UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
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 under ss. 240.14a-12
CROWN HOLDINGS, INC.
(Name of Registrant as Specified In Its Charter)
N/A
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
N/A
(2) Aggregate number of securities to which transaction applies:
N/A
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
N/A
(4) Proposed maximum aggregate value of transaction:
N/A
(5) Total fee paid:
N/A
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
Crown Holdings, Inc.
One Crown Way
Philadelphia, Pennsylvania 19154
--------------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
2005
--------------------------------
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of CROWN
HOLDINGS, INC. (the "Company") will be held at the Company's office located at
One Crown Way, Philadelphia, Pennsylvania on the 28th day of April 2005 at 9:30
a.m. to elect Directors; to ratify the appointment of independent auditors for
the fiscal year ending December 31, 2005; to consider and act upon a proposal to
approve an amendment to the Stock Compensation Plan for Non-Employee Directors,
which proposal the Board of Directors unanimously recommends; and to transact
such other business as may properly come before the Meeting.
The stock transfer books of the Company will not be closed prior to the
Meeting. Only Shareholders of Common Stock of record as of the close of business
on March 15, 2005 will be entitled to vote.
By Order of the Board of Directors
WILLIAM T. GALLAGHER
Senior Vice President, Secretary &
General Counsel
Philadelphia, Pennsylvania
March 25, 2005
WE CORDIALLY INVITE YOU AND HOPE THAT YOU WILL ATTEND THE
MEETING IN PERSON, BUT, IF YOU ARE UNABLE TO ATTEND,
THE BOARD OF DIRECTORS REQUESTS THAT YOU SIGN THE PROXY
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AND RETURN IT, WITHOUT DELAY, IN THE ENCLOSED ENVELOPE
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OR REGISTER YOUR VOTE BY TELEPHONE OR THROUGH THE
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INTERNET AS DESCRIBED ON THE PROXY CARD.
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(THIS PAGE INTENTIONALLY LEFT BLANK)
2
Crown Holdings, Inc.
One Crown Way
Philadelphia, Pennsylvania 19154
--------------------------------
PROXY STATEMENT - MEETING, April 28, 2005
TO ALL SHAREHOLDERS:
The accompanying Proxy is solicited by the Board of Directors of the
Company for use at the Annual Meeting of Shareholders to be held on April 28,
2005, and, if properly executed, shares represented thereby will be voted by the
named Proxies at such Meeting. The cost of soliciting proxies will be borne by
the Company. The Company has engaged D.F. King & Co., Inc. ("King") to assist in
the solicitation of proxies for a fee of $8,000 plus reimbursement for
out-of-pocket expenses and certain additional fees for services rendered by King
in connection with such solicitation. Certain Officers and employees of the
Company may also solicit proxies by mail, telephone, facsimile or in person
without any extra compensation. Any Shareholder giving a Proxy has the power to
revoke it at any time before it is voted by giving written notice of revocation
to the Secretary of the Company, by executing and delivering a later-dated Proxy
or by voting in person at the Meeting.
The persons named as Proxies were selected by the Board of Directors of
the Company, and all are Officers of the Company.
The Annual Report for the year ended December 31, 2004, containing audited
financial statements, is being mailed to Shareholders contemporaneously with
this Proxy Statement and accompanying Proxy, i.e., on or about March 25, 2005.
On March 4, 2005, there were 166,864,522 outstanding shares of Common
Stock, par value $5.00 per share ("Common Stock").
Shareholders of Common Stock of record as of March 15, 2005 are entitled
to vote at the Annual Meeting. Each share of Common Stock is entitled to one
vote. Shareholders may be represented by proxy at the Meeting by completing and
returning the Proxy or voting by telephone or by Internet. The presence, in
person or by proxy, of Shareholders entitled to cast a majority of votes will be
necessary to constitute a quorum for the transaction of business. Proxies
solicited herein will be voted, and if the person solicited specifies by means
of the ballot provided in the Proxy a choice with respect to matters to be acted
upon, the shares will be voted in accordance with such specification. Votes
withheld from Director nominees, abstentions and broker non-votes will be
counted in determining the presence of a quorum. Under Pennsylvania law and the
Company's By-Laws, votes withheld from Director nominees, abstentions and broker
non-votes are not considered to be "votes" and, therefore, will not be given
effect either as affirmative or negative votes. Directors are elected by
plurality vote. Other matters are determined by a majority of the votes cast.
The Company has, to its knowledge, no beneficial owner of more than 5
percent of the Common Stock outstanding as of March 4, 2005.
3
ELECTION OF DIRECTORS
The persons named in the Proxy shall vote the shares for the nominees
listed below, all of whom are now Directors of the Company, to serve as
Directors for the ensuing year or until their successors shall be elected. None
of the persons named as a nominee for Director has indicated that he or she will
be unable or will decline to serve. In the event that any of the nominees are
unable or decline to serve, which the Nominating and Corporate Governance
Committee of the Board of Directors does not believe will happen, the persons
named in the Proxy will vote for the remaining nominees and others who may be
selected by the Board of Directors.
The By-Laws of the Company provide for a variable number of Directors from
10 to 18. The Board of Directors has currently fixed the number of Directors at
11. It is intended that the Proxies will be voted for the election of the 11
nominees named below as Directors, and no more than 11 will be nominated by the
Company. The principal occupations stated below are the occupations which the
nominees have had during at least the last five years.
One of the Company's current Directors, William S. Urkiel, has not
previously been elected by the Shareholders. Mr. Urkiel was recommended by the
Company's Vice Chairman of the Board, Executive Vice President and Chief
Financial Officer.
We regretfully inform the Shareholders that Mr. G. Fred DiBona, Jr., a
member of the Board of Directors since 2004, died on January 11, 2005.
The Board of Directors recommends that Shareholders vote FOR election of
each of the nominees named below. The names of the nominees and information
concerning them and their associations as of March 4, 2005, as furnished by the
nominees, follow.
Year Became
Name Age Principal Occupation Director
---- --- -------------------- --------
Jenne K. Britell 62 Chairman and Chief Executive Officer of Structured Ventures; 2000
(b) former Executive Officer of several General Electric financial services
companies; also a Director of Lincoln National Corporation, Aames
Investment Corporation and U.S.-Russia Investment Fund
John W. Conway 59 Chairman of the Board, President and Chief Executive Officer; also a 1997
(a) Director of PPL Corporation
Arnold W. Donald 50 Chairman of Merisant Company; former Senior Vice President of 1999
(c) Monsanto Company; also a Director of Oil-Dri Corporation of America,
Carnival Corporation, The Scotts Company, The Laclede Group and
Russell Corporation
Marie L. Garibaldi 70 Former Associate Justice of the Supreme Court of New Jersey 2000
(d)
William G. Little 62 Former Chairman and Chief Executive Officer of West Pharmaceutical 2003
(b), (d) Services; also a Director of Constar International and Ligocyte
Pharmaceuticals
4
Year Became
Name Age Principal Occupation Director
---- --- -------------------- --------
Hans J. Loliger 62 Vice Chairman of Winter Group; former Chief Executive Officer of 2001
(c), (d) SICPA Group; also a Director of Fritz Meyer Holding, Cronat Holding,
List Holding and Buhler Holding
Thomas A. Ralph 64 Partner, Dechert LLP 1998
Hugues du Rouret 66 Chairman of Beaulieu Patrimoine; former Chairman and Chief Executive 2001
(b) Officer of Shell France; also a Director of Gras Savoye and Banque
Saint-Olive
Alan W. Rutherford 61 Vice Chairman of the Board, Executive Vice President and 1991
(a) Chief Financial Officer
Harold A. Sorgenti 70 General Partner of Sorgenti Investment Partners; former Chief Executive 1990
(a), (c), (d) Officer of Arco Chemical and former Chairman of Freedom Chemical;
also a Director of Philadelphia Facilities Management Corporation
William S. Urkiel 60 Former Senior Vice President and Chief Financial Officer of 2004
IKON Office Solutions
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(a) Member of the Executive Committee (c) Member of the Compensation Committee
(b) Member of the Audit Committee (d) Member of the Nominating and Corporate Governance Committee
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5
COMMON STOCK OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS
The following table shows, as of March 4, 2005, the number of shares of
Common Stock beneficially owned by each Director, the Company's five Executive
Officers who were the highest paid during 2004 and all Directors and Executive
Officers as a group. The Directors and Executive Officers of the Company have
sole voting and investment power with respect to the securities of the Company
listed in the table below.
