual
Meeting, where they will have the opportunity to make a statement if
they wish to do so and will be available to answer appropriate questions
from the stockholders. Should the appointment of auditors be
disapproved by the stockholders, the Board of Directors will review its
selection.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE APPROVAL OF THE
APPOINTMENT OF AUDITORS, WHICH IS DESIGNATED AS PROPOSAL NO. 3 ON THE
ENCLOSED PROXY CARD.
4. Stockholder Proposal
This proposal was submitted by Edward V. Regan, State Comptroller, as
Trustee of the New York State Common Retirement Fund, Office of the
State Comptroller, Albany, New York 12236, which is the owner of 901,943
shares of the common stock of the Company. Co-filers of the proposal
are: The American Baptist Churches, P.O. Box 851, Valley Forge, PA
19482-0851, owners of 800 shares; New York State Teachers' Retirement
System, 10 Corporate Woods Drive, Albany, New York 12211, owner of
606,400 shares; General Board of Pensions of the United Methodist
Church, 1200 Davis Street, Evanston, Illinois 60201, owner of 106,158
shares; General Board of Global Ministries - The United Methodist
Church, Women's Division, 475 Riverside Drive, New York, NY 10115, owner
of 28,000 shares; The Ministers and Missionaries Benefit Board of the
American Baptist Churches, 475 Riverside Drive, New York, NY 15, owner
of 36,900 shares; and Missionary Oblates of Mary Immaculate, 159 Moore
Street, Lowell, Massachusetts 01852, owners of 1,000 shares of the
common stock of the Company.
"WHEREAS, notwithstanding the release of Nelson Mandela, the unbanning
of political parties, and other reforms announced by the South Africa
government, we believe the statutory system of apartheid continues to
deny civil and human rights to the majority Black population in South
Africa and fosters social, political and economic instability throughout
that country;
WHEREAS, we believe withdrawal of U.S. corporate investment from South
Africa has resulted in pressure for change in South Africa without
adverse fiscal impact on shareholders;
NOW, THEREFORE, be it resolved that the shareholders request the Board
of Directors to establish as policy that:
The corporation implement a program of withdrawing its operations from
South Africa and the sale of its interest in any affiliate there. Where
possible, this program should include negotiation with labor
representatives and promote Black employee participation in ownership
and management."
The following statement has been submitted in support of the resolution.
"On October 3, 1989, in testimony before the Senate Committee on Foreign
Relations, Assistant Secretary of State Herman J. Cohen expressed the
Administration's opinion that economic sanctions have contributed to
stimulating the South Africa Government to contemplate additional
reforms. We believe that the withdrawal of U.S. corporate investment
from South Africa has been one of the most effective types of economic
sanction.
In our opinion, the corporation should not continue to invest within the
framework of statutory apartheid which mandates the denial of basic
human and civil rights of the Black majority. Shareholders must unite
in voicing their opposition to the discriminatory practices of South
Africa and in convincing our corporation to join the hundreds of other
companies which have made known, through withdrawal, that they cannot
co-exist with the system of apartheid.
Unless the statutory elements of apartheid are repealed, we believe the
prognosis is for expanded political and social unrest. Furthermore, the
use of product boycotts and contract restrictions in the
[SOURCE PAGE 18]
United States and the prospect of additional and more severe
Congressional sanctions will, in our opinion, have an adverse impact on
the value of the company.
In addition, pension funds and other institutional investors are
continually pressured by state and local political leaders to protest
apartheid by adopting divestment programs involving large sales of stock
which, in our opinion, will adversely impact the beneficiaries of such
institutions. Corporate withdrawal from South Africa will quickly
eliminate any need for state and local officials and others to advocate
the divestment of stock. Since the corporation has neither objected to
nor sought to block such governmental activities or such sale of its
stock, it should not be surprised that shareholders seek to protect
their interests by calling for corporate withdrawal.
In recommending withdrawal from South Africa, we request that, where
possible, the process include negotiation with the labor unions and the
promotion of Black employee participation in ownership and management.
By so assisting in the establishment of an economic foundation for the
Black majority, we feel the corporation can best effect a significant
contribution toward the elimination of apartheid."
THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST THE ADOPTION OF
PROPOSAL NO. 4 FOR THE REASONS SET FORTH BELOW.
As indicated in the proxy statements of the last four year, the Board of
Directors has continued to monitor developments affecting the difficult
decision as to whether to continue the Company's South African
operations. The political events in South Africa noted by the
proponents which have occurred over the last two years provide hope for
steps that could lead to the end of apartheid and a peaceful resolution
of some of that country's problems. Particularly at this time, the
Board believes that the Company's continued presence in South Africa
does more good than would its withdrawal and that the Company should
continue its operations there.
The Company's operations in South Africa consist of two small
businesses. Gillette South Africa Limited ("Gillette South Africa")
sells razors, blades and shaving preparations. Oral-B Laboratories
(S.A.) (Proprietary) Limited distributes toothbrushes and other oral
care products. As of December 31, 1990, these businesses employed 118
persons, one-third of whom were non-white. In 1990 Gillette's
operations in South Africa accounted for approximately 1% of the
Company's sales and net income.
From a business standpoint, South Africa presently provides a small but
worthwhile market for the Company's products. If South Africa can
overcome its political, social and economic problems, it is hoped that
it would become a larger and more important market. These businesses
have remained profitable despite the negative impact on the Company's
earnings resulting from the provisions of the United States Revenue Act
of 1987 regarding South African operations of U.S. companies.
From the standpoint of employee and human relations, the Company's
businesses in South Africa have been in the forefront in support of
human rights in South Africa: they have totally integrated facilities
and identical wage rates for white and non-white employees; they provide
excellent fringe benefits and offer educational programs for non-white
employees; and they have been active in the local black communities,
providing programs such as scholarships for needy black university
students, resources for technical and secondary schools, adult education
programs, health education, medical care, and local community economic
development. Gillette was South Africa's first private sector sponsor
of a Legal Aid Clinic. Also, the local companies actively lead programs
aimed at improving race relations.
Since 1977 Gillette has been a signatory of the Statement of Principles
for South Africa (formerly called the Sullivan Principles) and has
consistently received high ratings for its efforts. In addition, the
local management and employees, as a group and on an individual basis,
work directly and through local organizations to press the South African
government to dismantle the apartheid system and establish a just
society for post-apartheid South Africa.
The U.S. Ambassador to South Africa, William L. Swing, in an address to
the Pretoria Media Club on January 12, 1991, acknowledged the success of
the affirmative action and community development programs of the U.S.
companies continuing to operate in South Africa. In addition, he urged
companies to
[SOURCE PAGE 19]
remain in South Africa and continue their efforts to help accomplish a
peaceful transition to a post-apartheid South Africa.
The Board agrees with the State Department's position as expressed in
that address that individual companies, such as Gillette, can continue
to make meaningful contributions to the South African society, the lives
of their South African employees and the communities in which they
operate and will have an opportunity to continue to make contributions
to the political, economic and social development of a post-apartheid
South Africa.
For these reasons the Board believes that, particularly at this time, it
is in the best interests of the stockholders and the related interests
of its employees to continue the Company's operations in South Africa.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST THE ADOPTION OF THIS
STOCKHOLDER PROPOSAL, WHICH IS DESIGNATED AS PROPOSAL NO. 4 ON THE
ENCLOSED PROXY CARD.
5. Stockholder Proposal
This proposal was submitted on behalf of the New York City Fire
Department Pension Fund, by Elizabeth Holtzman, Comptroller of the City
of New York, One Centre Street, Room 736, New York, N.Y. 10007-2341. The
Fund is the owner of 27,465 shares of the common stock of the Company.
"RESOLVED, that the shareholders of the Corporation request that the
board of directors adopt and implement a policy requiring all proxies,
ballots and voting tabulations that identify how shareholders voted be
kept confidential, except when disclosure is mandated by law, such
disclosure is expressly requested by a shareholder or during a contested
election for the Board of Directors and that the tabulators and the
inspectors of election be independent and not the employees of the
Corporation."
The following statement has been submitted by the proponent in support
of the resolution.
"The confidential ballot is fundamental to the American political
system. The reason for this protection is to ensure that voters are not
subjected to actual or perceived coercive pressure. We believe that it
is time that this fundamental principle of the confidential ballot be
applied to public corporations.
Many excellent companies use confidential voting. None have reported
any difficulty reaching quorums or meeting supermajority vote
requirements and those surveyed reported that the added cost of
implementing confidentiality was negligible.
Strong support was shown at the last annual meeting when 29.8% of the
votes were cast in favor of this proposal.
It is our belief that all shareholders need the protection of a
confidential ballot no less than voters in political elections. While
there is no imputation that management has acted coercively, the
existence of this possibility is sufficient to justify confidentially.
This resolution would permit shareholders to voluntarily disclose their
vote to management by expressly requesting such disclosure on their
proxy cards. Additionally, shareholders may disclose their vote to any
other person they choose. This resolution would merely restrict the
ability of the Corporation to have access to the vote of its
shareholders without their specific consent.
Many shareholders believe confidentially of ownership is ensured when
shares are held in street or nominee name. This is not always the case.
Management has various means of determining actual (beneficial)
ownership. For instance, proxy solicitors have elaborate databases that
can match account numbers with the identity of some owners. Moreover,
why should shareholders have to transfer their shares to nominees in an
attempt to maintain confidentially? In our opinion, this resolution is
the only way to ensure a secret ballot for all shareholders irrespective
of how they choose to hold their shares.
We believe that confidential voting is one of the most basic reforms
needed in the proxy voting system and that the system must be free of
the possibility of pressure and the appearance of retaliation.
We hope that you agree and vote FOR this proposal."
[SOURCE PAGE 20]
THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST THE ADOPTION OF
PROPOSAL NO. 5 FOR THE REASONS SET FORTH BELOW.
This proposal is similar to a proposal submitted the last two years by a
trustee of a New York pension fund and rejected by over 70% of the
shareholders who voted on it.
The Board does not share the concern of the proponent that confidential
voting as prescribed by the proponent is necessary to guard against
coercion in the stockholder voting process. Gillette directors,
officers, employees and agents are required to respect the right of all
stockholders to vote without pressure or retaliation, and the proponent
concedes that "there is no imputation that management has acted
coercively." Participants in the Company's employees' savings plans and
employee stock ownership plans instruct the trustees of these plans in
confidence how to vote their shares. Stockholders who hold shares in a
nominee or "street" name or through a broker are protected by the
Federal securities laws which provide that such nominees may not
disclose to the Company the names of stockholders who object to such
disclosure.
The proponent's proposal requests that "tabulators and the inspectors of
election be independent and not the employees of the Corporation." For
a number of years, the Company employed its transfer agent to tabulate
votes and appointed inspectors of election from among Company attorneys.
The Board believes this practice was economical, efficient and
consistent with both Delaware and federal law. Nevertheless, in
deference to the proponent, both last year and this year the directors
appointed the Company's transfer agent as inspector of election instead
of Company attorneys. In this respect, the proponent's proposal has
been fully implemented by the Board.
The directors also decided to employ a confidential voting procedure, on
a trial basis for the 1989 and 1990 Annual Meetings and again this year.
In general, the Company's procedure requires that proxies and ballots be
kept confidential from officers, directors and employees of the Company
and from third parties. Certain employees or agents other than
directors and officers, such as those serving as proxy solicitors who
have agreed to comply with this procedure, may be permitted access to
the information to facilitate their participation in soliciting proxies
and conducting the meeting. This procedure does not apply in the event
of a proxy contest or other solicitation based on an opposition proxy
statement or a matter requiring for passage more than a majority of the
shares voting, such as Item 2, described at pages 15 and 16. The
proponent opposes permitting employees or agents who are serving as
proxy solicitors access to the voting information on the proxy cards
they solicit. The Board believes that unless such access is permitted,
solicitation of proxies could become more difficult and expensive.
Although this year's proposal contains an exception for a "contested
election for the Board of Directors", the proposal contains no such
exception in at least two other important areas. The first involves a
contested election on any other important issue. As a result, the
proponent's proposal could produce the anomalous situation of a
contesting shareholder being free to solicit proxies on an important
issue on a nonconfidential basis, while the Board of Directors would not
be free to do so. The second involves a noncontested election where a
higher than usual affirmative stockholder vote is required, e.g., an
amendment to the Company's Certificate of Incorporation requiring the
affirmative vote of more than 50% of the votes entitled to be cast, such
as Item 2, described at pages 15 and 16. The proponent's proposal could
be interpreted to prevent Company representatives from determining which
stockholders had not voted on the proposal so that they could be urged
to vote.
For the reasons stated above, and particularly in light of the
confidential voting procedure being employed for the Company's 1991
Annual Meeting, the Board opposes the proposal.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST THE ADOPTION OF THIS
STOCKHOLDER PROPOSAL, WHICH IS DESIGNATED AS PROPOSAL NO. 5 ON THE
ENCLOSED PROXY CARD.
[SOURCE PAGE 20]
Outstanding Voting Securities
The holders of the Company's common and preferred stock vote together as
one class on all matters submitted to a vote of the stockholders of the
Company.
On March 4, 1991, the record date for the 1991 Annual Meeting, there
were outstanding and entitled to vote 97,238,848 shares of the $1 par
value common stock of the Company, entitled to one vote per share;
600,000 shares of Series B Cumulative Convertible Preferred Stock,
entitled to twenty votes per share; and 165,815 shares of Series C ESOP
Convertible Preferred Stock, entitled to ten votes per share.
Solicitation of Proxies
The Company is employing the confidential voting procedure described on
page 20 for the 1991 Annual Meeting. The cost of soliciting proxies
will be borne by the Company. In addition to solicitation by mail,
solicitations may also be made by personal interview, telegram and
telephone. Arrangements will be made with brokerage houses and other
custodians, nominees and fiduciaries to send proxies and proxy material
to their principals, and the Company will reimburse them for their
expenses in so doing. Subject to the Company's confidential voting
procedure, directors, officers and other employees of the Company, as
yet undesignated, may also request the return of proxies by telephone or
telegram, or in person. The Company has retained Georgeson & Company
Inc., New York, New York, to assist in the solicitation of proxies using
the means referred to above at an anticipated cost of $17,500 plus
reasonable expenses.
Annual Report
The Annual Report of the Company for the year ended December 31, 1990,
is being mailed to all stockholders with this proxy statement.
Stockholder Proposals
Stockholder proposals intended to be considered for inclusion in the
Company's proxy statement for presentation at the 1992 Annual Meeting
must be received by the Company by November 18, 1991.
In general, the Company's Bylaws provide that stockholder proposals
intended to be presented at an Annual Meeting, but not intended to be
included in the Company's proxy statement, including proposals for the
nomination of directors, must be received by the Company 60 days in
advance of the meeting, or by February 14, 1992, to be considered for
the 1992 Annual Meeting.
Other Matters
The Board of Directors does not know of any matter other than those
described in this proxy statement that will be presented for action at
the meeting. If other matters properly come before the meeting, the
persons named as proxies intend to vote the shares they represent in
accordance with their judgment.
( END OF DOCUMENT. )
.PROXY 1993
Date of Document: 3/12/93
Print/Export Request: Entire Document
[SOURCE PAGE H1]
The Gillette Company
Prudential Tower Building
Massachusetts 02199
Gillette Stockholders:
You are cordially invited to attend the 1993 Annual Meeting of the
stockholders of The Gillette Company to be held at 1 0:00 a.m. on April
15,1993, at the John F Kennedy Library and Museum, Columbia Point,
Boston, Massachusetts.
At the meeting, we will vote on the proposals described in the
accompanying Notice and Proxy Statement. We will also report to you on
the operations of the Company. You will have the opportunity to ask
questions about the business that may be of general interest to
stockholders.
Your vote is important regardless of how many shares you own. Please
take a few minutes now to review the proxy statement and to sign and
date your proxy and return it in the envelope provided. If you attend
the meeting and vote in person, your previously executed proxy will be
revoked.
Please let us know if you plan to attend the meeting by marking the
appropriate space on the proxy card. We will send you an admission
ticket approximately one week in advance of the meeting. You should
bring a form of personal identification to the meeting with you. If
your shares are held of record by a broker, bank or other nominee and
you wish to attend the meeting, you must obtain a letter from the
broker, bank or other nominee confirming your beneficial ownership of
the shares and bring it to the meeting. In order to vote your shares at
the meeting, you must obtain from the record holder a proxy issued in
your name.
I look forward to seeing you at the meeting.
Very truly yours,
/S/ A. M. ZEIEN
Chairman of the Board
March 12, 1993
[SOURCE PAGE H2]
The Gillette Company
Prudential Tower Building
Boston, Massachusetts 02199
Notice of Annual Meeting of the Stockholders
The 1993 Annual Meeting of the stockholders of The Gillette Company will
be held at the John F Kennedy Library and Museum, Columbia Point,
Boston, Massachusetts, on Thursday, April 15, 1993, at 1 0:00 a.m. for
the following purposes:
1. To elect four directors for terms to expire at the 1996 Annual
Meeting of the stockholders.
2. To vote on the approval of the appointment of auditors for the year
1993.
3. To vote on the stockholder proposal described in the accompanying
proxy statement, if the proposal is presented at the meeting.
4. To transact such other business. as may properly come before the
meeting and any and all adjournments thereof.
The Board of Directors has fixed the close of business on March 1,
1993, as the record date for the determination of the stockholders
entitled to notice of and to vote at the meeting. A list of such
stockholders will be available at the time and place of the meeting and,
during the 1 0 days prior to the meeting, at the off ice of the
Secretary of the Company at the above address.
Whether or not you expect to attend, WE URGE YOU TO SIGN AND DATE THE
ENCLOSED PROXY AND RETURN IT PROMPTLY IN THE ENVELOPE PROVIDED.
By order of the Board of Directors
Kathryn E. DeMoss, Secretary
Boston, Massachusetts
March 12,1993
[SOURCE PAGE 1]
The Gillette Company
Prudential Tower Building
Boston, Massachusetts 02199
Proxy Statement
March 12, 1993
Solicitation of Proxies
This proxy statement is furnished in with the solicitation of proxies on
behalf of the Board of Directors for the 1993 Annual Meeting of the
stockholders of the Company on April 15, 1993. The Notice of Annual
Meeting, this proxy statement and the accompanying proxy are being
mailed to stockholders on or about March 12, 1993. You can ensure that
your shares are voted at the meeting,by signing and dating the enclosed
proxy and returning it in the envelope provided. Sending in a signed
proxy will not affect your right to attend the meeting and vote in
person. You may revoke your proxy at any time before it is voted by
notifying the Company's Transfer Agent, The First National Bank of
Boston, P.O. Box 471, Boston, Massachusetts 02102-9901 in writing, or
by executing a subsequent proxy, which revokes your previously executed
proxy.
The cost of soliciting proxies will be borne by the Company. In
addition to solicitation by mail, solicitations may also be made by
personal interview, telegram and telephone. The Company has retained
Georgeson & Company Inc., New York, New York, ("Georgeson") to assist in
the solicitation of proxies using the means referred to above at a cost
of $18,500 plus reasonable expenses. Arrangements will be made with
brokerage houses and other custodians, nominees and fiduciaries to send
proxies and proxy material to their principals, and the Company will
reimburse them for their expenses in so doing. In addition, directors,
officers and other regular employees of the Company may request the
return of proxies by telephone or telegram, or in person.
The Company is employing its confidential voting policy for the meeting.
Consistent with that policy, directors, officers and other regular
employees of the Company will not have access to the.proxies they may
solicit. Georgeson will have access to the proxies it solicits. The
confidential voting policy is described in more detail at page 18.
The enclosed proxy will also serve as a confidential voting instruction
to the trustees of the Company's employees' savings plans and the
Employee Stock Ownership Plan ("ESOP"). If voting instructions have not
been received from a participant by April 8, 1993, the shares allocated
to the participant's account(s) and ESOP shares that have not been
allocated to participant accounts will be voted on each issue by each
plan trustee in proportion to the shares as to which voting instructions
have been returned by other participants of that plan.
[SOURCE PAGE 2]
Voting of Proxies
When your proxy is returned properly signed, the shares represented will
be voted in accordance with your directions. Where specific choices are
not indicated, proxies will be voted for proposals 1 and 2 and against
proposal 3. If a proxy or a ballot indicates that a stockholder or
nominee abstains from voting or that shares are not to be voted on a
particular proposal, the shares will not be counted as having been voted
on that proposal, and those shares will not be reflected in the final
tally of the votes cast with regard to that proposal, although such
shares will be counted as in attendance at the meeting for purposes of
determining a quorum.
The required quorum for the meeting is 331/2% in interest of the shares
outstanding and entitled to vote at the meeting. A plurality of the
votes properly cast for the election of directors by the stockholders
attending the meeting in person or by proxy will elect directors to
office. An affirmative majority of the votes properly cast at the
meeting in person or by proxy is required for approval of proposals 2
and 3.
Annual Report
The Annual Report of the Company for the year ended December 31, 1992,
is being mailed with this proxy statement.
Stockholder Proposals
Stockholder proposals intended to be considered for inclusion in the
proxy statement for presentation at the 1994 Annual Meeting must be
received by the Company in advance of November 12, 1993.
In general, stockholder proposals intended to be presented at an annual
meeting, including proposals for the nomination of directors, must be
received by the Company 60 days in advance of the meeting, or by
February 18, 1994, to be considered for the 1994 Annual Meeting. The
requirements for submitting such proposals are set forth in the
Company's Bylaws.
1. Election of Directors
At the meeting, four directors are to be elected to serve for terms that
expire at the 1996 Annual Meeting of the stockholders. Michael B.
Gifford is standing for election for the first time. Warren E. Buffet,
Carol R. Goldberg and Joseph E. Mullaney are currently serving as Class
I directors. Information regarding the Board's four nominees for
directors is set forth at page 3. Information regarding the eight
directors whose terms expire in 1994 and 1995 is set forth at pages 4
and 5.
The accompanying proxy will be voted for the election of the Board's
nominees unless contrary instructions are given. If any Board nominee
is unable to serve, which is not anticipated, the persons named as
proxies intend to vote for the remaining Board nominees and, unless the
number of directors is reduced by the Board of Directors, for such other
person as the Board of Directors may designate.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF DIRECTORS,
WHICH IS DESIGNATED AS PROPOSAL NO. 1 ON THE ENCLOSED PROXY.
[SOURCE PAGE 3]
Nominees for Election to the Board of Directors for Three-Year Terms to
Expire at the 1996 Annual Meeting of the Stockholders
Warren E. Buffett
Director since 1989
Mr. Buffett, 62 years of age, is Chairman of the Board and Chief
Executive Officer of Berkshire Hathaway Inc., a company engaged in a
number of diverse business activities, the most important of which is
the property and casualty insurance business. Prior to assuming those
positions in 1970, he was a general partner of Buffett Partnership, Ltd.
He is a director of Capital Cities ABC, Inc., The Coca-Cola Company,
Solomon Inc. and U.S. Air Group.
Michael B. Gifford
Mr. Gifford, 57 years of age, is Managing Director and Chief Executive
of The Rank Organization plc, London, England, a leisure and
entertainment company. He has served in that capacity since 1983. He
was Finance Director of Cadbury Schweppes plc from 1978 to 1983 and
Chief Executive of Cadbury Schweppes Australia from 1975 to 1978. He is
also a director of English China Clays plc and Chairman of A. Kershaw
and Sons plc.
Carol R. Goldberg
Director since 1990
Mrs. Goldberg, 61 years of age, is President of The Avcar Group, Ltd.,
a management consulting firm. She was President and Chief Operating
Officer of The Stop & Shop Companies, Inc., a retail store chain, from
1985 to 1989. She joined Stop & Shop in 1959 and served in various
management positions prior to her election as Executive Vice President
and Chief Operating Officer in 1982. She served as a director of that
Company from 1972 to 1989. She also serves as a director of America
Service Group, Inc.; Boston Municipal Research Bureau; Goody Products,
Inc.; and the Kennedy Library Foundation.
Joseph E. Mullaney
Director since 1990
Mr. Mullaney, 59 years of age, is Vice Chairman of the Board. He
joined the Company in 1972 as Associate General Counsel and was elected
General Counsel in 1973, a Vice President in 1975, Senior Vice President
with responsibilities for legal and governmental affairs in 1977 and
Vice Chairman in 1990. He serves as the Chairman of Boston Municipal
Research Bureau and as a director of the Greater Boston Legal Services
Corporation, the Greater Boston Chamber of Commerce the New England
Legal Foundation and the World Affairs Council of Boston. He is also a
member of the Board of Trustees of the Massachusetts Taxpayers
Foundation, Inc.
