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 (Amendment No. )
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[_] Preliminary Proxy Statement
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RULE 14A-6(E)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S) 240.14a-11(c) or (S) 240.14a-12
PPG Industries, Inc
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(Name of Registrant as Specified In Its Charter)
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Notes:
[LOGO of PPG Industries, Inc.]
PPG Industries, Inc. One PPG Place Pittsburgh, Pennsylvania 15272
March 5, 2002
DEAR SHAREHOLDER:
You are cordially invited to attend the Annual Meeting of Shareholders of
PPG Industries, Inc. to be held on Thursday, April 18, 2002, in the Pittsburgh
Marriott Hotel, City Center, 112 Washington Place, Pittsburgh, Pennsylvania.
The meeting will begin at 11:00 A.M. We look forward to greeting personally
those shareholders who will be able to be present. This booklet includes the
notice of the Annual Meeting and the Proxy Statement, which contains
information about the business of the Annual Meeting and about your Board of
Directors and its committees and certain executive officers.
This year, in addition to the election of three Directors, you are being
asked to act on a proposal to amend and reapprove the PPG Industries, Inc.
Stock Plan. Your Board of Directors recommends that you vote in favor of this
proposal. The amended Plan will continue to provide the Company with a means
of tying executive compensation directly to share value.
It is important that your shares be represented at the Annual Meeting. You
are, therefore, urged to vote by telephone or internet or to complete, date
and sign the accompanying Proxy and Voting Instruction Card and return it
promptly in the return envelope provided whether or not you plan to attend
personally.
Sincerely yours,
/s/ Raymond W. LeBoeuf
----------------------
Raymond W. LeBoeuf
Chairman of the Board
PPG INDUSTRIES, INC.
One PPG Place, Pittsburgh, Pennsylvania 15272
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON APRIL 18, 2002
Notice is hereby given that the Annual Meeting of Shareholders of PPG
Industries, Inc. will be held on Thursday, April 18, 2002, at 11:00 A.M.,
prevailing time, in the PITTSBURGH MARRIOTT HOTEL, CITY CENTER, 112 WASHINGTON
PLACE, PITTSBURGH, PENNSYLVANIA, for the purpose of considering and acting
upon the following:
1. The election of three Directors; and
2. A proposal to amend and reapprove the PPG Industries, Inc. Stock Plan.
Only shareholders of record of the Company as of the close of business on
February 19, 2002 are entitled to notice of and to vote at the Meeting or any
adjournment thereof.
Admission to the Annual Meeting will be by Admission Card only. If you are a
shareholder of record or a Savings Plan participant and plan to attend, you
may obtain an Admission Card by following the instructions provided in your
proxy materials. If your shares are not registered in your name, please advise
the shareholder of record (your bank, broker, etc.) that you wish to attend.
That firm will request an Admission Card for you or provide you with evidence
of your ownership that will gain you admission to the Annual Meeting.
Michael C. Hanzel, Secretary
Pittsburgh, Pennsylvania
March 5, 2002
PPG INDUSTRIES, INC.
One PPG Place, Pittsburgh, Pennsylvania 15272
PROXY STATEMENT
Annual Meeting of Shareholders--April 18, 2002
Table of Contents
Page
----
Voting Securities.......................................................... 1
Election of Directors...................................................... 3
Committees of the Board.................................................. 5
Compensation of Directors................................................ 6
Other Transactions....................................................... 7
Compensation of Executive Officers......................................... 7
Compensation Committee Report on Executive Compensation.................. 7
Summary of Named Executives' Compensation................................ 11
Option Grants............................................................ 12
Option Exercises and Fiscal Year-End Values.............................. 13
Long-Term Incentive Plan Awards.......................................... 13
Retirement Plans......................................................... 14
Change In Control Arrangements........................................... 15
Board Proposal ............................................................ 15
Proposal--Amend and Reapprove the PPG Industries, Inc. Stock Plan........ 15
Background and Brief Description of Amendment........................... 15
Auditors................................................................... 17
Shareholder Return Performance Graph....................................... 18
Miscellaneous.............................................................. 18
Vote Required............................................................ 18
Solicitation Costs....................................................... 19
Shareholder Proposals for the Next Annual Meeting........................ 19
Section 16(a) Reporting.................................................. 19
Other Matters............................................................ 19
PPG INDUSTRIES, INC.