Amount of Securities of the Company Percentage of
Name Owned Beneficially, Directly or Indirectly Outstanding Shares
----------------------------------------------------------------------------------------------------------------
William R. Apted(1) 542,728 *
Jenne K. Britell 59,256 *
John W. Conway(2)(3) 2,258,071 1.35%
Arnold W. Donald 58,063 *
Marie L. Garibaldi 40,063 *
William G. Little 6,937 *
Hans J. Loliger 37,535 *
Frank J. Mechura(4) 478,138 *
Thomas A. Ralph 38,763 *
Hugues du Rouret 27,040 *
Alan W. Rutherford(3)(5) 1,652,085 *
Harold A. Sorgenti 53,813 *
William S. Urkiel 870 *
William H. Voss(6) 483,040 *
Directors and Executive Officers as a Group of 16(3)(7) 6,228,405 3.73%
---------------------------------------
* Less than 1%.
(1) Includes 473,188 shares of Common Stock subject to presently exercisable
options held by Mr. Apted.
(2) Includes 1,888,500 shares of Common Stock subject to presently exercisable
options held by Mr. Conway.
(3) Excludes 5,740,815 shares of Common Stock held in the Crown Cork & Seal
Company, Inc. Master Retirement Trust on behalf of various Company pension
plans (the "Trust Shares"). Messrs. Conway and Rutherford are each members
of the Benefits Plan Investment Committee of the trust, which has sole
voting and dispositive power with respect to the Trust Shares, but
disclaim beneficial ownership of the Trust Shares.
(4) Includes 384,000 shares of Common Stock subject to presently exercisable
options held by Mr. Mechura.
(5) Includes 1,483,000 shares of Common Stock subject to presently exercisable
options held by Mr. Rutherford.
(6) Includes 438,500 shares of Common Stock subject to presently exercisable
options held by Mr. Voss.
(7) Includes 5,133,688 shares of Common Stock subject to presently exercisable
options held by certain Directors and Executive Officers.
6
CORPORATE GOVERNANCE
Meetings of the Board of Directors. In 2004, there were five meetings of
the Board of Directors. Each incumbent Director of the Company attended at least
75% of the aggregate meetings held by the Board of Directors and by the
Committees on which he or she served.
Attendance at the Annual Meeting. Under the Company's Corporate Governance
Guidelines, members of the Board of Directors are expected to attend the
Company's Annual Meeting of Shareholders. Last year, each of the Directors
serving on the Board at the time attended the Annual Meeting of Shareholders.
Director Independence. The Board of Directors has determined that Jenne K.
Britell, Arnold W. Donald, Marie L. Garibaldi, William G. Little, Hans J.
Loliger, Hugues du Rouret, Harold A. Sorgenti and William S. Urkiel are
"independent" under the listing standards of the New York Stock Exchange. The
Board made this determination based on the absence of any of the express
disqualifying criteria set forth in the listing standards and in compliance with
the Company's By-Laws, which require that a majority of the Board nominees be
"Independent Directors." A person is an "Independent Director" under the
Company's By-Laws if the Director is a person who: (1) is not and has not been
employed by the Company or any of its subsidiaries in an executive capacity
within the five years immediately prior to such person's nomination; (2) is not
(and is not affiliated with a company or a firm that is) a regular advisor or
consultant, for compensation, to the Company or any of its subsidiaries; (3) is
not affiliated with a regular and significant customer or supplier of the
Company or any of its subsidiaries; (4) does not have a personal services
contract with the Company or any of its subsidiaries; (5) is not affiliated with
a tax-exempt entity that receives significant contributions from the Company or
any of its subsidiaries; and (6) is not a spouse, parent, sibling or child of
any person described in (1) through (5), above. Of the remaining Directors, John
W. Conway and Alan W. Rutherford are Executive Officers of the Company, and
Thomas A. Ralph is a partner in the law firm of Dechert LLP, which performed
services for the Company in 2004.
Director Compensation. Directors who are also employees of the Company
receive no additional compensation for service as a Director. Directors who are
not employees of the Company receive cash base Director's fees, annual grants of
Company Common Stock and cash Committee fees and attendance fees. Cash base
Director's fees are $40,000 annually, and cash meeting attendance fees are
$1,500 per meeting. Annual grants of Company Common Stock consist of $50,000 of
Company Common Stock under the current Stock Compensation Plan for Non-Employee
Directors (see the discussion of the proposal to amend this plan beginning on
page 24). Cash Committee fees are as follows: for the Audit Committee, $15,000
annually for the Chairperson and $10,000 annually for the other members; for
other Committees, $10,000 annually for the Chairperson and $7,500 annually for
the other members; for the Chairman of the Nominating and Corporate Governance
Committee, an additional $10,000 annually for services as Presiding Director;
and for all Committee members, an attendance fee of $1,500 per Committee
meeting. In addition, each Non-Employee Director first elected to the Board of
Directors on or before April 26, 2001 has been granted 3,000 shares of Company
Common Stock subject to certain restrictions which lapse as to one-fifth of such
shares each year over a five-year period. The Company discontinued the Pension
Plan for Outside Directors as to Directors elected after July 24, 1997.
Directors first elected to the Board of Directors on or before July 24, 1997
also participate in the Company's Pension Plan for Outside Directors, which
provides monthly retirement benefits equal to 1/12 of the sum of (x) 50% of the
base annual Director's fee and (y) 10% of the base annual Director's fee for
each full year of service in excess of five, up to an annual maximum benefit of
100% of the base annual Director's fee. Directors may defer receipt of all, or
any part, of their Director's fees through participation in the Company's
Deferred Compensation Plan for Directors.
7
Director Stock Ownership. Effective January 1, 2005, after four years of
service on the Board of Directors, Non-Employee Directors are required to hold
Company Common Stock having a market value of at least $200,000.
Audit Committee. In 2004, the Audit Committee had eight meetings. The
Audit Committee provides assistance to the Board of Directors in discharging its
responsibilities in connection with the oversight of the financial accounting
practices of the Company and the internal controls related thereto and
represents the Board of Directors in connection with the services rendered by
the Company's independent auditors. The current members of the Audit Committee
are Dr. Britell and Messrs. Little and du Rouret. Dr. Britell serves as
Chairperson of the Committee. The Board of Directors has determined that the
Directors who serve on the Audit Committee are all "independent" as defined in
the listing standards of the New York Stock Exchange and that Dr. Britell is an
"audit committee financial expert" within the meaning of SEC regulations. The
Board of Directors has adopted a written Audit Committee Charter.
Compensation Committee. In 2004, the Compensation Committee met four
times. The Compensation Committee is responsible for the review of the executive
compensation program. The current members of the Compensation Committee are
Messrs. Donald, Loliger and Sorgenti, each of whom is "independent" under the
listing standards of the New York Stock Exchange. Mr. Loliger serves as
Chairperson of the Compensation Committee. The Board of Directors has adopted a
written Compensation Committee Charter.
Nominating and Corporate Governance Committee. There were two meetings of
the Nominating and Corporate Governance Committee in 2004. The current members
of the Nominating and Corporate Governance Committee are Justice Garibaldi and
Messrs. Little, Loliger and Sorgenti, each of whom is "independent" under the
listing standards of the New York Stock Exchange. Mr. Sorgenti serves as
Chairperson of the Nominating and Corporate Governance Committee. The Board of
Directors has adopted a written Nominating and Corporate Governance Committee
Charter.
