SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for use of the Commission Only (as
permitted by Rule 14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to 240.14a-11(c) or
240.14a-12
GREIF BROS. CORPORATION
(Name of Registrant as Specified in its Charter)
NOT APPLICABLE
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required
/ / Fee computed on table below per Exchange Act Rules
14(a)-6(i)(4) and O-11
(1) Title of each class of securities to which
transaction applies:
____________________________________________
(2) Aggregate number of securities to which
transaction applies:
____________________________________________
(3) Per unit price or other underlying value of
transaction computed pursuant to Exchange Act
Rule O-11:
____________________________________________
(4) Proposed minimum aggregate value of
transaction:
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(5) Total fee paid:
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/ / Fee paid previously with preliminary materials
/ / Check box if any part of the fee is offset as
provided by Exchange Act Rule O-11(a)(2) and
identify the filing for which the offsetting fee
was paid previously. Identify the previous filing
by registration statement number, or the Form or
Schedule and the date of its filing,
(1) Amount Previously Paid:____________________
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(4) Date Filed:________________________________
GREIF BROS. CORPORATION
425 WINTER ROAD
DELAWARE, OHIO 43015
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To the Class B Stockholders of
Greif Bros. Corporation:
Notice is hereby given that the Annual Meeting of
Stockholders of Greif Bros. Corporation (the "Company") will
be held at the principal executive offices of the Company,
425 Winter Road, Delaware, Ohio 43015, on February 26, 2001,
at 10:00 A.M., E.S.T., for the following purposes:
1. To elect nine directors to serve for a one-year
term;
2. To consider and vote upon a proposal to approve
the Company's 2001 Management Equity Incentive and
Compensation Plan; and
3. To transact such other business as may properly
come before the meeting or any adjournment or
adjournments thereof.
Only Stockholders of record of the Class B Common Stock
at the close of business on January 24, 2001, will be
entitled to notice of and to vote at this meeting.
Whether or not you plan to attend this meeting, we hope
that you will sign the enclosed proxy and return it promptly
in the enclosed envelope. If you are able to attend the
meeting and wish to vote in person, at your request we will
cancel your proxy.
January 26, 2001 Kenneth E. Kutcher
Secretary
GREIF BROS. CORPORATION
425 WINTER ROAD
DELAWARE, OHIO 43015
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD FEBRUARY 26, 2001
To the Class B Stockholders of Greif Bros. Corporation:
This Proxy Statement is being furnished to the Class B
Stockholders of Greif Bros. Corporation, a Delaware corporation
(the "Company"), in connection with the solicitation by
Management of proxies that will be used at the Annual Meeting
scheduled to be held on February 26, 2001, at 10:00 A.M., E.S.T.,
at the Company's principal executive offices, 425 Winter Road,
Delaware, Ohio 43015. It is anticipated that this Proxy
Statement and form of proxy will first be sent to the Class B
Stockholders on or about January 26, 2001.
PROXIES AND VOTING
At the meeting, the Class B Stockholders will vote upon:
(1) the election of nine directors; (2) a proposal to approve the
Company's 2001 Management Equity Incentive and Compensation Plan;
and (3) such other business as may properly come before the
meeting or any and all adjournments.
Class B Stockholders do not have the right to cumulate their
votes in the election of directors, and the nine nominees
receiving the highest number of votes will be elected as
directors. The vote required for the approval of the Company's
2001 Management Equity Incentive and Compensation Plan is the
favorable vote of a majority of the outstanding shares of the
Class B Common Stock present, in person or by proxy, at the
Annual Meeting.
Shares of Class B Common Stock represented by properly
executed proxies will be voted at the Annual Meeting in
accordance with the choices indicated on the proxy. If no
choices are indicated on a proxy, the shares represented by that
proxy will be voted in favor of the nine nominees described in
this Proxy Statement and in favor of the proposal to approve the
Company's 2001 Management Equity Incentive and Compensation Plan.
Any proxy may be revoked at any time prior to its exercise by
delivering to the Company a subsequently dated proxy or by giving
notice of revocation to the Company in writing or in open
meeting. A Class B Stockholder's presence at the Annual Meeting
does not by itself revoke the proxy.
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Abstentions will be considered as shares of Class B Common
Stock present and entitled to vote at the Annual Meeting and will
be counted for purposes of determining whether a quorum is
present. Abstentions will not be counted in determining the
votes cast for the election of directors and will not have a
positive or negative effect on the outcome of the election.
Because the proposal to approve the Company's 2001 Management
Equity Incentive and Compensation Plan requires the favorable
vote of a majority of the outstanding shares of Class B Common
Stock present, in person or by proxy, at the Annual Meeting,
abstentions will have the same effect as a vote against this
proposal.
If your Class B Common Stock is held in street name, you
will need to instruct your broker regarding how to vote your
Class B Common Stock. If you do not provide your broker with
voting instructions regarding the election of directors, your
broker will nevertheless have the discretion to vote your shares
of Class B Common Stock for the election of directors. There are
certain other matters, however, over which your broker does not
have discretion to vote your Class B Common Stock without your
instructions - these situations are referred to as "broker non-
votes." The proposal regarding the approval of the Company's
2001 Management Equity Incentive and Compensation Plan falls into
this category. If you do not provide your broker with voting
instructions on this proposal, your shares of Class B Common
Stock will not be voted on this proposal. Because broker non-
votes will be considered as shares of Class B Common Stock
present and entitled to vote for this proposal, broker non-votes
will have the same effects as a vote against this proposal.
The close of business on January 24, 2001, has been fixed as
the record date for the determination of Class B Stockholders
entitled to notice of and to vote at the Annual Meeting and any
adjournment thereof. On the record date, there were outstanding
and entitled to vote 11,842,859 shares of Class B Common Stock.
Each share is entitled to one vote.
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PROPOSAL NO. 1 - ELECTION OF DIRECTORS
Elect Nine Directors to Serve for a One-Year Term
The number of directors currently is fixed at nine, with
each director serving for a one-year term. At the Annual
Meeting, shares of the Class B Common Stock represented by the
proxies, unless otherwise specified, will be voted to elect as
directors Michael J. Gasser, Charles R. Chandler, Michael H.
Dempsey, Naomi C. Dempsey, Daniel J. Gunsett, John C. Kane,
Robert C. Macauley, David J. Olderman and William B. Sparks, Jr.,
the nine persons nominated by the Nominating Committee of the
Board of Directors, all of whom are currently directors of the
Company and have served continuously since their first election
or appointment. Each of the nominees has consented to being
named in the proxy statement and to serve if elected.
If any nominee is unable to accept the office of director,
or will not serve, which is not anticipated, the persons named in
the proxy will not have authority to vote it for another nominee.
Directors' Biographies
MICHAEL J. GASSER, 49, has been a director since 1991. He has
been Chairman of the Board of Directors and Chief Executive
Officer of the Company since 1994. He has been an executive
officer of the Company since 1988. He is a member of the
Executive, Nominating and Stock Repurchase Committees. He is
also a director for Bob Evans Farms, Inc., a restaurant and food
products company.
CHARLES R. CHANDLER, 65, has been a director since 1987. He has
been Vice Chairman of the Company since 1996. During 1999, Mr.
Chandler also became President of Soterra LLC, a subsidiary of
the Company. Prior to 1996, and for more than five years, Mr.
Chandler had been the President and Chief Operating Officer of
Virginia Fibre Corporation, a former subsidiary of the Company.
He is a member of the Executive Committee.
MICHAEL H. DEMPSEY, 44, has been a director since 1996. He is an
investor. Prior to 1997, and for more than five years, he had
been the President of Kuschall of America, a wheelchair
manufacturing company. He is a member of the Audit, Compensation
and Executive Committees. Mr. Dempsey is the son of Naomi C.
Dempsey.
NAOMI C. DEMPSEY, 84, has been a director since 1995. She is an
investor and member of the Nominating and Stock Option
Committees. Mrs. Dempsey is the mother of Michael H. Dempsey.
DANIEL J. GUNSETT, 52, has been a director since 1996. For more
than five years, he has been a partner with the law firm of Baker
& Hostetler LLP. He is a member of the Audit, Compensation,
Executive, Nominating, Stock Option and Stock Repurchase
Committees.
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JOHN C. KANE, 61, has been a director since 1999. Prior to 2001,
and for more than five years, he was President and Chief
Operating Officer of Cardinal Health, Inc., a health-care
services company, and was a director for Cardinal Health, Inc. He
is a member of the Audit, Compensation and Stock Option
Committees. He is also a director of Connetics Corporation, a
biopharmaceutical company.
ROBERT C. MACAULEY, 77, has been a director since 1979. He is an
investor. He is the founder of AmeriCares Foundation. Prior to
1998, and for more than five years, he had been the Chief
Executive Officer of Virginia Fibre Corporation, a former
subsidiary of the Company.
DAVID J. OLDERMAN, 65, has been a director since 1996. He is an
investor. Prior to 1997, and for more than five years, he had
been Chairman, owner and Chief Executive Officer of Carret and
Company, Inc., an investment consulting firm. He is a member of
the Audit, Compensation and Stock Option Committees. He is also
a director for Van Eck Global Funds, a group of mutual funds,
Laidig, Inc., an engineering company, Chubb Investment Funds, a
group of mutual funds, and Signal Corporation, a financial
services holding corporation.
WILLIAM B. SPARKS, JR., 59, has been a director since 1995. He
has been President and Chief Operating Officer of the Company
since 1995. Prior to that time, and for more than five years,
Mr. Sparks was Chief Executive Officer of Down River
International, Inc., a former subsidiary of the Company. He is a
member of the Executive Committee.
In the tabulating of votes, abstentions and broker non-votes
will be disregarded and have no effect on the outcome of the
vote.
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PROPOSAL NO. 2 - APPROVAL OF THE 2001 MANAGEMENT EQUITY INCENTIVE
AND COMPENSATION PLAN
On December 4, 2000, the Company adopted the 2001 Management
Equity Incentive and Compensation Plan (the "Plan"). The Stock
Option Plan Committee of the Company's Board of Directors (the
"Committee") is responsible for administering the Plan. The
purpose of the Plan is to advance the interests of the Company
and its stockholders by providing a means of attracting and
retaining key employees for the Company and its subsidiary
corporations. The Plan does so by awarding stock options and
shares of common stock to these key employees. The following
discussion describes these awards in more detail and also
explains other important aspects of the Plan. This discussion is
intended to be a summary of the material provisions of the Plan.
Because it is a summary, some details that may be important to
you are not included. For this reason, the entire Plan is
attached as Exhibit A to this proxy statement. The Company
encourages you to read the Plan in its entirety.
The following individuals ("Eligible Participants") are
eligible to receive awards under the Plan: officers and other key
employees of the Company or one or more of its subsidiaries who
have responsibilities affecting the management, development, or
financial success of the Company or one or more of its
subsidiaries. The Committee is responsible for determining which
officers and employees of the Company satisfy these criteria,
making them eligible to receive awards under the Plan. As of the
date of this proxy statement, the approximate number of
individuals who qualify as an Eligible Participant is 200.
The types of awards that may be received under the Plan fall
within two categories: stock options and shares of stock.
Specifically, the Plan provides for the following type of awards:
* Incentive Stock Options
* Nonqualified Options
* Shares of the Company's Class A Common Stock ("Restricted
Shares")
* Shares of the Company's Common Stock ("Performance Shares").
The awards listed above may be granted alone or in
combination with each other. Each award must be authorized by the
Committee and evidenced by a written agreement. Among other
things, the agreement must describe the award and state that the
award is subject to all the terms and provisions of the Plan and
any other terms and provisions, not inconsistent with the Plan,
as the Committee may approve. The date on which the Committee
approves the granting of an Award is the date on which the award
is granted for all purposes, unless the Committee otherwise
specifies in its approval. The granting of an award under the
Plan, however, is effective only if and when a written agreement
is duly executed and delivered by or on behalf of the Company and
the Eligible Participant.
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Awards of Stock Options
The Plan allows the Committee to award two types of stock
options to Eligible Participants: Incentive Stock Options and
Nonqualified Options (together, "Stock Options"). The difference
between the two relates to their tax treatment under the Internal
Revenue Code of 1986 (the "Code"). Incentive Stock Options
qualify for special tax treatment under Section 422 of the Code;
Non-qualified Options do not qualify for such special tax
treatment.
The following is a summary of the material terms and
provisions of the Plan governing Stock Options:
Exercise Price. The exercise price per Share issuable upon
exercise of a Stock Option may not be less than the fair market
value per Share - as "fair market value" is defined in the Plan -
on the date the Stock Option is granted. However, if the
Eligible Participant at the time an Incentive Stock Option is
granted owns stock with more than 10% of the total combined
voting power of all classes of stock of the Company or of any
subsidiary, then the exercise price per Share must be at least
110% of the fair market value of the Shares subject to the
Incentive Stock Option on the date of grant.
Vesting and Exercise. The Committee has authority to
determine when and under what conditions the Shares underlying a
Stock Option will vest. Stock Options are exercisable only with
respect to Shares that have become vested. The Committee also
has authority to accelerate the time at which a Stock Option will
be exercisable if it determines that accelerating the time is
appropriate as a result of changes in the law or other
circumstances.
Term. Stock Options are not exercisable after the
expiration of 10 years from the date on which the Stock Option
was granted. With respect to Incentive Stock Options, if the
Eligible Participant at the time the Incentive Stock Option is
granted owns stock possessing more than 10% of the total combined
voting power of all classes of stock of the Company or any
subsidiary, then the Incentive Stock Option will not be
exercisable after the expiration of five years from the date on
which the Incentive Stock Option was granted.
Restrictions on Shares Subject to Stock Options. The
Committee has authority to make Shares issued upon the exercise
of a Stock Option subject to restrictions or conditions,
including those related to disposition and transferability of the
Shares.