One PPG Place, Pittsburgh, Pennsylvania 15272
PROXY STATEMENT
Annual Meeting of Shareholders--April 18, 2002
This Proxy Statement is being mailed to the shareholders of PPG Industries,
Inc. (hereinafter sometimes called "PPG" or the "Company") on or about March
5, 2002, in connection with the solicitation of proxies by the Board of
Directors of the Company (hereinafter sometimes called the "Board of
Directors" or the "Board"). Such proxies, which may be given by following the
instructions accompanying this Proxy Statement, will be voted at the Annual
Meeting of Shareholders of the Company (hereinafter sometimes called the
"Meeting") to be held on Thursday, April 18, 2002, at 11:00 A.M., prevailing
time, in the PITTSBURGH MARRIOTT HOTEL, CITY CENTER, 112 WASHINGTON PLACE,
PITTSBURGH, PENNSYLVANIA and at any adjournment thereof. Proxies may be
revoked at will before they have been exercised, but the revocation of a proxy
will not be effective until written notice thereof has been given to the
Secretary of the Company.
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VOTING SECURITIES
As of the close of business on February 19, 2002, there were outstanding
168,796,191 shares of the Common Stock of the Company, par value $1.66-2/3 per
share, the only class of voting securities of the Company outstanding. Only
shareholders of record as of the close of business on February 19, 2002, are
entitled to notice of and to vote at the Meeting. Except with respect to the
election of Directors, each such shareholder is entitled to one vote for each
share so held. With respect to the election of Directors, the right of
cumulative voting exists. That right permits each shareholder to multiply the
number of shares the shareholder is entitled to vote by the number of
Directors to be elected in order to determine the number of votes the
shareholder is entitled to cast for nominees, and, then, to cast all or any
number of such votes for one nominee or to distribute them among any two or
more nominees in that class. The proxies solicit discretionary authority to
vote cumulatively.
Set forth below is certain information with respect to the beneficial
ownership of shares of the Common Stock as of February 19, 2002 by certain
persons, including (i) the nominees for Directors, one of whom is the Chief
Executive Officer of the Company (hereinafter sometimes called the "CEO"), the
continuing Directors, and the four other most highly compensated Executive
Officers (as defined under the Securities and Exchange Act of 1934) of the
Company (in addition to the CEO) and (ii) such persons as a Group.
Shares of Beneficially Owned Common Stock
and Common Stock Equivalents(1)
-------------------------------------------
Name of Beneficially Owned Common Stock
Beneficial Owner Common Stock(2) Equivalents(3) Total(4)
---------------- ------------------ -------------- ---------
Raymond W. LeBoeuf.................. 929,590 8,577 938,167
James G. Berges..................... 3,500 1,365 4,865
Erroll B. Davis, Jr................. 6,121 8,715 14,836
Michele J. Hooper................... 6,600 3,939 10,539
Allen J. Krowe...................... 8,286 17,733 26,019
Steven C. Mason..................... 7,000 14,424 21,424
Robert Mehrabian.................... 7,000 12,074 19,074
Thomas J. Usher..................... 6,000 4,079 10,079
David G. Vice....................... 8,000 6,600 14,600
David R. Whitwam.................... 7,000 14,265 21,265
Frank A. Archinaco.................. 429,526 3,354 432,881
Charles E. Bunch.................... 299,096 1,445 300,541
William H. Hernandez................ 321,363 2,189 323,551
James C. Diggs...................... 129,022 2,405 131,427
All of the above as a Group (5)..... 2,168,104 101,165 2,269,270
(1) Each of the named owners has sole voting power and sole investment power
as to all the shares beneficially owned by them with the exception of (i)
shares held by certain of them jointly with, or directly by, their
spouses, and (ii) the Common Stock Equivalents shown in the second column
and described more fully below which have no voting power.