The Nominating and Corporate Governance Committee is responsible for
leading the search for individuals qualified to become members of the Board of
Directors and recommending individuals to the Board as Director nominees. The
Committee also oversees the annual self-evaluation of the Board of Directors and
its committees and the annual evaluation of management by the Board of
Directors, makes recommendations to the Board of Directors regarding the
membership of the committees of the Board of Directors and performs other
corporate governance functions. Consistent with the Company's Corporate
Governance Guidelines, the Committee seeks nominees committed to upholding the
highest standards of personal and professional integrity and representing the
interests of all shareholders, not particular shareholder constituencies. The
Committee identifies nominees for Director by first evaluating the current
members of the Board willing to continue in service. In addition, the Committee
regularly assesses the appropriate size of the Board, whether any vacancies on
the Board are expected because of retirement or otherwise and whether the Board
needs Directors with particular skills or experience. To identify and evaluate
potential candidates for the Board, the Committee solicits ideas for possible
nominees from a number of sources, which may include current Board members,
senior-level Company executives and professional search firms. The Committee
will also consider candidates properly submitted by Company Shareholders.
Candidates for the Board are evaluated through a process that may include
background and reference checks, personal interviews with members of the
Committee and a review of the candidate's qualifications and other relevant
characteristics.
Shareholders who wish to suggest qualified candidates may write, via
Certified Mail-Return Receipt Requested, to the Office of the Secretary, Crown
Holdings, Inc., One Crown Way, Philadelphia, PA 19154, stating in detail the
qualifications of the persons they recommend. Shareholders must include a letter
from each nominee affirming that he or she will agree to serve as a Director of
the Company if
8
elected by Shareholders. However, through its own resources, the Committee
expects to be able to identify an ample number of qualified candidates. See
"Proposals of Shareholders" for information on bringing nominations for the
Board of Directors at the 2006 Annual Meeting.
Executive Sessions. Under the Company's Corporate Governance Guidelines,
the Non-Management Directors of the Company meet periodically at regularly
scheduled executive sessions without Management Directors. The Chairperson of
the Nominating and Corporate Governance Committee, currently Mr. Sorgenti,
serves as the Presiding Director at such meetings.
Communications with the Board of Directors. Shareholders and other
interested parties who wish to send communications on any topic to the Presiding
Director, the Non-Management Directors or the Board as a whole may do so by
writing to Harold A. Sorgenti, Chairperson of the Nominating and Corporate
Governance Committee, c/o Office of the Secretary, Crown Holdings, Inc., One
Crown Way, Philadelphia, PA 19154. Communications will be forwarded to all
Directors if they relate to substantive matters and include information,
suggestions or comments that the Chairperson of the Nominating and Corporate
Governance Committee, with the assistance of the Corporate Secretary, deems
appropriate for consideration by the full Board.
Code of Business Conduct and Ethics. The Company has a Code of Business
Conduct and Ethics that applies to all Directors and employees. The Code of
Business Conduct and Ethics is available on the Company's website at
www.crowncork.com/Investors/Corporate_Governance.html and is also available in
print to any Shareholder who requests it. The Company intends to disclose
amendments to and waivers of the Code of Business Conduct and Ethics on the
Company's website.
Company Website. The Company's Corporate Governance Guidelines and the
Charters of the Audit, Compensation, and Nominating and Corporate Governance
Committees are available on the Company's website at
www.crowncork.com/Investors/Corporate_Governance.html. These documents are also
available in print to any Shareholder who requests them.
9
EXECUTIVE COMPENSATION
The following table sets forth certain information regarding compensation
earned during each of the Company's last three fiscal years by the Company's
five Executive Officers who were the highest paid during 2004:
Summary Compensation Table
Annual Compensation Long Term Compensation
------------------------------------------------ ----------------------
Shares of
Other Common Stock
Name & Principal Annual Underlying All Other
Position Year Salary Bonus Compensation(1)(2) Options Compensation(3)
($) ($) ($) (#) ($)
------------------------------- --------------------------------------------- ------------- ---------------
John W. Conway 2004 900,000 1,710,000 -- 650,000 18,386
- Chairman of the Board, 2003 900,000 1,282,500 -- 0 18,311
President and 2002 765,000 826,200 -- 350,000 18,311
Chief Executive Officer
Alan W. Rutherford 2004 545,000 872,000 -- 500,000 --
- Vice Chairman of the Board, 2003 545,000 654,000 -- 0 --
Executive Vice President and 2002 455,000 368,550 -- 300,000 --
Chief Financial Officer
William R. Apted 2004 450,000 675,000 230,041 275,000 --
- President - European 2003 450,000 492,458 184,854 0 --
Division 2002 325,000 175,500 136,747 150,000 --
Frank J. Mechura 2004 450,000 675,000 -- 275,000 11,597
- President - Americas 2003 450,000 386,438 -- 0 11,522
Division 2002 325,000 164,125 -- 150,000 11,522
William H. Voss 2004 310,000 465,000 141,309 210,000 23,323
- President - Asia-Pacific 2003 310,000 552,002 173,933 0 23,248
Division 2002 275,000 148,500 209,579 100,000 23,067
----------------------------------------------------
(1) The amount of perquisite and other personal benefits for Messrs. Conway,
Rutherford and Mechura did not exceed the lesser of $50,000 or 10% of the
total of annual salary plus bonus.
(2) Nearly all of the amounts listed for Messrs. Apted and Voss were paid in
respect of their overseas service in Paris and Singapore, respectively,
including overseas housing expense allowances to Mr. Apted of $72,867 in
2004, $61,954 in 2003 and $52,327 in 2002 and to Mr. Voss of $46,611 in
2004, $64,357 in 2003 and $90,098 in 2002 and also including U.S. tax
equalization payments by the Company for Mr. Apted of $105,110 in 2004,
$76,467 in 2003 and $48,093 in 2002 and for Mr. Voss of $34,750 in 2004,
$37,172 in 2003 and $55,373 in 2002.
(3) The amounts shown in this column for Mr. Conway represent $15,311 of life
insurance premiums in each of 2004, 2003 and 2002 and $3,075, $3,000 and
$3,000 contributed to the 401(k) Retirement Savings Plan in such years,
for Mr. Mechura represent $8,522 of life insurance premiums in each of
2004, 2003 and 2002 and $3,075, $3,000 and $3,000 contributed to the
401(k) Retirement Savings Plan in such years and for Mr. Voss represent
$20,248 of life insurance premiums in each of 2004, 2003 and 2002 and
$3,075, $3,000 and $2,819 contributed to the 401(k) Retirement Savings
Plan in such years. Any benefits paid pursuant to the above-referenced
insurance policies are credited against amounts payable to the Executive
Officer under the Senior Executive Retirement Plan.
10
Effective January 3, 2000, the Company entered into employment agreements
with John W. Conway and Alan W. Rutherford. Effective July 22, 2004, the Company
entered into employment agreements with William R. Apted, Frank J. Mechura and
William H. Voss. The agreements for Messrs. Conway and Rutherford are each for a
five-year term and the agreements for Messrs. Apted, Mechura and Voss are each
for a three-year term. All of the agreements provide for automatic one-year
extensions each year and terminate when the executive reaches age 65. The
agreements provide for a base salary that is periodically reviewed and may be
increased in accordance with the Company's regular compensation review policy.
In addition, each of the executives has the opportunity to receive an annual
bonus under the Company's executive bonus plans and awards under the Company's
Stock-Based Incentive Compensation Plans commensurate with each executive's
position with the Company. The agreements also entitle each of the executives to
participate in the Company's qualified retirement plans, Senior Executive
Retirement Plan and other employee benefit plans and programs in accordance with
the terms of those plans and programs.
Messrs. Conway and Rutherford have agreed that, during their employment
and for two years thereafter, they shall not compete with the Company or solicit
Company employees to terminate employment with the Company. Messrs. Apted,
Mechura and Voss are all subject to a similar non-competition provision which is
limited to a one year post-employment period.