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Transferability. In general, Stock Options are not
transferable and are exercisable during an Eligible Participant's
lifetime only by the Participant or his or her legal
representative. There are, however, exceptions to this general
rule. Incentive Stock Options may be transferred upon an
Eligible Participant's death by will or the laws of descent and
distribution. Nonqualified Options may be transferred by will or
the laws of descent and distribution. The Committee may also
provide for the irrevocable transfer of any Nonqualified Option
to an Eligible Participant's parents, spouse, domestic or life
partner, children, grandchildren, nieces, nephews or to the
trustee of a trust for the principal benefit of one or more such
persons or to a partnership whose only partners are one or more
such persons. In regard to all of the foregoing transfers, the
Stock Option will be exercisable only by the transferee or his or
her legal representative.
Termination of Stock Options. The Plan provides for the
termination of a Stock Option under some circumstances following
an Eligible Participant's termination of employment. Whether a
Stock Option will terminate or continue to be exercisable depends
upon the reason for the Eligible Participant's termination of
employment. The possibilities under the Plan are summarized
below.
Death or Disability. If an Eligible Participant's
employment with the Company terminates as a result of his or her
death or disability, then, unless otherwise determined by the
Committee within 60 days of the death or disability, to the
extent a Stock Option held by the Eligible Participant is not
vested as of the date of death or disability, the Stock Option
will automatically terminate. To the extent the Stock Option is
vested as of the date of death or disability, the Stock Option
may be exercised by the Eligible Participant, the legal
representative of his or her estate, his or her legatee under his
or her will, or the distributee of his or her estate for a period
of one year (or, with respect to Nonqualified Options, the period
specified by the Committee) from the date of death or disability
or until the expiration of the stated term of the Stock Option,
whichever period is shorter.
Retirement. If an Eligible Participant's employment with
the Company terminates as a result of his or her retirement, then
to the extent a Stock Option held by the Eligible Participant is
not vested it will be forfeited unless the Stock Option agreement
provides otherwise. Each vested Stock Option may be exercised by
the Eligible Participant according to its terms, including,
without limitation, for whatever period after the termination of
employment as is set forth in the Stock Option agreement.
For Cause. If an Eligible Participant's employment with the
Company or its subsidiaries is terminated for cause, all
unexercised Stock Options held by the Eligible Participant will
immediately lapse. The Committee is responsible for determining
whether termination of an Eligible Participant's employment is
for "cause".
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Other Reasons. If an Eligible Participant's employment with
the Company and its subsidiaries terminates for any reason other
than death, disability, or retirement, then to the extent any
Stock Option held by him or her is not vested as of the date of
termination, the Stock Option will automatically terminate. To
the extent any Stock Option is vested as of the date of
termination, the Stock Option may be exercised for a period of 90
days (or, with respect to Nonqualified Options, the period
specified by the Committee) from the date of termination or until
the expiration of the stated term of the Stock Option, whichever
period is shorter.
Tax Consequences. The tax treatment of a Stock Option
depends upon whether it is an Incentive Stock Option or a
Nonqualified Option. The differences are summarized below.
Incentive Stock Options. In general, for federal income tax
purposes under present law:
(a) Neither the grant nor the exercise of an Incentive Stock
Option, by itself, will result in income to the optionee;
however, the excess of the fair market value of the Company's
shares at the time of exercise over the exercise price is (unless
there is a disposition of shares acquired upon exercise of an
Incentive Stock Option in the taxable year of exercise)
includable in alternative minimum taxable income which may, under
certain circumstances, result in an alternative minimum tax
liability to the optionee.
(b) If shares acquired upon exercise of an Incentive Stock
Option are disposed of in a taxable transaction after the later
of two years from the date on which the Incentive Stock Option is
granted or one year from the date on which such shares are
transferred to the optionee, long-term capital gain or loss will
be realized by the optionee in an amount equal to the difference
between the amount realized by the optionee and the optionee's
basis which, except as provided in (e) below, is the exercise
price.
(c) Except as provided in (e) below, if the shares acquired
upon the exercise of an Incentive Stock Option are disposed of
within the two-year period from the date of grant or the one-year
period after the transfer of the shares to the optionee upon
exercise of the Incentive Stock Option (a "disqualifying
disposition"):
(i) Ordinary income will be realized by the optionee at
the time of the disqualifying disposition in the amount of
the excess, if any, of the fair market value of the shares
at the time of such exercise over the exercise price, but
not in an amount exceeding the excess, if any, of the
amount realized by the optionee over the exercise price.
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(ii) Short-term or long-term capital gain will be
realized by the optionee at the time of the disqualifying
disposition in an amount equal to the excess, if any, of
the amount realized over the fair market value of the
shares at the time of such exercise.
(iii) Short-term or long-term capital loss will be
realized by the optionee at the time of the disqualifying
disposition in an amount equal to the excess, if any, of
the exercise price over the amount realized.
(d) No deduction will be allowed to the employer corporation
with respect to Incentive Stock Options granted or shares
transferred upon exercise thereof, except that if a disposition
is made by the optionee within the two-year period referred to
above, the employer corporation will be entitled to a deduction
in the taxable year in which the disposition occurred in an
amount equal to the amount of ordinary income realized by the
optionee making the disposition.
(e) With respect to the exercise of an Incentive Stock
Option and the payment of the option price by the delivery of
shares to the extent that the number of shares received does not
exceed the number of shares surrendered, no taxable income will
be realized by the optionee at that time, the tax basis of the
shares received will be the same as the tax basis of the shares
surrendered, and the holding period (except for purposes of the
one-year period referred to in (c) above) of the optionee in the
shares received will include his or her holding period in the
shares surrendered. To the extent that the number of shares
received exceeds the number of shares surrendered, no taxable
income will be realized by the optionee at that time, such excess
shares will be considered Incentive Stock Option stock with a
zero basis, and the holding period of the optionee in such shares
will begin on the date such shares are transferred to the
optionee. If the shares surrendered were acquired as the result
of the exercise of an Incentive Stock Option and the surrender
takes place within two years from the date the option relating to
the surrendered shares was granted or within one year from the
date of such exercise, the surrender will result in a
disqualifying disposition and the optionee will realize ordinary
income at the time of exercise of the shares surrendered over the
basis of such shares. If any of the shares received are disposed
of within one year after the shares are transferred to the
optionee, the optionee will be treated as first disposing of the
shares with a zero basis.
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Nonqualified Options. In general, for federal income tax
purposes under present law:
(a) The grant of a Nonqualified Option, by itself, will not
result in income to the optionee.
(b) Except as provided in (e) below, the exercise of a
Nonqualified Option (in whole or in part, according to its terms)
will result in ordinary income to the optionee at that time in an
amount equal to the excess (if any) of the fair market value of
the Company's shares on the date of exercise over the exercise
price.
(c) Except as provided in (e) below, the optionee's tax
basis of shares acquired upon the exercise of a Nonqualified
Option, which will be used to determine the amount of any capital
gain or loss on a future taxable disposition of such shares, will
be the fair market value of the shares on the date of exercise.
(d) No deduction will be allowable to the employer
corporation upon the grant of a Nonqualified Option, but upon the
exercise of a Nonqualified Option, a deduction will be allowable
to the employer corporation at that time in an amount equal to
the amount of ordinary income realized by the optionee exercising
such Nonqualified Option if the employer corporation deducts and
withholds appropriate federal withholding tax.
(e) With respect to the exercise of a Nonqualified Option
and the payment of the exercise price by the delivery of shares,
to the extent that the number of shares received does not exceed
the number of shares surrendered, no taxable income will be
realized by the optionee at that time, the tax basis of shares
received will be the same as the tax basis of shares surrendered,
and the holding period of the optionee in shares received will
include his or her holding period in shares surrendered. To the
extent that the number of shares received exceeds the number of
shares surrendered, ordinary income will be realized by the
optionee at that time in the amount of the fair market value of
such excess shares, the tax basis of such shares will be equal to
the fair market value of such shares at the time of exercise, and
the holding period of the optionee in such shares will begin on
the date such shares are transferred to the optionee.
Awards of Restricted Shares
The Plan allows the Committee to award Restricted Shares to
Eligible Participants. As noted, "Restricted Shares" are shares
of the Company's Class A Common Stock. The following is a
summary of the material terms and provisions of the Plan
governing awards of Restricted Shares.
Price. The Committee is responsible for determining the
purchase price for Restricted Shares. The purchase price may be
zero.
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Acceptance of Restricted Shares. At the time of an award of
Restricted Shares, the Committee may determine that the
Restricted Shares will, after vesting, be further restricted as
to transferability or be subject to repurchase by the Company or
forfeiture upon the occurrence of certain events. Awards of
Restricted Shares must be accepted by the Eligible Participant
within 30 days (or the period specified by the Committee) after
the grant date by executing a Restricted Share Agreement.
Eligible Participants will not have any rights with respect to
the grant of Restricted Shares until they have executed a
Restricted Share Agreement, delivered a fully executed copy of it
to the Company, and otherwise complied with the applicable terms
and conditions of the award.
Share Restrictions. During whatever period has been
established by the Committee (the "Restriction Period"), Eligible
Participants will not be permitted to sell, transfer, pledge,
assign, or otherwise encumber the Restricted Shares. The
Committee has the authority, however, to accelerate the time at
which any or all of the restrictions shall lapse with respect to
any Restricted Shares. Unless otherwise determined by the
Committee, if an Eligible Participant's employment terminates
during the Restriction Period, all Restricted Shares held by the
Eligible Participant and still subject to restriction will be
forfeited. Upon the expiration of the Restriction Period, and
assuming no forfeiture, unrestricted Shares will be issued and
delivered to the Eligible Participant.
Stock Issuances and Restrictive Legends. Restricted Shares
may be issued in the form of a certificate, by book entry, or
otherwise, as determined by the Committee, and will bear an
appropriate restrictive legend. The Committee may, however,
require that Restricted Shares be issued to and held by the
Company or a trustee of a trust set up by the Committee to hold
the Restricted Shares until the restrictions on them have lapsed.
The Committee may also require the Eligible Participant to
deliver to the Company or such trustee, as appropriate, a stock
power, endorsed in blank, relating to the Restricted Shares
covered by the Award.
Termination of Employment. If an Eligible Participant's
employment by the Company and its subsidiaries terminates before
the end of any Restriction Period with the consent of the
Committee, or upon the Eligible Participant's death, retirement,
or disability, the Committee may authorize the issuance of all or
a portion of the Restricted Shares which would have been issued
to the Eligible Participant had his or her employment continued
to the end of the Restriction Period. If an Eligible
Participant's employment by the Company and its subsidiaries
terminates before the end of any Restriction Period for any other
reason, all Restricted Shares shall be forfeited.
11
Awards of Performance Shares
The Plan allows the Committee to award Performance Shares to
Eligible Participants. As noted, "Performance Shares" are shares
of the Company's Common Stock. Many of the provisions of the
Plan that govern Performance Shares are the same in all material
respects as those that govern Restricted Shares. For example,
the provisions that govern the purchase price of Performance
Shares, the acceptance of awards of Performance Shares, the
restrictions on the transfer or sale of Performance Shares, the
issuance of Performance Shares, and the effect of an Eligible
Participant's termination of employment are the same in all
material respects as those that govern Restricted Shares. The
provisions of the Plan are different, however, with respect to
the award of Performance Shares.
Awards of Performance Shares are based upon the achievement
of performance goals during a specified performance period. The
Committee establishes the performance period for each award of
Performance Shares at the time of the award. At the time of each
award, the Committee also establishes a range of performance
goals to be achieved during the performance period. The
performance goals are determined by the Committee using whatever
measures of performance are appropriate in the opinion of the
Committee. Such measures may include, for example, earnings or
return on capital. Performance Shares will be earned as
determined by the Committee with respect to the attainment of the
performance goals set for the performance period. Attainment of
the highest performance goal will earn 100% of the Performance
Shares awarded for the performance period; failure to attain the
lowest performance goal for the performance period will earn none
of the Performance Shares. The Committee is responsible for
determining whether a performance goal has been attained.
Administration of the Plan
The Committee is responsible for administering the Plan.
The Committee is composed of independent directors, meaning
directors who are not officers or employees of the Company.
Among other things, the Committee is responsible for the
following:
* selecting Eligible Participants to receive awards under the
Plan
* granting awards of Incentive Stock Options, Nonqualified
Options, Restricted Shares, and Performance Shares
* determining the number and type of awards to be granted
* determining the terms and conditions of awards
* interpreting the terms and provisions of the Plan, awards
granted under the Plan, and agreements relating to such awards
The Committee has sole discretion with respect to the
administration of the Plan, and its decisions are final and
binding on all persons.
12
Number of Shares Subject to the Plan
The maximum number of Shares that may be issued each year
under the Plan is determined by a formula that takes into
consideration the total number of Shares outstanding. The Plan
also contains anti-dilution provisions to account for potential
changes in the Company's capital structure. The maximum number
of Shares that may be issued each year is equal to (a) 5.0% of
the total outstanding Shares as of the last day of the Company's
immediately preceding fiscal year plus (b) the number of Shares
available for grant under the Plan as of June 1, 2001, plus (c)
any Shares related to awards that, in whole or in part, expire or
are unexercised, forfeited, terminated, surrendered, canceled,
settled in such a manner that all or some of the Shares covered
by an award are not issued to an Eligible Participant or returned
to the Company in payment of the exercise price or tax
withholding obligations in connection with outstanding awards,
plus (d) any unused portion of Shares available under section (a)
above for the immediately preceding two fiscal years (but not
prior to the Company's fiscal year ending October 31, 2001) as a
result of not being made subject to a grant or award in such
preceding two fiscal years. Notwithstanding the foregoing, for
the Company's fiscal year ending October 31, 2001, the number of
total outstanding Shares in section (a) above shall be calculated
as of January 1, 2001, rather than as of October 31, 2000.
The maximum number of Shares that may be issued each year
under the Plan is also subject to certain limits. Specifically,
in no event will more than 20% of all available Shares be granted
in the form of Awards other than Incentive Stock Options and
Nonqualified Options. In addition, the maximum number of
Incentive Stock Options that will be issued under the Plan during
its term is 2,500,000 Shares. The maximum number of Shares with
respect to which Incentive Stock Options, Nonqualified Options,
Restricted Shares, and Performance Shares may be granted to any
single Eligible Participant under the Plan during any single
fiscal year of the Company is 100,000.