(2) Shares of Common Stock considered to be "Beneficially Owned" include both
Common Stock actually owned and shares of Common Stock as to which there
is a right to acquire ownership on, or within sixty days after, February
19, 2002. None of the identified beneficial owners holds more than 1% of
the shares of Common Stock beneficially owned. The Group consisting of
the identified owners and all other Executive Officers holds 1.27% of the
shares of Common Stock beneficially owned. Of the shares shown, 5,000 of
the shares held by Messrs. Davis, Krowe, Mason, Mehrabian, Usher and
Whitwam and Ms. Hooper, and 2,500 of the shares held by Mr. Berges and
798,301, 359,347, 245,359, 295,322 and 118,783 of the shares of Messrs.
LeBoeuf, Archinaco, Bunch, Hernandez and Diggs, respectively, are shares
as to which the beneficial owner has the right to acquire beneficial
ownership within sixty days of February 19, 2002, upon the exercise of
Options granted under the PPG Industries, Inc. Stock Plan (sometimes also
referred to in this Proxy Statement as the "Stock Plan").
(3) Certain Directors hold Common Stock Equivalents in their accounts in the
Directors' Common Stock Plan and in their accounts in the Deferred
Compensation Plan for Directors (which plans are described under
"Compensation of Directors" below). Certain Executive Officers hold
Common Stock Equivalents in their accounts in the Company's Deferred
Compensation Plan. Common Stock Equivalents are hypothetical shares of
Common Stock having a value on any given date equal to the value of a
share of Common Stock. Common Stock Equivalents earn dividend equivalents
until the Common Stock Equivalents are paid, but they carry no voting
rights or other rights afforded to a holder of the Common Stock.
(4) This is the sum of the Beneficially Owned Common Stock and the Common
Stock Equivalents as shown in the previous two columns.
(5) The Group consists of fourteen persons: the five Executive Officers of
the Company as of February 19, 2002 (Messrs. LeBoeuf, Archinaco, Bunch,
Hernandez and Diggs), the two nominees for Directors other than the CEO,
the six continuing Directors and one Director (Mr. Vice) who is retiring
effective April 18, 2002.
2
ELECTION OF DIRECTORS
Three Directors are to be elected to a class which will serve until 2005 and
until their successors have been elected and qualified, or their earlier
retirement or resignation. It is intended that the shares represented by each
proxy will be voted cumulatively as to each class, in the discretion of the
proxies, for the nominees for Directors set forth below, each of whom is an
incumbent, or for any substitute nominee or nominees designated by the Board
of Directors in the event any nominee or nominees become unavailable for
election. The principal occupations of, and certain other information
regarding, the nominees and the continuing Directors, are set forth below.
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Nominees to Serve in the Class Whose Term Expires in the Year 2005
------------
[PHOTO] Michele J. Hooper, Former President and Chief Executive Officer,
Voyager Expanded Learning, Inc. Ms. Hooper, 50, has been a
Director of PPG since 1995. She was President and Chief
Executive Officer of Stadtlander Drug Company, Inc., a provider
of disease-specific pharmaceutical care from June 1998 until
Stadtlander was acquired in January 1999. From 1992 until June
1998 she was President, International Business Group of Caremark
International, Inc., an alternative-site health care provider
which is a subsidiary of Medpartners, Inc. She was also
Corporate Vice President of Caremark International, Inc., from
1993 until June 1998. She is also a director of Target
Corporation.