[SOURCE PAGE 4]
Members of the Board of Director Continuing in Office Terms Expire at
the 1994 Annual Meeting of the Stockholders
Lawrence E. Fouraker
Director since 1973
Mr. Fouraker, 69 years of age, is George F. Baker Professor, Emeritus
of the Graduate School of Business Administration, Harvard University He
joined the Business School faculty in 1961 and served as Dean from 1970
to 1980 and as a Professor through October 1983. He was a Fellow of the
JFK School of Government, Harvard University, from 1983 through 1990.
Mr. Fouraker is a director of Citicorp; Enserch Corporation; General
Electric Company; Ionics, Incorporated; New England Mutual Life
Insurance Company and Alcan Aluminium Ltd. He is Chairman of the Board
and a trustee of Resources for the Future.
Herbert H. Jacobi
Director since 1981
Mr. Jacobi, 58 years of age, has been Chairman of the Managing Partners
of Trinkaus & Burk-hardt, a German bank, since 1981. The Bank is
affiliated with Britain's Midland Bank plc, a member of the Hongkong
Bank Group. He was a managing partner of Berliner Handels-and Frank-
furter Bank from 1977 until 1981 and an Executive Vice President of
Chase Manhattan Bank from 1975 to 1977. Mr. Jacobi is a director of
Amtrol, Inc. and Braun AG, a Gillette subsidiary, and Vice Chairman of
Midland Bank France S.A. He is President of the Northrhine-Westfalia
Stock Exchange in Duesseldorf and a director of Deutsche Boerse AG in
Frankfurt.
Alexander B. Trowbridge
Director since 1990
Mr. Trowbridge, 63 years of age, is President of Trowbridge Partners
Inc., a management consulting firm. He was President of National
Association of Manufacturers, a trade organization, from 1980 through
1989. He was Vice Chairman of Allied Chemical Corporation (now
Allied-Signal Corporation) from 1976 to 1980, President of The
Conference Board, Inc. from 1970 to 1976, President of American
Management Association from 1968 to 1970 and U.S. Secretary of Commerce
from 1967 to 1968. Mr. Trowbridge is a director of Harris Corporation;
ICOS Corporation; New England Mutual Life Insurance Company; PHH
Corporation; The Rouse Company; The Sun Company, Inc.; SunResorts
International N.A. Ltd.; E.M. Warburg Pincus Counsellors Funds; and
Waste Management, Inc. He is a charter trustee of Phillips Academy,
Andover.
Joseph F. Turley
Director since 1980
Mr. Turley, 67 years of age, was President and Chief Operating Officer
of the Company until his retirement in 1988. He joined the Company in
1960 and served as General Manager of the Gillette subsidiary in Spain,
as President of Gillette Canada and, from 1971 to 1976, as President of
the Safety Razor Division. He was Executive Vice President in charge of
Gillette North America from 1976 to February 1981, when he became
President and Chief Operating Officer. Mr. Turley is a director of
Copley Properties, Inc. and EG&G, Inc., and is a trustee of five groups
of mutual funds sponsored by New England Mutual Life Insurance
Company.
[SOURCE PAGE 5]
Members of the Board of Directors Continuing in Office
Terms Expire at the 1995 Annual Meeting of the Stockholders
Wilbur H. Gantz
Director since 1992
Mr. Gantz, 55 years of age, is President, Chief Executive Officer and a
director of Pathogenesis Corporation, a biopharmaceutical and
diagnostics company. He served as President of Baxter International,
Inc., a manufacturer and marketer of health care products, from 1987 to
1992. He joined Baxter International, Inc. in 1966 and held various
management positions prior to becoming its Chief Operating Officer in
1983. Mr. Gantz is a director of Baxter International, Inc., W.W.
Grainger and Company, Harris Bankcorp and Harris Trust and Savings Bank.
Richard R. Pivirotto
Director since 1980
Mr. Pivirotto, 62 years of age, is President of Richard R. Pivirotto
Co., Inc., a management consulting firm. He served as President of
Associated Dry Goods Corporation, a retail department store chain, from
1972 to 1976 and as Chairman of its Board of Directors from 1976 to
February 1981. He is a director of General American Investors Company,
Inc.; lmmunomedics, Inc.; New York Life Insurance Company; and
Westinghouse Electric Corporation.
Juan M. Steta
Director since 1987
Mr. Steta, 66 years of age, is of counsel to the law firm of
Santamarina Steta, Mexico City, which is engaged in a general business
practice. He joined the firm in 1949, was elected a partner in 1956 and
served in that capacity until 1992. He is Chairman of the Board of
Bujias Champion de Mexico, of Materiales Moldeables and of Quimicos
Derivados and is a director of several other Mexican corporations,
including General Motors de Mexico and Grupo IDESA. He is also a
director of Barnes Group Inc. in Bristol, Connecticut.
Alfred M. Zeien
Director since 1980
Mr. Zeien, 63 years of age, is Chairman of the Board and Chief
Executive Officer. He joined the Company in 1968 and served as Chairman
of the Board of Management of Braun AG, a Gillette subsidiary, from 1976
to 1978 and as Senior Vice President, Technical Operations, from 1978 to
1981. He was elected Vice Chairman of the Board in 1981. In that
capacity, he served as the Company's senior technical officer and headed
the new business development group until November 1987, when he assumed
responsibility for Gillette International and the Diversified Companies.
He was elected President and Chief Operating Officer in January 1991 and
Chairman and Chief Executive Officer in February 1991. Mr. Zeien is a
director of Bank of Boston Corporation, The First National Bank of
Boston, Massachusetts Mutual Life Insurance Company, Polaroid
Corporation, Raytheon Company and Repligen Corporation.
[SOURCE PAGE 6]
Committees of the Board-Board Meetings
The Board of Directors has the following standing committees, which are
composed entirely of directors who are not employees of the Company,
except that the Chief Executive Officer is an ex officio member of the
Executive Committee.
Audit Committee
The members are Mr. Steta (Chairman), Mr. Buffett, Mr. Gantz, Mrs.
Goldberg and Mr. Trowbridge.
The Audit Committee recommends the appointment of the Company's
independent auditors, its with the auditors to review their report on
the financial operations of the business, and approves the audit
services and any other services to be provided. It reviews the
Company's internal audit function and the performance and adequacy of
the Company's benefit plan fund managers. It also reviews compliance
with the Company's statement of policy as to the conduct of its
business. Four meetings of the Committee were held in 1992.
Executive Committee
The members are Mr. Fouraker (Chairman), Mr. Buffett, Mr. Steta, Mr.
Turley and Mr. Zeien (ex officio).
The Executive Committee, acting with the Finance Committee, reviews and
makes recommendations on capital investment proposals. It is also
available to review and make recommendations to the Board with respect
to the nature of the business, plans for future growth, senior
management succession and stockholder relations. The Committee has the
added functions of reviewing the composition and responsibilities of the
Board and its committees and recommending to the Board nominees for
election as directors. It will consider nominations by stockholders,
which should be submitted in writing to the Chairman of the Committee in
care of the Secretary of the Company. Nine meetings of the Committee
were held in 1992.
Finance Committee
The members are Mr. Jacobi (Chairman), Mr. Gantz, Mrs. Goldberg, Mr.
Pivirotto and Mr. Trowbridge.
The Finance Committee reviews and makes recommendations with respect to
the Company's financial policies including cash flow, borrowing and
dividend policy and the financial terms of acquisitions and
dispositions. Acting with the Executive Committee, it reviews and makes
recommendations on capital investment proposals. Eleven meetings of the
Committee were held in 1992.
Personnel Committee
The members are Mr. Pivirotto (Chairman), Mr. Fouraker, Mr. Jacobi
and Mr. Turley.
The Personnel Committee reviews and makes recommendations to the
management or Board on personnel policies and plans or practices
relating to compensation. It also administers the Company's executive
incentive compensation plans and approves the compensation of all
officers and certain other senior executives. Ten meetings of the
Committee were held in 1992.
The Board of Directors held nine meetings in 1992.
[SOURCE PAGE 7]
Outstanding Voting Securities
On March 1, 1993, the record date for the 1993 Annual Meeting of the
stockholders, there were outstanding and entitled to vote 220,218,660
shares of the $1 par value common stock of the Company, entitled to one
vote per share, and 164,604 shares of Series C ESOP Convertible
Preferred Stock, entitled to 20 votes per share. The holders of the
Company's common and preferred stock vote together as one class on all
matters being submitted to a vote of the stockholders at the 1993 Annual
Meeting.
Stock Ownership of Certain Beneficial Owners and Management
As of March 1, 1993, Berkshire Hathaway Inc., located at 1440 Kiewit
Plaza, Omaha, Nebraska 68131, beneficially owned, through six insurance
subsidiaries, 24,000,000 shares, which constitute 10.9% of the
outstanding common stock of the Company and 10.7% of the votes entitled
to be cast by the holders of the outstanding voting securities of the
Company. One of the six Berkshire Hathaway Inc. subsidiaries, National
Indemnity Company, 3024 Harney Street, Omaha, Nebraska 68131, owned
directly 15,000,000 of the 24,000,000 shares, or 6.8% of the outstanding
common stock and 6.7% of the votes entitled to be cast by the holders of
the outstanding voting securities of the Company. The capital stock of
Berkshire Hathaway Inc. is beneficially owned approximately 41.6% by
Mr. Buffett and a trust of which he is trustee but in which he has no
economic interest and 3.2% by his wife, Susan T. Buffet.
State Street Bank and Trust Company, P.O. Box 5259, Boston,
Massachusetts 02101 ("State Street"), has reported in a Schedule 13G
dated February 10, 1993, filed with the Securities and Exchange
Commission, that, as of December 31, 1992, it held the following shares:
(1) as Trustee of The Gillette Company Employees' Savings Plan on behalf
of Plan participants, 8,169,222 common shares, over which it exercised
shared voting and dispositive power; (2) as Trustee of The Gillette
Company Employee Stock Ownership Plan on behalf of Plan participants,
164,608 shares of Series C ESOP Convertible Preferred Stock, which are
entitled to 20 votes per share, over which it exercised shared voting
and dispositive power; and (3) as trustee of various collective
investment funds for employee benefit plans and other accounts and for
various personal trust accounts, a total of 1,246,783 common shares, as
to which it had sole voting power with respect to 1,231,967 shares and
shared voting power with respect to the remaining 14,816 shares, and as
to which it exercised no dispositive power with respect to 700 shares;
sole dispositive power with respect to 1,228,317 shares; and shared
dispositive power with respect to 17,766 shares.
As of December 31, 1992, the common shares held by State Street: (1) as
Trustee of The Gillette Company Employees' Savings Plan represented 3.7%
of both the voting power of the Company's outstanding voting securities
and the outstanding common stock and (2) as trustee of various
collective investment funds and other accounts and personal trust
accounts represented .6% of both the voting power of the Company's out-
standing voting securities and the outstanding common stock.
As of March 1, 1993, State Street as Trustee of The Gillette Company
Employee Stock Ownership Plan held 164,604 shares of Series C ESOP
preferred stock on behalf of Plan participants, which represented 1.5%
of the voting power of the Company's outstanding voting securities and
100% of that class.
[SOURCE PAGE 8]
The following table sets forth the number of Gillette shares
beneficially owned on March 1, 1993, by (i) each director or nominee for
director, (ii) each of the executive officers named in the Summary
Compensation Table at page 13 and (iii) all directors, nominees and
executive officers as a group. All individuals listed in the table have
sole voting and investment power over the shares reported as owned,
except as otherwise stated.
Unrestricted
Stock Beneficially Optioon Shares
Title of Owned, Excluding Exercisable
Name Class (1) Options Within 60 days
Warren E. Buffett Common 24,000,000 (2) 1,000
Lawrence E. Fouraker Common 5,800 (3) 1,000
Wilbur H. Gantz Common 1,000 1,000
Michael B. Gifford Common 300 -
Carol R. Goldberg Common 1,000 1,000
Herbert H. Jacobi Common 1,806 1,000
Gaston R. Levy Common 29,956 (4) 20,000
Series C Pfd. 7 -
Joseph E. Mullaney Common 46,332 (4) 68,700
Series C Pfd. 7 -
Robert J. Murray Common 1,985 (4) 104,000
Series C Pfd. 7 -
Richard R. Pivirotto Common 1,600 1,000
Juan M. Steta Common 5,129 1,000
Alexander B. Common 300 1,000
Trowbridge
Joseph F. Turley Common 77,352 1,000
Lorne R. Waxlax Common 75,502 (4) -
Series C Pfd. 7 -
Alfred M. Zeien Common 319,027 (4) 200,350
Series C Pfd. 7 -
All directors, Common 24,668,729 (4) 510,150
nominees and Series C Pfd. 58 -
executive officers
as a group
(1) Except as indicated in note (2) below, the total number of shares
beneficially owned in each class constitutes less than 1% of the
outstanding shares in that class.
(2) Owned by insurance subsidiaries of Berkshire Hathaway Inc., a
company which Mr. Buffett may be deemed to control. Mr. Buffett shares
voting and investment power over the shares, which represent 10.9% of
the outstanding common stock.
(3) Mr. Fouraker has no voting and investment power over 3,000 of the
shares reported as owned.
(4) Includes common shares held under the Company's Employees' Savings
Plan as follows: Mr. Levy 542 shares; Mr. Mullaney 14,786 shares; Mr.
Murray 14,318 shares; Mr. Waxlax 536 shares; Mr. Zeien 83,953 shares;
and all employee directors and executive officers as a group 127,580
shares. Under the Employee's Savings Plan and ESOP, participants may
direct the voting of shares held in their accounts in accordance with
the shared voting procedure described at page 1 and share investment
power with the plans' trustees in accordance with the terms of the
plans. In addition, Mr. Mullaney shares voting and investment power
over 10,476 of the common shares reported as owned by him and one
executive officer shares voting and investment power over 20,961 of the
total number of common shares reported as owned by the group and certain
executive officers disclaim beneficial ownership with respect to 15,932
of the total number of shares reported as owned by the group. Mr. Levy
has no voting and investment power over 7,362 of the common shares
reported as owned by him.
[SOURCE PAGE 9]
Certain Transactions with Directors and Officers
Berkshire Hathaway Inc. and the Company continue to be subject to their
agreement of July 20, 1989. That agreement provides that, without the
approval of the Company's Board of Directors, until July 20, 1999,
Berkshire Hathaway Inc. will not acquire shares giving it a total of
more than 14.1 % of the voting power of the Company's outstanding voting
securities (other than through the exercise of rights, warrants or
convertible securities received by Berkshire Hathaway Inc. with respect
to its common stock) or become a participant in a proxy solicitation or
a member of another group within the meaning of Section 13(d) of the
Securities Exchange Act of 1934 with respect to the Company.
Berkshire Hathaway Inc. also remains subject to its agreement to use
its best efforts not to knowingly sell securities representing more than
3% of the voting power of the Company's outstanding voting securities to
any one entity or group except in certain specified circumstances
related to a change in control of the Company and to give the Company
certain rights of first refusal in the event of sales of the Company's
voting securities by Berkshire Hathaway Inc. If the Company does not
exercise its right of first refusal, Berkshire Hathaway Inc. has the
right to have the Company register, either in its entirety or in
increments of $1 00,000,000 or more from time to time, one or more
public offerings of the Gillette common stock held by Berkshire Hathaway
Inc.
While Berkshire Hathaway Inc. owns at least 5% of the voting power of
the Company's securities, the Company's directors will also continue to
be subject to their agreement to use their best efforts to secure the
election to the Board by the shareholders of Mr. Buffett, or such other
individual reasonably acceptable to the Company as Berkshire Hathaway
Inc. might nominate.
Management, after consultation with legal and financial advisors,
determined that the terms of the agreement were fair to the Company.
During 1992 the Company and its Mexican subsidiaries received legal
advice from the law firm of Santamarina y Steta, of which Mr. Steta is
of counsel, and paid the firm a total of $315,529 for its services. The
Company believes that all such services were provided on a basis as
favorable to the Company as those of comparable firms retained to
provide similar legal services to the Company. It is expected that
Santamarina y Steta will continue to provide legal services to the
Company and its subsidiaries during 1993.
Legal Proceedings Relating to Directors and Officers
The Company and certain of its directors and officers are named
defendants in a pending lawsuit filed on January 9, 1990, as a
derivative action in the Federal District Court in Boston,
Massachusetts, relating to certain actions by Gillette during and after
the proxy.contest in 1988 for the election of directors. Equitable and
monetary relief is sought.
Compensation of Directors
Directors who are not employees of the Company or its subsidiaries are
paid an annual retainer of $22,500 plus a fee of $900 for attendance at
each meeting of the Board of Directors or of its committees. Committee
Chairmen receive an additional retainer of $3,000 a year. The directors
may defer payment of all or any portion of these retainers or fees until
after retirement or resignation from the Board or until an earlier
change in control. Deferred amounts accrue interest equivalents. Upon
the death of a director, any unpaid amounts become payable in a lump
sum.
Directors who are not employees of the Company or its subsidiaries also
may be paid for service as directors of Company subsidiaries. During
1992 Mr. Jacobi received fees totaling $7,703 for his services as a
director of Braun AG.
Under an amendment to the Company's Stock Option Plan approved by the
stockholders on April 16,1992, each non-employee director is to receive
in 1992 and 1993 an automatic stock option grant, effective two business
days following the date of the annual meeting of the stockholders, to
purchase 1,000 shares of the common stock of the Company at a price
equal to the fair market value on the date of grant. The first such
[SOURCE PAGE 10]
grants were made on April 21, 1992, at a price of $48.81 per share. The
terms of the options granted to the directors are generally similar to
those granted to employees, which are described at page 15.
A director who has attained age 70 cannot stand for reelection to the
Board. Directors who have served as Board members for five or more
years receive an annual retirement benefit, which is equal to the annual
retainer in effect when they leave the Board and is payable for a period
equal to their years of service. No credit is given for service as a
director while an employee of the Company. Payment of the benefit
commences when service ends, or at age 65 if a director leaves the Board
at an earlier age. Upon the death of a director, the present value of
any unpaid amount becomes payable in a lump sum. In the event of a
change in control, a director leaving the Board would be entitled to
receive immediate payment of the present value of the full retirement
benefit. A director who at anytime acts in a manner contrary to the
best interests of the Company risks forfeiture of the future retirement
benefit.
Gillette Comparative Five-Year Investment Performance
The following chart compares the value of $100 invested in Gillette
common stock from December 31, 19 through December 31, 1992, with a
similar investment in the Standard and Poor's 500 Index and with a peer
group consisting of ten consumer products companies of generally similar
size and with whom the Company competes for executive resources.
[GRAPH OMITTED]
Cumulative return includes reinvestment of dividends. S&P 500 Stock
Index Sourced from The Wyatt Company.
1987 1988 1989 1990 1991 1992
GILLETTE $100 $126 $189 $246 $444 $456
PEER GRP $100 $115 $163 $194 $297 $280
S&P 500 $100 $117 $153 $149 $194 $208
Peer Group Companies:
American Home Products Corporation
Avon Products, Inc.
The Black & Decker Corporation
Bristol-Myers Squibb Company
Colgate-Palmolive Company
Johnson & Johnson
Pfizer Inc.
Procter & Gamble Company
Rubbermaid Incorporated
Warner-Lambert Company
[SOURCE PAGE 11]
Report on Executive Compensation
Overall executive compensation is dependent upon performance against
goals assigned to each executive under the Company's management by
objectives program. These objectives are designed to further the
Company's strategic business plan. Objectives include quantitative
factors that directly improve the Company's short-term financial
performance, as well as qualitative factors that strengthen the Company
over the long term, such as demonstrated leadership ability, management
development, insuring compliance with law and Company policies, and the
furtherance of the Company's mission and values.
Over the last five years the Personnel Committee of the Board of
Directors has sought to relate an increasingly greater percentage of
executive compensation directly to the financial performance of the
Company and to the part each executive played in achieving that
performance. This has resulted in a compensation package in which a
greater portion of each executive officer's compensation is contingent
upon the achievement of specific financial targets for the year.
The Personnel Committee approves the base salary of the executive
officers and in its discretion awards bonuses under the Incentive Bonus
Plan and grants stock options under the Stock Option Plan.
Base Salary
In determining the salary of an executive officer, a salary range is
assigned under a worldwide system of job evaluation based upon the level
of responsibility, the qualifications and experience required and the
need to provide, together with the Incentive Bonus Plan, competitive
compensation. Salary increases are based upon periodic reevaluations of
these factors and the performance of the executive in meeting
individually assigned objectives.
Incentive Bonus Plan
Under the Incentive Bonus Plan, early each year the Personnel Committee
sets goals relating to profit from operations, return on assets, and
sales and establishes the minimum and maximum bonus pools that may be
earned based upon the achievement of those Company goals. In order for
a bonus pool to be earned, a minimum profit from operations goal for the
Company must be met. The actual amount of any pool is determined based
upon the achievement of Company goals for the year. Company goals are
translated to operating unit and individual objectives and assigned to
executives. If a bonus pool has been earned, the Personnel Committee
grants bonus awards ranging from 5% to 70% of year-end salary based upon
the performance of each executive officer against individually assigned
objectives for the year.
At the time goals are set, a reserve equivalent to no more than 35% of
the amount of the budgeted bonus pool may be established by the
Committee from which bonuses may be awarded, if the minimum profit from
operations goal for the Company is not met, to executives in operating
units that have achieved assigned objectives. In addition, the
Committee may, within certain limits, carry forward a portion of the
bonus pool earned in any year for its discretionary use in the future.
Stock Option Plan
Stock option grants are intended to provide long-term incentives for the
achievement of the Company's strategic business plan and to align the
executive officers' interests with those of the shareholders. Under the
Stock Option Plan, most recently approved by the shareholders at the
1989 Annual Meeting, the Personnel Committee may award stock options for
terms not to exceed ten years at no less than the fair market value of
Gillette common stock on the date of grant. The size of any stock option
grant is related to the individual's level of responsibility within the
organization, and awards are made on a basis designed to be competitive
in value with similar programs of comparable companies.
Other Benefits
In order to attract, motivate and retain employees, the Company
maintains a competitive benefits package, participation in which is not
dependent upon performance. Executive officers participate in the
Company's broad-based employee benefit plans: the Employees' Savings
Plan, the Supplemental Savings Plan, the
[SOURCE PAGE 12]
Employee Stock Ownership Plan, the Retirement Plan and the Supplemental
Retirement Plan. These plans are described at-pages 13 through 16.
The Company's stock-based compensation is designed to align the
long-term interests of the participants with those of the shareholders
generally.
The executive officers, along with certain other executives, participate
in an Executive Life Insurance Pro- gram. Information on this Program
is included in the footnotes to the Summary Compensation Table at page
13. Beginning in 1993, the executive officers, as well as certain other
officers, may participate in an Estate Preservation Program under which,
over a 15-year period, the Company and the executive officer will share
the premiums on life insurance in the amount of $1,000,000 covering the
joint lives of each executive and his or her spouse, with the Company
recovering its contribution at the end of that period. In addition,
certain key employees, including the executive officers, are eligible to
receive reimbursement for estate tax planning services not to exceed
$3,000.
Mr. Zeien's Compensation
Mr. Zeien's compensation, like that of the other executive officers of
the Company, is set in accordance with the foregoing policies.
As Chairman and Chief Executive Officer, Mr. Zeien is responsible for
the entire scope of the Company's worldwide business. Gillette's profit
from operations for 1992 was $967 million, up 12% from 1991. The
Company's sales grew by 1 0%, to $5.1 billion, a record level. Earnings
per common share rose at a rate of 20% over those of 1991. Return on
assets was 12%, compared with 11 % in 1991.
Significant progress was made during 1992 toward achievement of the
Company's long-term growth goals - clear worldwide leadership in core
business categories and geographic expansion. During the year, the
Company expanded its operations geographically with new ventures
initiated in China, Russia and Poland. Product expansion continued with
the introduction of the Sensor for Women shaving system and the Gillette
Series male toiletries product line. Investment in the three principal
"growth drivers" - research and development capital spending and
advertising - in combination rose 12% over 1991 levels. Under Mr.
Zeien's leadership, the Company's Mission and Values Statement was
completed and disseminated throughout the Company, a process that
defined clearly the commitment to provide a superior return to Gillette
shareholders Mr. Zeien is also responsible for insuring the Company's
compliance with applicable laws and Company policies.
Mr. Zeien's compensation for 1992 takes into account his successful
leadership in managing the business and balancing the Company's
short-term and long-term objectives.
This Report on Executive Compensation has been furnished by the
Personnel Committee of the Company's Board of Directors. The members
are Richard R. Pivirotto (Chairman), Lawrence E. Fouraker, Herbert H.
Jacobi and Joseph F. Turley.
Personnel Committee Interlocks and Insider Participation
Mr. Turley, a member of the Personnel Committee, served as President
and Chief Operating Officer of the Company from February 1981 until his
retirement in 1988.