Under the agreements, if an executive's employment is terminated because
of death or disability, the Company will pay the executive (or his estate, if
applicable), his base salary through the date of termination, and any vested
retirement, incentive or other benefits. In addition, Messrs. Conway and
Rutherford (or their estates, if applicable) are entitled to salary continuation
through the end of the calendar year in which their death or disability occurs.
If an executive's employment terminates because of his retirement, the Company
will pay to the executive his base salary through his date of retirement and any
vested retirement, incentive or other benefits. If an executive's employment
with the Company is terminated for "Cause," the Company will pay to the
executive only the base salary owed through his date of termination and his
vested retirement, incentive or other benefits.
Under the agreements for Messrs. Conway and Rutherford, if the employment
of the executive is terminated by the Company without Cause or by the executive
for "Good Reason" prior to a "Change in Control," in addition to the executive's
base salary through the date of termination, the Company will pay to the
executive a lump sum payment equal to the sum of (i) his expected annual bonus
payment, (ii) any previously earned bonus payment and (iii) an amount equal to
three times the sum of the executive's base salary and his average bonus over
the prior three years. Under the agreements for Messrs. Apted, Mechura and Voss,
upon the termination of the executive under such circumstances, the Company will
pay to the executive (i) his base salary through the date of termination, (ii)
salary continuation for a one year period in accordance with the Company's
normal payroll practice, and (iii) a lump sum equal to the executive's target
bonus for the year of termination. In all such cases, the Company will also pay
to the executive any vested retirement, incentive or other benefits.
If the employment of Mr. Conway or Mr. Rutherford is terminated by the
Company without Cause or by the executive for Good Reason during the one year
period following a Change in Control, such executive will be entitled to the
same payments and benefits described in the preceding paragraph, and all stock
options granted to such executive by the Company will become fully vested and
immediately
11
exercisable. Upon the termination of Mr. Apted, Mr. Mechura or Mr. Voss by the
Company without Cause or by such executive for Good Reason during the one year
period following a Change in Control, the Company will pay to such executive (i)
his base salary though the date of termination, (ii) a lump sum equal to two
times the sum of the executive's base salary and his average bonus over the
prior three years, (iii) a lump sum equal to such executive's target bonus for
the year of termination, and (iv) all stock options granted to such executive by
the Company will be come fully vested and immediately exercisable.
If an executive voluntarily terminates his employment without Good Reason,
the Company will pay to the executive his base salary through his date of
termination, a pro-rated annual bonus for the year of termination, and any
vested retirement, incentive or other benefits.
To the extent an executive would be subject to the excise tax under
Section 4999 of the Internal Revenue Code on the amounts or benefits to be
received from the Company and required to be included in the calculation of
parachute payments for purposes of Sections 280G and 4999 of the Internal
Revenue Code, the Company will pay to the executive an additional amount so that
the executive will receive the full amount owed to him under his employment
agreement, without regard to the excise tax or any other taxes imposed on the
additional payment.
Mr. Mechura borrowed $50,000 on June 19, 1997 and $65,000 on June 3, 2002
from the Company in connection with relocation and housing. The loans were
payable on demand and accrued interest at the prime rate. Mr. Mechura repaid
$148,538, the full amount of principal and accrued interest on these loans, on
February 28, 2005.
12
Option Grants In Last Fiscal Year
The Company's 2001 and 2004 Stock-Based Incentive Compensation Plans are
administered by a committee of the Board of Directors. The following table
provides information related to Stock Options granted under these plans in the
last fiscal year to the five Named Executive Officers.
Number of
Securities % of Total
Underlying Option Shares
Options Granted to Grant Date
Granted Employees in Exercise Price Expiration Present
(A) (B) Fiscal Year Per Share (C) Date Value (D)
-------- -------------- ------------------ -------------- -----------
John W. Conway 150,000 2.76% $8.75 2/24/14 $ 818,370
500,000 9.20% 8.60 5/03/14 2,063,850
Alan W. Rutherford 100,000 1.84% 8.75 2/24/14 545,580
400,000 7.36% 8.60 5/03/14 1,651,080
William R. Apted 75,000 1.38% 8.75 2/24/14 409,185
200,000 3.68% 8.60 5/03/14 825,540
Frank J. Mechura 75,000 1.38% 8.75 2/24/14 409,185
200,000 3.68% 8.60 5/03/14 825,540
William H. Voss 60,000 1.10% 8.75 2/24/14 327,348
150,000 2.76% 8.60 5/03/14 619,155
(A) All options were non-statutory options, have an exercise price equal to
the fair market value of the Company Common Stock on the date of grant,
and have a term of ten years. The options granted on February 24, 2004
vest at a rate of 25% six months after the grant date and 25% per year on
the first through third anniversaries of the grant date. The options
granted on May 3, 2004 vest at a rate of 25% every six months after the
grant date.
(B) The committee administering the 2001 and 2004 Stock-Based Incentive
Compensation Plans has the discretion, subject to plan limits, including
applicable Shareholder approval requirements, to modify terms of
outstanding options and to reprice the options.
(C) The exercise price and tax withholding obligation related to exercise
shall be paid either in cash or by delivery of already-owned shares valued
at fair market value on the date of exercise.
(D) The Grant Date Present Value was determined using the Black-Scholes option
pricing model. The following assumptions were used to estimate the Grant
Date Present Value: dividend yield of 0%, weighted average risk-free
interest rate of 3.164%, estimated volatility of Company Common Stock of
61.6% and weighted average expected option term of 4.19 years. This
valuation model was not adjusted for risk of forfeiture. It is important
to note that options will have value to the five Named Executive Officers
and other recipients only to the extent that the stock price exceeds the
grant date exercise price shown in the table during the effective option
period.
13
Aggregated Option Exercises in Last Fiscal Year and Fiscal Year-End Option Values
Securities Value of Unexercised
Underlying Unexercised In-The-Money Options
Shares Acquired Value Options at 12/31/04 at 12/31/04 (2)
Upon Exercise Realized(1) Exercisable/Unexercisable Exercisable/Unexercisable
(#) ($) (#) ($)
--------------- ------------ ------------------------- -------------------------
John W. Conway 1994 Plan 0 0 87,000 / 0 0 / 0
1997 Plan 0 0 666,500 / 0 1,449,000 / 0
2001 Plan 0 0 847,500 / 112,500 7,506,525 / 561,375
2004 Plan 0 0 125,000 / 375,000 642,500 / 1,927,500
Alan W. Rutherford 1994 Plan 0 0 110,000 / 0 0 / 0
1997 Plan 0 0 463,000 / 0 1,134,000 / 0
2001 Plan 0 0 685,000 / 75,000 6,073,150 / 374,250
2004 Plan 0 0 100,000 / 300,000 514,000 / 1,542,000
William R. Apted 1990 Plan 0 0 15,000 / 0 0 / 0
1994 Plan 0 0 7,500 / 0 0 / 0
1997 Plan 0 0 263,188 / 0 1,707,000 / 0
2001 Plan 0 0 68,750 / 56,250 568,063 / 280,688
2004 Plan 0 0 50,000 / 150,000 257,000 / 771,000
Frank J. Mechura 1990 Plan 0 0 20,000 / 0 0 / 0
1994 Plan 0 0 24,000 / 0 0 / 0
1997 Plan 0 0 202,500 / 0 1,518,000 / 0
2001 Plan 0 0 98,750 / 56,250 852,763 / 280,688
2004 Plan 0 0 50,000 / 150,000 257,000 / 771,000
William H. Voss 1990 Plan 0 0 74,500 / 0 0 / 0
1994 Plan 0 0 41,000 / 0 0 / 0
1997 Plan 0 0 218,000 / 0 1,159,000 / 0
2001 Plan 0 0 65,000 / 45,000 549,350 / 224,550
2004 Plan 0 0 37,500 / 112,500 192,750 / 578,250
-------------------------------------------------------
(1) Value Realized is the difference between the price of the Company Common
Stock on the date exercised and the option exercise price.
(2) Value of the Unexercised Options is the difference between the closing
market price on December 31, 2004 of the Company Common Stock and the
option exercise price.