[PHOTO] Raymond W. LeBoeuf, Chairman of the Board and Chief Executive
Officer, PPG Industries, Inc. Mr. LeBoeuf, 55, has been a
Director of PPG since 1995. He has been Chairman of the Board
and Chief Executive Officer of PPG since 1998. He was President
and Chief Operating Officer of PPG from 1995 until 1998. He is
also a director of Praxair, Inc. and ITT Industries, Inc.
[PHOTO] Robert Mehrabian, Chairman of the Board, President and Chief
Executive Officer, Teledyne Technologies Inc. Dr. Mehrabian, 60,
has been a Director of PPG since 1992. He has been Chairman of
the Board, President and Chief Executive Officer of Teledyne
Technologies Inc., a provider of aerospace, electronic and
communications products, and systems engineering services, since
December 2000. He was President and Chief Executive Officer of
Teledyne Technologies Inc. from its formation (as a spin-off of
Allegheny Teledyne Inc.) in November 1999 until December 2000.
He was Executive Vice President of Allegheny Teledyne Inc., a
manufacturer of specialty metals, aerospace, electronics,
industrial and consumer products, from May 1998 until November
1999. He was Senior Vice President and Segment Executive of
Allegheny Teledyne Inc. from 1997 until May 1998. From 1990
until 1997 he was President of Carnegie Mellon University, an
educational institution. He is also a director of Teledyne
Technologies Inc. and Mellon Financial Corporation.
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Continuing Directors--Term Expires in 2003
------------
[PHOTO] Steven C. Mason, Retired Chairman of the Board and Chief
Executive Officer, Mead Corporation. Mr. Mason, 66, has been a
Director of PPG since 1990. He was Chairman of the Board and
Chief Executive Officer of Mead Corporation, a forest products
company, from 1992 until his retirement in 1997. He is also a
director of Convergys Corp. and The Elder-Beerman Stores Corp.
3
[PHOTO] Thomas J. Usher, Chairman of the Board, Chief Executive Officer
and President of United States Steel Corporation. Mr. Usher, 59,
has been a Director of PPG since 1996. He has been Chairman of
the Board, Chief Executive Officer and President of United
States Steel Corporation, a major producer of metal products,
since December 2001. He served as Chairman of the Board and
Chief Executive Officer of USX Corporation from 1995 until 2001.
He is also a director of United States Steel Corporation,
Marathon Oil Corporation, PNC Financial Services, Inc.,
Transtar, Inc. and H. J. Heinz Corporation.
[PHOTO] David R. Whitwam, Chairman of the Board and Chief Executive
Officer, Whirlpool Corporation. Mr. Whitwam, 60, has been a
Director of PPG since 1991. He has been Chairman of the Board
and Chief Executive Officer of Whirlpool Corporation, a
manufacturer and distributor of household appliances and related
products, since 1987. He is also a director of Whirlpool
Corporation.
------------
Continuing Directors -- Term Expires in 2004
------------
[PHOTO] James G. Berges, President, Emerson Electric Co. Mr. Berges, 54,
has been a Director of PPG since October 2000. He has been
President of Emerson Electric Co. since May 1999. Emerson
Electric Co. is a global manufacturer of products, systems and
services for industrial automation, process control, HVAC,
electronics and communications, and appliances and tools. He was
Executive Vice President of Emerson Electric from 1990 until May
1999. He is also a director of Emerson Electric and of MKS
Instruments, Inc.
[PHOTO] Erroll B. Davis, Jr., Chairman of the Board, President and Chief
Executive Officer, Alliant Energy, a global energy service
provider formed as the result of a merger of WPL Holdings, Inc.,
IES Industries Inc. and Interstate Power Co., in April 1998. Mr.