Executive Compensation
The following table sets forth all compensation earned by or paid or
awarded to the Chief Executive Officer and the next four most highly
compensated executive officers of the Company for all services rendered
in all capacities for the periods shown with the exception, as permitted
by the transitional provisions of the Securities and Exchange
Commission's amended proxy rules, that Other Annual Compensation and All
Other Compensation are reported for the 1992 fiscal year only.
[SOURCE PAGE 13]
Summary Compensation Table
Annual Compensation
Name and Principal
Position Year Salary Bonus Other
Alfred M. Zeien 1992 $780,000 $600,000 -
Chairman and Chief
Executive Officer 1991 691,667 420,000 -
Joseph E. Mullaney 1992 390,500 170,000 -
Vice Chairman of the Board 1991 363,375 160,000 -
1990 318,750 140,000 -
Gaston R. Levy 1992 420,000 235,000 -
Executive Vice President 1991 390,000 195,000 -
1990 357,917 175,000 -
Robert J. Murray 1992 435,000 230,000 $3,654
Executive Vice President 1991 400,000 210,000 -
Lorne R. Waxlax 1992 455,833 240,000 -
Executive Vice President 1991 420,000 240,000 -
1990 385,000 190,000 -
(TABLE CONTINUED)
Long-Term All Other
Compensation Compensation (2)
Stock Long-Term
Name and Principal Option Incentive
Position Awards Payouts (1)
Alfred M. Zeien 75,000 - $95,961
Chairman and Chief 65,000 - -
Executive Officer
Joseph E. Mullaney 25,000 - 32,101
Vice Chairman of the Board 17,000 - -
37,000 - -
Gaston R. Levy 32,000 $355,984 68,932
Executive Vice President 20,000 230,218 -
20,000 147,168 -
Robert J. Murray 32,000 436,517 41,451
Executive Vice President 20,000 269,188 -
Lorne R. Waxlax 32,000 352,605 40,433
Executive Vice President 20,000 141,626 -
22,000 141,626 -
(1) Long-Term Incentive Payout represents Stock Equivalent Unit Plan
amounts paid or payable but deferred with respect to segments of awards
vesting in 1992, plus amounts representing the growth in 1992 on prior
years' deferrals. Awards granted to executive officers after 1984 were
contingent upon the achievement of future performance goals. In 1990,
it was decided to utilize larger grants of stock options as long-term
incentives for executive officers and to discontinue granting Stock
Equivalent Unit Plan awards to this group of officers.
Under the Stock Equivalent Unit Plan, a phantom stock plan, awards of
basic stock units are made, at the discretion of the Personnel
Committee, to selected key employees of the Company and its
subsidiaries. Each basic unit is treated as equivalents to one share of
stock, although in no case does the employee receive the original market
value of the basic units awarded. Instead, the employee's account is
credited with appreciation, if any, in the market value of the Company's
common stock and with dividend equivalent units as dividends are paid on
the stock. Amounts credited for appreciation on the basic units are
limited benefits over seven years, vesting and becoming payable in
segments over the third through the seventh years of that period. Awards
made in 19833 accrue benefits over ten years, vesting and becoming
payable in segments over the fourth through the tenth years of that
period.
In general, awards become fully vested and payable upon the retirement,
death or disability of the employee and, in the case of retirement or
disability, payment may be deferred by employee election to future
years. If a deferred amount represents the final value of a fully
vested award, the amount accrues interest equivalents until paid. The
Plan provides that, upon a change in control, as that term is described
at page 16, awards held by employees whose employment is terminated
under certain circumstances would become fully vested, and, in the event
of a related liquidation, merger or consolidation of the Company, all
awards either would become fully vested and payable or would be replaced
by the surviving corporation.
(2) The amounts reported as All Other Compensation include the
following payments or accruals under the Company's benefit and incentive
plans:
(i) Company contributions during 1992 under the Employees' Savings Plan
and Supplemental Savings Plan as follows: Mr. Zeien $60,000, Mr.
Mullaney $27,525, Mr. Levy $21,000, Mr. Murray $21,750 and
[SOURCE PAGE 14]
Mr. Waxlax $34,792. Under the plans, the Company contributes 50 cents
for each dollar up to a maximum of 10% of compensation saved by
participants. In general, regular U.S. employees are eligible to
participate. During 1992, the Company contributed at the maximum rate
of 5% for each of the named individuals. Certain limitations on the
amount of benefits under tax-qualified plans such as the Employees'
Savings Plan were imposed by the Employee Retirement Income Security Act
of 1974, the Tax Equity and Fiscal Responsibility Act of 1982 and the
Tax Reform Act of 1986. The Company adopted the Supplemental Savings
Plan, as permitted by law, for the payment of amounts to employees who
may be affected by those limitations, so that, in general, total
benefits will continue to be calculated as before on the basis approved
by the stockholders.
(ii) Savings plan equivalents credited on 1992 Incentive Bonus Plan
deferrals as follows: Mr. Levy $11,750 and Mr. Murray $11,500. Before
being selected to receive a bonus, participants have the option to defer
until a future year or retirement or until an earlier change in control
payment of all or a portion of any bonus that may be awarded. Savings
plan equivalents represent amounts which would have been credited as
Company contributions under the Employees' Savings Plan or Supplemental
Savings Plan had payment of the bonuses not been deferred.
(iii) $2,531, which represents the value of Series C ESOP preferred
shares allocated in 1992 under the Employee Stock Ownership Plan
("ESOP") to the account of each of the named executive officers. The
Plan was adopted in January 1990 as part of the Company's modified U.S.
retiree medical benefit program. Since September 30, 1990, Series C
ESOP preferred shares have been allocated quarterly to the accounts of
eligible employees, generally on the basis of an equal amount per
participant. In general, regular U.S. employees participate in the ESOP
after completing one year of service with the Company.
(iv) Company cost for the Executive Life Insurance Program as follows:
Mr. Zeien $33,430, Mr. Mullaney $2,045, Mr. Levy $33,651, Mr. Murray
$5,670, and Mr. Waxlax $3,110. The program provides coverage during
employment equal to four times annual salary, subject to a $600,000
minimum and a $2,000,000 maximum, with the participant paying the
premium for coverage equal to two times salary or $200,000, whichever is
less. During retirement, a Company-paid death benefit equal to annual
salary, subject to a $150,000 minimum and a $500,000 maximum, continues
in effect for the life of the participant.
Stock Options Granted in 1992
Individual Grants
% of Total
Options Granted
Number of To Employees
Name Options Granted In 1992
Alfred M. Zeien 75,000 5.72%
Joseph E. Mullaney 25,000 1.91%
Gaston R. Levy 32,000 2.44%
Robert J. Murray 32,000 2.44%
Lorne R. Waxlax 32,000 2.44%
(TABLE CONTINUED)
Individual Grants
Per Share Expiration
Exercise Price (1) Date
Alfred M. Zeien $44.69 02/28/97
Joseph E. Mullaney 44.69 03/31/00
Gaston R. Levy 44.69 11/30/95
Robert J. Murray 44.69 06/17/02
Lorne R. Waxlax 44.69 09/30/00
(TABLE CONTINUED)
Potential Realizable
Value At Assumed
Annual Rates of
Stock Price
Appreciation For
Option Term (2)
5% 10%
Alfred M. Zeien $862,740 $1,894,074
Joseph E. Mullaney 516,170 1,299,757
Gaston R. Levy 262,706 559,018
Robert J. Murray 899,520 2,279,548
Lorne R. Waxlax 712,895 1,722,812
(1) The exercise price of a stock option is equal to the average of the
high and the low prices of Gillette shares traded on the date the option
is granted. Payment upon exercise is made in cash or in shares of the
Company's common stock or partially in cash and partially in shares.
(2) The assumed rates of annual appreciation are calculated from the
date of grant through the last date the option may be exercised assuming
an age 65 retirement. These amounts represent certain assumed rates of
annual appreciation. Actual gains, if any, on stock option exercises
and common stock holdings
[SOURCE PAGE 15]
are dependent on the future performance of the common stock and overall
stock market conditions. There can be no assurance that the values
reflected in this table will be achieved.
Options become exercisable one year from the date of grant, June 18,
1993 in the case of the options reported in the table above. At the
time of grant, options may be designated as incentive stock options
("ISO's"), a type of option authorized under the 1981 amendments to the
Internal Revenue Code. Options not so designated are granted as
"non-ISO's". Options generally remain exercisable for ten years from
the date of grant provided the recipient remains employed throughout
that period. The post-retirement exercise period is generally three
months for an ISO and two years for a non-ISO. If a termination of
employment occurs within one year after a change in control, as that
term is described at page 16, any options held by the employee optionee
that were not otherwise exercisable when employment ceased would become
immediately exercisable.
Aggregated Stock Option Exercises During 1992 and 1992 Year-End Stock
Option Values
Number Of
Shares Underlying Value
Name Options Exercised Realized (1)
Alfred M. Zeien 80,650 $3,475,694
Joseph E. Mullaney 30,100 1,267,697
Gaston R. Levy 20,000 602,460
Robert J. Murray 12,000 581,288
Lorne R. Waxlax 20,000 466,213
(TABLE CONTINUED)
Total Value
Of Unexercised
Number Of Unexercised In-The-Money Stock
Stock Options Held Options Held At
Name At Fiscal Year-End Fiscal Year-End
Alfred M. Zeien Exercisable 200,350 $5,479,240
Unexercisable 75,000 951,375
Joseph E. Mullaney Exercisable 68,700 2,011,491
Unexercisable 25,000 317,125
Gaston R. Levy Exercisable 20,000 428,700
Unexercisable 32,000 405,920
Robert J. Murray Exercisable 104,000 3,148,190
Unexercisable 32,000 405,920
Lorne R. Waxlax Exercisable - -
Unexercisable 32,000 405,920
(1) The amounts shown are the total values realized by the named
persons on exercises of options held for periods ranging from 2 to 7
years. The annualized values for the options exercised, calculated by
dividing the total value realized by the number of years from the date
of grant to the date of exercise, are as follows: Mr. Zeien $598,991,
Mr. Mullaney $260,850, Mr. Levy $200,820, Mr. Murray $83,041, and Mr.
Waxlax $233,107.
Retirement Plan
The following table sets forth the total annual pension benefits payable
in the form of a straight-life annuity before reduction for social
security benefits for employees who retire at age 65 under the Company's
Retirement Plan and Supplemental Retirement Plan.
Annual Pension
Average Annual Compensation
Used as Basis for 15 Years of 20 Years of 25 Years or More
Computing Pension Service Service of Service
$200,000 $60,000 $80,000 $100,000
300,000 90,000 120,000 150,000
400,000 120,000 160,000 200,000
500,000 150,000 200,000 250,000
600,000 180,000 240,000 300,000
700,000 210,000 280,000 350,000
800,000 240,000 320,000 400,000
900,000 270,000 360,000 450,000
1,000,000 300,000 400,000 500,000
1,100,000 330,000 440,000 550,000
1,200,000 360,000 480,000 600,000
[SOURCE PAGE 16]
In general, the benefit upon retirement at age 65 with 25 year of
service is equal to 50% of the employee's average annual compensation
(salary plus bonus, if any, as reported in the Summary Compensation
Table at page 13) during the five calendar years of highest compensation
included in the last ten calendar years of employment, minus 75% of
primary social security benefits.
Certain limitations on the amount of benefits under tax-qualified plans,
such as the Retirement Plan, were imposed by the Employee Retirement
Income Security Act of 1974, the Tax Equity and Fiscal Responsibility
Act of 1982 and the Tax Reform Act of 1986. The Company adopted the
Supplemental Retirement Plan, as permitted by law, for the payment of
amounts to employees who may be affected by those limitations, so that,
in general, total benefits will continue to be calculated on the basis
approved by the stockholders, as described above.
As of December 31, 1992, the persons named in the Summary Compensation
Table at page 13 had the following years of service under the Retirement
Plan: Mr. Zeien 25 years; Mr. Mullaney 21 years; Mr. Levy 34 years;
Mr. Murray 32 years and Mr. Waxlax 35 years.
Change in Control and Severance Arrangements
The Board of Directors has adopted a severance pay- and benefit
arrangement to become effective in the event of a change in control.
The arrangement would obligate any acquirer to continue long-standing
Gillette practice regarding severance payments to terminated employees.
Severance payments to U.S. employees whose employment is terminated
under certain circumstances after a change in control would, as under
present practice, be based on seniority and position level, subject to a
minimum for certain key employees, including certain executive officers.
Severance payments to employees in foreign countries would comply with
local law and follow past Gillette practice.
The maximum amount payable under the severance pay arrangement,
including any benefit plan payments resulting from a change in control,
is 2.99 times average annual compensation for the five-year period
preceding termination of employment. For most employees, including the
named persons, it is unlikely that payments would reach the maximum. The
aggregate of severance pay excluding benefit plan payments to the
persons named in the Summary Compensation Table at page 13 on December
31, 1992, in the event of a change in control on that date, would have
been $5,31 0,000, or 2 times the amount of their base salary on that
date. In general, benefit plan payments resulting from a change in
control are dependent upon salary, but vary with seniority and position
level.
A change in control is defined in the Company's Retirement Plan and, in
general, means those events by which control of the Company passes to
another person or corporation. Those events include a purchase of the
Company's stock pursuant to a tender offer, the acquisition of 20% or
more of the Company's stock by a person or group, a merger, or a sale of
substantially all of the assets of the Company. In addition, a change
in control would occur if, during any two-year period, the individuals
who were serving on the Board of Directors of the Company at the
beginning of the period or who were nominated for election or elected to
the Board during the period with the affirmative vote of at least
two-thirds of such individuals still in office, ceased to constitute a
majority of the Board.
2. Appointment of Auditors
On the recommendation of the Audit Committee of the Board of Directors,
the Board has appointed KPMG Peat Marwick as auditors for the year 1993,
subject to approval by the stockholders. KPMG Peat Marwick has audited
the books of the Company for many years.
Representatives of KPMG Peat Marwick will attend the 1993 Annual Meeting
of the Stockholders, where they will have the opportunity to make a
statement if they wish to do so and will be available to answer
appropriate questions from the stockholders. Should the appointment of
auditors be disapproved by the stockholders, the Board of Directors will
review its selection.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE APPROVAL OF THE
APPOINTMENT OF AUDITORS, WHICH IS DESIGNATED AS PROPOSAL NO. 2 ON THE
ENCLOSED PROXY.
[SOURCE PAGE 17]
3. Stockholder Proposal
This proposal was submitted on behalf of the New York City Fire
Department Pension Fund by Elizabeth Holtzman, Comptroller of the City
of New York, One Centre Street, Room 736, New York, N.Y. 10007-2341,
which is the owner of 96,630 shares of the common stock of the Company
Co-filer of the proposal is the General Board of Pensions of the United
Methodist Church, 1200 Davis Street, Evanston, IL 60201, which owns
305,266 shares.
"RESOLVED, that the shareholders of the Corporation request that the
board of directors adopt and implement a policy requiring all proxies,
ballots and voting tabulations that identify how shareholders voted be
kept confidential, except when disclosure is mandated by law, such
disclosure is expressly requested by a shareholder or during a contested
election for the board of directors, and that the tabulators and the
inspectors of election be independent and not the employees of the
Corporation."
The following statement has been submitted by the proponent in support
of the resolution.
"The confidential ballot is fundamental to the American political
system. The reason for this protection is to ensure that voters are not
subjected to actual or perceived coercive pressure. We believe that it
is time that this fundamental principle of the confidential ballot be
applied to public corporations.
Many excellent companies use confidential voting. None have reported
any difficulty reaching quorums or meeting super majority vote
requirements and those surveyed reported that the added cost of
implementing confidentiality was negligible.
Strong support was shown at the last annual meeting when.29.2% of the
votes were cast in favor of this proposal.
It is our belief that all shareholders need the protection of a
confidential ballot no less than voters in political elections. While
we make no imputation that our company's management has acted
coercively, the existence of this possibility is sufficient to justify
confidentiality.
This resolution would permit shareholders to voluntarily disclose their
vote to management by expressly requesting such disclosure on their
proxy cards. Additionally, shareholders may disclose their vote to any
other person they choose. This resolution would merely restrict the
ability of the Corporation to have access to the vote of its
shareholders without their specific consent.
Many shareholders believe confidentiality of ownership is ensured when
shares are held in street or nominee name. This is not always the case.
Management has various means of determining actual (beneficial
ownership. For instance, proxy solicitors have elaborate databases that
can match account numbers with the identity of some owners. Moreover,
why should shareholders have to transfer their shares to nominees in an
attempt to maintain confidentiality? In our opinion, this resolution is
the only way to ensure a secret ballot for all shareholders irrespective
of how they choose to hold their shares,
We believe that confidential voting is one of the most basic reforms
needed in the proxy voting system and that the system must be free of
the possibility of pressure and the appearance of retaliation.
We hope that you agree and vote FOR this proposal."
THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST THE ADOPTION OF
PROPOSAL NO. 3 FOR THE REASONS SET FORTH BELOW.
This proposal is similar to a proposal submitted the last four years by
a trustee of a New York pension fund and rejected by the holders of over
70% of the votes cast.
In 1992, the Board of Directors adopted its own confidential voting
policy. This policy was based on a confidential voting procedure
employed on a trial basis for the 1989, 1990 and 1991 Annual Meetings.
The Board does not share the concern of the proponent that confidential
voting as prescribed by the proponent is necessary to guard against
coercion in the stockholder voting process. Gillette directors,
officers, employees and agents are required to respect the right of all
stockholders to vote without pressure or retaliation,
[SOURCE PAGE 18]
and the proponent concedes that it makes "no imputation that our
company's management has acted coercively." Participants in the
Company's employees' savings plans and employee stock ownership plan
instruct the trustees of these plans in confidence how to vote their
shares. Stockholders who hold shares in a nominee or "street" name or
through a broker are protected by the Federal securities laws, which
provide that such nominees may not disclose to the Company the names of
stockholders who object to such disclosure.
The proponent's proposal requests that "tabulators and the inspectors of
election be independent and not the employees of the Corporation." For a
number of years, the Company has employed its transfer agent to tabulate
votes and appointed inspectors of election from among Company attorneys.
In deference to the proponent, for the last three years the directors
appointed the Company's transfer agent as inspector of election. In this
respect, the proponent's proposal has been fully implemented by the
Board.
The Company's policy requires that proxies and ballots be kept
confidential from officers, directors and employees of the Company and
from third parties. Certain outside agents, such as those serving as
proxy solicitors, who have agreed to comply with this policy, but not
Company employees, directors or officers, may be permitted access to
proxies and ballots to facilitate their participation in soliciting
proxies and conducting the meeting. This policy does not apply in the
event of a proxy contest or other solicitation based on an opposition
proxy statement or a matter requiring for passage more than a majority
of the votes cast. The policy would not prevent Company representatives
from determining which stockholders had not voted on a proposal so that
they could be urged to vote. The proponent opposes permitting even
outside agents who are serving as proxy solicitors access to the voting
information on the proxy cards they solicit. The Board believes that
unless such access is permitted, solicitation of proxies could become
more difficult and expensive.
Although the proponent's proposal contains an exception for a "contested
election for the board of directors", the proposal contains no such
specific exception in at least two other important areas. The first
involves a contest on any other important issue. As a result, the
proponent's proposal could produce the anomalous situation of a
contesting shareholder being free to solicit proxies on an important
issue on a nonconfidential basis, while the Board of Directors would not
be free to do so. The second involves a noncontested matter where a
higher than usual affirmative stockholder vote is required, e.g., an
amendment to the Company's Certificate of Incorporation requiring the
affirmative vote of more than 50% of the votes entitled to be cast. In
such a situation the Company believes the proponent's proposal might
prevent or make unnecessarily difficult obtaining the unusually high
number of affirmative votes required.
For the reasons stated above, and particularly in light of the
confidential voting policy adopted by the Company the Board opposes the
proposal.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST THE ADOPTION OF THIS
STOCKHOLDER PROPOSAL, WHICH IS DESIGNATED AS PROPOSAL NO. 3 ON THE
ENCLOSED PROXY.
Other Matters
Except for matters described in this proxy statement and any proposals
which have been omitted from this proxy statement pursuant to Rule 14
a-8 of the proxy rules of the Securities and Exchange Commission, the
Board of Directors does not know of any matter that will or may be
presented at the meeting. With respect to any such omitted proposals
and proposals not now known to the Board of Directors, the persons named
as proxies intend to vote the shares they represent in accordance with
their judgment.
( END OF DOCUMENT. )
.PROXY 1994
Date of Document: 3/17/94
Print/Export Request: Entire Document
LOGO -- See Appendix
March 17, 1994
Gillette Stockholders:
You are cordially invited to attend the 1994 Annual Meeting of the
stockholders of The Gillette Company to be held at 10:00 a.m. on
Thursday, April 21, 1994, at the John F. Kennedy Library and Museum,
Columbia Point, Boston, Massachusetts.
At the meeting, we will vote on the proposals described in the
accompanying Notice and Proxy Statement. We will also report to you on
the operations of the Company. You will have the opportunity to ask
questions about the business that may be of general interest to
stockholders.
Your vote is important regardless of how many shares you own. Please
take a few minutes now to review the proxy statement and to sign and
date your proxy and return it in the envelope provided. You may attend
the meeting and vote in person even if you have previously returned
your proxy.
I look forward to seeing you at the meeting.
Very truly yours,
Alfred M. Zeien
LOGO -- SEE APPENDIX
NOTICE OF ANNUAL MEETING OF THE STOCKHOLDERS
The 1994 Annual Meeting of the stockholders of The Gillette Company
will be held at the John F. Kennedy Library and Museum, Columbia
Point, Boston, Massachusetts, on Thursday, April 21, 1994, at 10:00
a.m. for the following purposes:
1. To elect three directors for terms to expire at the 1997
Annual Meeting of the stockholders.
2. To vote on the proposed Outside Directors' Stock Ownership
Plan, as described in the accompanying proxy statement.
3. To vote on the proposed amendment of the 1971 Stock Option
Plan, as described in the accompanying proxy statement.
4. To vote on the proposed amendment of the Stock Equivalent
Unit Plan, as described in the accompanying proxy statement.
5. To vote on the approval of the appointment of auditors for
the year 1994.
6. To transact such other business as may properly come before
the meeting and any and all adjournments thereof.
The Board of Directors has fixed the close of business on March 1,
1994, as the record date for the determination of the stockholders
entitled to notice of and to vote at the meeting. A list of such
stockholders will be available at the time and place of the meeting
and, during the ten days prior to the meeting, at the office of the
Secretary of the Company at the above address. If you indicate that
you plan to attend the meeting by marking the appropriate space on the
proxy card, an admission ticket will be sent approximately one week in
advance of the meeting. You should bring a form of personal
identification to the meeting with you. If your shares are held of
record by a broker, bank or other nominee and you wish to attend the
meeting, you must obtain a letter from the broker, bank or other
nominee confirming your beneficial ownership of the shares and bring it
to the meeting. In order to vote your shares at the meeting, you must
obtain from the record holder a proxy issued in your name.
Whether or not you expect to attend, WE URGE YOU TO SIGN AND DATE THE
ENCLOSED PROXY AND RETURN IT PROMPTLY IN THE ENVELOPE PROVIDED.
By order of the Board of Directors
Jill C. Richardson, Secretary
Boston, Massachusetts
March 17, 1994
LOGO -- See Appendix
March 17, 1994
PROXY STATEMENT
INTRODUCTION
This proxy statement is furnished in connection with the solicitation
of proxies on behalf of the Board of Directors for the 1994 Annual
Meeting of the stockholders of the Company on April 21, 1994. The
Notice of Annual Meeting, this proxy statement and the accompanying
proxy are being mailed to stockholders on or about March 17, 1994. You
can ensure that your shares are voted at the meeting by signing and
dating the enclosed proxy and returning it in the envelope provided.
Sending in a signed proxy will not affect your right to attend the
meeting and vote in person. You may revoke your proxy at any time
before it is voted by notifying the Company's Transfer Agent, The First
National Bank of Boston, P.O. Box 471, Boston, Massachusetts
02102-9901 in writing, or by executing a subsequent proxy, which
revokes your previously executed proxy.
The enclosed proxy will also serve as a confidential voting instruction
to the trustees of the Company's employees' savings plans and the
Employee Stock Ownership Plan ("ESOP"). If voting instructions have
not been received from a participant by April 13, 1994, the shares
allocated to the participant's account(s) and ESOP shares that have not
been allocated to participant accounts will be voted on each issue by
each plan trustee in proportion to the shares as to which voting
instructions have been returned by other participants of each
respective plan.
1. ELECTION OF DIRECTORS
At the meeting, three directors, Herbert H. Jacobi, Alexander B.