Change in Control
If a change in control or potential change in control of the
Company occurs (as each is defined in the Plan), the following
will occur with respect to awards under the Plan:
* Stock Options that have not vested will vest and become
exercisable immediately; and
* all restrictions on Restricted Shares and Performance Shares
will lapse.
13
The Company may also terminate any or all unexercised Stock
Options not more than 30 days after a change in control or
potential change in control so long as the Company pays the
Eligible Participant cash in an amount equal to the difference
between the fair market value of the Shares subject to the Stock
Option and the exercise price of the Stock Option. If the fair
market value is less than the exercise price, then the Committee
may terminate the Stock Option without any payment.
The Board of Directors unanimously recommends a vote "For"
approval of the 2001 Management Equity Incentive and Compensation
Plan.
14
Board of Directors Committees and Meetings
The Board held six meetings during the 2000 fiscal year.
Each director attended at least 75% of the meetings held by the
Board and committees on which he or she served during the 2000
fiscal year.
The Board has established an Executive Committee, a
Compensation Committee, an Audit Committee, a Stock Option
Committee, a Stock Repurchase Committee and a Nominating
Committee.
The Executive Committee, whose current members are Messrs.
Gasser, Chandler, Dempsey, Gunsett and Sparks, has the same
authority, subject to certain limitations, as the Board during
intervals between meetings of the Board. The Executive Committee
held five meetings during the 2000 fiscal year.
The Compensation Committee, whose current members are Mrs.
Dempsey and Messrs. Gunsett, Kane and Olderman, is responsible
for evaluating the compensation, fringe benefits and perquisites
provided to the Company's officers and adopting compensation
policies applicable to the Company's executive officers,
including the specific relationship, if any, of corporate
performance to executive compensation and the factors and
criteria upon which the compensation of the Company's Chief
Executive Officer should be based. The Compensation Committee
held three meetings during the 2000 fiscal year.
The Audit Committee, whose current members are Messrs.
Dempsey, Gunsett, Kane and Olderman, is responsible for
recommending the appointment of the Company's auditors to the
Board, reviewing with such auditors the scope and results of
their audit, reviewing the Company's accounting functions,
operations and management, and considering the adequacy and
effectiveness of the internal accounting controls and internal
auditing methods and procedures of the Company. The Audit
Committee held five meetings during the 2000 fiscal year.
The Stock Option Committee, whose current members are Mrs.
Dempsey and Messrs. Gunsett, Kane and Olderman, is responsible
for administering the Company's Incentive Stock Option Plan which
provides for the granting of options for shares of the Company's
Class A Common Stock to key employees. The Stock Option Committee
held one meeting during the 2000 fiscal year.
The Stock Repurchase Committee, whose current members are
Messrs. Gasser and Gunsett, is responsible for administering the
Company's Stock Repurchase Program. The Stock Repurchase
Committee held five meetings during the 2000 fiscal year.
15
The Nominating Committee, whose current members are Mrs.
Dempsey and Messrs. Gasser and Gunsett, is responsible for
nominating members to the Board and committees. The Nominating
Committee held one meeting to consider and nominate the nine
persons described in this Proxy Statement.
The Nominating Committee will consider for nomination as
directors of the Company persons recommended by the stockholders
of the Company. In order to recommend a person for the 2002
Annual Meeting, a stockholder must deliver a written
recommendation to the Secretary of the Company on or prior to 120
days in advance of the first anniversary of the date of this
Proxy Statement (the "Notice Date"). In order to be considered by
the Nominating Committee, the written recommendation must contain
the following information: (a) the name and address, as they
appear on the Company's books, of the stockholder making the
recommendation; (b) the class and number of shares of capital
stock of the Company beneficially owned by such stockholder; (c)
the name and address of the person recommended as a nominee and a
brief description of the background, experience and
qualifications of such person which will assist the Nominating
Committee in evaluating such person as a potential director of
the Company; and (d) any material interest of such stockholder or
such nominee in the business to be presented at the 2002 Annual
Meeting. After the Notice Date, the Nominating Committee will
meet and consider all persons recommended by stockholders as
nominees for directors. Within 30 days after the Notice Date,
the Secretary of the Company will notify in writing the
stockholder recommending the nominee whether or not the
Nominating Committee intends to nominate for election as a
director at the 2002 Annual Meeting the person he or she
recommended.
16
Security Ownership of Certain
Beneficial Owners and Management
The following table sets forth certain information, as of
January 3, 2001, with respect to the only persons known by the
Company to be the beneficial owners of 5% or more of the Class B
Common Stock, the Company's only class of voting securities:
Class of Type of Number of Percent
Name and Address Stock Ownership Shares of Class
Naomi C. Dempsey Class B See (1) below 5,905,904 49.85%
782 W. Orange Road
Delaware, Ohio
Michael H. Dempsey Class B See (2) below 2,010,592 16.97%
2240 Encinitas Boulevard
Suite D-403
Encinitas, California
Robert C. Macauley Class B Record and 1,150,000 9.71%
161 Cherry Street Beneficially
New Canaan, Conneticut
(1) Held by Naomi C. Dempsey as trustee of the Naomi C. Dempsey
Living Trust (5,425,904 shares) and the John C. Dempsey
Trust (480,000 shares).
(2) Held by Michael H. Dempsey (129,052 shares), Michael H.
Dempsey as trustee of the Naomi A. Coyle Trust (1,663,040
shares), Michael H. Dempsey as trustee of the Naomi C.
Dempsey Charitable Lead Annuity Trust (133,815 shares) and
Michael H. Dempsey as President of All Life Foundation
(84,685 shares).
17
The following table sets forth certain information, as of
January 3, 2001, with respect to the Class A Common Stock and
Class B Common Stock (the only equity securities of the Company)
beneficially owned, directly or indirectly, by each director and
each executive officer named in the summary compensation table:
Title and Percent of Class (1)
Name Class A %
Charles R. Chandler 65,400 *
Michael H. Dempsey 10,000 *
Naomi C. Dempsey 23,240 (2) *
Michael J. Gasser 105,000 *
Daniel J. Gunsett 10,000 *
John C. Kane 7,000 *
John S. Lilak -0- *
Robert C. Macauley -0- *
David J. Olderman 17,000 *
Joseph W. Reed 21,000 *
William B. Sparks, Jr. 66,086 *
Title and Percent of Class (1)
Name Class B %
Charles R. Chandler 4,000 *
Michael H. Dempsey 2,010,592 (3) 16.97%
Naomi C. Dempsey 5,905,904 (4) 49.85%
Michael J. Gasser 11,798 *
Daniel J. Gunsett 1,000 *
John C. Kane -0- *
John S. Lilak -0- *
Robert C. Macauley 1,150,000 9.71%
David J. Olderman 36,674 *
Joseph W. Reed -0- *
William B. Sparks, Jr. 6,248 *
* Less than one percent.
18
(1) Except as otherwise indicated below, the persons named in the
table (and their spouses, if applicable) have sole voting and
investment power with respect to all shares of Class A Common
Stock or Class B Common Stock owned by them. This table
includes shares for Class A Common Stock subject to currently
exercisable options, or options exercisable within 60 days of
January 3, 2001, granted by the Company under the 1995
Incentive Stock Option Plan and the 1996 Directors' Stock
Option Plan, for the following directors and named executive
officers: Mr. Chandler - 65,000; Mr. Dempsey - 10,000; Mrs.
Dempsey - 10,000; Mr. Gasser - 105,000; Mr. Gunsett - 10,000;
Mr. Kane - 2,000; Mr. Olderman - 10,000; Mr. Reed - 21,000
and Mr. Sparks, Jr. - 65,000.
(2) Held by Naomi C. Dempsey as trustee of the John C. Dempsey
Trust (13,240 shares) plus the exercisable options discussed
in (1) above.
(3) Held by Michael H. Dempsey (129,052 shares), Michael H.
Dempsey as trustee of the Naomi A. Coyle Trust (1,663,040
shares), Michael H. Dempsey as trustee of the Naomi C.
Dempsey Charitable Lead Annuity Trust (133,815 shares) and
Michael H. Dempsey as President of All Life Foundation
(84,685 shares).
(4) Held by Naomi C. Dempsey as trustee of the Naomi C. Dempsey
Living Trust (5,425,904 shares), and the John C. Dempsey
Trust (480,000 shares).
The Class A Common Stock has no voting power, except when
four quarterly cumulative dividends upon the Class A Common Stock
are in arrears.
The following sets forth the equity securities owned or
controlled by all directors and executive officers as a group (18
persons) as of January 3, 2001:
Title of Amount Percent
class of stock beneficially owned of class
Class A Common Stock (1) 342,976 3.26%
Class B Common Stock 9,127,066 77.04%
(1) Shares represent the number of shares beneficially owned,
directly or indirectly, by each director and executive
officer as of January 3, 2001. The number includes shares
subject to currently exercisable options or options
exercisable within 60 days of January 3, 2001, granted by the
Company under the 1995 Incentive Stock Option Plan and the
1996 Directors' Stock Option Plan, for the directors and
executive officers as a group - 316,100.
19
Executive Compensation
The following table sets forth the compensation for the
three years ended October 31, 2000 for the Company's Chief
Executive Officer and the Company's four other most highly
compensated executive officers:
Long-term
Annual Compensation Compensation
Number of
Deferred All Stock Options
Name & Position Year Salary Bonus Compensation Other Granted
Michael J. Gasser 2000 $510,090 $298,403 $ 3,000 28,000
Chairman
Chief Executive 1999 $486,667 $171,378 $ 4,513 25,000
Officer
1998 $463,338 $182,595 $ 3,440 25,000
Charles R. Chandler 2000 $492,609 $221,675 $312,121 $ 6,544 16,000
Vice Chairman and
President of Soterra 1999 $470,174 $165,623 $325,757 $14,034 16,000
LLC (subsidiary
company) 1998 $452,018 $176,769 $300,458 $54,903 15,000
John S. Lilak * 2000 $246,045 $110,720 $162,576 12,500
Executive Vice
President, 1999 $ 78,333 $ 59,792 $ 2,009 10,000
Containerboard &
Corrugated Products
Joseph W. Reed 2000 $247,054 $111,175 $ 1,980 10,000
Vice President
1999 $235,802 $ 83,063 $ 2,415 5,000
1998 $226,827 $ 88,653 $ 940 11,000
William B. Sparks, 2000 $379,132 $187,671 $ 4,134 17,000
Jr.- Director
President and Chief 1999 $361,834 $127,470 $ 6,300 16,000
Operating Officer
1998 $345,004 $135,977 $ 2,690 15,000
* Mr. Lilak was hired as Executive Vice President, Containerboard &
Corrugated Products, in September 1999. Prior to that time, he was
not an employee of the Company.
20
Mr. Michael J. Gasser, Chairman and Chief Executive Officer,
on November 1, 1995, entered into an employment agreement with
Greif Bros. Corporation principally providing for (a) the
employment of Mr. Gasser as Chairman and Chief Executive Officer
for a term of 15 years; (b) the right of Mr. Gasser to extend his
employment on a year-to-year basis until he reaches the age of
65; (c) the agreement of Mr. Gasser to devote all of his time,
attention, skill and effort to the performance of his duties as
an officer and employee of Greif Bros. Corporation; and (d) the
fixing of the minimum basic salary during such period of
employment to the current year's salary plus any additional
raises authorized by the Board of Directors within two fiscal
years following October 31, 1995. The minimum basic salary is
currently fixed at $470,000 per year.
Mr. Charles R. Chandler, Vice Chairman and President of
Soterra LLC (subsidiary company), on August 1, 1986, and amended
in 1988, 1992 and 1996, entered into an employment agreement,
principally providing for: (a) the employment of Mr. Chandler as
Vice Chairman until 2000; (b) the agreement of Mr. Chandler to
devote all of his time, attention, skill and effort to the
performance of his duties as an officer and employee of Greif
Bros. Corporation; and (c) the fixing of minimum basic salary
during such period of employment at $424,356 per year. The
employment contract with Mr. Chandler gives him the right to
extend his employment beyond the original term up to five
additional years.
Mr. Joseph W. Reed, Vice President, on August 18, 1997,
entered into an employment agreement with Greif Bros.
Corporation, principally providing for: (a) the employment of Mr.
Reed as Chief Financial Officer and Secretary for a term of three
years; (b) the agreement of Mr. Reed to devote all of his time,
attention, skill and effort to the performance of his duties as
an officer and employee of Greif Bros. Corporation; and (c) the
fixing of the minimum basic salary during such period of
employment at $220,000 per year.
Mr. William B. Sparks, Jr., President and Chief Operating
Officer, on November 1, 1995 entered into an employment agreement
with Greif Bros. Corporation, principally providing for: (a) the
employment of Mr. Sparks as President and Chief Operating Officer
for a term of 11 years; (b) the agreement of Mr. Sparks to devote
all of his time, attention, skill and effort to the performance
of his duties as an officer and employee of Greif Bros.
Corporation; and (c) the fixing of the minimum basic salary
during such period of employment to the current year's salary
plus any additional raises authorized by the Board of Directors
within two fiscal years following October 31, 1995. The minimum
basic salary is currently fixed at $350,000 per year.
21
No Directors' fees are paid to Directors who are full-time
employees of the Company or its subsidiary companies. Directors
who are not employees of the Company receive $24,000 per year,
plus $1,500 for each Board meeting and $1,000 for each committee
meeting that they attend. Committee chairs also receive an
additional $4,000 per year. Directors may defer all or a portion
of their fees pursuant to a deferred compensation plan.
During 1996, a Directors' Stock Option Plan was adopted
which provides for the granting of stock options to directors who
are not employees of the Company. The aggregate number of shares
of the Company's Class A Common Stock for which options may be
granted shall not exceed 100,000. Beginning in 1997, each
outside director was granted an annual option to purchase 2,000
shares immediately following each Annual Meeting of Stockholders.