Davis, 57, has been a Director of PPG since 1994. Prior to the
merger which formed Alliant Energy, he was President and Chief
Executive Officer of Wisconsin Power and Light Company and WPL
Holdings, Inc. He was President of Wisconsin Power and Light
Company from 1987 until April 1998 and Chief Executive Officer
from 1988 until April 1998. He was President and Chief Executive
Officer of WPL Holdings, Inc., the parent company of Wisconsin
Power and Light Company, from 1990 until April 1998. He is also
a director of Alliant Energy and BP plc.
4
[PHOTO] Allen J. Krowe, Retired Director and Vice Chairman, Texaco Inc.
Mr. Krowe, 69, has been a Director of PPG since 1987. He was
Vice Chairman of Texaco Inc., an international petroleum
company, from 1993, until his retirement in 1997, having served
as Chief Financial Officer from 1988 to 1994. He is also a
director of I.B.J. Whitehall Bank & Trust Company and Navistar
International Corporation.
Committees of the Board
The Board of Directors has appointed four standing committees, including an
Audit Committee, a Nominating and Governance Committee, an Officers-Directors
Compensation Committee and an Investment Committee. During 2001, the Board held
eight meetings, while the Audit Committee held three meetings, the Nominating
and Governance Committee three meetings, the Officers-Directors Compensation
Committee two meetings and the Investment Committee two meetings. The average
attendance at meetings of the Board and Committees of the Board during 2001 was
over 92%, and each Director attended at least 79% of the total number of
meetings of the Board and Committees of the Board on which such Director
served. Descriptions of the Audit, Nominating and Governance, Officers-
Directors Compensation and Investment Committees are set forth below. None of
the members of those Committees is a past or present employee or officer of the
Company.
Audit Committee--The functions of the Audit Committee are primarily to review
with the independent public accountants and the Company's officers and internal
auditors their respective reports and recommendations concerning audit findings
and the scopes of and plans for their future audit programs and to review
audits, annual financial statements, accounting and financial controls. The
Audit Committee also recommends to the Board of Directors the independent
public accountants. The Audit Committee is composed of five independent
directors. The members of the Audit Committee are James G. Berges, Erroll B.
Davis, Jr., Michele J. Hooper, Steven C. Mason (Chair) and Robert Mehrabian.
Audit Committee Report to Shareholders--The Audit Committee of the Board of
Directors has oversight responsibility for the Company's financial reporting
process and the quality of its financial reporting. The Audit Committee
operates under a written Audit Committee Charter adopted by the Board of
Directors. In connection with the December 31, 2001 financial statements, the
Audit Committee:
1) Reviewed and discussed the audited financial statements with
management,
2) Discussed with the Company's independent auditors, from the Deloitte &
Touche LLP, the matters required by Statement on Auditing Standards No.
61 (Communications with Audit Committees) and
3) Received the written independence disclosures from Deloitte & Touche
LLP required by Independence Standards Board Standard No. 1, and has
discussed with Deloitte & Touche LLP their independence.
Based upon these reviews and discussions, the Audit 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 year ended December 31, 2001 for
filing with the Securities and Exchange Commission.
The Audit Committee:
James G. Berges
Erroll B. Davis, Jr.
Michele J. Hooper
Steven C. Mason
Robert Mehrabian
5
Nominating and Governance Committee--The Nominating and Governance Committee
recommends to the Board of Directors the persons to be nominated by the Board
to stand for election as Directors at each Annual Meeting of Shareholders, the
person or persons to be elected by the Board to fill any vacancy or vacancies
in its number, the persons to be elected by the Board to be Chairman of the
Board, Vice Chairman of the Board, if any, President, and the Executive
Officers of the Company, actions to be taken regarding the structure,
organization and functioning of the Board, and the persons to serve as members
of the standing committees of, and certain committees appointed by the Board.
The Nominating and Governance Committee also annually reports to the Board the
Committee's assessment of the performance of the Board as a whole. The members
of the Nominating and Governance Committee are James G. Berges, Michele J.
Hooper, Allen J. Krowe (Chair), David G. Vice (who is retiring at the Annual
Meeting) and David R. Whitwam.