14
Equity Compensation Plan Information
The following table provides information as of December 31, 2004 with
respect to shares of the Company's Common Stock that may be issued under its
equity compensation plans:
Number of Securities
Number of Securities Remaining Available for
to Be Issued upon Weighted-Average Future Issuance under
Exercise of Exercise Price of Equity Compensation Plans
Outstanding Options, Outstanding Options, (Excluding Securities
Plan Category Warrants and Rights Warrants and Rights Reflected in Column (a))
------------- ------------------- ------------------- ------------------------
(a) (b) (c)
-----------------------------------------------------------------------------------------------------------------
Equity compensation plans
approved by security holders 15,259,982(1) $13.93 1,937,151(2)
-----------------------------------------------------------------------------------------------------------------
Equity compensation plans
not approved by security holders 0 N/A 0
-----------------------------------------------------------------------------------------------------------------
Total 15,259,982 $13.93 1,937,151
(1) Includes the 1990, 1994, 1997, 2001 and 2004 Stock-Based Incentive
Compensation Plans.
(2) Includes 146,625, 1,525,500 and 265,026 shares available for issuance at
December 31, 2004 under the 2001 Stock-Based Incentive Compensation Plan,
the 2004 Stock-Based Incentive Compensation Plan, and the Company's Stock
Purchase Plan, respectively. The table does not include any shares
available for issuance under the Stock Compensation Plan for Non-Employee
Directors in effect in 2004 because the number of shares issuable under
the Plan is determined by a formula based on the market price of the
Common Stock of the Company at the time of grant. In 2004, 46,937 shares
of Common Stock, representing quarterly grants worth $12,500 to each
Non-Employee Director, were granted under that Plan.
Retirement Programs
The Company maintains a Pension Plan ("Pension Plan") for certain eligible
employees in the United States meeting minimum eligibility requirements in which
four Named Executive Officers (Messrs. Conway, Rutherford, Mechura and Voss)
participate. The Pension Plan is designed and administered to qualify under
Section 401(a) of the Internal Revenue Code of 1986, as amended. The Pension
Plan provides normal retirement benefits at age 65 based on the average of the
five highest consecutive years of earnings in the last ten years. For purposes
of the Pension Plan, earnings consist of salary excluding any bonus. These
average earnings are multiplied by 1.25%. This result is then multiplied by
years of service, which yields the annual Company-funded pension benefit. Under
federal law for 2005, benefits from a qualified retirement plan are limited to
$170,000 per year and may be based only on the first $210,000 of an employee's
annual earnings. The benefits payable under the Pension Plan are generally not
subject to reduction for Social Security or other offset amounts.
15
For illustration purposes, the following table shows estimated maximum
annual Company-funded retirement benefits payable from the Pension Plan to
employees who retire at age 65, assuming the employees receive their benefit as
a single life annuity, without survivor benefits:
Final Years of Service
Average
Earnings 25 30 35 40 45
---------------------------------------------------------------------------------------------------------------------------
$ 50,000 $15,625 $18,750 $21,875 $ 25,000 $ 28,125
100,000 31,250 37,500 43,750 50,000 56,250
150,000 46,875 56,250 65,625 75,000 84,375
210,000 65,625 78,750 91,875 105,000 118,125
and above
The Company also maintains the Senior Executive Retirement Plan ("SERP")
in which nine key executives, including the five Named Executive Officers,
participate. In general, the annual benefit for executives eligible to
participate in the SERP is based upon a formula equal to (i) 2.25% of the
average of the five highest consecutive years of earnings (determined without
regard to the limits imposed on tax qualified plans) times years of service up
to twenty years plus (ii) 1.67% of such earnings for the next fifteen years plus
(iii) at the discretion of the Compensation Committee, 1% of such earnings for
years of service beyond thirty-five less (iv) Social Security old-age benefits
and the Company-funded portion of the executive's Pension Plan benefits and
401(k) Retirement Savings Plan benefits. Based upon the above, the annual
benefit, estimated as of December 31, 2004, under the SERP at the retirement age
of 65, assuming each executive's current base salary for 2005, annual salary
increases of 5% and that the executive achieves the current target bonus under
the Company's executive bonus plan, would be $1,657,934 for Mr. Conway, $852,635
for Mr. Rutherford, $464,661 for Mr. Apted, $634,075 for Mr. Mechura and
$340,024 for Mr. Voss.
Participants in the SERP may elect to take all or part of their annual
retirement benefit in a lump sum at retirement, the amount of which is
determined by present valuing the actuarially determined future annual payments.
The SERP also provides a lump-sum death benefit of five times the annual
retirement benefit and subsidized survivor benefits.
SERP participants vest in their benefits at the earliest of five years of
participation, specified retirement dates, total disability or employment
termination (other than for cause) after a change in control of the Company. A
"change in control" under the SERP occurs if: 1) a person (other than a Company
employee benefit plan) becomes the beneficial owner of 25% or more of the voting
power of the Company; 2) over a two year period Directors at the beginning of
the period and new Directors approved by such Directors cease to constitute a
majority of the Board; or 3) the Shareholders approve certain mergers or
consolidations, a sale of substantially all of the Company's assets or a
complete liquidation of the Company.
Years of service credited under the Pension Plan and the SERP for the
above-Named Executive Officers are: Mr. Conway - 30 years, Mr. Rutherford - 31
years, Mr. Apted - 8 years, Mr. Mechura - 37 years and Mr. Voss - 35 years.
16
COMPARATIVE STOCK PERFORMANCE
Comparison of Five-Year Cumulative Total Return (a)
Crown Holdings, S&P 500 Index, Dow Jones "Containers & Packaging" Index (b)
[Chart Graphic Omitted]
Plot points are as follows:
Crown Holdings S&P 500 Index Dow Jones "Containers & Packaging" Index
-------------- ------------- ----------------------------------------
100 100 100
2000 37 91 65
2001 13 80 82
2002 39 62 88
2003 45 80 105
2004 68 89 125
(a) Assumes that the value of the investment in Crown Holdings Common Stock
and each index was $100 on December 31, 1999 and that all dividends were
reinvested.
(b) Industry index is weighted by market capitalization and is comprised of
Crown Holdings, Aptargroup, Ball, Bemis, Chesapeake, Owens-Illinois,
Packaging Corp. of America, Pactiv, Sealed Air, Smurfit-Stone Container,
Sonoco Products and Temple-Inland.
17
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors is composed entirely
of Directors who are independent under New York Stock Exchange listing
standards. The Committee is responsible for establishing and administering the
Company's executive compensation program. This report describes both the
principles under which the program is administered and the decisions that
directly impacted the Chief Executive Officer during 2004.
Principles
Our guiding principle is to provide a program that enables the Company to
retain and motivate a team of high quality executives who will create long-term
value for the Shareholders. We do this by:
o Developing an ownership-oriented program that rewards for long-term
improvement in total Shareholder return;
o Integrating all facets of the executive compensation program including
benefits available under employment contracts and the Company's
retirement plans with the Company's short and long-term objectives and
strategies;
o Regularly commissioning studies of competitive pay practices within the
container industry and other manufacturing companies to ensure pay
opportunities are generally within competitive norms; and
o Working with independent management consultants to monitor the
effectiveness of the entire program.
In order to improve the Company's performance and Shareholder value, we
must continue to motivate existing management as well as attract and retain
experienced managers at all levels in the Company. The specific components of
the program are described below.
Base Salaries - In order to attract and retain high quality executives, we
endeavor to maintain senior executive salaries within the competitive market
rates as defined by the container and manufacturing industries. The competitive
market includes, but is not limited to, firms of the Company's size in the
container, non-durable manufacturing and general industry segments.