Trowbridge, and Joseph F. Turley, are to be elected to serve for terms
that expire at the 1997 Annual Meeting of the stockholders. Lawrence
E. Fouraker, whose term as a director will expire at the 1994 Annual
Meeting, is not standing for reelection, having reached the mandatory
retirement age for directors. Information regarding the Board's three
nominees for directors is set forth at page 2. Information regarding
the eight directors whose terms expire in 1995 and 1996 is set forth at
pages 3 and 4.
The accompanying proxy will be voted for the election of the Board's
nominees unless contrary instructions are given. If any nominee is
unable to serve, which is not anticipated, the persons named as proxies
intend to vote for the remaining Board nominees and, unless the number
of directors is reduced by the Board of Directors, for such other
person as the Board of Directors may designate.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF DIRECTORS,
WHICH IS DESIGNATED AS PROPOSAL NO. 1 ON THE ENCLOSED PROXY.
NOMINEES FOR ELECTION TO THE BOARD OF DIRECTORS FOR THREE-YEAR TERMS TO
EXPIRE AT THE 1997 ANNUAL MEETING OF THE STOCKHOLDERS
Photo of
Herbert H. Jacobi HERBERT H. JACOBI Director since 1981
Mr. Jacobi, 59 years of age, has been Chairman of the Managing Partners
of Trinkaus & Burkhardt, a German bank, since 1981. The Bank is
affiliated with Britain's Midland Bank plc, a member of the Hongkong
Bank Group. He was a managing partner of Berliner Handels-und
Frankfurter Bank from 1977 until 1981 and an Executive Vice President
of Chase Manhattan Bank from 1975 to 1977. Mr. Jacobi is a director of
Amtrol, Inc. and Braun AG, a Gillette subsidiary, a member of the
Partnership Council of Freshfields, a U.K. law firm, and Vice Chairman
of Midland Bank France S.A. He is President of the
Northrhine-Westfalia Stock Exchange in Duesseldorf and a director of
Deutsche Boerse AG in Frankfurt.
Photo of
Alexander B. Trowbridge ALEXANDER B. TROWBRIDGE Director since 1990
Mr. Trowbridge, 64 years of age, is President of Trowbridge Partners
Inc., a management consulting firm. He was President of National
Association of Manufacturers, a trade organization, from 1980 through
1989. He was Vice Chairman of Allied Chemical Corporation (now
Allied-Signal Corporation) from 1976 to 1980, President of The
Conference Board, Inc. from 1970 to 1976, President of American
Management Association from 1968 to 1970 and U.S. Secretary of
Commerce from 1967 to 1968. Mr. Trowbridge is a director of Harris
Corporation; ICOS Corporation; New England Mutual Life Insurance
Company; PHH Corporation; The Rouse Company; The Sun Company, Inc.;
SunResorts International N.A. Ltd.; E.M. Warburg Pincus Counsellors
Funds; and WMX Technologies Inc. He is a charter trustee of Phillips
Academy, Andover.
Photo of
Joseph F. Turley JOSEPH F. TURLEY Director since 1980
Mr. Turley, 68 years of age, was President and Chief Operating Officer
of the Company until his retirement in 1988. He joined the Company in
1960 and served as General Manager of the Gillette subsidiary in Spain,
as President of Gillette Canada and, from 1971 to 1976, as President of
the Safety Razor Division. He was Executive Vice President in charge
of Gillette North America from 1976 to February 1981, when he became
President and Chief Operating Officer. Mr. Turley is a director of
Copley Properties, Inc. and EG&G, Inc., and is a trustee of five
groups of mutual funds sponsored by New England Mutual Life Insurance
Company.
MEMBERS OF THE BOARD OF DIRECTORS CONTINUING IN OFFICE
TERMS EXPIRE AT THE 1995 ANNUAL MEETING OF THE STOCKHOLDERS
Photo of
Wilbur H. Gantz WILBUR H. GANTZ Director since 1992
Mr. Gantz, 56 years of age, is President, Chief Executive Officer and a
director of PathoGenesis Corporation, a biopharmaceutical and
diagnostics company. He served as President of Baxter International,
Inc., a manufacturer and marketer of health care products, from 1987 to
1992. He joined Baxter International, Inc. in 1966 and held various
management positions prior to becoming its Chief Operating Officer in
1983. Mr. Gantz is a director of W.W. Grainger and Company; Bank of
Montreal; Harris Bankcorp; and Harris Trust and Savings Bank.
Photo of
Richard R. Pivirotto RICHARD R. PIVIROTTO Director since 1980
Mr. Pivirotto, 63 years of age, is President of Richard R. Pivirotto
Co., Inc., a management consulting firm. He served as President of
Associated Dry Goods Corporation, a retail department store chain, from
1972 to 1976 and as Chairman of its Board of Directors from 1976 to
February 1981. He is a director of General American Investors Company,
Inc.; Immunomedics, Inc.; New York Life Insurance Company; and
Westinghouse Electric Corporation.
Photo of Juan M. Steta JUAN M. STETA Director since 1987
Mr. Steta, 67 years of age, is of counsel to the law firm of
Santamarina y Steta, Mexico City, which is engaged in a general
business practice. He joined the firm in 1949, was elected a partner
in 1956 and served in that capacity until 1992. He is Chairman of the
Board of Quimicos y Derivados and T & N de Mexico and is a director of
several other Mexican corporations, including General Motors de Mexico,
B.I.P. Plastics and Grupo IDESA. He is also a director of Barnes
Group Inc. in Bristol, Connecticut.
Photo of
Alfred M. Zeien ALFRED M. ZEIEN Director since 1980
Mr. Zeien, 64 years of age, is Chairman of the Board and Chief
Executive Officer. He joined the Company in 1968 and served as
Chairman of the Board of Management of Braun AG, a Gillette subsidiary,
from 1976 to 1978 and as Senior Vice President, Technical Operations,
from 1978 to 1981. He was elected Vice Chairman of the Board in 1981.
In that capacity, he served as the Company's senior technical officer
and headed the new business development group until November 1987, when
he assumed responsibility for Gillette International and the
Diversified Companies. He was elected President and Chief Operating
Officer in January 1991 and Chairman and Chief Executive Officer in
February 1991. Mr. Zeien is a director of Bank of Boston Corporation;
The First National Bank of Boston; Massachusetts Mutual Life Insurance
Company; Polaroid Corporation; Raytheon Company; and Repligen
Corporation.
MEMBERS OF THE BOARD OF DIRECTORS CONTINUING IN OFFICE
TERMS EXPIRE AT THE 1996 ANNUAL MEETING OF THE STOCKHOLDERS
Photo of
Warren E. Buffett WARREN E. BUFFETT Director since 1989
Mr. Buffett, 63 years of age, is Chairman of the Board and Chief
Executive Officer of Berkshire Hathaway Inc., a company engaged in a
number of diverse business activities, the most important of which is
the property and casualty insurance business. Prior to assuming those
positions in 1970, he was a general partner of Buffett Partnership,
Ltd. He is a director of Capital Cities/ABC, Inc., The Coca-Cola
Company, Salomon Inc. and U.S. Air Group.
Photo of
Michael B. Gifford MICHAEL B. GIFFORD Director since 1993
Mr. Gifford, 58 years of age, is Managing Director and Chief Executive
of The Rank Organisation Plc, London, England, a leisure and
entertainment company. He has served in that capacity since 1983. He
was Finance Director of Cadbury Schweppes plc from 1978 to 1983 and
Chief Executive of Cadbury Schweppes Australia from 1975 to 1978. He
is also a director of English China Clays plc and Chairman of A.
Kershaw and Sons plc.
Photo of
Carol R. Goldberg CAROL R. GOLDBERG Director since 1990
Mrs. Goldberg, 62 years of age, is President of The Avcar Group, Ltd.,
a management consulting firm. She was President and Chief Operating
Officer of The Stop & Shop Companies, Inc., a retail store chain, from
1985 to 1989. She joined Stop & Shop in 1959 and served in various
management positions prior to her election as Executive Vice President
and Chief Operating Officer in 1982. She served as a director of that
Company from 1972 to 1989. She also serves as a director of America
Service Group, Inc., Boston Municipal Research Bureau and the Kennedy
Library Foundation.
Photo of
Joseph E. Mullaney JOSEPH E. MULLANEY Director since 1990
Mr. Mullaney, 60 years of age, is Vice Chairman of the Board. He
joined the Company in 1972 as Associate General Counsel and was elected
General Counsel in 1973, Vice President in 1975, Senior Vice President
with responsibilities for legal and governmental affairs in 1977 and
Vice Chairman in 1990. He serves as the Chairman of Boston Municipal
Research Bureau and as a director of the Greater Boston Legal Services
Corporation, the Greater Boston Chamber of Commerce, the New England
Legal Foundation and the World Affairs Council of Boston. He is also a
member of the Board of Trustees of the Massachusetts Taxpayers
Foundation, Inc.
BOARD MEETINGS
The Board of Directors held nine meetings in 1993.
COMMITTEES OF THE BOARD
The Board of Directors has the following standing committees, which are
composed entirely of directors who are not employees of the Company,
except that the Chief Executive Officer is an ex officio member of the
Executive Committee.
Audit Committee
The members are Mr. Steta (Chairman), Mr. Buffett, Mr. Gantz, Mr.
Gifford, Mrs. Goldberg and Mr. Turley.
The Audit Committee recommends the appointment of the Company's
independent auditors, meets with the auditors to review their report on
the financial operations of the business, and approves the audit
services and any other services to be provided. It reviews the
Company's internal audit function and the performance and adequacy of
the Company's benefit plan fund managers. It also reviews compliance
with the Company's statement of policy as to the conduct of its
business. Three meetings of the Committee were held in 1993.
Executive Committee
The members are Mr. Fouraker (Chairman), Mr. Buffett, Mrs. Goldberg,
Mr. Steta, Mr. Turley and Mr. Zeien (ex officio).
The Executive Committee, acting with the Finance Committee, reviews and
makes recommendations on significant capital investment proposals. It
is also available to review and make recommendations to the Board with
respect to the nature of the business, plans for future growth, senior
management succession and stockholder relations. The Committee has the
added functions of reviewing the composition and responsibilities of
the Board and its committees and recommending to the Board nominees for
election as directors. It will consider nominations by stockholders,
which should be submitted in writing to the Chairman of the Committee
in care of the Secretary of the Company. Eleven meetings of the
Committee were held in 1993.
Finance Committee
The members are Mr. Jacobi (Chairman), Mr. Gantz, Mr.Gifford, Mr.
Pivirotto and Mr. Trowbridge.
The Finance Committee reviews and makes recommendations with respect to
the Company's financial policies, including cash flow, borrowing and
dividend policy and the financial terms of acquisitions and
dispositions. Acting with the Executive Committee, it reviews and
makes recommendations on significant capital investment proposals. Ten
meetings of the Committee were held in 1993.
Personnel Committee
The members are Mr. Pivirotto (Chairman), Mr. Fouraker, Mr. Jacobi and
Mr. Trowbridge.
The Personnel Committee reviews and makes recommendations to the
management or Board on personnel policies and plans or practices
relating to compensation. It also administers the Company's executive
incentive compensation plans and approves the compensation of all
officers and certain other senior executives. Nine meetings of the
Committee were held in 1993.
OUTSTANDING VOTING SECURITIES
On March 1, 1994, the record date for the 1994 Annual Meeting of the
stockholders, there were outstanding and entitled to vote 220,979,835
shares of the $1 par value common stock of the Company, entitled to one
vote per share, and 164,216 shares of Series C ESOP Convertible
Preferred Stock, entitled to 20 votes per share. The holders of the
Company's common and preferred stock vote together as one class on all
matters being submitted to a vote of the stockholders at the 1994
Annual Meeting.
STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
As of March 1, 1994, Berkshire Hathaway Inc., located at 1440 Kiewit
Plaza, Omaha, Nebraska 68131, beneficially owned, through six insurance
subsidiaries, 24,000,000 shares, which constitute 10.9% of the
outstanding common stock of the Company and 10.7% of the votes entitled
to be cast by the holders of the outstanding voting securities of the
Company. One of the six Berkshire Hathaway Inc. subsidiaries,
National Indemnity Company, 3024 Harney Street, Omaha, Nebraska 68131,
owned directly 15,000,000 of the 24,000,000 shares, or 6.8% of the
outstanding common stock and 6.7% of the votes entitled to be cast by
the holders of the outstanding voting securities of the Company. The
capital stock of Berkshire Hathaway Inc. is beneficially owned
approximately 41.6% by Mr. Buffett and a trust of which he is trustee
but in which he has no economic interest and 3.2% by his wife, Susan T.
Buffett.
As of March 1, 1994, State Street Bank and Trust Company, P.O. Box
5259, Boston, Massachusetts 02101 ("State Street") held as Trustee of
The Gillette Company Employee Stock Ownership Plan on behalf of Plan
participants, 164,216 shares of Series C ESOP Convertible Preferred
Stock which represent 100% of that class and 1.5% of the votes entitled
to be cast by the holders of the Company's outstanding voting
securities. State Street exercises shared voting and dispositive power
over the shares.
The following table sets forth the number of Gillette shares
beneficially owned on March 1, 1994, by (i) each director, (ii) each of
the executive officers named in the Summary Compensation Table at page
13 and (iii) all directors and current executive officers as a group.
All individuals listed in the table have sole voting and investment
power over the shares reported as owned, except as otherwise stated.
Unrestricted
Stock Beneficially Option Shares
Title of Owned, Excluding Exercisable
Name Class(1) Options Within 60 days
---- -------- ---------------- ---------------
Warren E. Buffett Common 24,000,000(2) 2,000
Lawrence E. Fouraker Common 6,800(3) 1,000
Wilbur H. Gantz Common 1,300 2,000
Michael B. Gifford Common 300 1,000
Carol R. Goldberg Common 1,100(4) 2,000
Herbert H. Jacobi Common 2,320 2,000
Jacques Lagarde Common 5,836(5) 67,500
Series C Pfd. 9 --
Gaston R. Levy Common 30,158(5) 32,000
Series C Pfd. 9 --
Joseph E. Mullaney Common 47,735(5) 78,000
Series C Pfd. 9 --
Robert J. Murray Common 32,633(5) 104,800
Series C Pfd. 9 --
Richard R. Pivirotto Common 1,600 2,000
Thomas F. Skelly Common 48,702(5) 54,500
Series C Pfd. 9 --
Juan M. Steta Common 5,172(6) 2,000
Alexander B. Trowbridge Common 500 1,800
Joseph F. Turley Common 77,252 2,000
Lorne R. Waxlax Common 65,792(5) 32,000
Series C Pfd. 9 --
Alfred M. Zeien Common 305,110(5) 234,358
Series C Pfd. 9 --
All directors and Common 24,588,435(5) 648,558
current executive Series C Pfd. 80 --
officers as a group
(1) Except as indicated in note (2) below, the total number of
shares beneficially owned in each class constitutes less than
1% of the outstanding shares in that class.
(2) Owned by insurance subsidiaries of Berkshire Hathaway Inc., a
company which Mr. Buffett may be deemed to control. Mr.
Buffett shares voting and investment power over the shares,
which represent 10.9% of the outstanding common stock, as
described under this item at page 6.
(3) Mr. Fouraker has no voting and investment power over 3,000 of
the shares reported as owned and disclaims beneficial
ownership with respect to those shares.
(4) Mrs. Goldberg has no voting and investment power over 100 of
the shares reported as owned and disclaims beneficial
ownership with respect to those shares.
(5) Includes common shares held under the Company's Employees'
Savings Plan as follows: Mr. Lagarde 5,836 shares; Mr. Levy
744 shares; Mr. Mullaney 15,426 shares; Mr. Murray 14,982
shares; Mr. Skelly 9,917 shares; Mr. Waxlax 826 shares; Mr.
Zeien 85,776 shares; and the total of all employee directors
and all current executive officers, including the named
current executive officers, as a group 162,150 shares. Under
the Employees' Savings Plan and ESOP, participants may direct
the voting of shares held in their accounts in accordance with
the shared voting procedure described at page 1 and share
investment power with the plans' trustees in accordance with
the terms of the plans. In addition, Mr. Levy has no voting
and investment power over 7,362 of the common shares reported
as owned by him and disclaims beneficial ownership with regard
to those shares; Mr. Mullaney shares voting and investment
power over 10,476 of the common shares reported as owned by
him; Mr. Murray has no voting and investment power over 300 of
the shares reported as owned by him and disclaims beneficial
ownership with regard to those shares; Mr. Skelly shares
voting and investment power over 20,883 of the common shares
reported as owned by him, has no voting and investment power
over 15,332 of the common shares reported as owned by him and
disclaims beneficial ownership with regard to those 15,332
shares; and one executive officer shares voting and investment
power over 104 of the total number of common shares reported
as owned by the group and disclaims beneficial ownership with
regard to 600 of the total number of common shares reported as
owned by the group.
(6) Mr. Steta has no voting and investment power over 900 of the
shares reported as owned by him and disclaims beneficial
ownership with regard to those shares.
CERTAIN TRANSACTIONS WITH DIRECTORS AND OFFICERS
Berkshire Hathaway Inc. and the Company continue to be subject to
their agreement of July 20, 1989. Management, after consultation with
legal and financial advisors, determined that the terms of the
agreement, as described below, were fair to the Company.
The agreement provides that, without the approval of the Company's
Board of Directors, until July 20, 1999, Berkshire Hathaway Inc. will
not acquire shares giving it a total of more than 14.1% of the voting
power of the Company's outstanding voting securities (other than
through the exercise of rights, warrants or convertible securities
received by Berkshire Hathaway Inc. with respect to its common stock)
or become a participant in a proxy solicitation or a member of another
group within the meaning of Section 13(d) of the Securities Exchange
Act of 1934 with respect to the Company. Berkshire Hathaway Inc. also
remains subject to its agreement to use its best efforts not to
knowingly sell securities representing more than 3% of the voting power
of the Company's outstanding voting securities to any one entity or
group except in certain specified circumstances related to a change in
control of the Company, and to give the Company certain rights of first
refusal in the event of sales of the Company's voting securities by
Berkshire Hathaway Inc. If the Company does not exercise its right of
first refusal, Berkshire Hathaway Inc. has the right to have the
Company register, either in its entirety or in increments of
$100,000,000 or more from time to time, one or more public offerings of
the Gillette common stock held by Berkshire Hathaway Inc.
While Berkshire Hathaway Inc. owns at least 5% of the voting power of
the Company's securities, the Company's directors will also continue to
be subject to their agreement to use their best efforts to secure the
election to the Board by the shareholders of Mr. Buffett or such other
individual reasonably acceptable to the Company as Berkshire Hathaway
Inc. might nominate. Fees paid during 1993 to the law firm of
Santamarina y Steta, of which Mr. Steta is of counsel, are reported
under Compensation of Directors below.
COMPENSATION OF DIRECTORS
Directors who are not employees of the Company or its subsidiaries are
paid an annual Board retainer fee of $25,000 ($22,500 prior to October
1, 1993) plus a fee of $1,000 ($900 prior to October 1, 1993) for
attendance at each meeting of the Board of Directors or of its
committees. If the Outside Directors' Stock Ownership Plan is approved
by the stockholders at the 1994 Annual Meeting, one half of all annual
Board retainer fees earned beginning January 1, 1994, will be paid in
common stock of the Company. Committee Chairmen receive an additional
retainer of $3,000 a year. The directors may defer payment of all or
any portion of cash retainers or fees until after retirement or
resignation from the Board or until an earlier change in control.
Deferred amounts accrue interest equivalents. Upon the death of a
director, any unpaid amounts become payable in a lump sum.
Directors who are not employees of the Company or its subsidiaries also
may be paid for service as directors of Company subsidiaries. During
1993 Mr. Jacobi received standard outside director fees totalling
$9,196 for his services as a director of Braun AG.
In 1993 each non-employee director received an automatic stock option
grant, effective two business days following the date of the annual
meeting of the stockholders, to purchase 1,000 shares of the common
stock of the Company at a price equal to the fair market value on the
date of grant. The grants were made on
April 19, 1993 at a price of $49.25 per share. The terms of the
options granted to the directors are generally similar to those granted
to employees, which are described at page 15 and in proposal number 3
at page 18. A director who has attained age 70 cannot stand for
reelection to the Board. Directors who have served as Board members
for five or more years receive an annual retirement benefit, which is
equal to the annual retainer in effect when they leave the Board and is
payable for a period equal to their years of service. No credit is
given for service as a director while an employee of the Company.
Payment of the benefit commences when service ends, or at age 65 if a
director leaves the Board at an earlier age. Upon the death of a
director, the present value of any unpaid amount becomes payable in a
lump sum. In the event of a change in control, a director leaving the
Board would be entitled to receive immediate payment of the present
value of the full retirement benefit. A director who at any time acts
in a manner contrary to the best interests of the Company risks
forfeiture of the future retirement benefit.
During 1993 the Company and its Mexican subsidiaries received legal
advice from the law firm of Santamarina y Steta, of which Mr. Steta is
of counsel, and paid the firm a total of $496,231 for its services.
The Company believes that all such services were provided on terms at
least as favorable to the Company as those of comparable firms retained
to provide similar legal services to the Company. It is expected that
Santamarina y Steta will continue to provide legal services to the
Company and its subsidiaries during 1994.
GILLETTE COMPARATIVE FIVE-YEAR INVESTMENT PERFORMANCE
The following chart compares the value of $100 invested in Gillette
common stock from December 31, 1988 through December 31, 1993 with a
similar investment in the Standard & Poor's 500 Stock Index and with a
peer group consisting of ten consumer products companies of generally
similar size.
1988 1989 1990 1991 1992 1993
GILLETTE $100 $151 $196 $354 $363 $385
PEER GRP $100 $140 $166 $242 $223 $220
S&P 500 $100 $132 $128 $166 $179 $197
Peer Group Companies: Bristol-Myers Squibb Company
American Home Products Corporation Colgate-Palmolive Company
Avon Products, Inc. Johnson & Johnson
The Black & Decker Corporation Pfizer Inc.
Procter & Gamble Company
Rubbermaid Incorporated
Warner-Lambert Company
PERSONNEL COMMITTEE REPORT ON EXECUTIVE COMPENSATION
Overall Objectives and Programs
The objective of the Company's executive compensation program is to
provide compensation that will attract and retain executives, motivate
each executive toward the achievement of the Company's short and
long-term financial and other goals as reflected in its statement of
mission and values and strategic business plan, and recognize
individual contributions as well as overall business results. In order
to achieve this objective, the primary focus of the Personnel Committee
has been on the competitiveness as to each of the key elements of
executive compensation --base salary, bonus and stock option grants --
and the compensation package as a whole.
Overall executive compensation is dependent upon performance against
goals assigned to each executive under the Company's management by
objectives program. These objectives are designed to further the
Company's strategic business plan and mission and values. Objectives
include quantitative factors that directly improve the Company's
short-term financial performance, as well as qualitative factors that
strengthen the Company's ability to enhance profitable growth over the
long term, such as demonstrated leadership ability, management
development, insuring compliance with law and Company policies, and the
furtherance of the Company's mission and values.
Each year the Committee reviews a report prepared by independent
compensation consultants assessing the competitiveness of the Company's
program for the past year with the peer group used for compensation
comparisons ("the Compensation Peer Group") to determine whether the
Company has achieved its executive compensation program objective and
to help the Committee determine whether there is a need to make
prospective adjustments in the compensation of executive officers. The
Compensation Peer Group includes most of the companies listed on page 9
as well as a number of other companies with which the Company competes
for executive talent. The companies included in this group are not
identical to those included in the peer group index in the Performance
Graph included in this proxy statement because the Committee believes
that the companies with which the Company competes for executive talent
are not necessarily the same as those appropriate for comparing
shareholder returns. Over the last several years the Personnel
Committee has sought to relate an increasingly greater percentage of
executive compensation directly to the financial performance of the
Company and to the part each executive played in achieving that
performance. This has resulted in a compensation package in which a
greater portion of each executive officer's compensation is contingent
upon the achievement of specific financial targets for the year. In
1993 the bonus represented approximately one third of total direct
compensation (base salary plus bonus), a proportion generally in line
with that of the
Compensation Peer Group.
It has also been the Committee's objective that, in any year in which a
budgeted bonus pool is earned under the Incentive Bonus Plan, the total
direct compensation of its executive officers be well above the median
of direct compensation paid by the Compensation Peer Group.
The Personnel Committee approves the base salary of the executive
officers and, at its discretion, awards bonuses under the Incentive
Bonus Plan and grants stock options under the Stock Option Plan.
Base Salary
In determining the salary of an executive officer, a salary range is
assigned under a worldwide system of job evaluation based upon the
level of responsibility, the qualifications and experience required and
the need to provide, together with the Incentive Bonus Plan,
competitive compensation. Salary increases are based upon periodic
reevaluations of these factors and the performance of the executive in
meeting individually assigned objectives.