The Company's bylaws provide that nominations for persons to stand for
election as Directors may be made by holders of record of Common Stock
entitled to vote in the election of the Directors to be elected, provided that
a nomination may be made by a shareholder at a meeting of shareholders only if
written notice of such nomination is received by the Secretary of the Company
not later than (i) with respect to an election to be held at an Annual Meeting
of Shareholders, held on the third Thursday in April, ninety days prior to
such Annual Meeting and (ii) with respect to an election to be held at an
Annual Meeting of Shareholders held on a date other than the third Thursday in
April or an election to be held at a special meeting of shareholders, the
close of business on the tenth day following the date on which notice of such
meeting is first given to shareholders. Each notice of nomination from a
shareholder must set forth: (a) the name and address of the shareholder who
intends to make the nomination and of the person or persons to be nominated;
(b) a representation that the shareholder is a holder of record of stock of
the Company entitled to vote at such meeting and intends to be present at the
meeting in person or by proxy to nominate the person or persons specified in
the notice; (c) a description of all arrangements or understandings between
the shareholder and each nominee and any other person or persons (naming such
person or persons) pursuant to which the nomination or nominations are to be
made by the shareholder; (d) such other information regarding each nominee
proposed by such shareholder as would be required to be included in a proxy
statement filed pursuant to the proxy rules of the Securities and Exchange
Commission, had the nominee been nominated by the Board of Directors; and (e)
the written consent of each nominee, signed by such nominee, to serve as a
director of the Company if so elected.
Officers-Directors Compensation Committee--The Officers-Directors
Compensation Committee (in the Compensation Committee Report and in
discussions concerning the proposed amendment and reapproval of the PPG
Industries, Inc. Stock Plan below sometimes referred to as the "Committee")
approves, adopts, administers, interprets, amends, suspends and terminates the
compensation plans of the Company applicable to, and fixes the compensation
and benefits of, all officers of the Company serving as Directors of the
Company (currently only Raymond W. LeBoeuf) and all Executive Officers of the
Company. The members of the Officers-Directors Compensation Committee are
Steven C. Mason, Robert Mehrabian, Thomas J. Usher and David R. Whitwam
(Chair).
Investment Committee--The Investment Committee reviews the investment
policies of the Company concerning its pension plans and certain benefit plans
and the asset investment policies of the PPG Industries Foundation. The
Committee also reviews (i) the selection of providers of services to such
pension and benefit plans of the Company and to the Foundation, (ii) the
allocations of assets among classes and the performance of the investments of
such pension and benefit plans and the Foundation, and (iii) the actuarial
assumptions concerning and the funding levels of the Company's pension plans.
The members of the Investment Committee are Erroll B. Davis, Jr. (Chair),
Allen J. Krowe, Thomas J. Usher and David G. Vice (who is retiring at the
Annual Meeting).
Compensation of Directors
Directors who are not also Officers receive a basic annual retainer of
$30,000 and a fee of $1,000 for each Board or Committee meeting they attend.
In addition, the members of the Audit Committee receive an annual retainer of
$4,000 while the members of the Nominating and Governance, Officers-Directors
Compensation and Investment Committees receive an annual retainer of $3,000
for each Committee. The Chair of each Committee
6
receives an additional $1,000 annually. Any Director who is also an Officer
receives no compensation as a Director. In addition, under the PPG Stock Plan,
each Director was granted on February 20, 2002, a Nonqualified Option to
purchase 2,500 shares of Common Stock at an exercise price of $49.00 per
share. The Options are exercisable one year after the date of grant, provided
that the recipient is an active Director on such date.