Annual Incentive Bonus - The Company has an Economic Profit Incentive Plan
under which executives are eligible to receive an annual incentive bonus, up to
a designated maximum annual bonus amount for each executive, upon the
achievement of specific targets. The bonus targets are based on quantitative and
qualitative elements as generally follows:
o 50% is based on the Company's economic profit for the year (defined
generally as economic profit as adjusted for currency exchange rates
and acquisitions/divestitures);
o 30% is based on the Company's cash flow for the year (defined generally
as modified operating cash flow as adjusted for average working capital
variances); and
o 20% is based on qualitative factors (such as achievement of key
strategic goals, business unit goals, and agreed-upon personal business
goals in helping the Company to improve operations, efficiency and work
procedures).
18
Long Term Incentives - The Committee believes that stock options, and
other stock-based incentives, are an important link between the executive and
Shareholder interests, and it is for that reason that grants have always been a
part of the executive compensation program. The program administered by the
Committee under the Company's stock-based plans offers annual grants that vary
in size based on the Company's and the executive's performance. As part of its
ongoing review of the competitiveness and effectiveness of the Company's
executive compensation programs, the Committee annually evaluates the components
of the compensation system as well as the desired mix of compensation among
these components. The Committee believes that a substantial portion of the
compensation paid to the Company's executives should be at risk contingent on
the Company's operating and market performance. Consistent with this philosophy,
the Committee will continue to place significant emphasis on stock-based
compensation and performance measures, in an effort to more closely align
compensation with Shareholder interests and to increase executives' focus on the
Company's long-term performance.
In summary, the Committee believes that its role in administering the
executive compensation program is critical to the objective of driving
performances to the ultimate benefit of the Shareholders. Base salaries need to
be within competitive norms so that executives will be attracted, retained and
motivated to fulfill their roles and responsibilities over the long-term. Annual
incentive bonus awards deliver the message that competitive pay is received only
when earnings and other strategic goals are achieved. In addition, benefits
realized from long-term incentives, in the form of annual stock-based incentive
grants, require continuous improvement in value created for the Shareholders.
Specific Decisions Impacting Compensation for the Chairman and Chief Executive
Officer
Mr. Conway's continued implementation of plans initiated in 2001/2
resulted in positive results for the Company in 2004. Gross profit improved over
the prior year by over 18%, with all divisions contributing to this result. Free
cash flow generation was strong and enabled the Company to continue delevering.
During the year, the Company successfully refinanced part of its debt, raising
C=460 million, which reduced the Company's dollar exposure in Europe and
extended debt maturities beyond 2010. Mr. Conway encouraged investments in
growth areas around the globe, especially in Asia, the Middle East and North
Africa, and Eastern Europe to ensure full Company participation in these markets
in the years ahead.
Based upon these positive results and the policies and practices described
above, Mr. Conway's base salary was increased from $765,000 to $900,000 on
January 1, 2003 and remained the same during 2004. Mr. Conway earned a bonus in
2004 of $1,710,000 under the 2004 Economic Profit Incentive Plan, $1,539,000 of
which was based on meeting the economic profit and cash flow targets generally
described above, after adjustment to take into account the maximum bonus amount
designated for Mr. Conway under the Plan. Mr. Conway was also granted options to
purchase 150,000 shares of Common Stock on February 24, 2004 and 500,000 shares
of Common Stock on May 3, 2004. The options granted on February 24, 2004 vest at
a rate of 25% six months after the grant date and 25% per year on the first
through third anniversaries of the grant date. The options granted on May 3,
2004 vest at a rate of 25% every six months after the grant date. The options
all have a term of ten years.
19
Section 162(m) of the Internal Revenue Code generally disallows a
deduction for annual compensation to a public company's chief executive officer
and any of the four other most highly compensated officers in excess of
$1,000,000, unless such compensation is "performance based" as defined under
Section 162(m). A portion of Messrs. Conway's, Rutherford's, Apted's and
Mechura's 2004 compensation exceeded the threshold. Because the Company's cost
in realizing tax benefits under Section 162(m) may outweigh those benefits, the
Committee intends to maintain flexibility to pay compensation that is not
entirely deductible when sound direction of the Company would make that
advisable. All stock options granted to Crown Executive Officers are
"performance based."
This report is respectfully submitted by the members of the Compensation
Committee of the Board of Directors.
Hans J. Loliger, Chairperson
Arnold W. Donald
Harold A. Sorgenti
20
PRINCIPAL ACCOUNTANT FEES AND SERVICES
The firm of PricewaterhouseCoopers LLP, independent registered public
accountants, is the independent auditors for the most recently completed fiscal
year. The Audit Committee has appointed PricewaterhouseCoopers LLP as
independent auditors to audit and report on the Company's financial statements
for 2005. PricewaterhouseCoopers LLP performs annual audits of the Company's
financial statements and assists the Company in the preparation of various tax
returns around the world. A representative or representatives of
PricewaterhouseCoopers LLP are expected to be present at the Annual Meeting and
will have the opportunity to make a statement if they desire to do so. Such
representatives are also expected to be available to respond to questions raised
orally at the Meeting or submitted in writing to the Office of the Secretary of
the Company before the Meeting.
The Audit Committee reviewed the fees of PricewaterhouseCoopers LLP for
the fiscal years ended December 31, 2004 and December 31, 2003. (1) Audit Fees
totaled $8,580,000 and $5,892,000 for the years 2004 and 2003, respectively.
These fees represent professional services rendered for the audits of the
consolidated financial statements of the Company, including US and foreign
subsidiary audits, statutory audits, issuance of comfort letters, consents and
assistance with review of documents filed with the SEC. (2) Audit Related Fees
totaled $208,000 and $286,000 for the years 2004 and 2003, respectively. The
fees were for assurance and related services for employee benefit plan audits
and accounting consultations. (3) Tax Fees totaled $537,000 and $1,178,000 for
the years 2004 and 2003, respectively. The fees were for tax compliance,
including the preparation of tax returns and claims for refunds. (4) Tax
Advisory Services totaled $1,064,000 and $550,000 for the years 2004 and 2003,
respectively. These fees represent tax planning and advice. (5) All Other Fees
totaled $58,000 and $74,000 for the years 2004 and 2003, respectively, and were
for services rendered for translation and other assistance provided primarily in
non-US subsidiaries. For 2004, Audit Fees include $3,480,000 in fees for
services related to compliance with the requirements of Section 404 of the
Sarbanes-Oxley Act of 2002. There were no fees associated with financial
information systems design and implementation for 2004 and 2003.
All of the services described above were approved by the Company's Audit
Committee, and the Audit Committee has considered whether the non-audit fees
paid to PricewaterhouseCoopers LLP are compatible with maintaining their
independence as auditors. The Audit Committee pre-approves all audit and
permitted non-audit services, and related fees, to be performed by its
independent auditors. Under the Audit Committee Charter, the Chairperson of the
Audit Committee has the authority to review and approve all such proposed fees
and reports back to the full Audit Committee.
21
AUDIT COMMITTEE REPORT
The Audit Committee provides assistance to the Board of Directors by its
oversight of the financial accounting practices of the Company and the internal
controls related thereto and represents the Board of Directors in connection
with the services rendered by the Company's independent auditors, who report
directly to the Audit Committee.
In fulfilling its responsibilities, the Audit Committee has reviewed and
discussed with the Company's management and its independent auditors the audited
financial statements for the fiscal year ended December 31, 2004 and the
Company's system of internal controls and its effectiveness. Management is
responsible for the financial statements and the reporting process, including
the system of internal controls, and has represented to the Committee that such
financial statements were prepared in accordance with generally accepted
accounting principles. The Company's independent auditors,
PricewaterhouseCoopers LLP, are responsible for expressing an opinion as to
whether the financial statements fairly present in all material respects the
financial position, results of operations and cash flows of the Company in
accordance with generally accepted accounting principles in the United States.
PricewaterhouseCoopers LLP has informed the Committee that they have given such
an opinion with respect to the audited financial statements for the fiscal year
ended December 31, 2004.
The Audit Committee discussed with the independent auditors the matters
required to be discussed by Statement on Auditing Standards No. 61,
Communication with Audit Committees, as amended. In addition, the Committee has
discussed with the independent auditors the auditors' independence from the
Company and its management, including the matters in the written disclosures and
letter which were received by the Committee from the independent auditors as
required by Independence Standards Board Standard No. 1, Independence
Discussions with Audit Committees, as amended.