Each eligible director also received a one-time grant in 1996 to
purchase 2,000 shares. Under the terms of the Directors' Stock
Option Plan, options are granted at exercise prices equal to the
market value on the date the options are granted and become
exercisable immediately. In 2000, 10,000 options were granted to
outside directors with option prices of $29.88 per share. Options
expire ten years after the date of grant.
The Compensation Committee of the Board of Directors voted
in favor of bonuses for employees in 2000, based upon the
progress of the Company, the contributions of the particular
employees to that progress, and individual merit.
Supplementing the pension benefits, there is a deferred
compensation contract with Charles R. Chandler. This contract is
designed to supplement the Greif Bros. Riverville Mill's defined
benefit pension plan only if the executive retires under such
pension plan at or after age 65. No benefit is paid to the
executive under this contract if death precedes retirement. The
deferred compensation is payable to the executive or his spouse
for a total period of 15 years.
Under the above Deferred Compensation Contract, the annual
amounts payable to the executive or his surviving spouse are
diminished by the amounts receivable under the defined benefit
pension plan of Greif Bros. Riverville Mill. Mr. Chandler's
estimated accrued benefit from the Deferred Compensation Contract
is $316,722 per year for 10 years and $211,254 per year for an
additional five years.
22
With respect to Mr. Gasser, the dollar amount in the all
other category relates to the Company match for the 401(k) plan
and premiums paid for life insurance.
With respect to Mr. Chandler, the dollar amount in the all
other category relates to the Company match for the 401(k) plan
and premiums paid for life insurance.
With respect to Mr. Lilak, the dollar amount in the all
other category relates to the reimbursement for moving,
relocation and spousal expenses, Company match for the 401(k)
plan and premiums paid for life insurance.
With respect to Mr. Macauley, the dollar amount in the all
other category relates to the Company match for the 401(k) plan.
With respect to Mr. Reed, the dollar amount in the all other
category relates to premiums paid for life insurance.
With respect to Mr. Sparks, the dollar amount in the all
other category relates to the Company match for the 401(k) plan
and premiums paid for life insurance.
During 1995, the Company adopted an Incentive Stock Option
Plan, which provides for the granting of incentive stock options
to key employees and non-statutory options for non-employees.
The aggregate number of shares of the Company's Class A Common
Stock for which options may be granted shall not exceed 1,000,000
shares. Under the terms of the Incentive Stock Option Plan,
options are granted at exercise prices equal to the market value
on the date the options are granted and become exercisable after
two years from the date of grant. Options expire ten years after
date of grant.
23
The following table sets forth certain information with
respect to options to purchase Class A Common Stock granted
during the fiscal year ended October 31, 2000, to each of the
named executive officers:
OPTION GRANTS TABLE
Potential Net
Realizable
Value at Assumed
Annual Rates of Stock
Price Appreciation for
Individual Grants Option Term
Percent of
Total
Options
Number of Granted to Exercise
Options Employees in Price Per Date
Name Granted(1) Fiscal Year Share Expires 5%(2) 10%(2)
M.J. Gasser 28,000 9% $29.19 9/6/10 $514,008 $1,302,598
C.R. Chandler 16,000 5% $29.19 9/6/10 $293,719 $ 744,341
J.S. Lilak 12,500 4% $29.19 9/6/10 $229,468 $ 581,517
J.W. Reed 10,000 3% $29.19 9/6/10 $183,574 $ 465,213
W.B. Sparks, Jr. 17,000 6% $29.19 9/6/10 $312,076 $ 790,863
(1) The options are exercisable on September 6, 2002.
(2) The values shown are based on the indicated assumed rates of
appreciation compounded annually. Actual gains realized, if
any, are based on the performance of the Class A Common
Stock. There is no assurance that the values shown will be
achieved.
24
The following table sets forth certain information with the
respect to the exercise of options to purchase Class A Common
Stock during the fiscal year ended October 31, 2000, and the
unexercised options held and the value thereof at that date, by
each of the named executive officers:
AGGREGATE OPTION EXERCISES AND FISCAL
YEAR-END OPTION VALUES TABLE
Number of Unexercised Value of In-The-
Shares Value Options Held at Money Options Held
Acquired Realized Year-End at Year-End
on Upon Exer- Unexer- Exer- Unexer-
Exercise Exercise cisable cisable cisable cisable
M.J. Gasser -0- $-0- 105,000 53,000 $289,925 $272,486
C.R. Chandler -0- $-0- 65,000 32,000 $150,475 $168,992
J.S. Lilak -0- $-0- -0- 22,500 $ -0- $112,650
J.W. Reed -0- $-0- 21,000 15,000 $ 22,750 $ 66,870
W.B. Sparks, Jr. -0- $-0- 65,000 33,000 $184,825 $171,804
The following table illustrates the amount of annual pension
benefits for eligible employees upon retirement on the specified
remuneration and years of service classifications under the
Company's defined benefit pension plan:
DEFINED BENEFIT PENSION PLAN TABLE
Annual Benefit for Years of Service
Remuneration 15 20 25 30
$150,000 $26,250 $35,000 $43,750 $52,500
$300,000 $28,000 $37,333 $46,667 $56,000
$450,000 $28,000 $37,333 $46,667 $56,000
$600,000 $28,000 $37,333 $46,667 $56,000
$750,000 $28,000 $37,333 $46,667 $56,000
$900,000 $28,000 $37,333 $46,667 $56,000
25
The following table sets forth certain information with
respect to the benefits under the defined benefit pension plans
of the Company and Greif Bros. Riverville Mill for each of the
named executive officers:
Estimated Estimated
annual annual
Renumeration benefit benefit under
Name of individual Credited used for under supplemental
or number of Years of calculation of retirement retirement
persons in group Service annual benefit plan benefit agreement
M.J. Gasser 21 $671,970 $39,200 $125,433
C.R. Chandler * 28 $219,224 $61,383 $ -0-
J.S. Lilak 1 $371,177 $ 1,867 $ 2,463
J.W. Reed 3 $330,658 $ 5,600 $ -0-
W.B. Sparks, Jr. 6 $491,464 $11,200 $ 23,202
* Defined benefit pension plan of Greif Bros. Riverville Mill.
The Company's pension plan is a defined benefit pension plan
with benefits based upon the average of the three consecutive
highest-paying years of salary and bonus and upon years of
credited service up to 30 years. Supplementing the pension
benefits of the Company pension plan, a supplemental retirement
benefit agreement has been entered into with a select group of
management and highly compensated employees to replace any
benefits that the executive would otherwise receive if not for
limitations imposed by the Internal Revenue Code of 1986.
The annual retirement benefits under the defined benefit
pension plan of Greif Bros. Riverville Mill are calculated at 1%
per year based upon the average of the five highest out of the
last ten years of salary compensation.
None of the pension benefits described in this item are
subject to offset because of the receipt of Social Security
benefits or otherwise.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934
requires the Company's officers and directors, and persons owning
more than 10% of a registered class of the Company's equity
securities, to file reports of ownership with the Securities and
Exchange Commission. Officers, directors and greater than 10%
Stockholders are required by the Securities and Exchange
Commission's regulations to furnish the Company with copies of
all Section 16(a) forms they file. Based solely on a review of
the copies of such forms furnished to the Company, the Company
believes that during 2000 all Section 16(a) filing requirements
applicable to its officers, directors and greater than 10%
Stockholders were complied with by such persons.
26
Compensation Committee Interlocks and Insider Participation
John C. Kane, David J. Olderman, Michael H. Dempsey and
Daniel J. Gunsett served as members of the Company's Compensation
Committee for the 2000 fiscal year. During fiscal year 2000, the
Company retained the law firm of Baker & Hostetler LLP to perform
legal services on its behalf, and it anticipates retaining such
firm in 2001. Mr. Gunsett is a partner of Baker & Hostetler LLP.
No executive officer of the Company served during the 2000
fiscal year as a member of a Compensation Committee or as a
director of any entity of which any of the Company's directors
served as an executive officer.
Compensation Committee Report on Executive Compensation
The following is the report of the Company's Compensation
Committee, whose members are identified below, with respect to
compensation reported for 2000 as reflected in the Summary
Compensation Table set forth above.
Compensation Policy; Committee Responsibilities
The Company's compensation policy is to align compensation
with business objectives and performance to enable the Company to
attract, retain and reward individuals who contribute to the
long-term success of the Company. The Company believes in a
consistent policy for all individuals.
The Company realizes that to accomplish its objectives it
needs to pay competitive compensation. The Compensation Committee
reviews competitive positions in the market to periodically
confirm the competitive nature of the compensation for the Chief
Executive Officer and the Company's five highest paid
individuals.
The Compensation Committee believes that a varying portion
of compensation must be linked to the Company's performance. In
that regard, the Company has implemented a discretionary bonus
plan which links the payment of cash bonuses to the achievement
of certain predetermined pretax income thresholds.
The Company believes that an alignment of stockholder value
with employees' compensation is of utmost importance. The
Company has addressed this concern by implementing an incentive
stock option plan which is administered by the members of the
Stock Option Committee. As described elsewhere in this Proxy
Statement, the Company intends to replace, subject to stockholder
approval, the current incentive stock option plan with the 2001
Management Equity Incentive and Compensation Plan. See "Proposal
No. 2 - Approval of the 2001 Management Equity Incentive and
Compensation Plan."
27
The Compensation Committee's responsibilities include the
following:
* Review the compensation of the Chief Executive Officer and the
Company's five highest paid individuals to ensure that their
compensation is consistent with the above policy.
* Review the operation of the discretionary bonus plan.
* Review the grant of stock options.
* Recommend the action to resolve compensation, discretionary
bonus and stock option issues to the full Board of Directors.
Compensation of the Chief Executive Officer
In December 2000, the Compensation Committee met to review
the 2000 performance of Michael J. Gasser, the Company's Chairman
of the Board and Chief Executive Officer. Consistent with the
Company's compensation policies, Mr. Gasser's compensation
package consists of three components, salary, cash bonus and
stock options. The Compensation Committee believes that a
portion of Mr. Gasser's compensation package should be at-risk,
and that this is accomplished through the grant of incentive
stock options and the award of a cash bonus pursuant to the
Company's incentive bonus plan. The Compensation Committee also
attempts to establish a compensation package that appropriately
balances risk and reward. Finally, the Compensation Committee
attempts to establish a compensation package that is comprised of
both a subjective component, such as the grant of incentive stock
options, and an objective component, such as an award under the
incentive bonus plan which is based upon the pretax income
performance of the Company with threshold levels.
28
In evaluating the performance of Mr. Gasser with respect to
each of the categories of his compensation, the Compensation
Committee specifically discussed and recognized the following
factors: his leadership, his vision for the future of the
Company, his dedication and focus on the short-term and long-term
interests of the Company and its shareholders, and his
professionalism, integrity and competence; the Company enjoying
its most profitable year its history; and his demonstrated
dedication and high performance in leadership, guidance and
strategic planning for the Company, its Board of Directors and
its executives. None of the factors were given specific relative
weight.
Based upon its evaluation of the foregoing factors, the
Compensation Committee increased Mr. Gasser's base salary to
$580,000 for calendar year 2001 from $510,090 for calendar year
2000. In addition, the Compensation Committee determined that
the Company had met the threshold for incentive bonuses for
fiscal year 2000, and that Mr. Gasser qualified for an incentive
bonus of 90% of the 100% level bonus of $331,558 for his position
and recommended that he receive a bonus of $298,402.
In September 2000, incentive stock options were granted to
Mr. Gasser and other employees at the then market price for Class
A Common Stock. Mr. Gasser was granted options to purchase
28,000 shares of Class A Common Stock, which options were granted
primarily as incentive for future performance. The basis for
granting stock options to Mr. Gasser and other employees included
his continued leadership, vision for the future of the Company,
guidance in unification of Company goals and assimilation and
reorganization of Company acquisitions.
John C. Kane, Committee Chairman
David J. Olderman
Michael H. Dempsey
Daniel J. Gunsett
29
The following graph compares the Company's stock performance
to that of the Standard and Poor's 500 Index and the Company's
industry group (Peer Index). The graph does not purport to
represent the value of the Company.
[STOCK PERFORMANCE CHART]
Year GBC Stock S&P 500 Index Peer Index
1995 100 100 100
1996 111 121 106
1997 138 157 117
1998 132 187 96
1999 120 234 129
2000 136 246 93
The Peer Index is comprised of the paper containers index
and paper and forest products index as shown in the Standard &
Poor's Statistical Services Guide.
30
Report of the Audit Committee
The Audit Committee oversees the Company's financial
reporting process on behalf of the Board of Directors.
Management has the primary responsibility for the financial
statements and the reporting process, including the systems of
internal controls. In fulfilling its oversight responsibilities,
the Audit Committee reviewed the audited financial statements in
the Annual Report on Form 10-K for the Company's 2000 fiscal year
with management, including a discussion of the quality, not just
the acceptability, of the accounting principles, the
reasonableness of significant judgments, and the clarity of
disclosures in the financial statements.
The Audit Committee reviewed with the independent auditors,
who are responsible for expressing an opinion on the conformity
of those audited financial statements with generally accepted
accounting principles, their judgments as to the quality, not
just the acceptability, of the Company's accounting principles
and such other matters as are required to be discussed with the
Audit Committee under generally accepted auditing standards. In
addition, the Audit Committee discussed with the independent
auditors the auditors' independence from management and the
Company, including the matters in the written disclosures
required by the Independence Standards Board and considered the
compatibility of nonaudit services with the auditors'
independence.
The Audit Committee discussed with the Company's internal
and independent auditors the overall scope and plans for their
respective audits. The Audit Committee meets with the internal
and independent auditors, with and without management present, to
discuss the results of their examinations, their evaluations of
the Company's internal controls, and the overall quality of the
Company's financial reporting. The Committee held five meetings
during the 2000 fiscal year, and each member of the Audit
Committee attended at least 75% of the meetings.