Incentive Bonus Plan
Under the Incentive Bonus Plan, the Personnel Committee establishes
bonus pools based on budgeted goals set before the year begins relating
to profit from operations, return on assets, and sales (weighted 75%,
15% and 10%, respectively for 1993) and establishes the minimum,
budgeted, and maximum Company wide aggregate bonus pools that may be
earned based upon the achievement of those Company goals. For 1994 the
Committee has altered the weighting of the factors so that it will be
70% for profit from operations, 15% for return on assets and 15% for
sales. The greater emphasis on sales is in keeping with the Company's
recently announced Realignment Plan under which accelerated sales
growth is a key objective.
In order for a bonus pool to be earned, a minimum profit from
operations goal for the Company must be met. The actual amount of any
pool is determined based upon the level of achievement of Company goals
for the year. Company goals are translated to operating unit and
individual objectives and assigned to executives under the Company's
management by objectives program. For the year 1993, the Plan provided
for awards ranging from 5% to 70% of year-end salary based upon the
performance of each executive officer against individually assigned
objectives for the year.
At the time goals are set, a reserve equivalent to no more than 35% of
the amount of the budgeted bonus pool may be established by the
Committee from which bonuses may be awarded, if the overall minimum
profit from operations goal for the Company is not met, to executives
in operating units that have achieved assigned objectives. In
addition, the Committee may, within certain limits, carry forward a
portion of the bonus pool earned in any year for its discretionary use
in the future.
Stock Option Plan
Stock option grants are intended to provide long-term incentives for
the achievement of the Company's strategic business plan and mission
and values and to align the executive officers' interests with those of
the shareholders. Under the Stock Option Plan, the Company's sole
long-term incentive plan for executive officers, the Personnel
Committee has awarded stock options for terms not to exceed ten years
at no less than the fair market value of Gillette common stock on the
date of grant. The size of any stock option grant is related to the
individual's level of responsibility within the organization, and
awards are made on a basis designed to be competitive in value with the
median grant size of similar programs of companies in the Compensation
Peer Group.
Other Benefits
In order to attract, motivate and retain employees, the Company also
maintains a competitive benefits package, participation in which is not
dependent upon performance. In general executive officers participate
on the same basis as other employees in the Company's broad-based
employee benefit plans: the Employees' Savings Plans, the Employee
Stock Ownership Plan, and the Retirement Plans. Information on these
plans is provided on pages 14 through 17.
The executive officers, along with certain other executives,
participate in an Executive Life Insurance Program and Estate
Preservation Plan. Information on these programs is included in the
footnotes to the Summary Compensation Table at page 14.
The Personnel Committee has reviewed the impact of recently enacted
Section 162(m) of the Internal Revenue Code which, beginning in 1994,
limits the deductibility of certain otherwise deductible compensation
in excess of $1 million paid to the CEO and the next four most highly
compensated executive officers. It is the policy of the Company to
attempt to have its executive compensation plans treated as tax
deductible compensation wherever, in the judgement of the Personnel
Committee, to do so would be consistent with the objectives of that
compensation plan. Accordingly, the Personnel Committee has
recommended that the Stock Option Plan and Stock Equivalent Unit Plan,
which are being submitted for approval at the 1994 Annual Meeting of
stockholders, be amended to fulfill the requirements for treatment as
tax deductible compensation.
The Committee has determined that to attempt to amend the Incentive
Bonus Plan to comply with the definition of tax deductible compensation
would require changes which would be contrary to the compensation
philosophy underlying that plan and which would seriously impede the
Committee's ability to administer the plan as designed in accordance
with the business judgement of the Committee. The Incentive Bonus Plan
was deliberately designed so that individual awards were not to be
dependent solely on objective or numerical criteria but also to allow
the Committee the flexibility to apply its independent business
judgement as to broader factors.
Compensation of Chief Executive Officer
As Chairman and Chief Executive Officer, Mr. Zeien's compensation, like
that of the other executive officers of the Company, is set in
accordance with the foregoing policies.
Base Salary
Mr. Zeien's base salary represents an effort by the Personnel
Committee, in response to data contained in a report from the
independent compensation consultants, to place his base salary at or
above the median of salaries of chief executive officers in the
Compensation Peer Group.
Incentive Bonus Plan
In 1993 the Company met the criteria necessary for a bonus pool to be
earned. Mr. Zeien is responsible for the entire scope of the Company's
worldwide business.
The Company's sales grew by 5%, to $5.41 billion, a record level.
Before realignment charges and the effect of mandated accounting
changes, profit from operations was $1,087 million, a 12% increase from
the $967 million reported a year earlier; net income of $591 million
was 15% higher than the $513 million of the same period in 1992; and
earnings per common share rose at a rate of 15% over those of 1992.
Return on average assets for 1993 was 13%, matching the 1992 level.
Significant progress was made during 1993 toward achievement of the
Company's long-term growth goals --clear worldwide leadership in core
business categories and geographic expansion. During the year, the
Company expanded its operations by the acquisition of the worldwide
business of Parker Pen Holdings Limited, and the Company's recent
ventures in China, Poland and Russia exceeded their start-up period
targets. The Company's continuing emphasis on geographic expansion and
technology-driven new products was never more apparent than in 1993.
In addition to starting up three facilities in new geographic areas, a
steady stream of new products was launched during the year, from the
successful introduction of the Gillette Series line of male toiletries
earlier in the year, to an array of new Braun and oral care products,
and to the launch of the new SensorExcel shaving system. Investment in
the three principal "growth drivers" --research and development,
capital spending and advertising --in combination rose 5% over 1992
levels, matching the Company's sales growth rate. As an indicator of
the effectiveness of this investment, 37% of the Company's 1993 sales
came from products introduced in the last five years. Mr. Zeien is
also responsible for insuring the Company's compliance with applicable
laws and Company policies.
Mr. Zeien's 1993 bonus was based upon his successful leadership in
managing the business and balancing the Company's long and short-term
objectives as described above.
Stock Option Plan
The 1993 option grant to Mr. Zeien was based upon the Committee's
judgement that the grant of options is designed as the Company's sole
long-term incentive and that the number of options granted, which was
the same in 1992, represents an amount competitive in value with
long-term incentives granted other chief executive officers of the
companies in the Compensation Peer Group.
Richard R. Pivirotto
(Chairman)
Lawrence E. Fouraker
Herbert H. Jacobi
Alexander B. Trowbridge
PERSONNEL COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Mr. Turley, a member of the Personnel Committee until April 15, 1993,
served as President and Chief Operating Officer of the Company from
February 1981 until his retirement in 1988.
EXECUTIVE COMPENSATION
The following table sets forth all compensation earned by or paid or
awarded to the Chief Executive Officer, the next four most highly
compensated executive officers of the Company and Mr. Levy and Mr.
Waxlax, who ceased to be executive officers on November 30, 1993 and
September 30, 1993, respectively, for all services rendered in all
capacities for the periods shown, with the exception, as permitted by
the transitional provisions of the Securities and Exchange Commission's
amended proxy rules, that Other Annual Compensation and All Other
Compensation are reported only for 1992 and 1993.
Summary Compensation Table
Annual Compensation
--------------------------------------------------
Name and Principal Other
------------------ Annual
Position Year Salary Bonus Compensation
-------- ---- ------ ----- ------------
Alfred M. Zeien 1993 $908,333 $675,000 --
Chairman and Chief 1992 780,000 600,000 --
Executive Officer 1991 691,667 420,000
Joseph E. Mullaney 1993 415,000 180,000 --
Vice Chairman of the 1992 390,500 170,000 --
Board 1991 363,375 160,000
Jacques Lagarde 1993 417,250 170,000 $ 772
Executive Vice
President
Gaston R. Levy(3) 1993 460,000 275,000 --
Executive Vice 1992 420,000 235,000 --
President 1991 390,000 195,000
Robert J. Murray 1993 470,000 265,000 14,135
Executive Vice 1992 435,000 230,000 3,654
President 1991 400,000 210,000
Thomas F. Skelly 1993 375,000 165,000 --
Sr. Vice President 1992 353,750 145,000 --
1991 333,250 130,000
Lorne R. Waxlax(4) 1993 485,000 200,000 --
Executive Vice 1992 455,833 240,000 --
President 1991 420,833 240,000
(TABLE CONTINUED)
Long-Term All Other
Compensation Compensation(2)
---------------------------- ---------------
Name and Principal # of Stock Long-Term
------------------ Options Incentive
Position Granted Payouts(1)
-------- ------- ----------
Alfred M. Zeien 75,000 -- $157,273
Chairman and Chief 75,000 -- 95,961
Executive Officer 65,000 --
Joseph E. Mullaney 25,000 -- 55,238
Vice Chairman of the 25,000 -- 32,101
Board 17,000 --
Jacques Lagarde 30,000 $ 74,053 46,049
Executive Vice
President
Gaston R. Levy(3) 0 284,036 129,803
Executive Vice 32,000 355,984 68,932
President 20,000 230,218
Robert J. Murray 32,000 385,267 52,824
Executive Vice 32,000 436,517 41,451
President 20,000 269,188
Thomas F. Skelly 22,500 -- 53,638
Sr. Vice President 22,500 -- 39,825
15,000 --
Lorne R. Waxlax(4) 32,000 320,087 70,824
Executive Vice 32,000 352,605 40,433
President 20,000 222,518
(1) Long-Term Incentive Payouts represent Stock Equivalent Unit
Plan amounts paid or payable but deferred with respect to
segments of awards vesting in 1993, plus amounts representing
the growth in 1993 on prior years' deferrals. Awards granted
to executive officers after 1984 were contingent upon the
achievement of future performance goals. In 1990, it was
decided to utilize larger grants of stock options as long-term
incentives for executive officers and to discontinue granting
Stock Equivalent Unit Plan awards to this group of officers.
The terms of the Stock Equivalent Unit Plan are described in
proposal number 4 on page 21.
(2) The amounts reported as All Other Compensation include the
following payments or accruals under the Company's benefit and
incentive plans:
(i) Company contributions during 1993 under the Employees'
Savings Plan and Supplemental Savings Plan as follows: Mr.
Zeien $75,417, Mr. Mullaney $29,250, Mr. Lagarde $30,050,
Mr. Levy $25,654, Mr. Murray $23,500, Mr. Skelly $26,000
and Mr. Waxlax $36,250. Under the plans, the Company
contributes 50 cents for each dollar up to a maximum of
10% of compensation saved by participants. In general,
regular U.S. employees are eligible to participate.
During 1993, the Company contributed at the maximum rate
of 5% for each of the named individuals. Certain
limitations on the amount of benefits under tax-qualified
plans such as the Employees' Savings Plan were imposed by
the Employee Retirement Income Security Act of 1974, the
Tax Equity and Fiscal Responsibility Act of 1982, the Tax
Reform Act of 1986 and the Revenue Reconciliation Act of
1993. The Company adopted the Supplemental Savings Plan,
as permitted by law, for the payment of amounts to
employees who may be affected by those limitations, so
that, in general, total benefits will continue to be
calculated as before on the basis approved by the
stockholders.
(ii) Savings plan equivalents credited on 1993 Incentive Bonus
Plan deferrals as follows:
Mr. Murray $13,250, Mr. Waxlax $10,000 and Mr. Zeien
$33,750. Before being selected to receive a bonus,
participants have the option to defer until a future year
or retirement, or until an earlier change in control,
payment of all or a portion of any bonus that may be
awarded. Savings plan equivalents represent amounts
which would have been credited as Company contributions
under the Employees' Savings Plan or Supplemental Savings
Plan had payment of the bonuses not been deferred.
(iii) For each of the named executive officers $2,505 which
represents the value of Series C ESOP preferred shares
allocated under the Employee Stock Ownership Plan
("ESOP") to each of their accounts. The ESOP was adopted
in January 1990 as part of the Company's modified U.S.
retiree medical benefit program. Since September 30,
1990, Series C ESOP preferred shares have been allocated
quarterly to the accounts of eligible employees,
generally on the basis of an equal amount per
participant. In general, regular U.S. employees
participate in the ESOP after completing one year of
service with the Company.
(iv) Company cost for the Executive Life Insurance Program as
follows: Mr.Zeien $28,271, Mr. Mullaney $6,563, Mr.
Lagarde $3,105, Mr. Levy $27,982, Mr. Murray $5,641, Mr.
Skelly $12,203 and Mr. Waxlax $7,900. The program
provides coverage during employment equal to four times
annual salary, subject to a $600,000 minimum and a
$2,000,000 maximum, with the participant paying the
premium for coverage equal to two times salary or
$200,000, whichever is less. During retirement, a
Company-paid death benefit equal to annual salary, subject
to a $150,000 minimum and a $500,000 maximum, continues in
effect for the life of the participant.
(v) Company cost for the Estate Preservation Program as
follows: Mr. Zeien $17,330, Mr. Mullaney $13,920, Mr.
Lagarde $7,389, Mr. Levy $17,585, Mr. Murray $7,928, Mr.
Skelly $12,930 and Mr. Waxlax $11,169. The executive
officers, as well as certain other officers, may
participate in the Estate Preservation Program, under which
the Company and the executive officer will share equally
the cost of life insurance in the amount of $1,000,000
payable on the death of the survivor of each executive and
his or her spouse, with the Company recovering its
contribution at the end of a 15-year period, or if earlier,
when the survivor of the executive and the executive's
spouse dies. In addition, certain key employees, including
the executive officers, are eligible to receive a one-time
reimbursement for estate tax planning services not to
exceed $3,000. During 1993 Mr. Mullaney, Mr. Lagarde, Mr.
Levy and Mr. Waxlax each received a $3,000 reimbursement
for estate tax planning services.
(vi) Accrued vacation pay of $53,077 was received by Mr. Levy
upon his termination of employment as described in
footnote 3 below.
(3) Mr. Levy ceased to be an executive officer of the Company on
November 30, 1993 and retired from the Company on January 1,
1994. Pursuant to a consulting and noncompetition agreement
he will receive consulting fees of $125,000 per year for the
years 1994 and 1995.
(4) Mr. Waxlax served as Executive Vice President through
September 30, 1993. Pursuant to a three-year noncompetition
agreement ending December 31, 1996, he will continue to be
employed by the Company for the two years ended December 31,
1995, during which period he will receive annual compensation
of $725,000 per year and participate in certain Company
benefits. In the event of a change in control of the Company,
the compensation payable under the agreement would become
immediately payable in a lump sum.
Stock Options Granted in 1993
Individual Grants
% Of Total
Options Granted Per Share
Number of To Employees Exercise
Name Options Granted In 1993 Price(1)
---- --------------- ------------ -------------
Alfred M. Zeien 75,000 7.71% $48.25
Joseph E. Mullaney 25,000 2.57% 48.25
Jacques Lagarde 22,500 2.31% 48.25
7,500 .77% 54.75
Gaston R. Levy -- -- --
Robert J. Murray 32,000 3.29% 48.25
Thomas F. Skelly 22,500 2.31% 48.25
Lorne R. Waxlax 29,928 3.08% 48.25
2,072 .21% 48.25
(TABLE CONTINUED)
Potential Realizable
Value At Assumed
Annual Rates of
Stock Price
Appreciation For
Option Term(2)
----------------------
Name Expiration Date 5% 10%
---- ---------------- ---------- ----------
Alfred M. Zeien 02/28/97 $715,608 $1,531,672
Joseph E. Mullaney 03/31/00 471,801 1,093,454
Jacques Lagarde 06/16/03 682,739 1,730,204
09/15/03 258,238 654,429
Gaston R. Levy -- -- --
Robert J. Murray 06/16/03 971,006 2,460,735
Thomas F. Skelly 01/31/01 487,163 1,155,148
Lorne R. Waxlax 12/31/97 358,566 784,279
03/31/96 14,580 30,506
(1) The exercise price of a stock option is equal to the average
of the high and the low prices of Gillette shares traded on
the date the option is granted. Payment upon exercise is made
in cash or in shares of the Company's common stock or
partially in cash and partially in shares.
(2) The assumed rates of annual appreciation are calculated from
the date of grant through the last date the option may be
exercised assuming retirement at age 65. These amounts
represent certain assumed rates of annual appreciation.
Actual gains, if any, on stock option exercises and common
stock holdings are dependent on the future performance of the
common stock and overall stock market conditions. There can
be no assurance that the values reflected in this table or any
other value will be achieved.
Options become exercisable one year from the date of grant. The
options granted on June 17, 1993, at a price of $48.25 become
exercisable on June 17, 1994. The options granted on September 16,
1993, at a price of $54.75 become exercisable on September 16, 1994.
At the time of grant, options may be designated as incentive stock
options ("ISOs"), a type of option authorized under the 1981 amendments
to the Internal Revenue Code. Options not so designated are granted as
"non-ISOs". Options generally remain exercisable for ten years from
the date of grant provided the recipient remains employed throughout
that period. The post-retirement exercise period is generally three
months for an ISO and two years for a non-ISO granted before 1994. If
termination of employment occurs within one year after a change in
control, as that term is described at page 17, any options held by the
employee optionee that were not otherwise exercisable when employment
ceased would become immediately exercisable.
Aggregated Stock Option Exercises During 1993 And 1993 Year-End Stock
Option Values
Number Of Number Of Unexercised
Shares Underlying Value Stock Options Held
Name Options Exercised Realized(1) At Fiscal Year-End
---- ----------------- ----------- -------------------------
Alfred M. Zeien 40,992 $1,673,616 Exercisable 234,358
Unexercisable 75,000
Joseph E.
Mullaney 15,700 602,294 Exercisable 78,000
Unexercisable 25,000
Jacques Lagarde 0 0 Exercisable 67,500
Unexercisable 30,000
Gaston R. Levy 20,000 499,960 Exercisable 32,000
Unexercisable 0
Robert J. Murray 30,200 1,257,409 Exercisable 105,800
Unexercisable 32,000
Thomas F. Skelly 25,000 1,090,614 Exercisable 54,500
Unexercisable 22,500
Lorne R. Waxlax 0 0 Exercisable 32,000
Unexercisable 32,000
(TABLE CONTINUED)
Total Value
Of Unexercised
In-The-Money Stock
Options Held At
Name Fiscal Year-End
---- ---------------
Alfred M. Zeien $5,538,272
857,813
Joseph E.
Mullaney 1,995,422
285,938
Jacques Lagarde 717,404
294,375
Gaston R. Levy 479,920
0
Robert J. Murray 2,636,544
366,000
Thomas F. Skelly 1,203,615
257,344
Lorne R. Waxlax 479,920
366,000
(1) The amounts shown are the total values realized by the named
persons on exercises of options held for periods ranging from
3 to 8 years. The annualized values for the options
exercised, calculated by dividing the total value realized by
the number of years from the date of grant to the date of
exercise, are as follows: Mr. Zeien $326,793, Mr. Mullaney
$126,617, Mr. Levy $166,653, Mr. Murray $227,289 and Mr.
Skelly $202,948.
RETIREMENT PLAN
The following table sets forth the total annual pension benefits
payable in the form of a straight-life annuity before reduction for
social security benefits for employees who retire at age 65 under the
Company's Retirement Plan and Supplemental Retirement Plan.
Annual Pension
Average Annual Compensation-----------------------------------------
Used as Basis for 15 Years of 20 Years of 25 Years or More
Computing Pension Service Service of Service
------------------------ ------- -------- ---------------
$ 400,000 $120,000 $160,000 $200,000
500,000 150,000 200,000 250,000
600,000 180,000 240,000 300,000
700,000 210,000 280,000 350,000
800,000 240,000 320,000 400,000
900,000 270,000 360,000 450,000
1,000,000 300,000 400,000 500,000
1,100,000 330,000 440,000 550,000
1,200,000 360,000 480,000 600,000
In general, the benefit upon retirement at age 65 with 25 years or more
of service is equal to 50% of the employee's average annual
compensation (salary plus bonus, if any, as reported in the Summary
Compensation Table at page 13) during the five calendar years of
highest compensation included in the last ten calendar years of
employment, minus 75% of primary social security benefits.
Certain limitations on the amount of benefits under tax-qualified
plans, such as the Retirement Plan, were imposed by the Employee
Retirement Income Security Act of 1974, the Tax Equity and Fiscal
Responsibility Act of 1982, the Tax Reform Act of 1986 and the Revenue
Reconciliation Act of 1993. The Company adopted the Supplemental
Retirement Plan, as permitted by law, for the payment of amounts to
employees who may be affected by those limitations, so that, in
general, total benefits will continue to be calculated on the basis
approved by the stockholders, as described above.
As of December 31, 1993, the persons named in the Summary Compensation
Table at page 13 had the following years of service under the
Retirement Plan: Mr. Zeien 26 years; Mr. Mullaney 22 years;
Mr. Lagarde 23 years; Mr. Levy 35 years; Mr. Murray 33 years; Mr.
Skelly 27 years and Mr. Waxlax 36 years.
Change in Control and Severance Arrangements
The Board of Directors has adopted a severance pay and benefit
arrangement to become effective in the event of a change in control.
In general, the arrangement would obligate any acquirer to continue
long-standing Gillette practice regarding severance payments to
terminated employees. Severance payments to U.S. employees whose
employment is terminated under certain circumstances after a change in
control would be based on seniority and position level, subject to a
minimum for certain key employees, including certain executive
officers. Severance payments to employees in foreign countries would
comply with local law and follow past Gillette practice. The maximum
amount payable under the severance pay arrangement, including any
benefit plan payments resulting from a change in control, is 2.99 times
average annual compensation for the five-year period preceding
termination of employment. For most employees, including the named
persons, it is unlikely that payments would reach the maximum. The
aggregate of severance pay excluding benefit plan payments to the
persons named in the Summary Compensation Table at page 13 on December
31, 1993, in the event of a change in control on that date, would have
been $7,385,000, or 2 times the amount of their base salary on that
date. In general, benefit plan payments resulting from a change in
control are dependent upon salary, but vary with seniority and position
level.
A change in control is defined in certain of the Company's benefit
plans and, in general, means those events by which control of the
Company passes to another person or corporation. Those events include
a purchase of the Company's stock pursuant to a tender offer, the
acquisition of 20% or more of the Company's stock by a person or group,
a merger, or a sale of substantially all of the assets of the Company.
In addition, a change in control would occur if, during any two-year
period, the individuals who were serving on the Board of Directors of
the Company at the beginning of the period or who were nominated for
election or elected to the Board during the period with the affirmative
vote of at least two-thirds of such individuals still in office, ceased
to constitute a majority of the Board.
Benefits generally comparable to those applicable in the event of a
change in control of the Company have been extended to employees,
including officers, whose employment terminates pursuant to the
Company's Realignment Plan announced in January 1994.
2. PROPOSED APPROVAL OF THE OUTSIDE DIRECTORS' STOCK OWNERSHIP PLAN
Subject to the approval of the stockholders, the Board of Directors has
adopted the Outside Directors' Stock Ownership Plan. Under this plan,
non-employee directors of the Company will receive 50% of their annual
Board retainer fee in common stock of the Company instead of 100% in
cash. Currently the annual Board retainer fee is $25,000, paid
quarterly in advance. After the 1994 Annual Meeting, if the nominees
for director are reelected, nine members of the Board of Directors will
participate in the plan. The adoption of this plan will not result in
any additional cost to the Company or represent additional compensation
for the directors.
The Board of Directors is of the opinion that the plan will help to
advance the interests of the Company by helping to attract, motivate
and retain highly qualified outside directors and by providing
compensation which will even more closely align the interests of the
directors with those of the shareholders. This plan is consistent with
the Company's compensation objectives for its executive officers and
other key employees in that rewards under the plan are dependent on
those factors which directly benefit the Company's stockholders,
dividends paid and appreciation in the market value of Company stock.
The adoption of this plan will give greater relative weight to the
long-term incentive component of the compensation program for outside
directors of the Company.
The material features of the proposed plan and other information about
the plan are described below and in the New Plan Benefits table on page
22. Under the proposed plan, 50% of the directors' annual Board
retainer fee earned on and after January 1, 1994 will be paid in common
stock of the Company. The plan will be administered by the Personnel
Committee of the Board of Directors.
While the plan permits stock to be issued by the Company, either from
authorized but unissued shares or from the treasury, the plan also
permits and it is contemplated that shares will be acquired on an
ongoing basis through quarterly cash deposits by the Company to
accounts established for each outside director for this purpose under
the Dividend Reinvestment and Stock Purchase Plan (the "DRP") for the
Company's common stock maintained by the Company's transfer agent. The
transfer agent will purchase common stock for the accounts of the
directors on the fixed date established under the DRP for all
purchases. Dividends earned on the common stock will similarly be
reinvested.