Based on the reviews and discussions referred to above, the Committee
recommended to the Board of Directors that the audited financial statements be
included in the Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 2004.
This report is respectfully submitted by the members of the Audit
Committee of the Board of Directors.
Jenne K. Britell, Chairperson
William G. Little
Hugues du Rouret
22
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
The Audit Committee has appointed the firm of PricewaterhouseCoopers LLP,
independent registered public accountants, as independent auditors to audit and
report on the Company's financial statements for 2005.
Although the submission to Shareholders of the appointment of
PricewaterhouseCoopers LLP is not required by law or the Company's By-Laws, the
Audit Committee believes it is appropriate to submit this matter to Shareholders
to allow a forum for Shareholders to express their views with regard to the
Audit Committee's selection. In the event Shareholders do not ratify the
appointment, the Audit Committee may reconsider the appointment of
PricewaterhouseCoopers LLP.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS
A VOTE FOR THE RATIFICATION OF THE APPOINTMENT OF
PRICEWATERHOUSECOOPERS LLP AS INDEPENDENT AUDITORS.
23
PROPOSAL TO APPROVE AN AMENDMENT TO STOCK COMPENSATION PLAN
FOR NON-EMPLOYEE DIRECTORS
The Board of Directors has adopted and recommends that the Shareholders
approve an Amendment to the Crown Holdings, Inc. Stock Compensation Plan for
Non-Employee Directors (the "Plan"). The proposed Amendment modifies the Plan
to: (i) provide for a maximum limit of 500,000 shares of Common Stock that may
be granted under the Plan on and after the date the Amendment is approved, (ii)
allow for discretionary grants of Common Stock for each Non-Employee Director
which may be up to $100,000 in value annually, as determined by the Board in its
discretion, and (iii) remove the Plan's five year automatic termination
provision. The Plan, as currently in effect, and as proposed to be amended, is
described below.
Purpose
-------
The purpose of the Plan is to compensate the Non-Employee Directors of the
Company for services rendered, to promote a greater identity of interest between
the Non-Employee Directors and the Shareholders of the Company and to provide a
financial incentive that will help attract and retain the most qualified
Non-Employee Directors. The Plan will accomplish these goals by awarding
unrestricted Common Stock of the Company to the Non-Employee Directors on a
quarterly basis.
Eligibility
-----------
All Non-Employee Directors of the Company are eligible to participate in
the Plan. There are currently nine Non-Employee Directors eligible to
participate in the Plan. No other Director, Officer or employee of the Company
is eligible to participate in the Plan.
Awards of Common Stock
----------------------
Under the current Plan, each Non-Employee Director is awarded Common Stock
of the Company worth $50,000 per year or $12,500 for each calendar quarter
during which the Director serves on the Board. Each award under the Plan is
immediately vested. Under the proposed Amendment, the maximum value of Common
Stock that may be awarded annually will be increased to $100,000 per year or
$25,000 per calendar quarter, with the Board of Directors having the discretion
to award any amount up to that maximum. The Board will annually determine the
amount of the award, which will be the same for all Non-Employee Directors. The
Board of Directors determined that the amount to be awarded for 2005, assuming
approval of the Amendment by Shareholders, will be $60,000 or $15,000 per
quarter. The Plan does not prevent the Company from adopting other or additional
compensation arrangements for Non-Employee Directors.
Valuation
---------
The number of shares of Common Stock awarded each quarter will be
calculated based on the average of the closing price on the New York Stock
Exchange on the 2nd through the 6th business days following the Company's
announcement of its quarterly earnings for the applicable quarter.
24
Administration and Implementation
---------------------------------
The Plan is administered by the Board. The Board has full power to
interpret the provisions of the Plan, make all determinations necessary for
administration of the Plan, adopt regulations for carrying out the Plan and make
changes in such regulations from time to time. The Board will determine the
effect of a reorganization, recapitalization, spin-off, stock split,
combination, merger or any other change of corporate structure on the number and
kind of shares authorized by the Plan and make any other adjustments to the Plan
as it deems appropriate in such situation.
Amendment and Termination
-------------------------
The Board has authority to amend, suspend, modify or terminate the Plan at
any time and for any purpose. However, the Company will seek Shareholder
approval for any material change to the Plan to the extent required by law.
The Plan currently provides that it remains in effect for five years from
the date of its approval by Shareholders (April 22, 2004), unless earlier
terminated by the Board. The proposed Amendment will remove the termination date
from the Plan. Instead, the Amendment will provide that a maximum of 500,000
shares may be issued under the Plan on or after the date the Amendment is
approved.
The total number of shares of Common Stock that will be reserved under the
Plan if the Amendment is approved would equal approximately 0.30% of the
outstanding shares of Common Stock of the Company as of March 4, 2005. The last
sales price of Common Stock, as reported on the NYSE for March 4, 2005, was
$17.02 per share.
Federal Tax Treatment
---------------------
Except as discussed below, each Non-Employee Director will realize taxable
income, and the Company will be entitled to a deduction, when Common Stock is
awarded to the Non-Employee Director. Upon sale of the shares, the Non-Employee
Director will realize short-term or long-term capital gain or loss, depending
upon whether the shares have been held for more than one year. Such gain or loss
will be equal to the difference between the sale price of the shares and the
fair market value of the shares on the date that the Non-Employee Director
recognizes income.
Deferral of Stock Awards
------------------------
The Plan provides each Non-Employee Director with the opportunity to defer
the receipt of all or any portion of a quarterly award of Common Stock until
termination from the Board or such other time designated by the Non-Employee
Director. Notwithstanding the foregoing, in the event of a change in control, a
Non-Employee Director will immediately receive all shares of Common Stock that
were previously deferred.
25
Benefits under the Amended Plan
-------------------------------
The Amendment will not take effect unless approved by the Shareholders,
and therefore grants under the Plan have been made at the rate of $12,500 per
quarter in value. If the Amendment is approved, it will not have retroactive
effect. However, had the proposed Amendment been in effect during the last
fiscal year, and had the Board exercised its discretion to award the maximum
grants of $25,000 per quarter allowed under the amended Plan, the Non-Employee
Directors, in the aggregate, would have received the following:
Name and Position Dollar Value Number of Units
----------------- ------------ ---------------
9 Non-Employee Directors(1) $900,000 93,865(2)
(1) There were nine Non-Employee Directors for all calendar quarters except for
one in which there were ten.
(2) The Number of Units above is calculated based on the average of the closing
price of Common Stock on the New York Stock Exchange on the 2nd through the 6th
business days following the Company's announcement of its quarterly earnings.
Requisite Vote
--------------
To be approved, the proposed Amendment to the Plan requires the
affirmative vote of a majority of the votes cast by all Shareholders entitled to
vote thereon.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE
FOR THE APPROVAL OF THE AMENDMENT TO THE CROWNHOLDINGS, INC.
STOCK COMPENSATION PLAN FOR NON-EMPLOYEE DIRECTORS.
26
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's Directors, Executive Officers and persons who own more than 10% of a
registered class of the Company's equity securities to file initial reports of
ownership and reports of changes in ownership with the Securities and Exchange
Commission (the "SEC") and the New York Stock Exchange. Such persons are
required by SEC regulation to furnish the Company with copies of all Section
16(a) forms they file.
Based solely on the review of the copies of SEC forms received by the
Company with respect to fiscal year 2004, or written representations from
reporting persons, the Company believes that its Directors and Executive
Officers have complied with all applicable filing requirements, except that,
because of an administrative error, Messrs. Conway, Rutherford, Apted, Mechura,
Voss, Timothy J. Donahue, Senior Vice President-Finance, and Thomas A. Kelly,
Vice President and Corporate Controller, were each late in filing a Form 4
reporting the grant of options to purchase shares of Common Stock by the Company
on February 24, 2004. The grants were each reported on a Form 4 filed on March
4, 2004.