In reliance on the reviews and discussions referred to
above, the Audit Committee recommended to the Board of Directors
(and the Board has approved) that the audited financial
statements be included in the Annual Report on Form 10-K for the
2000 fiscal year for filing with the Securities and Exchange
Commission. The Committee also recommended to the Board of
Directors (and the Board has approved) the selection of the
Company's independent auditors for the 2001 fiscal year.
31
The Company's Board of Directors has adopted a written
charter for the Audit Committee. A copy of the Audit Committee
Charter is attached to this Proxy Statement as Exhibit B.
All of the members of the Audit Committee are independent
directors as defined by the rules and regulations of Nasdaq.
Daniel J. Gunsett, Committee Chairman
Michael H. Dempsey
John C. Kane
David J. Olderman
Certain Relationships and Related Transactions
During fiscal year 2000, the Company retained the law firm
of Baker & Hostetler LLP to perform legal services on its behalf.
Daniel J. Gunsett, a partner in that firm, is a member of the
Audit, Compensation, Executive, Nominating, Stock Option and
Stock Repurchase Committees and a director of the Company. The
Company anticipates retaining Baker & Hostetler LLP in 2001. The
Company believes that this relationship does not violate the
NASDAQ independent director and audit committee requirements.
Loans have been made by the Company to certain employees,
including certain directors and executive officers of the
Company. The following is a summary of these loans for the
fiscal year ended October 31, 2000:
Balance at Balance at
Beginning Amount End of
Name of Debtor of period New Loans Collected Period
Charles R. Chandler $ 322,515 $ - $15,543 $306,972
Michael J. Gasser 140,090 - 20,117 119,973
Sharon R. Maxwell 94,775 - 2,702 92,073
Philip R. Metzger 105,570 - 10,530 95,040
William B. Sparks, Jr. 365,660 - 19,901 345,759
$1,028,610 $-0- $68,793 $959,817
Charles R. Chandler is Vice Chairman of Greif Bros.
Corporation and President of Soterra LLC. The loan is secured by
a first mortgage on a house and lot in Ohio and interest is
payable at 5% per annum.
Michael J. Gasser is Chairman and Chief Executive Officer of
Greif Bros. Corporation. The loan is secured by 5,599 shares of
the Company's Class B Common Stock and a first mortgage on a
house and lot in Ohio. Interest is payable at 3% per annum.
Sharon R. Maxwell is Assistant Secretary of Greif Bros.
Corporation. The loan is secured by a first mortgage on a house
and lot in Ohio and interest is payable at 7-1/4% per annum.
32
Philip R. Metzger is Treasurer of Greif Bros. Corporation.
The loan is secured by a first mortgage on a house and lot in
Ohio and a portion of the interest is payable at 3% per annum and
a portion at 7-1/4% per annum.
William B. Sparks, Jr. is President and Chief Operating
Officer of Greif Bros. Corporation. The loan is secured by 6,248
shares of the Company's Class B Common Stock and 1,000 shares of
the Company's Class A Common Stock. Interest is payable at 3%
per annum. An additional loan is secured by a first mortgage on
a house and lot in Ohio with interest payable at 5% per annum.
Independent Public Accountants
Ernst & Young LLP served as the independent public
accountants of the Company for the fiscal year ended October 31,
2000. It is currently expected that a representative of Ernst &
Young LLP will be present at the Annual Meeting, will have an
opportunity to make a statement if such representative so
desires, and will be available to respond to appropriate
questions from Stockholders. Ernst & Young LLP have been
retained as the Company's independent public accountants for its
current fiscal year.
On February 1, 1999, the Company informed
PricewaterhouseCoopers LLP, the Company's independent public
accounting firm prior to its engagement of Ernst & Young LLP,
that an audit proposal would not be sought from that firm and
that it was being dismissed as the Company's independent public
accountants. For the two fiscal years ended October 31, 1998,
the report of PricewaterhouseCoopers LLP on the Company's
consolidated financial statements did not contain an adverse
opinion or a disclaimer of opinion, nor was any such report
qualified or modified as to uncertainty, audit scope or
accounting principles. The decision to change accountants was
approved by the Audit Committee of the Company's Board of
Directors. During the Company's two fiscal years ended October
31, 1998 and through February 1, 1999, there were no
disagreements between PricewaterhouseCoopers LLP and the Company
regarding any matter of accounting principles or practices,
financial statement disclosure or auditing scope or procedure
which, if not resolved to the satisfaction of the former
accountant, would have caused it to make reference thereto in
its report on the financial statements for such years.
33
Stockholder Proposals
Proposals of Stockholders intended to be presented at the
2002 Annual Meeting of Stockholders (expected to be held in
February 2002) must be received by the Company for inclusion in
the Proxy Statement and form of proxy on or prior to 120 days in
advance of the first anniversary of the date of this Proxy
Statement. If a Stockholder intends to present a proposal at
the 2002 Annual Meeting, but does not seek to include such
proposal in the Company's Proxy Statement and form of proxy,
such proposal must be received by the Company on or prior to 45
days in advance of the first anniversary of the date of this
Proxy Statement or the persons named in the form of proxy for
the 2002 Annual Meeting will be entitled to use their
discretionary voting authority should such proposal then be
raised at such meeting, without any discussion of the matter in
the Company's Proxy Statement or form of proxy. Furthermore,
Stockholders must follow the procedures set forth in Article I,
Section 8, of the Company's Amended and Restated By-Laws in
order to present proposals at the 2002 Annual Meeting.
Proxies Solicited by Management;
Proxies Revocable; Cost of Solicitation to be
Borne by Company
The proxy enclosed with this Proxy Statement is solicited
by and on behalf of the Management of Greif Bros. Corporation. A
person giving the proxy has the power to revoke it.
The expense for soliciting proxies for this Annual Meeting
of Stockholders is to be paid by the treasurer out of the funds
of the Company. Solicitations of proxies also may be made by
personal calls upon or telephone or telegraphic communications
with Stockholders, or their representatives, by not more than
five officers or regular employees of the Company who will
receive no compensation for doing so other than their regular
salaries.
No Other Matters to be Submitted at the Annual Meeting
The Management knows of no matters to be presented at the
Annual Meeting other than the above proposals. However, if any
other matters properly come before the Annual Meeting, it is the
intention of the persons named in the accompanying form of proxy
to vote the proxy in accordance with their judgment on such
matters.
January 26, 2001 Kenneth E. Kutcher
Secretary
34
EXHIBIT A
2001 MANAGEMENT EQUITY INCENTIVE
AND COMPENSATION PLAN
Section 1. Purposes of Plan.
The purpose of this 2001 Management Equity Incentive and
Compensation Plan (the "Plan") of Greif Bros. Corporation, a
Delaware corporation (the "Company"), is to advance the interests
of the Company and its stockholders by providing a means of
attracting and retaining key employees for the Company and its
subsidiary corporations. In order to serve this purpose, the
Plan encourages and enables key employees to participate in the
Company's future prosperity and growth by providing them with
incentives and compensation based on the Company's performance,
development, and financial success. These objectives will be
promoted by granting to key employees equity-based awards in the
form of: (a) Incentive Stock Options ("ISOs"), which are intended
to qualify under Section 422 of the Internal Revenue Code of
1986, as amended (the "Code"); (b) stock options which are not
intended to qualify as ISOs ("NQSOs") (ISOs and NQSOs are
referred to together hereinafter generally as "Stock Options");
(c) shares of Class A Common Stock, without par value, of the
Company ("Shares"), which will be subject to a vesting schedule
based on the recipient's continued employment ("Restricted
Shares"); and (d) Shares, which will be subject to a vesting
schedule based on certain performance objectives ("Performance
Shares"). (The Performance Shares, Stock Options and Restricted
Shares are referred to generally hereafter as the "Awards"). For
purposes of this Plan, "subsidiary" shall mean a subsidiary
corporation as defined in Section 424(f) of the Code.
35
Section 2. Administration of Plan.
The Plan shall be administered by the Stock Option Plan
Committee of the Company's Board of Directors (the "Board"), or
such other committee as the Board may designate (the
"Committee"); provided, however, that members of the Committee
shall be (i) "Non-Employee Directors" within the meaning of Rule
16b-3 of the Securities Exchange Act of 1934, as amended (the
"1934 Act"), and (ii) "outside directors" within the meaning of
Section 162(m) of the Code. The members of the Committee shall
serve at the pleasure of the Board, which may remove members from
the Committee or appoint new members to the Committee from time
to time, and members of the Committee may resign by written
notice to the Chairman of the Board or the Secretary of the
Company. The Committee shall have the power and authority to:
(a) select Eligible Employees (as defined in Section 3, below) as
recipients of Awards (such recipients, "Participants"); (b) grant
Stock Options, Restricted Shares, or Performance Shares, or any
combination thereof; (c) determine the number and type of Awards
to be granted; (d) determine the terms and conditions, not
inconsistent with the terms hereof, of any Award, including
without limitation, time and performance restrictions; (e) adopt,
alter, and repeal such administrative rules, guidelines, and
practices governing the Plan as it shall, from time to time, deem
advisable; (f) interpret the terms and provisions of the Plan and
any Award granted hereunder and any agreements relating thereto;
and (g) take any other actions the Committee considers
appropriate in connection with, and otherwise supervise the
administration of, the Plan. All decisions made by the Committee
pursuant to the provisions hereof, including without limitation,
decisions with respect to employees to be granted Awards and the
number and type of Awards, shall be made in the Committee's sole
discretion and shall be final and binding on all persons.
The Committee may designate persons other than its members
to carry out its responsibilities under such conditions and
limitations as it may set, except to the extent that such
delegation is prohibited by law or would cause an Award intended
to be exempt from the limitation on deductibility under Section
162(m) of the Code, or from the short-swing profit recovery rules
of Section 16(b) of the 1934 Act, to fail to be so exempt.
Section 3. Participants in Plan.
The persons eligible to receive Awards under the Plan
("Eligible Employees") shall include officers and other key
employees of the Company or one or more of its subsidiaries who,
in the opinion of the Committee, have responsibilities affecting
the management, development, or financial success of the Company
or such subsidiaries.
36
Section 4. Shares Subject to Plan.
The maximum aggregate number of Shares which may be issued
each calendar year under the Plan ("Available Shares") shall be an amount
equal to the sum of (a) 5.0% of the total outstanding Shares as
of the last day of the Company's immediately preceding fiscal
year, plus (b) any Shares related to Awards
that, in whole or in part, expire or are unexercised, forfeited,
terminated, surrendered, canceled, settled in such a manner that
all or some of the Shares covered by an Award are not issued to a
Participant, or returned to the Company in payment of the
exercise price or tax withholding obligations in connection with
outstanding Awards, plus (c) in calendar year 2001, the number of shares
avaliable for grant under the Plan as of June 1, 2001, and in all
subsequent years of the Plan, any unused portion of the Shares
available under Section (a) above for the immediately preceding
two fiscal years (but not prior to the Company's fiscal year
ending October 31, 2001) as a result of not being made subject to
a grant or award in such preceding two fiscal years.
Notwithstanding the foregoing, for the Company's fiscal year
ending October 31, 2001, the number of total outstanding Shares
in Section (a) above, shall be calculated as of January 1, 2001,
rather than as of October 31, 2000 (the last day of the
immediately preceding fiscal year). In no event shall more than
20% of the Available Shares be granted in the form of Awards
other than Stock Options, and, of the Available Shares, the
maximum number of ISOs that will be issued under the Plan during
its term is 2,500,000 Shares. The Available Shares may be
authorized but unissued Shares or issued Shares reacquired by the
Company, including Shares purchased on the open market, and held
as treasury Shares. The maximum number of Shares with respect to
which Stock Options, Restricted Shares, and Performance Shares
may be granted to any single Participant under the Plan during
any single fiscal year of the Company shall be 100,000. Any of
the Shares delivered upon the assumption of or in substitution
for outstanding grants made by a company or division acquired by
the Company shall not decrease the number of Available Shares,
except to the extent otherwise provided by applicable law or
regulation.
Section 5. Grant of Awards.
ISOs, NQSOs, Restricted Shares, and Performance Shares may
be granted alone or in addition to other Awards granted under the
Plan. Any Awards granted under the Plan shall be in such form as
the Committee may from time to time approve, consistent with the
Plan, and the provisions of Awards need not be the same with
respect to each Participant.
37
Each Award granted under the Plan shall be authorized by the
Committee and shall be evidenced by a written Stock Option
Agreement, Restricted Share Agreement, or Performance Share
Agreement, as the case may be (collectively, "Award Agreements"),
in the form approved by the Committee from time to time, which
shall be dated as of the date approved by the Committee in
connection with the grant, signed by an officer of the Company
authorized by the Committee, and signed by the Participant, and
which shall describe the Award and state that the Award is
subject to all the terms and provisions of the Plan and such
other terms and provisions, not inconsistent with the Plan, as
the Committee may approve. The date on which the Committee
approves the granting of an Award shall be deemed to be the date
on which the Award is granted for all purposes, unless the
Committee otherwise specifies in its approval. The granting of
an Award under the Plan, however, shall be effective only if and
when a written Award Agreement is duly executed and delivered by
or on behalf of the Company and the Participant.
Section 6. Stock Options.
Stock Options granted under the Plan shall be subject to the
following terms and conditions and shall contain such additional
terms and conditions not inconsistent with the terms of the Plan
as the Committee deems appropriate:
(a.) Exercise Price.
The exercise price per Share issuable upon exercise of
a Stock Option shall be no less than the fair market value
per Share on the date the Stock Option is granted; provided
that, if the Participant at the time an ISO is granted owns
stock possessing more than 10% of the total combined voting
power of all classes of stock of the Company or of any
subsidiary, the exercise price per Share shall be at least
110% of the fair market value of the Shares subject to the
ISO on the date of grant. For purposes of the Plan, the
fair market value of the Shares shall mean, as of any given
date, the (i) last reported sale price on the New York Stock
Exchange on the most recent previous trading day, (ii) last
reported sale price on the NASDAQ National Market System on
the most recent previous trading day, (iii) mean between the
high and low bid and ask prices, as reported by the National
Association of Securities Dealers, Inc. on the most recent
previous trading day, or (iv) last reported sale price on
any other stock exchange on which the Shares are listed on
the most recent previous trading day, whichever is
applicable; provided that if none of the foregoing is
applicable, then the fair market value of the Shares shall
be the value determined in good faith by the Committee, in
its sole discretion.