Fifty percent of the directors' Board retainer fees payable on January
1 and April 1, 1994 will be retained by the Company and, if the
proposed plan is approved by the Company's stockholders, will be used
to purchase common stock on the open market for the directors on April
25, 1994. These shares will thereafter be deposited in the DRP
accounts described above.
The proposed plan provides that in the event the Company were to elect
to issue common stock from its authorized but unissued shares or from
its treasury, the value of the shares will be based upon the average of
the high and the low prices for the common stock as reported on the New
York Stock Exchange composite index on the date the shares would
otherwise have been purchased under the DRP.
The term of the plan is indefinite. The Board of Directors may
terminate the plan or amend the plan at any time but not more often
than once every six months other than to comply with tax and other
applicable laws. In addition, approval by the stockholders of the
Company will be required for any amendment which requires stockholder
approval to maintain the plan's status under Section 16 of the
Securities Exchange Act or other applicable law. Approval of the
proposed plan by the stockholders will exempt the acquisition of the
shares of common stock for the accounts of the directors from being
treated as purchases for purposes of Section 16 of the Securities
Exchange Act. In addition, if the plan is approved, the Company
intends to register the shares to be purchased under the plan with the
Securities and Exchange Commission.
The portion of the directors' annual Board retainer fee used to
purchase stock under the proposed plan will be taxable for U.S. tax
purposes in the year earned.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE OUTSIDE DIRECTORS'
STOCK OWNERSHIP PLAN, WHICH IS DESIGNATED AS PROPOSAL NO. 2 ON THE
ENCLOSED PROXY.
3. PROPOSED AMENDMENT OF THE 1971 STOCK OPTION PLAN
Subject to the approval of the stockholders, the Board of Directors, on
the recommendation of its Personnel Committee, has amended the 1971
Stock Option Plan. The proposed amendment extends the period for
grants to employees and non-employee directors under the plan to April
15, 1999, increases by 8,000,000 the number of shares upon which stock
options may be granted under the plan, clarifies the definition of
eligible employee, and limits to 100,000 the number of shares upon
which options can be granted to any participant in any calendar year.
Since 1990 the Company has utilized larger grants of stock options as
long-term incentives for executive officers and certain other
high-level employees of the Company in lieu of Stock Equivalent Unit
Plan awards previously made to these groups. As of March 1, 1994,
61,950 of the 5,800,000 additional shares authorized for grant in 1989
(adjusted to reflect splits) remain available for grant. If approved,
the amendment will make available for grant over the next five years a
number of options (adjusted to reflect stock splits) generally
comparable to the number available for prior comparable periods over
the 23-year history of the plan. The number of newly authorized shares
on which options could be granted under the 1971 Stock Option Plan
during the proposed additional five-year period will represent
approximately 3.6% of the currently outstanding shares of the Company's
stock.
The stockholders adopted the plan in 1971 and amended it in 1977, 1979,
1984 and 1989 to extend the period for grants and, except in 1977, to
increase the number of options which could be granted under the plan.
In 1992 the plan was amended by the stockholders to provide for an
automatic annual grant of options on 1,000 shares to each of the
Company's non-employee directors. The Board of Directors is of the
opinion that the Stock Option Plan has helped the Company compete for,
motivate and retain high caliber directors, executives and other key
employees, and that it is in the best interests of the Company to amend
the plan as proposed. Consistent with the Company's compensation
objectives, rewards under the Stock Option Plan are dependent on those
factors which directly benefit the Company's stockholders, dividends
paid and appreciation in the market value of Company stock.
The amendment will permit the continuation of option grants, thereby
providing long-term incentives to the directors, executive officers and
other key salaried employees of the Company who have the potential to
direct and manage the business of the Company successfully in the
future.
The material provisions of the plan and other information relating to
the plan are described below and in the New Plan Benefits table on page
22. The plan is administered by the Personnel Committee, which, in its
discretion, may award options for terms up to ten years to purchase the
common stock of the Company to selected key salaried employees of the
Company and its subsidiaries, including those who may also serve as
officers or directors. At any given time, this group is expected to
represent approximately 2% of all employees. Options have been granted
to employees at not less than the fair market value of the Company's
stock on the date of grant and are exercisable as determined by the
Committee, except that options must be exercised within ten years from
the date of grant. All outstanding options have ten-year terms and are
exercisable commencing one year from the date of grant, provided the
optionee is still an employee.
In 1992 the plan was amended to provide for an automatic annual option
grant for the purchase of 1,000 shares of the common stock of the
Company to each non-employee director of the Company at the fair market
value of the stock on the date of grant. The date of grant is fixed
under the terms of the plan as the second business day after the annual
meeting of stockholders. Options granted to non-employee directors are
similar to those available to key salaried employees except that the
timing of option grants, the number of shares granted, the option price
of each grant and certain other provisions are fixed by the plan. In
contrast, the timing and terms of option grants made to employees are
subject to the discretion of the Personnel Committee. Upon the
election of directors at the 1994 Annual Meeting, there will be nine
non-employee members of the Board of Directors.
The Committee may designate options granted to employees (including
officers and employee directors) as incentive stock options ("ISOs"), a
type of option authorized under the 1981 amendments to the Internal
Revenue Code. Options not so designated are granted as "non-ISOs".
Options granted to non-employee directors are designated as non-ISOs.
Options generally remain exercisable for a limited period following the
termination of employment of an employee optionee, including an
employee who may be an officer or a director. The post-retirement
exercise period of a non-ISO is three years for options to be granted
in the future (two years for options granted prior to 1994), unless a
shorter period is specified by the Personnel Committee. The comparable
period for an ISO is three months. If the termination of employment
occurs within one year after a change in control, any options held by
the employee optionee that were not otherwise exercisable when
employment ceased will become immediately exercisable. Non-employee
director options remain exercisable following termination of Board
membership on a basis generally comparable to non-ISOs granted to
employees and similarly become immediately exercisable upon termination
of Board membership within one year after a change in control.
Shares delivered on the exercise of an option may be either authorized
and unissued shares or treasury shares. Payment on exercise is made in
cash or, at the discretion of the Secretary of the Personnel Committee,
in shares of the Company's common stock or partially in cash and
partially in shares. An employee who is not an officer or a director
of the Company may pay the purchase price in cash installments over a
five-year period at a rate no less than the minimum rate of interest
provided under the Internal Revenue Code for such compensation related
loans. On approval by the Board of Directors, options may provide for
a loan, guarantee or other assistance by the Company. No such loan,
guarantee or other assistance has been provided to any officer or
employee director while serving in that capacity or to any non-employee
director.
The Board may terminate the plan or may amend it or any outstanding
option, but stockholder approval is required to increase the number of
shares available under the plan, to increase the maximum annual grant
per participant, to reduce the price at which options may be granted to
below 95% of the fair market value on the date of grant, to reduce the
option price of outstanding options, to extend the term of an option
beyond ten years, to extend the period during which options may be
granted or to amend those provisions of the plan relating to options
granted to non-employee directors. No amendment may adversely affect
the rights of any optionee under an outstanding option or, after a
change in control, may deprive an optionee of a right which became
operative upon a change in control. In the event of changes resulting
from stock dividends, stock splits or exchange rights, the number of
shares subject to the plan may be adjusted by the Board.
Federal Income Tax Consequences Upon Issuance and Exercise of Options
After consultation with tax counsel, the Company is of the opinion
that:
An optionee does not realize any taxable income under the Internal
Revenue Code upon the grant of an option.
The exercise of a non-ISO results in immediate taxable income to
the optionee in an amount equal to the difference between the
option price and the market price on the date of exercise. This
same amount is deductible by the Company as compensation, provided
income taxes are withheld from or deposited by the optionee.
The exercise of an ISO results in no tax consequences either to the
optionee or the Company. Although the difference between the
option price and the market price on the date of exercise is not
taxable to the optionee upon exercise, it is a tax preference item,
which, under certain circumstances, may give rise to an alternative
minimum tax liability on the part of the optionee.
The sale within one year of stock acquired by the exercise of an
ISO will be deductible by the Company as compensation in an amount
equal to the difference between the option price and the lesser of
the market price on the date of exercise or the net proceeds of the
sale. The sale of stock acquired through the exercise of an ISO
held for more than one year after exercise does not result in such
a deduction for the Company.
As options expire unexercised they again become available for grant.
Options on 4,446,158 shares, granted at option prices ranging from
$5.95 to $59.25 per share after adjustment for stock splits (a weighted
average price of $37.38 per share), will expire at various dates up to
September 15, 2003. The closing price of the common stock of the
Company on March 1, 1994, as quoted on a composite basis was $60.375.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE AMENDMENT OF THE 1971
STOCK OPTION PLAN, WHICH IS DESIGNATED AS PROPOSAL NO. 3 ON THE
ENCLOSED PROXY.
4. PROPOSED AMENDMENT OF THE STOCK EQUIVALENT UNIT PLAN
Subject to the approval of the stockholders, the Board of Directors, on
the recommendation of its Personnel Committee, has amended the Stock
Equivalent Unit Plan. The proposed amendment extends the period for
grants of awards under the plan to April 15, 1999, increases by 100,000
the number of basic stock units that may be awarded under the plan,
clarifies the definition of eligible employee, and limits to 50,000 the
number of basic stock units which may be awarded to any participant in
a calendar year.
As of March 1, 1994, 1,173,959 of the 3,000,000 additional basic units
authorized for grant in 1989 (adjusted to reflect splits) remain
available for grant. If approved, the amendment will make available
for grant over the next five years an aggregate of 1,273,959 basic
units, a number of units estimated to be necessary to continue the plan
for the key employees of the Company (excluding the executive officers)
and substantially less than one half of the number of units available
during each of the last three 5-year periods of the plan.
The stockholders adopted the plan in 1971 and amended it in 1977, 1979,
1984 and 1989 to extend the period for grants and to increase the
number of units which may be awarded under the plan.
The Board of Directors is of the opinion that this plan has helped the
Company compete for, motivate and retain high caliber executives and
key employees, and that it is in the best interests of the Company to
amend the plan as proposed. Consistent with the Company's compensation
objectives, rewards under the plan are dependent on the same factors as
those which directly benefit the Company's stockholders, dividends paid
and appreciation in the market value of the Company's stock. The plan
is administered by the Personnel Committee, which is composed of
directors who are not employees and not eligible to participate in the
plan. The amendment will permit the Committee to continue to grant
basic stock unit awards under the plan thereby providing long-term
incentives to key salaried employees who have the potential to manage
the business of the Company successfully in the future.
The material provisions of the plan and other information about the
plan are described below and in the New Plan Benefits table on page 22.
Under the Stock Equivalent Unit Plan, a phantom stock plan, awards of
basic stock units are made, at the discretion of the Personnel
Committee, to selected key salaried employees of the Company and its
subsidiaries. Each basic stock unit is treated as equivalent to one
share of the Company's common stock, although in no case does the
employee receive the original market value of the basic units awarded.
Instead, the employee's account is credited with appreciation, if any,
in the market value of the Company's common stock and with dividend
equivalent units as dividends are paid on the stock. Amounts credited
for appreciation on basic stock units are limited to 100% of the market
value of the stock on the date of the award.
Awards of basic stock units may be made under the plan to a somewhat
broader group of key employees of the Company and its subsidiaries than
those who are eligible to receive stock options. At any given time,
eligible employees are expected to represent approximately 2% of all
employees. Under the terms of the plan, no awards may be made to
officers who serve as directors. No awards have been made to executive
officers since 1989. With respect to certain grants made after 1983,
all or any portion of an award may, by its terms, be contingent upon
achievement of future performance goals.
Awards accrue benefits over seven years, vesting and becoming payable
in segments over the third through the seventh years of that period.
Each award is revalued annually until the award becomes fully vested
and the value becomes fixed and payable. Before each vesting, the
employee may elect to defer the amounts becoming payable. In general,
awards become fully vested upon the retirement, death or disability of
the employee and, in the case of retirement or disability, payment may
be deferred by employee election to future years. If a deferred amount
represents the final value of a fully vested award, the amount accrues
interest equivalents until paid.
The plan provides that, upon a change in control, all
performance-related contingency provisions of awards will be removed,
awards of employees whose employment is terminated under certain
circumstances as described in the plan will become fully vested, and,
in the event of a related liquidation, merger or consolidation of the
Company, all awards either will become fully vested or will be replaced
by the surviving corporation.
The Board of Directors may amend the plan, but stockholder approval is
required to extend the maturity date of an award or the period during
which awards may be made, to increase the maximum number of basic stock
units available under the plan or to increase the maximum annual grant
per participant. The Board may terminate the plan at any time, but no
termination or amendment may adversely affect the rights of
participants under outstanding awards or, after a change in control,
deprive a participant of a right which became operative upon a change
in control. In the event of changes resulting from stock dividends,
stock splits or exchange rights, the number of units subject to the
plan may be adjusted by the Board.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE AMENDMENT OF THE STOCK
EQUIVALENT UNIT PLAN, WHICH IS DESIGNATED AS PROPOSAL NO. 4 ON THE
ENCLOSED PROXY.
NEW PLAN BENEFITS
Other than stock option grants to outside directors, the benefits or
amounts that will be received or allocated in the future under the
plans listed below are not determinable. With the exception of the
amounts indicated for the Outside Directors' Stock Ownership Plan, the
table below indicates, where applicable, benefits or amounts received
or accrued under the plans for the year 1993.
Stock Option Plan Stock Equivalent Unit Plan
Number of Number of
Name and Position Shares Granted* Units Awarded**
---------- ---------------------- ------------------------
Alfred M. Zeien 75,000 N/A
Chairman and Chief
Executive Officer
Joseph E. Mullaney 25,000 N/A
Vice Chairman of
the Board
Jacques Lagarde 30,000 0
Executive Vice
President
Gaston R. Levy 0 0
Executive Vice
President
Robert J. Murray 32,000 0
Executive Vice
President
Thomas F. Skelly 22,500 0
Senior Vice
President
Lorne R. Waxlax 32,000 0
Executive Vice
President
All current 230,000 0
executive officers
as a group
All non-executive
outside directors
as a group 10,000 0
All non-executive
officer employees
as a group 742,500 718,500
(TABLE CONTINUED)
Outside Directors'
Stock Ownership Plan
Name and Position Dollar Value($)
---------- ----------------------
Alfred M. Zeien N/A
Chairman and Chief
Executive Officer
Joseph E. Mullaney N/A
Vice Chairman of
the Board
Jacques Lagarde N/A
Executive Vice
President
Gaston R. Levy N/A
Executive Vice
President
Robert J. Murray N/A
Executive Vice
President
Thomas F. Skelly N/A
Senior Vice
President
Lorne R. Waxlax N/A
Executive Vice
President
All current N/A
executive officers
as a group
All non-executive
outside directors
as a group $117,069***
All non-executive
officer employees
as a group N/A
* See also Stock Options Granted and Aggregated Stock Option
Exercises tables on pages 15 and 16.
** See Summary Compensation Table on page 13 for amounts accrued
during 1993 for the named persons under awards made prior to
1990. The amounts credited during 1993 to the vested
accounts of all current executive officers as a group and all
other employees as a group were $459,320 and $21,668,736,
respectively.
*** Represents amount to be paid during 1994 based upon one half
of current directors' annual Board retainers.
5. APPOINTMENT OF AUDITORS
On the recommendation of the Audit Committee of the Board of Directors,
the Board has appointed KPMG Peat Marwick as auditors for the year
1994, subject to approval by the stockholders. KPMG Peat Marwick has
audited the books of the Company for many years.
Representatives of KPMG Peat Marwick will attend the 1994 Annual
Meeting of the stockholders, where they will have the opportunity to
make a statement if they wish to do so and will be available to answer
appropriate questions from the stockholders. Should the appointment of
auditors be disapproved by the stockholders, the Board of Directors
will review its selection.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE APPROVAL OF THE
APPOINTMENT OF AUDITORS, WHICH IS DESIGNATED AS PROPOSAL NO. 5 ON THE
ENCLOSED PROXY.
SOLICITATION OF PROXIES
The cost of soliciting proxies will be borne by the Company. In
addition to solicitation by mail, solicitations may also be made by
personal interview, telegram and telephone. The Company has retained
Georgeson & Company Inc., New York, New York, to assist in the
solicitation of proxies using the means referred to above at a cost of
$20,000 plus reasonable expenses. Arrangements will be made with
brokerage houses and other custodians, nominees and fiduciaries to send
proxies and proxy material to their principals, and the Company will
reimburse them for their expenses in so doing. In addition, directors,
officers and other regular employees of the Company may request the
return of proxies by telephone or telegram, or in person.
VOTING OF PROXIES
Under the by-laws of the Company, as permitted by Delaware law, the
required quorum for the meeting is 3313% in interest of the shares
outstanding and entitled to vote at the meeting, a plurality of the
votes properly cast for the election of directors by the stockholders
attending the meeting in person or by proxy will elect directors to
office, and an affirmative majority of the votes properly cast at the
meeting in person or by proxy is required for approval of proposals 2
through 5.
When your proxy is returned properly signed, the shares represented
will be voted in accordance with your directions. Where specific
choices are not indicated, proxies will be voted for proposals 1
through 5. If a proxy or ballot indicates that a stockholder, broker,
or other nominee abstains from voting or that shares are not to be
voted on a particular proposal, the shares will not be counted as
having been voted on that proposal, and those shares will not be
reflected in the final tally of the votes cast with regard to whether
that proposal is approved under Delaware law and the by-laws of the
Company, although such shares will be counted as in attendance at the
meeting for purposes of a quorum. Abstentions, however, will have the
effect of a negative vote in determining whether the Outside Directors'
Stock Ownership Plan (Proposal 2) and the proposed amendment of the
1971 Stock Option Plan (Proposal 3) have been approved by the
shareholders for purposes of Rule 16 b-3 of the Securities and Exchange
Commission, because that Rule requires approval by the affirmative vote
of a majority of the shares present or represented by proxy at the
meeting in order for transactions under such plans to be exempt from
its application. For purposes of Rule 16 b-3, broker non votes,
although counted for quorum purposes, will have no other effect.
CONFIDENTIAL VOTING
For the last six years, the Company has received shareholder proposals
relating to confidential voting from the trustees of New York City
pension funds. Following discussions with representatives of the New
York City Fire Department Pension Fund, the Board of Directors has
determined that the confidential voting policy adopted for the last two
years' annual meetings, which in turn was based upon the procedure
employed on a trial basis at the three prior annual meetings, will
apply to the Corporation's annual meeting. The Company's policy
requires that proxies and ballots be kept confidential from officers,
directors and employees of the Company and from third parties. Certain
outside agents, such as those serving as proxy solicitors, who have
agreed to comply with this policy, but not Company employees, directors
or officers, may be permitted access to proxies and ballots to
facilitate their participation in soliciting proxies and conducting the
meeting. The policy will not prevent Company officers, directors or
other employees or representatives from determining which stockholders
have not voted so that they could be urged to vote. The policy will
not apply in the event of a proxy contest or other solicitation based
on an opposition proxy statement.
ANNUAL REPORT
The Annual Report of the Company for the year ended December 31, 1993,
is being mailed with this proxy statement.
STOCKHOLDER PROPOSALS
Stockholder proposals intended to be considered for inclusion in the
proxy statement for presentation at the 1995 Annual Meeting must be
received by the Company in advance of November 17, 1994.
In general, stockholder proposals intended to be presented at an annual
meeting, including proposals for the nomination of directors, must be
received by the Company 60 days in advance of the meeting, or prior to
February 19, 1995, to be considered for the 1995 Annual Meeting. The
requirements for submitting such proposals are set forth in the
Company's by-laws.
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
On one occasion Mrs. Goldberg filed a late report covering the
simultaneous purchase by her investment manager for four accounts in
which she has an interest of an aggregate of 800 shares of the common
stock of the Company. The late report was a result of the failure of
her investment manager to notify her of the purchase until after the
required report filing date.
OTHER MATTERS
Except for matters described in this proxy statement, the Board of
Directors does not know of any matter that will or may be presented at
the meeting. With respect to any such proposals not now known to the
Board of Directors, the persons named as proxies intend to vote the
shares they represent in accordance with their judgment.
THE GILLETTE COMPANY
OUTSIDE DIRECTORS' STOCK OWNERSHIP PLAN
1. PURPOSE.
The purpose of The Gillette Company Outside Directors' Stock Ownership
Plan (the "Plan") is to advance the interests of the Company and its
shareholders by helping to attract and retain highly qualified outside
directors and providing compensation which aligns the interests of the
directors with those of the shareholders. The Plan shall be
interpreted and implemented in a manner so that eligible directors will
not fail, by reason of the Plan or its implementation, to be
"disinterested persons" within the meaning of Rule 16(b)3 of the
Securities Exchange Act of 1934, as such Rule and such Act may be
amended.
2. DEFINITION.
Unless the context clearly indicates otherwise, the following
terms when used in the Plan shall have the meanings set forth in
this section:
a. "Board of Directors" shall mean the Board of Directors of the
Company.
b. "Company" shall mean The Gillette Company, a Delaware
corporation, or its successor.
c. "Director" shall mean any member of the Board of Directors of
the Company who is not also an employee or officer of the
Company or any of its affiliates and who serves as a director
on or after January 1, 1994.
d. "Common Stock" shall mean the shares of common stock of the
Company, $1 par value per share.
e. "Dividend Reinvestment Plan" shall mean the Dividend
Reinvestment and Stock Purchase Plan maintained by the
Company's transfer agent for the Company's Common Stock.
f. "Retainer(s)" shall mean the annual retainer(s) paid
quarterly, in advance, to each Director for services on the
Board of Directors.
3. SHARES OF COMMON STOCK SUBJECT TO THE PLAN.
Common Stock may be shares of the Company's authorized but unissued
Common Stock, treasury shares of Common Stock or shares of Common Stock
purchased on the open market.
4. ELIGIBILITY.
Only Directors of the Company shall participate in the Plan.
5. ACQUISITION OF COMMON STOCK
With respect to all Director Retainers earned for Board service on and
after January 1, 1994, payment of fifty percent of all Retainers shall
be made in the form of Common Stock in accordance with provisions set
out below and further administrative procedures to be determined by the
Personnel Committee of the Board of Directors of the Company.
In the event that Common Stock is to be purchased on the open market on
behalf of the Director, the Company shall, on the first business day of
each quarter, transfer a sum of money for each Director equal to fifty
percent of his or her quarterly Retainer to an account established in
the name of each Director under the Dividend Reinvestment Plan. Such
Retainers shall be used to purchase Common Stock and the dividends paid
thereon also shall be invested in Common Stock all in accordance with
the terms of the Dividend Reinvestment Plan.
In the event that Common Stock is to be issued by the Company from its
authorized but unissued shares or from its treasury, the value of the
shares shall be based upon the average of the high and the low prices
for the Common Stock as reported on the New York Stock Exchange
composite index on the date that the shares would otherwise have been
purchased under the Dividend Reinvestment Plan. Shares issued by the
Company are to be deposited in the Director's account under the
Dividend Reinvestment Plan.
Notwithstanding the above, 50% of the Retainer(s) for Board service
payable on January 1 and April 1, 1994 shall be retained by the Company
and shall be used to purchase Common Stock on the open market on April
25, 1994 subject to approval of the Plan by the shareholders. Such
shares shall be deposited in the Dividend Reinvestment Plan account
established for each Director under this plan.
When a Director's service as a Director of the Company ceases the
Director may continue or terminate participation in the Dividend
Reinvestment Plan.
6. GENERAL PROVISIONS.
a. No Director and no beneficiary or other person claiming under
or through such Director shall have any right, title or
interest by reason of this Plan or any share of Common Stock
to any particular assets of the Company. The Company shall
not be required to establish any fund or make any other
segregation of assets to assure the award of Common Stock
hereunder.
b. No right under the Plan shall be subject to anticipation,
sale, assignment, pledge, encumbrance or charge except by will
or the law of descent and distribution.
c. Notwithstanding any other provision of the Plan or agreements
made pursuant hereto, the Company shall not be required to
issue, purchase or deliver any certificate for shares of
Common Stock under this Plan prior to fulfillment of all of
the following conditions:
1. Any required listing or approval upon notice of issuance
or purchase of such shares on any securities exchange on
which the Common Stock may then be traded.
2. Any registration or other qualification of such shares
under any state or federal law or regulation or other
qualification which the Board of Directors shall upon the
advice of counsel deem necessary or advisable.
3. The obtaining of any other required consent or approval or
permit from any state or federal government agency.
d. In no event shall the Company be required to issue a
fractional share hereunder.
e. The issuance to or purchase of shares for Directors or their
legal representatives shall be subject to any applicable taxes
or other laws or regulations of the United States of America
or any state having jurisdiction thereover.