PROPOSALS OF SHAREHOLDERS
In order to be considered for inclusion in the Proxy Statement for the
Company's 2006 Annual Meeting of Shareholders, any Shareholder proposal intended
to be presented at the meeting, in addition to meeting the shareholder
eligibility and other requirements of the SEC rules governing such proposals,
must be received in writing, via Certified Mail - Return Receipt Requested, by
the Office of the Secretary, Crown Holdings, Inc., One Crown Way, Philadelphia,
Pennsylvania 19154 not later than November 25, 2005. In addition, the Company's
By-Laws currently provide that a Shareholder of record at the time that notice
of the meeting is given and who is entitled to vote at the meeting may bring
business before the meeting or nominate a person for election to the Board of
Directors if the Shareholder gives timely notice of such business or nomination.
To be timely, and subject to certain exceptions, notice in writing to the
Secretary must be delivered or mailed, via Certified Mail-Return Receipt
Requested and received at the above address not less than 120 days, which is
November 25, 2005, nor more than 150 days, which is October 26, 2005, prior to
the first anniversary of the date on which the Company's Proxy Statement for its
previous Annual Meeting of Shareholders was first released to Shareholders. The
notice must describe various matters regarding the nominee or proposed business.
Any Shareholder desiring a copy of the Company's By-Laws will be furnished one
copy without charge upon written request to the Secretary.
27
OTHER MATTERS
The Board of Directors knows of no other matter that may be presented for
Shareholders' action at the Meeting, but if other matters do properly come
before the Meeting, or if any of the persons named above to serve as Directors
are unable to serve, it is intended that the persons named in the Proxy or their
substitutes will vote on such matters and for other nominees in accordance with
their best judgment.
The Company filed its 2004 Annual Report on Form 10-K with the Securities
and Exchange Commission on March 11, 2005. A copy of the Report, including the
financial statements and schedules thereto and a list describing all the
exhibits not contained therein, may be obtained without charge by any
Shareholder. Requests for copies of the Report should be sent to: Senior Vice
President - Finance, Crown Holdings, Inc., One Crown Way, Philadelphia,
Pennsylvania 19154.
WILLIAM T. GALLAGHER
Senior Vice President, Secretary &
General Counsel
Philadelphia, Pennsylvania 19154
March 25, 2005
28
CROWN HOLDINGS, INC.
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STOCK COMPENSATION PLAN FOR NON-EMPLOYEE DIRECTORS
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Pursuant to the power reserved to it in Article 8 of the Crown Holdings, Inc.
Stock Compensation Plan for Non-Employee Directors ("Plan"), the Board of
Directors of Crown Holdings, Inc. hereby amends the Plan, subject to shareholder
approval, effective April 1, 2005, as follows:
1. Section 2.3 is hereby amended in its entirety to read as follows:
"2.3 `Annual Stock Award' means the aggregate amount of unrestricted Common
Stock each Non-Employee Director is entitled to receive for a calendar year
under the Plan. The Annual Stock Award may be valued at up to $100,000
annually ($25,000 per quarter)."
2. Section 3.1 is hereby amended in its entirety to read as follows:
"3.1 The Plan shall be effective on the date of adoption by the shareholders
of the Company (the "Effective Date"). The Plan shall remain effective until
terminated by the Board in its sole discretion or until all Common Stock
authorized for award under the Plan has been granted, whichever occurs
earlier."
3. Section 5.1 is hereby amended by adding the following sentence to the end
thereof:
"Subject to adjustment as provided in Section 7.1, the total number of shares
of Common Stock available for Annual Stock Awards granted on or after April
1, 2005 shall be 500,000 shares."
4. A new Section 5.2 is hereby added to the Plan to read as follows:
"5.2 On an annual basis, the Board, in its sole discretion, shall determine
the amount of the Annual Stock Award (which shall be the same for all
Non-Employee Directors).
CROWN HOLDINGS, INC.
ANNUAL MEETING OF SHAREHOLDERS
Thursday, April 28, 2005
9:30 a.m.
Crown Holdings, Inc.
One Crown Way
Philadelphia, PA 19154-4599
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Crown Holdings, Inc.
One Crown Way
Philadelphia, PA 19154-4599
proxy
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Proxy for Annual Meeting of Shareholders to be held on April 28, 2005
This Proxy is solicited on behalf of the Board of Directors.
The undersigned hereby appoints John W. Conway, Alan W. Rutherford and William
T. Gallagher as Proxies, each with the power to appoint his substitute, and
hereby authorizes them to represent and to vote, as designated on the reverse
side, all the shares of stock of Crown Holdings, Inc. held of record by the
undersigned on March 15, 2005 at the Annual Meeting of Shareholders to be held
at One Crown Way, Philadelphia, Pennsylvania on April 28, 2005 at 9:30 a.m., or
any adjournments thereof, for the items shown below and in the discretion of the
Proxies in any other matter that may properly come before the meeting or any
adjournments thereof.
You are encouraged to specify your choices by marking the appropriate boxes (SEE
REVERSE SIDE), but you need not mark any boxes if you wish to vote in accordance
with the Board of Directors' recommendations. The Proxies cannot vote your
shares unless you sign and return this card or you elect to vote your shares
electronically by telephone or via the Internet.
See reverse for voting instructions.
|COMPANY # |
There are three ways to vote your Proxy
Your telephone or Internet vote authorizes the Named Proxies to vote your shares
in the same manner as if you marked, signed and returned your proxy card.
VOTE BY PHONE -- TOLL FREE -- 1-800-560-1965 -- QUICK *** EASY *** IMMEDIATE
o Use any touch-tone telephone to vote your proxy 24 hours a day, 7 days a
week, until 12:00 p.m. (CT) on April 27, 2005.
o Please have your proxy card and the last four digits of your Social Security
Number or Tax Identification Number available. Follow the simple instructions
the voice provides you.
VOTE BY INTERNET -- http://www.eproxy.com/cck/ -- QUICK *** EASY *** IMMEDIATE
o Use the Internet to vote your proxy 24 hours a day, 7 days a week, until
12:00 p.m. (CT) on April 27, 2005.
o Please have your proxy card and the last four digits of your Social Security
Number or Tax Identification Number available. Follow the simple instructions
to obtain your records and create an electronic ballot.
VOTE BY MAIL
Mark, sign and date your proxy card and return it in the postage-paid envelope
we've provided or return it to Crown Holdings, Inc., c/o Shareowner ServicesSM,
P.O. Box 64873, St. Paul, MN 55164-0873.
If you vote by Phone or Internet, please do not mail your Proxy Card
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Please detach here
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THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
The Board of Directors Recommends a Vote FOR Items 1, 2 and 3.
1.Election of 01 Jenne K. Britell 05 William G. Little 09 Alan W. Rutherford [ ] Vote FOR [ ] Vote WITHHELD
directors: 02 John W. Conway 06 Hans J. Loliger 10 Harold A. Sorgenti all nominees from all nominees
03 Arnold W. Donald 07 Thomas A. Ralph 11 William S. Urkiel (except as marked)
04 Marie L. Garibaldi 08 Hugues du Rouret
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(Instructions: To withhold authority to vote for any indicated nominee, write
the number(s) of the nominee(s) in the box provided to the right.)
----------------------------------
2.To ratify the appointment of independent auditors for the fiscal [ ] For [ ] Against [ ] Abstain
year ending December 31, 2005, which the Board of Directors unanimously recommends.
3.For a proposal to approve an amendment to the Stock Compensation [ ] For [ ] Against [ ] Abstain
Plan for Non-Employee Directors, which the Board of Directors unanimously
recommends.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED AS DIRECTED OR, IF NO DIRECTION IS GIVEN, WILL BE VOTED FOR EACH PROPOSAL.
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Address Change? Mark Box [ ] Indicate changes below:
Date
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Signature(s) in Box
Please sign exactly as your name(s) appears on Proxy. If held in joint tenancy,
all persons should sign. Trustees, administrators, etc., should include title
and authority. Corporations should provide full name of corporation and title
of authorized officer signing the proxy.
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