38
(b.) Vesting and Exercise of Options.
A Stock Option shall be exercisable only with respect
to the Shares which have become vested pursuant to the terms
of that Stock Option. Each Stock Option shall become vested
with respect to Shares subject to that Stock Option on such
date or dates and on the basis of such other criteria,
including without limitation, the performance of the
Company, as the Committee may determine, in its discretion,
and as shall be specified in the applicable Stock Option
Agreement. The Committee shall have the authority, in its
discretion, to accelerate the time at which a Stock Option
shall be exercisable whenever it may determine that such
action is appropriate by reason of changes in applicable tax
or other law or other changes in circumstances occurring
after the grant of such Stock Option.
(c.) Term.
Each Stock Option Agreement shall set forth the period
for which such Option shall be exercisable from the date on
which that Stock Option is granted. In no event, however,
shall a Stock Option be exercisable after the expiration of
10 years from the date on which that Stock Option is
granted. In addition, with respect to ISOs, if the
Participant at the time the ISO is granted owns stock
possessing more than 10% of the total combined voting power
of all classes of stock of the Company or any subsidiary,
the ISO shall not be exercisable after the expiration of
five years from the date on which the ISO is granted.
(d.) Method of Exercise.
A Stock Option may be exercised, in whole or in part,
by giving written notice to the Company stating the number
of Shares (which must be a whole number) to be purchased.
Upon receipt of payment of the full purchase price for such
Shares by certified or bank cashier's check or other form of
payment acceptable to the Company, or, if approved by the
Committee, by (i) delivery of unrestricted Shares having a
fair market value on the date of such delivery equal to the
total exercise price, (ii) surrender of Shares subject to
the Stock Option which have a fair market value equal to the
total exercise price at the time of exercise, or (iii) a
combination of the preceding methods, and subject to
compliance with all other terms and conditions of the Plan
and the Stock Option Agreement relating to such Stock
Option, the Company shall issue, as soon as reasonably
practicable after receipt of such payment, such Shares to
the person entitled to receive such Shares, or such person's
designated representative. Such Shares may be issued in the
form of a certificate, by book entry, or otherwise, in the
Company's sole discretion.
39
(e.) Restrictions on Shares Subject to Stock Options.
Shares issued upon the exercise of any Stock Option may
be made subject to such disposition, transferability or
other restrictions or conditions as the Committee may
determine, in its discretion, and as shall be set forth in
the applicable Stock Option Agreement.
(f.) Transferability.
Except as provided in this paragraph, Stock Options
shall not be transferable, and any attempted transfer (other
than as provided in this paragraph) shall be null and void.
Except for Stock Options transferred as provided in this
paragraph, all Stock Options shall be exercisable during a
Participant's lifetime only by the Participant or the
Participant's legal representative. Without limiting the
generality of the foregoing, (i) ISOs may be transferred
only upon the Participant's death and only by will or the
laws of descent and distribution and, in the case of such a
transfer, shall be exercisable only by the transferee or
such transferee's legal representative, (ii) NQSOs may be
transferred by will or the laws of descent and distribution
and, in the case of such a transfer, shall be exercisable
only by the transferee or such transferee's legal
representative, and (iii) the Committee may, in its sole
discretion and in the manner established by the Committee,
provide for the irrevocable transfer, without payment of
consideration, of any NQSO by a Participant to such
Participant's parent(s), spouse, domestic partner,
children, grandchildren, nieces, nephews or to the trustee
of a trust for the principal benefit of one or more such
persons or to a partnership whose only partners are one or
more such persons, and, in the case of such transfer, such
NQSO shall be exercisable only by the transferee or such
transferee's legal representative.
40
For purposes of this paragraph (f.), the term "domestic
partner" of a Participant means an adult with whom the
Participant has established a domestic partnership for
purposes of sharing one another's lives in a single,
intimate and committed relationship of mutual caring. A
domestic partnership shall be considered to have been
established when all of the following requirements are met:
(i) the Participant and the domestic partner (A) have a
common, permanent residence; (B) agree to be jointly
responsible for each other's basic living expenses incurred
during the domestic partnership; (C) are not related by
blood in a way that would prevent them from being married to
each other in their state of residence; (D) are each at
least 18 years of age; and (E) are both capable of
consenting to the domestic partnership; (ii) neither the
Participant nor the domestic partner is married or a member
of another domestic partnership; and (iii) the Participant
has delivered to the Committee an acknowledgement signed by
both the Participant and the domestic partner representing
to the Committee that they meet the definition of a domestic
partnership. Such acknowledgement shall be in a form
specified from time to time by the Committee. Upon
acceptance by the Committee, such domestic partnership shall
be deemed to continue unless and until the Participant and
the domestic partner execute and deliver to the Committee a
further acknowledgement whereby they each agree that the
domestic partnership established thereby has terminated.
(g.) Termination of Employment by Reason of Death or Disability.
If a Participant's employment with the Company
terminates by reason of the Participant's death or
disability (as defined in Section 22(e)(3) of the Code with
respect to ISOs, and, with respect to NQSOs, as defined by
the Committee in its sole discretion at the time of grant
and set forth in the Stock Option Agreement), then (i)
unless otherwise determined by the Committee within 60 days
of such death or disability, to the extent a Stock Option
held by such Participant is not vested as of the date of
death or disability, such Stock Option shall automatically
terminate on such date, and (ii) to the extent a Stock
Option held by such Participant is vested (whether pursuant
to its terms, a determination of the Committee under the
preceding clause (i), or otherwise) as of the date of death
or disability, such Stock Option may thereafter be exercised
by the Participant, the legal representative of the
Participant's estate, the legatee of the Participant under
the will of the Participant, or the distributee of the
Participant's estate, whichever is applicable, for a period
of one year (or, with respect to NQSOs, such other period as
the Committee may specify at or after grant or death or
disability) from the date of death or disability or until
the expiration of the stated term of such Stock Option,
whichever period is shorter.
41
(h.) Termination of Employment by Reason of Retirement.
If a Participant's employment with the Company
terminates by reason of the Participant's retirement, then
(i) to the extent such Option is not vested it shall, unless
otherwise provided in the Award Agreement, be forfeited, and
(ii) each vested Option held by such Participant may
thereafter be exercised by the Participant according to its
terms, including, without limitation, for such period after
such termination of employment as shall be set forth in the
applicable Stock Option Agreement. Each ISO held by such
Participant that is exercised by the Participant later than
90 days after the date of such termination of employment may
not receive ISO tax treatment; in such event the Option
shall be treated as an NQSO. For purposes of the Plan,
"retirement" means a termination from employment from the
Company and its subsidiaries that qualifies as either early
or normal retirement under the Company's tax qualified
pension plan, provided that the Participant is not
thereafter employed by (whether as an employee, consultant,
agent, officer, director or independent contractor) or
engaged in (whether as a shareholder or other owner,
partner, creditor, promoter or otherwise) any business which
competes with the Company, as determined by the Committee in
its sole discretion.
(i.) Other Termination of Employment.
If a Participant's employment with the Company and its
subsidiaries terminates for any reason other than death,
disability, or retirement, then (i) to the extent any Stock
Option held by such Participant is not vested as of the date
of such termination, such Stock Option shall automatically
terminate on such date; and (ii) to the extent any Stock
Option held by such Participant is vested as of the date of
such termination, such Stock Option may thereafter be
exercised for a period of 90 days (or, with respect to
NQSOs, such other period as the Committee may specify at or
after grant or termination of employment) from the date of
such termination or until the expiration of the stated term
of such Stock Option, whichever period is shorter; provided
that, upon the termination of the Participant's employment
by the Company or its subsidiaries for Cause (as defined in
an applicable Stock Option Agreement), any and all
unexercised Stock Options granted to such Participant shall
immediately lapse and be of no further force or effect. For
purposes of the Plan, whether termination of a Participant's
employment by the Company and its subsidiaries is for
"Cause" shall be determined by the Committee, in its sole
discretion.
42
(j.) Effect of Termination of Participant's Employment on Transferee.
Except as otherwise permitted by the Committee in its
sole discretion, no Stock Option held by a transferee of a
Participant pursuant to Section 6(f)(iii), above, shall
remain exercisable for any period of time longer than would
otherwise be permitted under Sections 6(g), (h), and (i)
without specification of other periods by the Committee as
provided therein.
(k.) ISO Limitations and Savings Clause.
The aggregate fair market value (determined as of the
time of grant) of the Shares with respect to which ISOs are
exercisable for the first time by the Participant during any
calendar year under the Plan and any other stock option plan
of the Company and its affiliates shall not exceed $100,000
unless otherwise permitted by Code Section 422 as an unused
limit carryover to such year. Any Options which were
intended to be ISOs that exceed this limitation shall be
deemed to be NQSOs.
Any provision of the Plan to the contrary
notwithstanding, without the consent of each Participant
affected, no provision of the Plan relating to ISOs shall be
interpreted, amended, or altered, nor shall any discretion
or authority granted under the Plan be so exercised, so as
to disqualify the Plan under Section 422 of the Code or so
as to disqualify any ISO under such Code Section 422.
Section 7. Restricted Shares.
Restricted Shares awarded under the Plan shall be subject to
the following terms and conditions and such additional terms and
conditions not inconsistent with the terms of the Plan as the
Committee deems appropriate:
(a.) Price.
The purchase price for Restricted Shares shall be any
price set by the Committee and may be zero. Payment in full
of the purchase price, if any, shall be made by certified or
bank cashier's check or other form of payment acceptable to
the Company, or, if approved by the Committee, by (i)
delivery of unrestricted Shares having a fair market value
on the date of such delivery equal to the total purchase
price, or (ii) a combination of the preceding methods.
43
(b.) Acceptance of Restricted Shares.
At the time of the Restricted Share Award, the
Committee may determine that such Shares shall, after
vesting, be further restricted as to transferability or be
subject to repurchase by the Company or forfeiture upon the
occurrence of certain events determined by the Committee, in
its sole discretion, and specified in the Restricted Share
Agreement. Awards of Restricted Shares must be accepted by
the Participant within 30 days (or such other period as the
Committee may specify at grant) after the grant date by
executing the Restricted Share Agreement. The Participant
shall not have any rights with respect to the grant of
Restricted Shares unless and until the Participant has
executed the Restricted Share Agreement, delivered a fully
executed copy thereof to the Company, and otherwise complied
with the applicable terms and conditions of the Award.
(c.) Share Restrictions.
Subject to the provisions of the Plan and the
applicable Restricted Share Agreement, during such period as
may be set by the Committee, in its discretion, and as shall
be set forth in the applicable Restricted Share Agreement
(the "Restriction Period"), the Participant shall not be
permitted to sell, transfer, pledge, assign, or otherwise
encumber the Restricted Shares. The Committee shall have
the authority, in its sole discretion, to accelerate the
time at which any or all of the restrictions shall lapse
with respect to any Restricted Shares. Unless otherwise
determined by the Committee at or after grant or termination
of the Participant's employment, if the Participant's
employment by the Company and its subsidiaries terminates
during the Restriction Period, all Restricted Shares held by
such Participant and still subject to restriction shall be
forfeited by the Participant.
44
(d.) Stock Issuances and Restrictive Legends.
Upon execution and delivery of the Restricted Share
Agreement as described above and receipt of payment of the
full purchase price, if any, for the Restricted Shares
subject to such Restricted Share Agreement, the Company
shall, as soon as reasonably practicable thereafter, issue
the Restricted Shares. Restricted Shares may be issued,
whenever issued, in the form of a certificate, by book
entry, or otherwise, in the Company's sole discretion, and
shall bear an appropriate restrictive legend.
Notwithstanding the foregoing to the contrary, the Committee
may, in its sole discretion, require that Restricted Shares
be issued to and held by the Company or a trustee of a trust
set up by the Committee, consistent with the terms and
conditions of the Plan, to hold such Restricted Shares until
the restrictions thereon have lapsed (in full or in part, in
the Committee's sole discretion), and the Committee may
require that, as a condition of any Restricted Share Award,
the Participant shall have delivered to the Company or such
trustee, as appropriate, a stock power, endorsed in blank,
relating to the Restricted Shares covered by the Award.
(e.) Shareholder Rights.
Unless otherwise provided in the applicable Restricted
Share Agreement, no Participant (or his executor or
administrator or other transferee) shall have any rights of
a shareholder in the Company with respect to the Restricted
Shares covered by an Award unless and until the Restricted
Shares have been duly issued and delivered to him under the
Plan.
(f.) Expiration of Restriction Period.
Upon the expiration of the Restriction Period without
prior forfeiture of the Restricted Shares (or rights
thereto) subject to such Restriction Period, unrestricted
Shares shall be issued and delivered to the Participant.
45
(g) Termination of Employment.
If a Participant's employment by the Company and its
subsidiaries terminates before the end of any Restriction
Period with the consent of the Committee, or upon the
Participant's death, retirement (as defined in Section 6(h),
above), or disability (as defined by the Committee in its
discretion at the time of grant and set forth in the
Restricted Share Agreement), the Committee may authorize the
issuance to such Participant (or his legal representative or
designated beneficiary) of all or a portion of the
Restricted Shares which would have been issued to him had
his employment continued to the end of the Restriction
Period. If the Participant's employment by the Company and
its subsidiaries terminates before the end of any
Restriction Period for any other reason, all Restricted
Shares shall be forfeited.
Section 8. Performance Shares.
Performance Shares awarded under the Plan shall be subject
to the following terms and conditions and such additional terms
and conditions not inconsistent with the terms of the Plan as the
Committee deems appropriate:
(a.) Performance Periods and Goals.