7. ADMINISTRATION.
This Plan shall be administered by the Personnel Committee of the Board
of Directors of the Company. The Committee shall have the authority,
consistent with the Plan to adopt, amend and rescind rules and
regulations for the administration of the Plan and for its own acts and
proceedings and decide all questions and settle all controversies and
disputes which may arise in connection with the Plan. The Personnel
Committee may delegate any or all responsibilities assigned to it. All
decisions, determinations and interpretations of the Personnel
Committee or its delegates with respect to the exercise of their
respective responsibilities shall be binding on all parties concerned.
8. EFFECTIVE DATE; TERMINATION AND AMENDMENT.
a. This Plan shall become effective upon its approval by the
holders of an affirmative majority of the votes properly cast
at the 1994 Annual Meeting of the shareholders of the Company.
The term of the Plan shall be indefinite.
b. The Board of Directors may terminate the Plan or make such
modifications or amendments to the Plan as it may deem
advisable, provided, however, that the Board of Directors may
not amend the Plan:
(1) more often than once every six months, other than to
comply with changes in the Internal Revenue Code, the
Employee Retirement Income Security Act, or the rules
thereunder; and
(2) without the approval of the shareholders of the Company if
such approval is required to maintain the Plan's
compliance under Section 16 of the Securities and Exchange
Act or is otherwise required pursuant to any applicable
law or rule.
THE GILLETTE COMPANY
l971 Stock Option Plan, as amended
l. PURPOSE. The purpose of the 1971 Stock Option Plan (hereinafter
referred to as the "Plan") is to provide a special incentive to
selected key salaried employees of The Gillette Company
(hereinafter referred to as the "Company") and of its subsidiaries
and to the non-employee members of the Board of Directors of the
Company to promote the Company's business. The Plan is designed to
accomplish this purpose by offering such employees and non-employee
directors a favorable opportunity to purchase shares of the common
stock of the Company so that they will share in the success of the
Company's business. For purposes of the Plan a subsidiary is any
corporation in which the Company owns, directly or indirectly,
stock possessing fifty percent or more of the total combined voting
power of all classes of stock or over which the Company has
effective operating control.
2. ADMINISTRATION. The Plan shall be administered by the Personnel
Committee heretofore established by the Board of Directors of the
Company, no member of which shall be an employee of the Company or
of any subsidiary. The Committee shall have authority, not
inconsistently with the Plan, (a) to determine which of the key
salaried employees of the Company and its subsidiaries shall be
granted options; (b) to determine whether the options granted to
any employees shall be incentive stock options within the meaning
of the Internal Revenue Code or non-qualified stock options or
both; provided, however, that with respect to options granted after
December 31, 1986, in no event shall the fair market value of the
stock (determined at the time of grant of the options) subject to
incentive stock options within the meaning of the Internal Revenue
Code which first became exercisable by any employee in any calendar
year exceed $100,000 (and, to the extent such fair market value
exceeds $100,000, the later granted options shall be treated as
nonqualified stock options); (c) to determine the time or times
when options shall be granted to employees and the number of shares
of common stock to be subject to each such option provided,
however, subject to adjustment as provided in Section 9 of the
Plan, in no event shall any employee be granted options covering
more than 100,000 shares of common stock in any calendar year; (d)
with respect to options granted to employees,to determine the
option price of the shares subject to each option and the method of
payment of such price; (e) with respect to options granted to
employees, to determine the time or times when each option becomes
exercisable and the duration of the exercise period; (f) to
prescribe the form or forms of the instruments evidencing any
options granted under the Plan and of any other instruments
required under the Plan and to change such forms from time to time;
(g) to make all determinations as to the terms of any sales of
common stock of the Company to employees under Section 8; (h) to
adopt, amend and rescind rules and regulations for the
administration of the Plan and the options and for its own acts and
proceedings; and (i) to decide all questions and settle all
controversies and disputes which may arise in connection with the
Plan. All decisions, determinations and interpretations of the
Committee shall be binding on all parties concerned.
3. PARTICIPANTS. The participants in the Plan shall be such key
salaried employees of the Company or of any of its subsidiaries,
whether or not also officers or directors, as may be selected from
time to time by the Committee in its discretion, subject to the
provisions of Section 8. In addition, effective upon shareholder
approval at the 1992 Annual Meeting of Shareholders of the Company
, each non-employee director shall be a participant in the Plan.
In any grant of options after the initial grant, or any sale made
under Section 8 after the initial sale, employees who were
previously granted options or sold shares under the Plan may be
included or excluded.
4. LIMITATIONS. No option shall be granted under the Plan and no sale
shall be made under Section 8 after April 15, 1999, but options
theretofore granted may extend beyond that date. Subject to
adjustment as provided in Section 9 of the Plan, the number of
shares of common stock of the Company which may be delivered under
the Plan shall not exceed 28,200,000 in the aggregate. To the
extent that any option granted under the Plan shall expire or
terminate unexercised or for any reason become unexercisable as to
any shares subject thereto, such shares shall thereafter be
available for further grants under the Plan, within the limit
specified above.
5. STOCK TO BE DELIVERED. Stock to be delivered under the Plan may
constitute an original issue of authorized stock or may consist of
previously issued stock acquired by the Company, as shall be
determined by the Board of Directors. The Board of Directors and
the proper officers of the Company shall take any appropriate
action required for such delivery.
6. TERMS AND CONDITIONS OF OPTIONS GRANTED TO EMPLOYEES. All options
granted to either non-employee directors or employees shall be
subject to Section 6 Paragraph (c) Subparagraphs (4) and (5). All
options granted to employees under the Plan shall be subject to all
the following additional terms and conditions (except as provided
in Sections 7 and 8 below) and to such other terms and conditions
as the Committee shall determine to be appropriate to accomplish
the purposes of the Plan:
(a) Option Price. The option price under each option shall be
determined by the Committee and shall be not less than l00
percent of the fair market value per share at the time the
option is granted. If the Committee so directs, an option may
provide that if an employee Participant who was an employee
participant at the time of the grant of the option and who is
not an officer or director of the Company at the time of any
exercise of the option, he shall not be required to make
payment in cash or equivalent at that time for the shares
acquired on such exercise, but may at his election pay the
purchase price for such shares by making a payment in cash or
equivalent of not less than five percent of such price and
entering into an agreement, in a form prescribed by the
Committee, providing for payment of the balance of such price,
with interest at a specified rate, but not less than four
percent, over a period not to exceed five years and containing
such other provisions as the Committee in its discretion
determines. In addition, if the Committee so directs, an
option may provide for a guarantee by the Company or repayment
of amounts borrowed by the Participant in order to exercise the
option, provided he is not an officer or director of the
Company at the time of such borrowing, or may provide that the
Company may make a loan, guarantee, or otherwise provide
assistance as the Committee deems appropriate to enable the
Participant to exercise the option, provided that no such loan,
guarantee, or other assistance shall be made without approval
of the Board of Directors as required by law.
(b) Period of Options. The period of an option shall not exceed
ten years from the date of grant.
(c) Exercise of Option.
(l) Each option held by a participant other than a non-employee
director shall be made exercisable at such time or times,
whether or not in installments, as the Committee shall
prescribe at the time the option is granted. In the case
of an option held by a participant other than a
non-employee director which is not immediately exercisable
in full, the Committee may at any time accelerate the time
at which all or any part of the option may be exercised.
(2) Options intended to be incentive stock options, as defined
in the Internal Revenue Code, shall contain and be subject
to such provisions relating to the exercise and other
matters as are required of incentive stock options under
the applicable provisions of the Internal Revenue Code and
Treasury Regulations, as from time to time in effect, and
the Secretary of the Committee shall inform optionees of
such provisions.
(3) Each incentive stock option within the meaning of the
Internal Revenue Code granted on or before December 31,
1986 shall contain and be subject to the following
provision:
This option shall not be exercisable while there is outstanding (within
the meaning of Section 422A(c)7 of the Internal Revenue Code of l954,
as amended) any incentive stock option (as that term is defined in said
Code) which was granted to the Participant before the granting of this
option to purchase stock in his employer corporation (whether The
Gillette Company or a parent or subsidiary corporation thereof), or in
a corporation which at the time of the granting of this option is a
parent or subsidiary corporation of the employer corporation, or in a
predecessor corporation of any such corporation.
Each incentive stock option within the meaning of the Internal Revenue
Code granted after December 31, 1986 shall not be subject to the above
provision.
(4) Payment for Delivery of Shares. Upon exercise of any
option, payment in full in the form of cash or a certified
bank, or cashier's check or, with the approval of the
Secretary of the Committee, in whole or part Common Stock
of the Company at fair market value, which for this purpose
shall be the closing price on the business day preceding
the date of exercise, shall be made at the time of such
exercise for all shares then being purchased thereunder,
except in the case of an exercise to which the provisions
of the second sentence of subsection (a) above are
applicable.
The purchase price payable by any person, other than a non-employee
director, who is not a citizen or resident of the United States of
America and who is an employee of a foreign subsidiary at the time
payment is due shall, if the Committee so directs, be paid to such
subsidiary in the currency of the country in which such subsidiary is
located, computed at such exchange rate as the Committee may direct.
The amount of each such payment may, in the discretion of the
Committee, be accounted for on the books of such subsidiary as a
contribution to its capital by the Company. The Company shall not be
obligated to deliver any shares unless and until, in the opinion of the
Company's counsel, all applicable federal and state laws and
regulations have been complied with, nor, in the event the outstanding
common stock is at the time listed upon any stock exchange, unless and
until the shares to be delivered have been listed or authorized to be
added to the list upon official notice of issuance upon such exchange,
nor unless or until all other legal matters in connection with the
issuance and delivery of shares have been approved by the Company's
counsel. Without limiting the generality of the foregoing, the Company
may require from the Participant such investment representation or such
agreement, if any, as counsel for the Company may consider necessary in
order to comply with the Securities Act of 1933 and may require that
the Participant agree that any sale of the shares will be made only on
the New York Stock Exchange or in such other manner as is permitted by
the Committee and that he will notify the Company when he makes any
disposition of the shares whether by sale, gift, or otherwise. The
Company shall use its best efforts to effect any such compliance and
listing, and the Participant shall take any action reasonably requested
by the Company in such connection. A Participant shall have the rights
of a shareholder only as to shares actually acquired by him under the
Plan.
(5) Notwithstanding any other provision of this Plan, if within
one year of a Change in Control, as hereinafter defined,
the employment of an employee Participant is terminated for
any reason other than willful misconduct or the service as
a director of a non-employee director is terminated, all
his outstanding options which are not yet exercisable shall
become immediately exercisable and all the rights and
benefits relating to such options including, but not
limited to, periods during which such options may be
exercised shall become fixed and not subject to change or
revocation by the Company; provided, that in the case of
any incentive stock option (the "second option") which is
not exercisable by reason of a previously granted incentive
stock option which is still "outstanding" within the
meaning of section 422A(c)(7) of the Internal Revenue Code
(as in effect before the amendments made by the Tax Reform
Act of 1986), the second option shall not be exercisable
until the earlier outstanding option is exercised in full
or expires by reason of the lapse of time. For purposes of
the foregoing, a Change in Control shall mean the happening
of any of the following events:
(A) Any person within the meaning of Sections 13(d) and 14(d)
of the Securities Exchange Act of 1934 (the "1934 Act"), other
than the Company or any of its subsidiaries, has become the
beneficial owner, within the meaning of Rule 13d-3 under the
1934 Act, of 20% or more of the combined voting securities of
the Company;
(B) A tender offer or exchange offer, other than an offer by
the Company, pursuant to which shares of the Company's common
stock have been purchased;
(C) The stockholders or directors of the Company have approved
an agreement to merge or consolidate with or into another
corporation and the Company is not the surviving corporation or
an agreement to sell or otherwise dispose of all or
substantially all of the Company's assets (including a plan of
liquidation); or
(D) During any period of two consecutive years, individuals who
at the beginning of such period constituted the board of
directors cease for any reason to constitute at least a
majority thereof. For this purpose, new directors who were
elected, or nominated (or approved for nomination in the
case of nomination by a Committee of the Board) for election by
shareholders of the Company, by at least two thirds of the directors
then still in office who were, or are deemed to have been directors at
the beginning of the period, shall be deemed to have been directors at
the beginning of the period.
(d) Nontransferability of Options. No option may be transferred by the
Participant otherwise than by will or by the laws of descent and
distribution, and during the Participant's lifetime the option may
be exercised only by him.
(e) Nontransferability of Shares. If the Committee so determines, an
option granted to an employee may provide that, without prior
consent of the Committee, shares acquired by exercise of the option
shall not be transferred, sold, pledged or otherwise disposed of
within a period not to exceed one year from the date the shares are
transferred to the Participant upon his exercise of the option or
prior to the satisfaction of all indebtedness with respect thereto,
if later.
(f) Termination of Employment. If the employment of a Participant
terminates for any reason other than his death, he may, unless
discharged for cause which in the opinion of the Committee casts
such discredit on him as to justify termination of his option,
thereafter exercise his option as provided below. (i) If such
termination of employment is voluntary on the part of the
Participant, he may exercise his option only within seven days
after the date of termination of his employment (unless a longer
period not in excess of three months is allowed by the Committee).
(ii) If such termination of employment is involuntary on the part
of the Participant, he may exercise his option only within three
months after the date of termination of his employment. (iii)
Notwithstanding the above, if a Participant retires under The
Gillette Company Retirement Plan or the retirement plan of a
subsidiary, or if a Participant terminates his employment with a
subsidiary that does not maintain a retirement plan and he would
have been eligible to retire under the terms of The Gillette
Company Retirement Plan had he been a Participant in that Plan, he
may exercise any option granted prior to January 1, 1994, other
than an incentive stock option within the meaning of the Internal
Revenue Code, within a period not to exceed two years after his
retirement date, any option granted after December 31, 1993 other
than an incentive stock option within the meaning of the Internal
Revenue Code within a period not to exceed three years after his
retirement date, and any incentive stock option within a period not
to exceed three months after his retirement date. The Committee
may, in its sole discretion, terminate any such option at or at any
time after the time when that option would otherwise have
terminated as a result of the termination of a Participant's
employment, if it deems such action to be in the best interests of
the Company. In no event, however, may any Participant exercise
any option which was not exercisable on the date he ceased to be an
employee, or after the expiration of the option period. For
purposes of this subsection (g) a Participant's employment shall
not be considered terminated in the case of a sick leave or other
bona fide leave of absence approved by the Company or a subsidiary
in conformance with the applicable provisions of the Internal
Revenue Code or Treasury Regulations, or in the case of a transfer
to the employment of a subsidiary or to the employment of the
Company.
(g) Death. If a Participant dies at a time when he is entitled to
exercise an option, then at any time or times within one year after
his death (or with respect to employee participants such further
period as the Committee may allow) such option may be exercised, as
to all or any of the shares which the Participant was entitled to
purchase immediately prior to his death, by his executor or
administrator or the person or persons to whom the option is
transferred by will or the applicable laws of descent and
distribution, and except as so exercised such option shall expire
at the end of such period. In no event, however, may any option be
exercised after the expiration of the option period or, in the case
of an incentive stock option within the meaning of the Internal
Revenue Code after the expiration of any period of exercise for
such options specified in the Internal Revenue Code or the
regulations thereunder.
7. REPLACEMENT OPTIONS. The Company may grant options under the Plan
on terms differing from those provided for in Section 6 where such
options are granted in substitution for options held by employees
of other corporations who concurrently become employees of the
Company or a subsidiary as the result of a merger or consolidation
of the employing corporation with the Company or subsidiary, or the
acquisition by the Company or a subsidiary of property or stock of
the employing corporation. The Committee may direct that the
substitute options be granted on such terms and conditions as the
Committee considers appropriate in the circumstances.
Notwithstanding anything contained in this Plan, the Committee shall
have authority, with respect to any options granted or to be granted to
employees or outstanding installment Purchase Agreements of
participants other than non-employee directors under this Plan, to
extend the time for payment of any and all installments, to modify the
amount of any installment, to amend outstanding option certificates to
provide for installment payments or to take any other action which it
may, in its discretion, deem necessary, provided that: (1) interest on
the unpaid balance under any outstanding Purchase Agreement at the rate
of at least four percent (4%) per annum shall continue to be due and
payable quarterly during the period of any deferral of payment; (2) all
such installment Purchase Agreements and unexercised options, shall at
all times be in accordance with the applicable provisions of Regulation
G of the Board of Governors of the Federal Reserve System, as from time
to time amended, and with all other applicable legal requirements; (3)
no such action by the Committee shall jeopardize the status of stock
options as incentive stock options under the Internal Revenue Code.
8. FOREIGN EMPLOYEES. The Company may grant options under the Plan on
terms differing from those provided for in Section 6 where such
options are granted to employee Participants who are not citizens
or residents of the United States of America if the Committee
determines that such different terms are appropriate in view of the
circumstances of such Participants, provided, however, that such
options shall not be inconsistent with the provisions of Section
6(a) or Section 6(b).
In addition, if the Committee determines that options are inappropriate
for any key salaried employees who are not citizens or residents of the
United States of America, whether because of the tax laws of the
foreign countries in which such employees are residents or for other
reasons, the Board of Directors may authorize special arrangements for
the sale of shares of common stock of the Company to such employees,
whether by the Company, or a subsidiary, or other person. Such
arrangements may, if approved by the Board of Directors, include the
establishment of a trust by the foreign subsidiary which is the
employer of the key salaried employees, designated by such subsidiary,
to whom the shares are to be sold. Such arrangements shall provide for
a purchase price of not less than the fair market value of the stock at
the date of sale and a maximum annual grant per participant of options
to purchase 100,000 shares of common stock and may provide that the
purchase price be paid over a period of not more than ten years, with
or without interest, and that such employees have the right, with or
without payment of a specified premium, to require the seller of the
shares to repurchase such shares at the same price, subject to
specified conditions. Such arrangements may also include provisions
deemed appropriate as to acceleration or prepayment of the balance of
the purchase price, restrictions on the transfer of the shares by the
employee, representations or agreements by the employee about his
investment purposes and other miscellaneous matters.
9. CHANGES IN STOCK. In the event of a stock dividend, split-up or
combinations of shares, recapitalization or merger in which the
Company is the surviving corporation, or other similar capital
change, the number and kind of shares of stock or securities of the
Company to be subject to the Plan and to options then outstanding
or to be granted thereunder, the maximum number of shares or
securities which may be issued or sold under the Plan, the maximum
annual grant for each participant, the automatic annual grant for
each non-employee director, the option price and other relevant
provisions shall be appropriately adjusted by the Board of
Directors of the Company, whose determination shall be binding on
all persons. In the event of a consolidation or a merger in which
the Company is not the surviving corporation or which results in
the acquisition of substantially all the Company's outstanding
stock by a single person or entity or by a group of persons and/or
entities acting in concert, or in the event of complete liquidation
of the Company, all outstanding options shall thereupon terminate,
provided that (i) at least twenty days prior to the effective date
of any such consolidation or merger, the Board of Directors shall
with respect to employee participants either (a) make all
outstanding options immediately exercisable, or (b) arrange to have
the surviving corporation grant replacement options to the employee
Participants and (ii) in the case of option grants to non-employee
directors, all outstanding options not otherwise exercisable shall
become exercisable on the twentieth day prior to the effective date
of the merger.
l0. EMPLOYMENT RIGHTS. The adoption of the Plan does not confer upon
any employee of the Company or a subsidiary any right to continued
employment with the Company or a subsidiary, as the case may be,
nor does it interfere in any way with the right of the Company or
a subsidiary to terminate the employment of any of its employees
at any time.
ll. THE COMMITTEE MAY AT ANY TIME DISCONTINUE GRANTING OPTIONS UNDER
THE PLAN. The Board of Directors of the Company or the Personnel
Committee of the Board of Directors if and to the extent
authorized, may at any time or times amend the Plan or amend any
outstanding option or options or arrangements established under
Section 8 for the purpose of satisfying the requirements of any
changes in applicable laws or regulations or for any other purpose
which may at the time be permitted by law, provided that (except
to the extent required or permitted under Section 9 and, with
respect to clauses (b) and (f) below, except to the extent
required or permitted under Section 7) no such amendment shall,
without the approval of the stockholders of the Company, (a)
increase the maximum number of shares available under the Plan or
the maximum annual grant per participant other than as permitted
under Section 9, (b) reduce the minimum option price of options
thereafter to be granted below the price provided for in Section
6(a), except that the Plan may be amended to provide that the
minimum option price of non-qualified stock options thereafter to
be granted to employees may be not less than 95% of the fair
market value at the date of grant if the Board determines that
such amendment is necessary for tax reasons to carry out the
objectives of the Plan, (c) reduce the price at which shares of
common stock of the Company may be sold under Section 8 below the
price provided for in Section 8, (d) reduce the option price of
outstanding options, (e) extend the time within which options may
be granted, (f) extend the period of an outstanding option beyond
ten years from the date of grant, (g) amend the provisions of
Section 12 with respect to the terms and conditions of options to
non-employee directors and further provided no such amendment
shall adversely affect the rights of any Participant (without his
consent) under any option theretofore granted or other contractual
arrangements theretofore entered into or after a Change in Control
deprive any Participant of any right or benefit which became
operative in the event of a Change in Control. Notwithstanding
the above, in no event may the provisions of Section 12 be amended
more than once every six months, other than to comport with
changes in the Internal Revenue Code, the Employee Retirement
Income Security Act, or the rules thereunder.
12. TERMS AND CONDITIONS OF OPTIONS GRANTED TO NON-EMPLOYEE DIRECTORS.
Effective at the close of business on the second business day
after the 1992 Annual Meeting of Shareholders of the Company and
on the second business day after each Annual Meeting thereafter,
each non-employee director shall be automatically granted a
non-incentive stock option to purchase 1,000 shares of the common
stock of the Company upon the following terms and conditions:
(a) Option Price. The option price under each option shall be the
fair market value on the date of grant, which for this purpose
is defined as the average between the high and the low price of
the common stock on the NYSE Composite Transaction listing.
(b) Option Period. The period of an option shall be ten years from
the date of grant.
(c) Option Exercise. Each option shall become exercisable on the
first anniversary of the date of grant except as otherwise
provided under Section 6 Paragraph c Subparagraph 5 of this
Plan. Any option, otherwise exercisable, may be exercised
during the period a non-employee director remains a member of
the Board of Directors and for a period of three months
following the date a non-employee director ceases to be a
director except in the case where the non-employee director is
or will be eligible to receive benefits under the Company's
Retirement Plan for Directors when membership on the Board of
Directors ends and where the non-employee director continues to
be so eligible as of the date of exercise, that non-employee
director's options shall be exercisable for a period of two
years from the date membership on the Board of Directors
ceases.
If a non-employee director dies at the time when the non-employee
director is entitled to exercise an option, then at any time or times
within one year after that non-employee director's death that
non-employee director's option may be exercised in accordance with the
provisions of Section 6 Paragraph (g) of the Plan. In no event shall
any option be exercised after the expiration of the option period.
(d) Payment for Delivery of Shares. Payment for the shares shall
be made in accordance with the provisions of Section 6
Paragraph c Subparagraph 4 of this Plan.
(e) Nontransferability of Options. No option may be transferred by
a non-employee director otherwise than by will or by the laws
of descent and distribution, and during the non-employee
director's lifetime the option may be exercised only by the
non-employee director.
THE GILLETTE COMPANY
Stock Equivalent Unit Plan, as amended
l. PURPOSE. The purpose of the Stock Equivalent Unit Plan is to
provide an incentive and reward to key salaried employees of The
Gillette Company and its subsidiaries who can make substantial
contributions to the success of the business. To that end, the
Plan provides an opportunity for such key salaried employees to
participate in that success through awards of stock equivalent
units, subject to the conditions set forth in the Plan.
2. DEFINITIONS. Unless the context otherwise requires, the following
words have the following meanings for purposes of the Plan.
2.1 Basic stock unit - A stock equivalent unit awarded to a
participant pursuant to Section 4.2.
2.2 Committee - The Personnel Committee established by the Board of
Directors of the Company.
2.3 Company - The Gillette Company, a Delaware corporation.
2.4 Disability - Mental or physical disability, either occupational
or non-occupational in cause, which, in the opinion of the
Committee, on the basis of medical evidence satisfactory to it,
prevents the employee from engaging in any occupation or
employment for wage or profit and is likely to be permanent.
2.5 Dividend equivalent unit - A stock equivalent unit which is
credited to a participant's account as the result of conversion
of amounts credited to the account in respect of dividends, as
provided in Section 5.2.
2.6 Employee - Any person, whether or not an officer or director of
the Company or any subsidiary, who is regularly employed by the
Company or a subsidiary on a salaried full-time basis, or who,
under conditions approved by the Committee, is regularly
employed by the Company or subsidiary on a salaried part-time
basis.