(i) The performance period for each Award of
Performance Shares shall be of such duration as the
Committee shall establish at the time of the Award (the
"Performance Period"). There may be more than one Award in
existence at any one time, and Performance Periods may
differ.
(ii) At the time of each Award of Performance Shares,
the Committee shall establish a range of performance goals
(the "Performance Goals") to be achieved during the
Performance Period. The Performance Goals shall be
determined by the Committee using such measures of the
performance of the Company over the Performance Period as
the Committee shall select, including without limitation
earnings, return on capital, or any performance goal
approved by the shareholders of the Company in accordance
with Section 162(m) of the Code. Performance Shares awarded
to Participants will be earned as determined by the
Committee with respect to the attainment of the Performance
Goals set for the Performance Period. Attainment of the
highest Performance Goal for the Performance Period will
earn 100% of the Performance Shares awarded for the
Performance Period; failure to attain the lowest Performance
Goal for the Performance Period will earn none of the
Performance Shares awarded for the Performance Period. After
the applicable Performance Period shall have ended, the
Committee shall certify in writing the extent to which the
established Performance Goals have been achieved and the
number of Performance Shares earned.
46
(iii) Attainment of the Performance Goals will be
determined by the Committee. If Performance Goals are based
on the financial performance of the Company, attainment of
the Performance Goals shall be determined from the
consolidated financial statements of the Company, as
applicable, but shall generally exclude (A) the effects of
changes in federal income tax rates, (B) the effects of
unusual, non-recurring, and extraordinary items as defined
by Generally Accepted Accounting Principles ("GAAP"), and
(C) the cumulative effect of changes in accounting
principles in accordance with GAAP. The Performance Goals
may vary for different Performance Periods and need not be
the same for each Participant receiving an Award for a
Performance Period. The Committee may, in its sole
discretion, subject to the limitations of Section 17, vary
the terms and conditions of any Performance Share Award,
including without limitation the Performance Period and
Performance Goals, without shareholder approval, as applied
to any recipient who is not a "covered employee" with
respect to the Company as defined in Section 162(m) of the
Code. In the event applicable tax or securities laws change
to permit the Committee discretion to alter the governing
performance measures as they pertain to covered employees
without obtaining shareholder approval of such changes, the
Committee shall have sole discretion to make such changes
without obtaining shareholder approval.
(b.) Price.
The purchase price for Performance Shares shall be any
price set by the Committee and may be zero. Payment in full
of the purchase price, if any, shall be made by certified or
bank cashier's check or other form of payment acceptable to
the Company, or, if approved by the Committee, by (i)
delivery of unrestricted Shares having a fair market value
on the date of such delivery equal to the total purchase
price, or (ii) a combination of the preceding methods.
47
(c.) Acceptance of Performance Shares.
At the time of the Performance Share Award, the
Committee may determine that such Shares shall, after
vesting pursuant to the Performance Period and Performance
Goal provisions described above, be further restricted as to
transferability or be subject to repurchase by the Company
or forfeiture upon the occurrence of certain events
determined by the Committee, in its sole discretion, and
specified in the Performance Share Agreement. Awards of
Performance Shares must be accepted by the Participant
within 30 days (or such other period as the Committee may
specify at grant) after the grant date by executing the
Performance Share Agreement. The Participant shall not have
any rights with respect to the grant of Performance Shares
unless and until the Participant has executed the
Performance Share Agreement, delivered a fully executed copy
thereof to the Company, and otherwise complied with the
applicable terms and conditions of the Award.
(d.) Share Restrictions.
Subject to the provisions of the Plan and the
applicable Performance Share Agreement, during the
Performance Period and any additional restriction period (as
described in Section 8(c), above), the Participant shall not
be permitted to sell, transfer, pledge, assign, or otherwise
encumber the Performance Shares. The Committee shall have
the authority, in its sole discretion, to accelerate the
time at which any or all of the restrictions shall lapse
with respect to any Performance Shares. Unless otherwise
determined by the Committee at or after grant or termination
of the Participant's employment, if the Participant's
employment by the Company and its subsidiaries terminates
during the Performance Period or any additional period of
restriction, all Performance Shares held by such Participant
and still subject to restriction shall be forfeited by the
Participant.
48
(e.) Stock Issuances and Restrictive Legends.
Upon execution and delivery of the Performance Share
Agreement as described above and receipt of payment of the
full purchase price, if any, for the Performance Shares
subject to such Performance Share Agreement, the Company
shall, as soon as reasonably practicable thereafter, issue
the Performance Shares. Performance Shares may be issued,
whenever issued, in the form of a certificate, by book
entry, or otherwise, in the Company's sole discretion, and
shall bear an appropriate restrictive legend.
Notwithstanding the foregoing to the contrary, the Committee
may, in its sole discretion, require that the Performance
Shares be issued to and held by the Company or a trustee of
a trust set up by the Committee, consistent with the terms
and conditions of the Plan, to hold such Performance Shares
until the restrictions on such Performance Shares have
lapsed (in full or in part, in the Committee's sole
discretion), and the Committee may require that, as a
condition of any Performance Share Award, the Participant
shall have delivered to the Company or such trustee a stock
power, endorsed in blank, relating to the Performance Shares
covered by the Award.
(f.) Shareholder Rights.
Unless otherwise provided in the applicable Performance
Share Agreement, no Participant (or his executor or
administrator or other transferee) shall have any rights of
a shareholder in the Company with respect to the Performance
Shares covered by an Award unless and until the Performance
Shares have been duly issued and delivered to him under the
Plan.
(g.) Expiration of Restricted Period.
Subject to fulfillment of the terms and conditions of
the applicable Performance Share Agreement and any other
vesting requirements related to the applicable Performance
Period or Performance Goals, and upon the expiration of any
additional period of restriction as described in Section
8(c), if any, without prior forfeiture of the Performance
Shares (or rights thereto) subject to such Restriction
Period, unrestricted Shares shall be issued and delivered to
the Participant.
49
(h.) Termination of Employment.
If a Participant's employment by the Company and its
subsidiaries terminates before the end of any Performance
Period with the consent of the Committee, or upon the
Participant's death, retirement (as defined in Section 6(h),
above), or disability (as defined by the Committee in its
discretion at the time of grant and set forth in the
Performance Share Agreement), the Committee, taking into
consideration the performance of such Participant and the
performance of the Company over the Performance Period, may
authorize the issuance to such Participant (or his legal
representative or designated beneficiary) of all or a
portion of the Performance Shares which would have been
issued to him had his employment continued to the end of the
Performance Period. If the Participant's employment by the
Company and its subsidiaries terminates before the end of
any Performance Period for any other reason, all such
Performance Shares shall be forfeited.
Section 9. Restriction on Exercise After Termination.
Notwithstanding any provision of this Plan to the contrary,
no unexercised right created under this Plan (an "Unexercised
Right") and held by a Participant on the date of termination of
such Participant's employment with the Company and its
subsidiaries for any reason shall be exercisable after such
termination if, prior to such exercise, the Participant (a) takes
other employment or renders services to others without the
written consent of the Company, (b) violates any non-competition,
confidentiality, conflict of interest, or similar provision set
forth in the Award Agreement pursuant to which such Unexercised
Right was awarded, or (c) otherwise conducts himself in a manner
adversely affecting the Company in the sole discretion of the
Committee.
50
Section 10. Withholding Tax.
The Company, at its option, shall have the right to require
the Participant or any other person receiving Shares, Restricted
Shares, or Performance Shares (including cash in lieu of
Performance Shares) to pay the Company the amount of any taxes
which the Company is required to withhold with respect to such
Shares, Restricted Shares, or Performance Shares or, in lieu of
such payment, to retain or sell without notice a number of such
Shares sufficient to cover the amount required to be so withheld.
The Company, at its option, shall have the right to deduct from
all dividends paid with respect to Shares, Restricted Shares, and
Performance Shares the amount of any taxes which the Company is
required to withhold with respect to such dividend payments. The
Company, at its option, shall also have the right to require a
Participant to pay to the Company the amount of any taxes which
the Company is required to withhold with respect to the receipt
by the Participant of Shares pursuant to the exercise of a Stock
Option, or, in lieu of such payment, to retain, or sell without
notice, a number of Shares sufficient to cover the amount
required to be so withheld. The obligations of the Company under
the Plan shall be conditional on such payment or other
arrangements acceptable to the Company.
Section 11. Securities Law Restrictions.
No right under the Plan shall be exercisable and no Share
shall be delivered under the Plan except in compliance with all
applicable federal and state securities laws and regulations.
The Company shall not be required to deliver any Shares or other
securities under the Plan prior to such registration or other
qualification of such Shares or other securities under any state
or federal law, rule, or regulation as the Committee shall
determine to be necessary or advisable.
The Committee may require each person acquiring Shares under
the Plan (a) to represent and warrant and agree with the Company,
in writing, that such person is acquiring the Shares without a
view to the distribution thereof, and (b) to make such additional
representations, warranties, and agreements with respect to the
investment intent of such person or persons as the Committee may
reasonably request. Any certificates for such Shares may include
any legend which the Committee deems appropriate to reflect any
restrictions on transfer.
All Shares or other securities delivered under the Plan
shall be subject to such stop-transfer orders and other
restrictions as the Committee may deem advisable under the rules,
regulations, and other requirements of the Securities and
Exchange Commission, any stock exchange upon or market in which
the Shares are then listed or traded, and any applicable federal
or state securities law, and the Committee may cause a legend or
legends to be put on any certificates evidencing such Shares to
make appropriate reference to such restrictions.
51
Section 12. Change in Control.
(a.) Accelerated Vesting and Company Purchase Option.
Notwithstanding any provision of this Plan or any Award
Agreement to the contrary (unless such Award Agreement
contains a provision referring specifically to this Section
12 and stating that this Section 12 shall not be applicable
to the Award evidenced by such Award Agreement), if a Change
in Control or a Potential Change in Control (each as defined
below) occurs, then:
(i) Any and all Stock Options theretofore granted
and not fully vested shall thereupon become vested and
exercisable in full and shall remain so exercisable in
accordance with their terms, and the restrictions
applicable to any or all Restricted Shares and
Performance Shares shall lapse and such Shares and
Awards shall be fully vested; provided that no Stock
Option or other Award which has previously been
exercised or otherwise terminated shall become
exercisable; and
(ii) The Company may, at its option, terminate any
or all unexercised Stock Options and portions thereof
not more than 30 days after such Change in Control or
Potential Change in Control; provided that the Company
shall, upon such termination and with respect to each
Stock Option so terminated, pay to the Participant (or
such Participant's transferee, if applicable)
theretofore holding such Stock Option cash in an amount
equal to the difference between the fair market value
(as defined in Section 6(a), above) of the Shares
subject to the Stock Option at the time the Company
exercises its option under this Section 12(a)(ii) and
the exercise price of the Stock Option; and provided
further that if such fair market value is less than
such exercise price, then the Committee may, in its
discretion, terminate such Stock Option without any
payment.
52
(b.) Definition of Change in Control.
For purposes of the Plan, a "Change in Control" shall
mean the happening of either of the following:
(i) When any "person" as defined in Section
3(a)(9) of the 1934 Act and as used in Sections 13(d)
and 14(d) thereof, including a "group" as defined in
Section 13(d) of the 1934 Act, but excluding the
Company, any subsidiary of the Company, and any
employee benefit plan sponsored or maintained by the
Company or any subsidiary of the Company (including any
trustee of such plan acting as trustee), directly or
indirectly, becomes the "beneficial owner" (as defined
in Rule 13d-3 under the 1934 Act) of securities of the
Company representing 50% or more of the combined voting
power of the Company's then outstanding securities; or
(ii) The occurrence of a transaction requiring
stockholder approval for the acquisition of the Company
by an entity other than the Company, a subsidiary of
the Company, or any of their respective affiliates
through purchase of assets, by merger, or otherwise.
Notwithstanding the foregoing to the contrary, a change
in control shall not be deemed to be a Change in Control for
purposes of this Plan if the Incumbent Directors of the
Board approve or had approved such change (A) described in
Sections 12(b)(i), (ii), or 12(c)(i) of this Plan, or (B)
prior to the commencement by any person other than the
Company of a tender offer for Shares.
(c.) Definition of Potential Change in Control.
For purposes of the Plan, a "Potential Change in
Control" means the happening of either one of the following:
(i) The approval by the stockholders of the
Company of an agreement by the Company, the
consummation of which would result in a Change in
Control of the Company as defined in Section 12(b),
above; or
(ii) The acquisition of beneficial ownership of
the Company, directly or indirectly, by any entity,
person, or group (other than the Company, a subsidiary
of the Company, or any Company employee benefit plan
(including any trustee of such plan acting as such
trustee)) representing 15% or more of the combined
voting power of the Company's outstanding securities
and the adoption by the Board of a resolution to the
effect that a Potential Change in Control of the
Company has occurred for purposes of the Plan.
53
Section 13. Changes in Capital Structure.
In the event the Company changes its outstanding Shares by
reason of stock splits, stock dividends, or any other increase or
reduction of the number of outstanding Shares without receiving
consideration in the form of money, services, or property deemed
appropriate by the Board, in its sole discretion, the aggregate
number of Shares subject to the Plan, the limitation on the
number of Shares available under the Plan for issuance pursuant
to an Award other than Stock Options, the limitation on the
number of Shares subject to ISOs and the limitations on the
number of Shares subject to Stock Options, Restricted Shares and
Performance Shares granted to any single Participant shall be
proportionately adjusted or substituted and the number of Shares,
and the exercise price for each Share subject to the unexercised
portion of any then-outstanding Award shall be proportionately
adjusted, with the objective that the Participant's proportionate
interest in the Company shall reflect equitably the effects of
such changes as applicable to the unexercised portion of any
then-outstanding Awards, all as determined by the Committee in
its sole discretion.
In the event of any other recapitalization, corporate
separation or division, or any merger, consolidation, or other
reorganization of the Company, the Committee shall make such
adjustment, if any, as it may deem appropriate to accurately
reflect the number and kind of shares deliverable, and the
exercise prices payable, upon subsequent exercise of any
then-outstanding Awards, as determined by the Committee in its
sole discretion.
The Committee's determination of the adjustments appropriate
to be made under this Section 13 shall be conclusive upon all
Participants under the Plan.
Section 14. No Enlargement of Employee Rights.
The adoption of this Plan and the grant of one or more
Awards to an employee of the Company or any of its subsidiaries
shall not confer any right to the employee to continue in the
employ of the Company or any such subsidiary and shall not
restrict or interfere in any way with the right of his employer
to terminate his employment at any time, with or without cause.
Section 15. Rights as a Shareholder.
No Participant or his executor or administrator or other
transferee shall have any rights of a shareholder in the Company
with respect to the Shares covered by an Award unless and until
such Shares have been duly issued and delivered to him under the
Plan.
54
Section 16. Acceleration of Rights.
The Committee shall have the authority, in its discretion,
to accelerate the time at which a Stock Option or other Award
right shall be exercisable whenever it may determine that such
action is appropriate by reason of changes in applicable tax or
other laws or other changes in circumstances occurring after the
grant of the Award.
Section 17. Interpretation, Amendment, or Termination of the
Plan.
The interpretation by the Committee of any provision of the
Plan or of any Award Agreement executed pursuant to the grant of
an Award under the Plan shall be final and conclusive upon all
Participants or transferees under the Plan. The Board, without
further action on the part of the shareholders of the Company,
may from time to time alter, amend, or suspend the Plan or may at
any time terminate the Plan, provided that: (a) no such action
shall materially and adversely affect any outstanding Stock
Option under the Plan without the consent of the holder of such
Stock Option; and (b) except for the adjustments provided for in
Section 13, above, no amendment may be made by Board action
without shareholder approval if the amendment would require
shareholder approval under applicable law or regulation. Subject
to the above provisions, the Board shall have authority to amend
the Plan to take into account changes in applicable tax and
securities laws and accounting rules, stock exchange or market
rules, as well as other developments.
The Committee may amend the terms of any Award theretofore
granted, prospectively or retroactively; provided, no such
amendment shall impair the rights of any Participant without the
Participant's consent, unless it is made to cause the Plan or
such Award to comply with applicable law, stock exchange or
market rules or accounting rules.
Section 18. Unfunded Status of the Plan.
The Plan is intended to constitute an "unfunded" plan for
incentive and deferred compensation. With respect to any
payments or deliveries of Shares not yet made by the Company to a
Participant or transferee nothing contained herein shall give any
such Participant or transferee any rights that are greater than
those of a general creditor of the Company. The Committee may
authorize the creation of trusts or other arrangements to meet
obligations created under the Plan to deliver Shares or payments
hereunder consistent with the foregoing.
Section 19. Protection of Board and Committee.
No member of the Board or the Committee shall have any
liability for any determination or other action made or taken in
good faith with respect to the Plan or any Award granted under
the Plan.
55
Section 20. Government Regulations.
Notwithstanding any provision of the Plan or any Award
Agreement executed pursuant to the Plan, the Company's
obligations under the Plan and such Award Agreement shall be
subject to all applicable laws, rules, and regulations and to
such approvals as may be required by any governmental or
regulatory agencies, including without limitation, any stock
exchange or market on which the Company's Shares may then be
listed or traded.
Section 21. Governing Law.
The Plan shall be construed under and governed by the laws
of the State of Delaware.
Section 22. Genders and Numbers.
When permitted by the context, each pronoun used in the Plan
shall include the same pronoun in other genders and numbers.
Section 23. Captions.
The captions of the various sections of the Plan are not
part of the context of the Plan, but are only labels to assist in
locating those sections, and shall be ignored in construing the
Plan.
Section 24. Effective Date.
The Plan shall be effective December 4, 2000 (the "Effective
Date"). The Plan shall be submitted to the shareholders of the
Company for approval and ratification as soon as practicable but
in any event not later than 12 months after the adoption of the
Plan by the Board. If the Plan is not approved and ratified by
the shareholders of the Company within 12 months after the
adoption of the Plan by the Board, the Plan and all Awards
granted under the Plan shall became null and void and have no
further force or effect.
Section 25. Term of Plan.
No Award shall be granted pursuant to the Plan on or after
the 10th anniversary of the Effective Date, but Awards granted
prior to such tenth anniversary may extend beyond that date.
56
Section 26. Savings Clause.
In case any one or more of the provisions of this Plan or
any Award shall be held invalid, illegal, or unenforceable in any
respect, the validity, legality, and enforceability of the
remaining provisions shall not in any way be affected or impaired
thereby, and the invalid, illegal, or unenforceable provision
shall be deemed null and void; however, to the extent permissible
by law, any provision which could be deemed null and void shall
first be construed, interpreted, or revised retroactively to
permit this Plan or such Award, as applicable, to be construed so
as to foster the intent of this Plan. This Plan and all Awards
are intended to comply in all respects with applicable law and
regulation, including, as applicable, Section 422 of the Code,
Rule 16b-3 under the 1934 Act (with respect to persons subject to
Section 16 of the 1934 Act ("Reporting Persons")), and Section
162(m) of the Code (with respect to covered employees as defined
under Section 162(m) of the Code ("Covered Employees")). In case
any one or more of the provisions of this Plan or any Award shall
be held to violate or be unenforceable in any respect under Code
Section 422, if applicable, Rule 16b-3, or Code Section 162(m),
then, to the extent permissible by law, any provision which could
be deemed to violate or be unenforceable under Code Section 422,
Rule 16b-3, or Code Section 162(m) shall first be construed,
interpreted, or revised retroactively to permit the Plan or such
Award, as applicable, to be in compliance with Code Section 422,
Rule 16b-3, and Code Section162(m). Notwithstanding anything in
this Plan to the contrary, the Committee, in its sole discretion,
may bifurcate the Plan so as to restrict, limit, or condition the
use of any provision of this Plan to Participants who are
Reporting Persons or Covered Employees without so restricting,
limiting, or conditioning this Plan with respect to other
Participants.
The Committee may modify the terms of any Award under the
Plan granted to a Participant who, at the time of grant or during
the term of the Award, is resident or employed outside of the
United States in any manner deemed by the Committee to be
necessary or appropriate in order to accommodate differences in
local law, regulation, tax policy or custom, or so that the value
and other benefits of the Award to the Participant, as affected
by foreign tax laws and other restrictions applicable as a result
of the Participant's residence or employment abroad, will be
comparable to the value of such Award to a Participant who is
resident or employed in the United States. Moreover, the
Committee may approve such supplements to, or amendments,
restatements or alternative versions of this Plan as it may
consider necessary or appropriate for such purposes without
thereby affecting the terms of this Plan as in effect for any
other purpose, provided that no such supplements, amendments,
restatements or alternative versions shall include any provisions
that are inconsistent with the terms of the Plan, as then in
effect, unless this Plan could have been amended to eliminate
such inconsistency without further approval of shareholders of
the Company.
57
Executed this 4th day of December, 2000.
GREIF BROS. CORPORATION
By:_________________________________
Title: Chairman and Chief
Executive Officer
58
EXHIBIT B
AUDIT COMMITTEE CHARTER
The Audit Committee will be composed of not less than three
members of the Board and will be selected by the Board. All of
the members of the committee will be outside directors who are
independent of management. In accordance with NASDAQ
requirements a director will not be considered independent if,
among other things, he or she has:
* been employed by the corporation or its affiliates in the
current or past three years;
* accepted any compensation from the corporation or its
affiliates in excess of $60,000 during the previous fiscal
year (except for board service, retirement plan benefits, or
non-discretionary compensation);
* an immediate family member who is, or has been in the past
three years, employed by the corporation or its affiliates as
an executive officer;
* been a partner, controlling shareholder or an executive
officer of any for-profit business to which the corporation
made, or from which it received, payments (other than those
which arise solely from investments in the corporation's
securities) that exceed five percent of the organization's
consolidated gross revenues for that year, or $200,000,
whichever is more, in any of the past three years; or
* been employed as an executive of another entity where any of
the company's executives serve on that entity's compensation
committee.
All directors must be able to read and understand
fundamental financial statements, including a company's balance
sheet, income statement and cash flow statement. At least one
director must have past employment experience in finance or
accounting, requisite professional certification in accounting,
or other comparable experience or background, including a current
or past position as a chief executive or financial officer or
other senior officer with financial oversight responsibilities.
59
The Audit Committee shall have unrestricted access to
Company personnel and documents and will be given the resources
necessary to discharge its responsibilities. The Audit Committee
shall provide assistance to the corporate directors in fulfilling
their responsibilities to the shareholders, potential
shareholders and investment community relating to corporate
accounting, reporting practices of the Company and the quality
and integrity of the financial reports of the Company. In so
doing, it is the responsibility of the Audit Committee to
maintain free and open means of communication among the
directors, the independent auditors, the internal auditors and
the financial management of the Company. The Audit Committee
shall meet on a regular basis and call special meetings as
required.
Responsibilities of the Committee
The oversight responsibility of the committee includes the
following:
a) Those in which the committee will inform the Board that action
has been taken in the Board's interest and does not require
prior Board approval.
1. Review and approve the scope of the annual audit for the
Company and its subsidiaries recommended jointly by the
independent auditors and the Chief Financial Officer (CFO).
2. Review and approve the scope of the Company's annual profit
and pension trusts audits.
3. Review and approve the audit plan as recommended by the
Company's internal auditor.
4. Request the internal auditor to study a particular area of
interest or concern.
5. Discuss with the independent auditors their independence
from management and the Company and the matters included in
the written disclosures required by the Independence
Standards Board.
b) Those which the committee will review and then recommend
action by the Board.
1. Appoint independent public accounts, establishing the
outside auditor's accountability to the Board and the Audit
Committee.
2. Review major accounting policy changes before
implementation.
3. Review SEC registration statements before signature by other
Board members.
4. Review with management and the independent auditors the
financial statements to be included in the Company's Annual
Report on Form 10-K, including their judgment about the
quality, not just acceptability, of accounting principles,
the reasonableness of significant judgements, and the
clarity of the disclosures in the financial statements.
5. Review annual audit reports including auditor's opinions and
management letter.
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c) Those which the committee will review and provide summary
information reports to the Board when appropriate.
1. Review trends in accounting policy changes proposed or
adopted by organizations such as the Financial Accounting
Standards Board, the Securities and Exchange Commission
(SEC), and the American Institute of Certified Public
Accountants.
2. Interview independent auditors for review and analysis of
strengths and weaknesses of the Company's financial staff,
systems, adequacy of controls, and other factors which might
be pertinent to the integrity of published financial
reports.
3. Review the interim financial statements with management and
the independent auditors prior to the filing of the
Company's Quarterly Report on Form 10-Q. The committee
shall discuss the results of the quarterly review and any
other matters required to be communicated to the committee
by the independent auditors under generally accepted
auditing standards. The chair of the committee may
represent the entire committee for the purposes of this
review.
4. Review administration of the Company's "conflict of
interest" policy, code of ethics and other policies and
procedures relative to officers.
5. Review insurance programs.
6. Review the adequacy and maintenance of internal controls.
7. Review with management significant findings or sensitive
data or disclosures.
8. Review legal and regulatory items as they apply to the
Company.
The Audit Committee will perform any other functions
assigned by the Board or by Law. The Audit Committee should meet
with the Company's independent auditors at least annually. The
Audit Committee should serve as a communication vehicle for the
internal auditor and independent auditor to the Board. The
internal auditor should report directly to the chairman of the
Audit Committee with the Chief Financial Officer of the Company
having the day-to-day supervisory functions over the internal
auditor.
61
GREIF BROS. CORPORATION
CLASS B PROXY
FOR THE ANNUAL MEETING OF STOCKHOLDERS
CALLED FOR FEBRUARY 26, 2001
This Proxy is Solicited on Behalf of Management
The undersigned, being the record holder of Class B Common Stock and
having received the Notice of Meeting and Proxy Statement dated January 26,
2001,hereby appoints Michael J. Gasser, Charles R. Chandler, Michael H.
Dempsey, Naomi C. Dempsey, Daniel J. Gunsett, John C. Kane, Robert C.
Macauley, David J. Olderman and William B. Sparks, Jr., and each or any of
them as proxies, with full power of substitution, to represent the undersigned
and to vote all shares of Class B Common Stock of Greif Bros. Corporation,
which the undersigned is entitled to vote at the Annual Meeting of Stockholders
of the Corporation to be held at 425 Winter Road, Delaware, Ohio 43015, at
10:00o'clock A.M., E.S.T., on February 26, 2001, and at any adjournment thereof;
as follows:
1. FOR [] OR AGAINST [] THE ELECTION OF ALL NOMINEES LISTED BELOW (except
as marked to the contrary below):
Michael J. Gasser Charles R. Chandler Michael H. Dempsey
Naomi C. Dempsey Daniel J. Gunsett John C. Kane
Robert C. Macauley David J. Olderman William B. Sparks, Jr.
Instruction: To withhold authority to vote for any individual nominee,
strike a line through his or her name.
2. Proposal to approve the Greif Bros. Corporation 2001 Management Equity
Incentive and
Compensation Plan.
FOR [] AGAINST [] ABSTAIN []
3. IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH OTHER
MATTERS AS MAY PROPERLY COME BEFORE THE ANNUAL MEETING OR ANY
ADJOURNMENT THEREOF.
The Shares represented by this Proxy will be voted upon the proposals listed
above in accordance with the instructions given by the undersigned, but if no
instructions are given, this Proxy will be voted to elect all of the nominees
for directors as set forth in Item 1, above, to approve the Company's 2001
Management Equity Incentive and Stock Compensation Plan as set forth in Item 2,
above, and in the discretion of the proxies on any other matter which properly
comes before the Annual Meeting.
Record Holder Number of Class B Shares Held
Dated , 2001
Please date and sign proxy exactly as your name appears above, joint owners
should each sign personally. Trustees and others signing in a representative
capacity should indicate the capacity in which they sign.