2.7.1 Maturity date (with respect to awards made on or before
12/31/83) - When used with respect to an award, March l5 of
the tenth calendar year following the calendar year in which
the award was made.
2.7.2 Maturity date (with respect to awards made after 12/31/83) -
When used with respect to an award, March 15 of the seventh
calendar year following the calendar year in which the award
was made.
2.8 Normal retirement date - In the case of any participant, the
date prescribed under the Retirement plan maintained by his
employer as his normal retirement date (or, if no such plan is
maintained by his employer, the normal retirement date
prescribed under The Gillette Company Retirement Plan).
2.9 Plan - The Stock Equivalent Unit Plan set forth herein, as from
time to time amended.
2.10 Share - A share of the Company's common stock as the same is
constituted from time to time.
2.11 Stock equivalent unit - A measure of value equal in amount to
the value of one share at the time of reference.
2.12 Subsidiary - Any corporation in which the Company owns,
directly or indirectly, stock possessing fifty percent or more
of the total combined voting power of all classes of stock or
over which the company has effective operating control.
2.13 (A) Total credits - When used with respect to an individual
account, the sum of (a) the excess, if any, of (i) the value
of that number of shares which is equal to the number of basic
stock units credited to the account in respect of awards in
designated years, after adjustment for any prior payments,
over (ii) the value on the date of the respective awards of
that number of shares which corresponds, after adjustment for
stock splits, stock dividends and similar capital changes, to
the number of basic stock units referred to in (i), except
that for awards made after 12/31/78, the amount of the excess
cannot exceed an amount equal to the value on the date of the
respective awards of that number of shares which corresponds,
after adjustment for stock splits, stock dividends and similar
capital changes, to the number of basic stock units referred
to in (i), plus (b) the value of that number of shares which
is equal to the number of dividend equivalent units then
credited to the account in respect of such awards plus (c) any
amounts then credited to the account based on dividend
payments attributable to such awards which have not been
converted into dividend equivalent units.
2.14 Value - When used with respect to a share
(a) On the date of an award of basic stock units, the average
of the reported high and low sales prices of the shares
as quoted on a composite basis;
(b) For purposes of converting dividend credits into dividend
equivalent units, the average of the reported closing
prices of the shares as quoted on a composite basis on
the last business day of the months of December, January,
and February immediately preceding the March l5 on which
such conversion occurs;
(c) For purposes of determining the amount payable in respect
of an interest which becomes vested or for purposes of
determining the amount payable, in cases not covered by
(d) or (e) below, in respect of an interest which
previously became vested, the average of the reported
closing prices of the shares as quoted on a composite
basis on the last business day of the twelve calendar
months immediately preceding the March l5 on which such
vesting occurs or the month in which such payment becomes
payable;
(d) For purposes of determining the amount payable to a
terminating participant or to the estate of a deceased
participant, the average of the reported closing prices
of the shares as quoted on a composite basis on the last
business day of the twelve calendar months immediately
preceding the month in which the participant's employment
terminates or the participant dies or the twelve
consecutive calendar months including and ending with
that month if such termination or death occurs on or
after the last business day of that month;
(e) For purposes of determining the amount payable with
respect to an award on or after the maturity date
thereof, the average of the reported closing prices of
the shares as quoted on a composite basis on the last
business day of the twelve calendar months immediately
preceding such maturity date;
2.15 Unapproved Change in Control shall mean the happening of any
one of the following events, which, in each case, was not
recommended to the shareholders by a vote of at least
two-thirds of the non-employee directors of the Company then
still in office who were in office two years prior to such
event:
(a) Any person within the meaning of Sections 13(d) and 14(d)
of the Securities Exchange Act of 1934 (the "1934 Act"),
other than the Company or any of its subsidiaries, has
become the beneficial owner, within the meaning of Rule
13d-3 under the 1934 Act, of 20% or more of the combined
voting securities;
(b) A tender offer or exchange offer, other than an offer by
the Company, pursuant to which shares of the Company's
common stock have been purchased;
(c) The stockholders or directors of the Company have
approved an agreement to merge or consolidate with or
into another corporation and the Company is not the
surviving corporation or an agreement to sell or
otherwise dispose of all or substantially all of the
Company's assets (including a plan of liquidation); or
(d) During any period of two consecutive years, individuals
who at the beginning of such period constituted the board
of directors cease for any reason to constitute at least
a majority thereof. For this purpose, new directors who
were elected, or nominated (or approved for nomination in
the case of nomination by a Committee of the Board) for
election by shareholders of the Company, by at least two
thirds of the directors then still in office who were, or
are deemed to have been directors at the beginning of the
period, shall be deemed to have been directors at the
beginning of the period.
2.16 Approved Change in Control shall mean the happening of any
one of the following events, which, in each case was
recommended to the shareholders by a vote of at least
two-thirds of the non-employee directors of the Company then
still in office who were in office two years prior to such
event:
(a) Any person within the meaning of Sections 13(d) and 14(d)
of the Securities Exchange Act of 1934 (the "1934 Act"),
other than the Company or any of its subsidiaries, has
become the beneficial owner, within the meaning of Rule
13d-3 under the 1934 Act, of 20% or more of the combined
voting securities;
(b) A tender offer or exchange offer, other than an offer by
the Company, pursuant to which shares of the Company's
common stock have been purchased;
(c) The stockholders or directors of the Company have approved
an agreement to merge or consolidate with or into another
corporation and the Company is not the surviving
corporation or an agreement to sell or otherwise dispose
of all or substantially all of the Company's assets
(including a plan of liquidation); or
(d) During any period of two consecutive years, individuals
who at the beginning of such period constituted the board
of directors cease for any reason to constitute at least a
majority thereof. For this purpose, new directors who
were elected, or nominated (or approved for nomination in
the case of nomination by a Committee of the Board) for
election by shareholders of the Company, by at least two
thirds of the directors then still in office who were, or
are deemed to have been directors at the beginning of the
period, shall be deemed to have been directors at the
beginning of the period.
3. ADMINISTRATION.
3.1 The Plan shall be administered by the Personnel Committee
heretofore established by the Board of Directors of the Company no
member of which shall be an employee of the Company or of any
subsidiary. The Committee shall have authority, not inconsistently
with the Plan, (a) to determine which of the eligible Employees of
the Company and its subsidiaries shall be awarded basic stock
units; (b) to determine the times when basic stock units shall be
awarded and the number of basic stock units to be awarded to each
participant; (c) to determine the time or times when amounts may
become payable with respect to stock equivalent units within the
limits provided in the Plan; (d) to prescribe the form of the
instruments evidencing any basic stock units awarded under the Plan
(which forms need not be identical); (e) to adopt, amend and
rescind rules and regulations for the administration of the Plan
and the stock equivalent units and for its own acts and
proceedings; and (f) to decide all questions and connection settle
all controversies and disputes which may arise in with the Plan.
All decisions, determinations and interpretations of the Committee
shall be binding on all parties concerned.
3.2 The maximum number of basic stock units which may be awarded under
the Plan is 20,700,000 subject to adjustment as provided under
Section 8.3. No basic stock units may be awarded under the Plan
after April 15, 1999.
4. PARTICIPATION.
4.1 The participants in the Plan shall be such key salaried Employees
as may be selected from time to time by the Committee. Directors
who are not employees shall not be eligible. The Employees to whom
basic stock units are awarded at any time may include Employees to
whom basic stock units were previously granted under the Plan.
4.2 Awards of basic stock units shall be made from time to time by the
Committee in its discretion. In addition, with respect to any
award, the Committee shall have discretion to provide that all or
any portion of that award shall be contingent on achievement by the
participant or by any unit or units of the Company of any
performance goal or goals over any period or periods of time ending
before March 15 of the third year following the date of the award.
Notwithstanding the above, the Committee may not award more than
50,000 basic stock units to any participant in any calendar year
subject to adjustment as provided under Section 8.3.
5. INDIVIDUAL ACCOUNTS.
5.1 The Committee shall maintain a separate account for each award made
under the Plan. Each such account shall show the information
necessary to compute the participant's total credits in respect of
each award, including the number of basic stock units awarded to
the participant, the value of an equal number of shares on the date
of the award, the amount credited to the account in respect of
dividends, as provided below, the number of dividend equivalent
units credited to the account and details as to any payments under
the Plan which are deducted from the account.
5.2 Whenever the Company pays a dividend (other than a stock dividend)
upon its outstanding common stock, there shall be credited to the
separate account for each award a dollar amount equal to the value
of such dividend per share multiplied by the number of stock
equivalent units credited to the account on the record date for
such dividend. However, no such credits shall be made with respect
to any award after the maturity date thereof or after the date on
which the participant ceases to be an employee. As of March 15 in
each year the aggregate of the amounts so credited to the account
since the prior March 15 shall be converted into a number of
dividend equivalent units by dividing such aggregate by the value
of a share.
5.3 In the event of a dividend payable in shares, or in the event of a
stock split or combination of shares, the Committee shall make a
corresponding change in the number of basic stock units and
dividend equivalent units then credited to the account.
5.4 On the maturity date of an award, the total amount payable with
respect to such award shall become a fixed amount which will not
change thereafter except that the Committee may provide for the
payment of interest beginning at maturity on amounts whose payment
is deferred to a date thereafter. Such fixed amount shall be the
total credits in respect of such award on such maturity date.
5.5 Whenever a payment is made under the Plan to a participant with
respect to any award, there shall be a corresponding reduction in
the number of stock equivalent units and other amounts credited to
the participant's account in respect of such award, or in the case
of a payment after maturity date or after the date on which the
participant ceases to be an employee, in the amount then credited
to the account. A similar reduction shall be made if a participant
forfeits any portion of his interest in any awards.
6. PAYMENT.
6.1 Payments to a participant under the Plan may be made from time to
time when segments of his total credits in respect of an award
become vested, or payment may be deferred, all in accordance with
rules established from time to time by the Committee.
6.2.1 With respect to awards made on or before 12/31/83 fifteen percent
of the total credits in respect of an award shall become vested
on March 15 of the fourth calendar year following the calendar
year of the award, an additional fifteen percent thereof (or, in
cases of vesting after one or more prior payments under Section
6.3, the applicable vesting percentage thereof as provided below)
shall become vested on March 15 of the fifth, sixth, seventh,
eighth, and ninth calendar years following the calendar year of
the award, and any unvested balance thereof shall become vested
on the maturity date of such award.
6.2.2 With respect to awards made after 12/31/83 twenty percent of the
total credits in respect of an award shall become vested on March
15 of the third calendar year following the calendar year of the
award, an additional twenty percent thereof (or, in cases of
vesting after one or more prior payments under Section 6.3, the
applicable vesting percentage thereof as provided below) shall
become vested on March 15 of the fourth, fifth, and sixth
calendar years following the calendar year of the award, and any
unvested balance thereof shall become vested on the maturity date
of such award.
6.2.3 Such vesting as described above shall occur only if the
participant is an employee on the date of vesting and has been an
employee continuously since the date of the award. The total
credits in respect of all awards not at that time subject to any
contingency pursuant to Section 4.2 shall become fully vested if
the participant, while an employee, dies, incurs a disability,
retires prior to his normal retirement date with the consent of
the Company and under conditions approved by the Committee, or
retires on or after his normal retirement date, and the total
amount payable with respect thereto shall become a fixed amount
which will not change thereafter, except that the Committee may
provide for the payment of interest on amounts whose payment is
deferred to a date thereafter. If the employment of a
participant terminates as a result of the merger, sale or other
absorption or termination of operations of a subsidiary or a
division, all credits in respect of any such participant's award
not at that time subject to any contingency pursuant to Section
4.2 may become vested if the Committee, in its sole discretion,
determines such action to be in the best interests of the
Company, and the total amount payable with respect thereto shall
become a fixed amount which will not change thereafter, except
that the Committee may provide for the payment of interest on
amounts whose payment is deferred to a date thereafter. In
connection with the determination of any participant's vested
rights under this paragraph 6.2.3, the Committee may
retroactively remove any contingency in effect pursuant to
Section 4.2. Notwithstanding the above, in the event of an
Unapproved or Approved Change in Control, if a participant
retires prior to his normal retirement date the consent of the
Company shall not be required and all credits and all
contingencies with respect to the awards of such participant
shall become fully vested and immediately payable.
6.2.3.l In the event of an Unapproved Change in Control, all
contingencies then in effect pursuant to Section 4.2 shall be
automatically removed and the total credits in respect of all
awards of a participant shall become fully vested and payable
(1) upon termination of the employment of a participant for any
reason within one year following the Unapproved Change in
control, or (2) upon termination of the employment of a
participant at any time after an Unapproved Change in Control
if such termination (a) is initiated by the Company, except
that termination for willful misconduct shall not be treated as
a termination under this subparagraph (2), or (b) is initiated
by the participant for Good Reason. In the event of an
Approved Change in Control, all contingencies then in effect
pursuant to Section 4.2 shall be automatically removed and the
total credits in respect of all awards of a participant shall
become fully vested and payable upon termination of the
employment of a participant after an Approved Change in Control
if such termination is (i) initiated by the Company, except
that termination for willful misconduct shall not be treated as
a termination under this sentence, or (ii) initiated by the
participant for Good Reason. Good Reason, as used herein,
shall mean any of the following: Assignment of any duties
inconsistent with the position, duties, responsibilities and
status of the employee or reduction or adverse change in the
nature or status of responsibilities of the employee from those
which existed on the date immediately preceding an Approved or
Unapproved Change in Control; any reduction by the Company or
any successor entity in the employees' compensation including
benefits, other than such reduction required by law or required
to maintain the tax-qualified status of any benefit Plan, from
those which existed on the date immediately preceding an
Approved or Unapproved Change in Control; or the Company or any
successor entity requiring the employee to be based at a
location in excess of fifty miles from the location where the
employee is based on the date immediately preceding an Approved
or Unapproved Change in Control.
6.2.3.2 Notwithstanding any other provision of this Plan, (a) upon an
employer-initiated termination of employment of a participant
pursuant to the Restructuring Plan approved by the Board of
Directors of the Company at its meeting on December 18, 1986,
the Reorganization Plan approved by the Board of Directors of
the Company at its meeting on December 14, 1989 or the 1994
Realignment Plan and Parker Integration Plan, or (b) upon the
sale or other disposition of the unit, division or subsidiary
in which a participant is employed pursuant to the
Restructuring Plan approved by the Board of Directors of the
Company at its meeting on December 18, 1986, or the
Reorganization Plan approved by the Board of Directors of the
Company at its meeting on December 14, 1989, which sale or
other disposition results in the participant no longer being
employed by the Company or any of its subsidiaries, all
contingencies then in effect pursuant to Section 4.2 shall be
automatically removed except with respect to contingencies
which expire on February 19, 1987. Further, in such event, the
total credits in respect of all awards of a participant for
which no contingencies remain in effect shall become fully
vested and the amount of such awards shall be fixed and
payable. With respect to awards or segments of awards which
become vested under this subparagraph or any other award or
segment thereof which becomes payable by reason of the
participant's termination of employment, the participant may
elect to receive such awards upon termination of employment or
may, prior to the date participant's employment with the
Company or any subsidiary terminates, elect to defer such award
in accordance with the provisions of Paragraph 6.2.3 and rules
established from time to time by the Committee.
Notwithstanding the above, the removal of contingencies and the
granting of vesting and deferral rights provided for in this
Paragraph 6.2.3.2 shall serve as partial consideration for a
settlement of all claims and disputes which the participant may
have against the Company, its subsidiaries, employees and
agents and shall be subject to the execution by the participant
of a release and settlement agreement in a form to be
prescribed by the Committee.
6.2.4 In order to make proper adjustment for any previous payments
under Section 6.3, the applicable vesting percentage to be used
in computing vested segments under the foregoing provisions of
this Section 6.2 and in computing the amount of a payment under
Section 6.3 or Section 6.4 shall be determined as follows
(a) In computing such vested segment or the amount or a
payment under section 6.3 for awards made prior to 12/31/83,
the applicable vesting percentage to be applied to the total
credits in respect of a particular award shall be equal in
value to a fraction whose numerator is fifteen (or ten in the
case of the final vested installment) and whose denominator
is (i) 100 minus (ii) fifteen multiplied by the number of
vested segments previously paid to the participant under
Section 6.3. Payment of each vested segment shall be
considered a separate payment.
(b) In the case of a payment under section 6.4 for awards
made prior to 12/31/83, the applicable vesting percentage to
be applied to the total credits in respect of a particular
award shall be equal in value to a fraction whose numerator
is (i) fifteen multiplied by the number of segments of the
award which have become vested in accordance with the
foregoing provisions prior to the date on which the
participant ceases to be an employee (but not more than 100)
minus (ii) fifteen multiplied by the number of vested
segments previously paid to the participant under Section
6.3, and whose denominator is 100 minus (ii) above.
(c) In computing such vested segment or the amount of a
payment under section 6.3 for awards made after 12/31/83, the
applicable vesting percentage to be applied to the total
credits in respect of a particular award shall be equal in
value to a fraction whose numerator is twenty and whose
denominator is (i) 100 minus (ii) twenty multiplied by the
number of vested segments previously paid to the participant
under Section 6.3. Payment of each vested segment shall be
considered a separate payment.
(d) In the case of a payment under section 6.4 for awards
made after 12/31/83, the applicable vesting percentage to be
applied to the total credits in respect of a particular award
shall be equal in value to a fraction whose numerator is (i)
twenty multiplied by the number of segments of the award
which have become vested in accordance with the foregoing
provisions prior to the date on which the participant ceases
to be an employee (but not more than 100) minus (ii) twenty
multiplied by the number of vested segments previously paid
to the participant under Section 6.3, and whose denominator
is 100 minus (ii) above.
6.3 Prior to any date on which a participant is to acquire a vested
interest or additional vested interest in the total credits in
respect of an award, the participant shall make an election, at the
time and in a manner specified by the Committee, as to the time
when payment is to be made of the segment or segments of such total
credits which may become vested on such date. The participant may
elect (a) to receive payment within a reasonable time after such
date or (b) to defer payment in accordance with rules established
from time to time by the Committee. In the event of an Approved or
Unapproved Change in Control, the participant may, upon any date,
revoke his election to defer receipt of any or all interests in
respect of an award and the Company shall make payment to the
participant of the value of any vested interest or interests,
within a reasonable time after such revocation and with respect to
interests which have not yet vested as of the date of such
revocation, within a reasonable time after such interests become
vested. If no such election is made, payment shall be made within
a reasonable time after the date on which such vested interest or
additional vested interest is acquired.
The amount of any payment shall be computed by multiplying the total
credits in respect of the award at the time of payment, or in the case
of revocation of an election to defer, at the time of such revocation,
by the applicable vesting percentage. The Committee may provide for
the payment of interest beginning upon maturity for amounts deferred
beyond maturity.
6.4 If a participant ceases to be an employee for any reason not
specified in Section 6.2, his vested interest in respect of each
award shall thereupon become a fixed amount which will not change
thereafter. Such fixed amounts shall be determined by multiplying
the total credits in respect of each award on the date of
termination of employment by the applicable vesting percentage.
The participant shall thereupon forfeit his interest in any amounts
then credited to his account to the extent his interest has not
become vested. Payment of vested interests shall be made in
accordance with rules established from time to time by the
Committee.
6.5 If a participant dies prior to termination of his employment, an
amount equal to his total credits in respect of all awards not
subject to any contingency pursuant to Section 4.2 shall be paid to
his executor or administrator or as otherwise provided by law
valued as of the date of death.
6.6 All payments will be made in cash and will be subject to any
required tax withholdings.
7. AMENDMENT AND TERMINATION.
7.1 The Board of Directors of the Company or the Personnel Committee of
the Board of Directors if and to the extent authorized may at any
time amend the Plan for the purposes of satisfying the requirements
of any changes in applicable laws or regulations or for any other
purpose which may be permitted by law, except that neither the
Board of Directors or the Personnel Committee of the Board of
Directors may, without the approval of the stockholders of the
Company, increase the maximum number of basic stock units that may
be awarded under the Plan or the maximum annual grant for each
participant (subject to Section 8.3) or increase the time within
which basic stock units may be awarded, as provided in Section 3.2,
or extend the maturity date of an award beyond March 15 of the
tenth calendar year following the calendar year in which the award
was made. Notwithstanding the above, in the event of an Approved
or Unapproved Change in Control, no amendment to the Plan which
provides for prospective Plan benefits and other terms and
conditions any less favorable to Plan participants than those which
existed prior to the amendment shall be effective unless it
provides that all contingencies which are then in existence be
removed and all awards which are unvested prior to such amendment
shall become immediately vested and payable.
7.2 The Board of Directors of the Company may terminate the Plan at any
time except that after an Approved or Unapproved Change in Control
such Plan may not be terminated without providing that all
contingencies then in existence shall be removed and all unvested
awards shall become immediately vested and payable.
7.3 No such amendment or termination shall adversely affect the rights
of any participant (without his consent) under any award previously
made or after an Approved Change in Control deprive a participant
of a benefit or right which became operative upon an Approved
Change in Control or after an Unapproved Change in Control deprive
a participant of a benefit or right which became operative upon an
Unapproved Change in Control.
8. MISCELLANEOUS.
8.1 The interest under the Plan of any participant, his heirs or
legatees shall not be alienable by the participant, his heirs or
legatees by assignment or any other method and shall not be subject
to being taken by his creditors by any process whatsoever.
8.2 The Plan shall not be deemed to give any participant or employee
the right to be retained in the employ of the Company or any
subsidiary nor shall the Plan interfere with the right of the
Company or any subsidiary to discharge any employee at any time.
8.3 In the event of a stock dividend, split-up or combinations of
shares, recapitalization or merger in which the Company is the
surviving corporation or other similar capital change, the number
and kind of shares of stock or securities of the Company to be used
as a basis for granting awards under the Plan, the units then
outstanding or to be granted thereunder, the maximum number of
basic stock units which may be granted, the maximum annual grant
for each participant, the unit value and other relevant provisions
shall be appropriately adjusted by the Board of Directors of the
Company, whose determination shall be binding on all persons. In
the event of a consolidation or a merger in which the Company is
not the surviving corporation or complete liquidation of the
Company, all outstanding basic stock units and dividend equivalent
units shall thereafter accrue no further value, provided that at
least twenty days prior to the effective date of any such
consolidation or merger, the Board of Directors shall either (a)
make all outstanding basic units and dividend equivalent units
immediately vested and payable, or (b) arrange to have the
surviving corporation grant replacement units to the participants.
THE GILLETTE COMPANY PRUDENTIAL TOWER BUILDING
BOSTON, MA 02199
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF THE COMPANY
The undersigned (a) revokes all prior proxies and appoints and
authorizes Jill C. Richardson and William J. McMorrow and each of
them with power of substitution, as the Proxy Committee, to vote the
stock of the undersigned at the 1994 Annual Meeting of the stockholders
of The Gillette Company on April 21, 1994, and any adjournment thereof,
as specified on the reverse side of this card on proposals 1 through 5
and in their discretion on all other matters coming before the meeting
and, if applicable, (b) directs the trustee of each plan, as indicated
on the reverse, to vote the shares allocated to the account(s) of the
undersigned at the 1994 Annual Meeting and at any adjournment thereof.
Plan shares for which no directions are received, and ESOP shares which
have not been allocated to participant accounts, will be voted by each
trustee on each issue in proportion to those shares allocated to
participant accounts of the same plan for which voting instructions on
that issue have been received by that trustee. Each trustee is
authorized to vote in its judgment or to empower the Proxy Committee to
vote in accordance with the Proxy Committee's judgment, on such other
business as may properly come before the meeting and any adjournment
thereof.
(Important - To be signed and dated on reverse side)
( SEE REVERSE SIDE )
Please mark
( X ) votes as in
this example
This proxy will be voted as directed by the stockholder, but if no
choice is specified it will be voted FOR proposals 1 through 5.
The Board of Directors recommends a vote FOR proposals 1 through 5
1. Election of directors for 3-year terms:
H.H. Jacobi, A.B. Trowbridge, J.F. Turley
FOR AGAINST ABSTAIN FOR AGAINST ABSTAIN
Withhold 2. Approval of the Out-
For All ( ) From All ( ) side Directors' Stock ( ) ( ) ( )
Nominees Nominees Ownership Plan.
3. Amendment of the
1971 Stock Option ( ) ( ) ( )
Plan
4. Amendment of the
Stock Equivalent ( ) ( )
Unit Plan
5. Approval of the
Appointment of ( ) ( )
KPMG Peat Marwick
as Auditors
APPENDIX
Stockholder Letter -- Gillette Logo & Letterhead of Alfred M. Zeien
in top left corner.
Notice of Annual Meeting -- Gillette Logo in top left corner.
Proxy Statement Page One -- Gillette Logo in top left corner.
( END OF DOCUMENT. )
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