Under the Company's Deferred Compensation Plan for Directors, each Director
must defer receipt of such compensation as the Board mandates. Currently, the
Board mandates deferral of one-third of each payment of the basic annual
retainer of each Director. Each Director may also elect to defer the receipt
of (i) an additional one-third of each payment of the basic annual retainer,
(ii) all of the basic annual retainer or (iii) all compensation. All deferred
payments are held in the form of Common Stock Equivalents and earn dividend
equivalents until paid. Payments will be made in the Common Stock of the
Company (and cash as to any fractional Common Stock Equivalents).
Under the Directors' Common Stock Plan, each Director who neither is nor was
an employee of the Company and who serves on the Board of Directors as of the
day following each Annual Meeting of Shareholders is credited with Common
Stock Equivalents worth one-half of the Directors' basic annual retainer. The
Common Stock Equivalents held in each Director's account earn dividend
equivalents until paid. Upon termination of service, the Common Stock
Equivalents held in a Director's account will be paid in Common Stock (and
cash as to any fractional Common Stock Equivalents).
Common Stock Equivalents under both the Deferred Compensation Plan for
Directors and the Directors' Common Stock Plan are hypothetical shares of
Common Stock having a value on any given date equal to the value of a share of
Common Stock. Common Stock Equivalents carry no voting rights or other rights
afforded to a holder of Common Stock.
As part of its overall program to promote charitable giving, the Company has
established a Directors' charitable award program funded by insurance policies
on the lives of Directors. Each of the Company's Directors participates in the
program. Upon the death of an individual Director, the Company will donate an
amount up to and including a total of $1 million to one or more qualifying
charitable organizations designated by such Director and approved by the
Company. The Company will subsequently be reimbursed from the proceeds of the
life insurance policies. Individual Directors derive no financial benefit from
this program since all charitable deductions accrue solely to the Company.
Other Transactions
PPG and its subsidiaries purchase products and services from and/or sell
products and services to companies of which certain of the Directors of PPG
are executive officers or were executive officers during 2001. PPG does not
consider the amounts involved in such transactions material. Such purchases
from and sales to each company involved less than 1% of the consolidated gross
revenues for 2001 of the purchaser and seller and all of such transactions
were in the ordinary course of business. Some of such transactions are
continuing, and it is anticipated that similar transactions will recur from
time to time.
COMPENSATION OF EXECUTIVE OFFICERS
Compensation Committee Report on Executive Compensation
The Officers-Directors Compensation Committee of the Board of Directors is
responsible for determining and administering the policies which govern the
executive compensation programs of the Company. The Committee, which consists
entirely of independent outside Directors, met two times in 2001 to establish
Company performance goals, base salary pay levels and target annual bonus
awards, to approve annual bonus payments and to establish and approve long-
term incentives for the CEO and the other four executives named in the
compensation table on page 11 (collectively, the "Named Executives") and
certain other Officers of the Company.
7
Philosophy
The philosophy of the Committee is that the interests of the Company and its
shareholders require attracting and retaining the best possible executive
talent, motivating executives to achieve goals which support business
strategies and linking executive and shareholder interests. The Committee
believes this is generally best accomplished by compensating the CEO and other
Executive Officers (referred to collectively in this Proxy Statement as the
"Executives") competitively while having a significant portion of their total
compensation variable and related to the performance of the Company against
established goals and to their overall personal performance in directing the
enterprise. The Committee also utilizes equity-based plans for a portion of
compensation to link executive and shareholder interests.
Annual Compensation Programs
The levels of base salary and target annual bonuses for the Executives,
including Named Executives, are established annually under a program intended
to maintain parity with the market for similar positions. Total annual
compensation is targeted at the median of the market value for each position
based on data available from several independent market surveys. The Committee
believes that the most direct competitors for executive talent are not
necessarily the companies that comprise the Standard and Poor's 500 Index or
the Standard and Poor's Materials Sector Index. Thus, the companies compared
for annual compensation purposes and the companies compared for long-term
compensation purposes are not the same as the companies included in the
indices used in the Comparison of Five-Year Cumulative Total Shareholder
Return graph on page 18.
The Executives' base salaries are maintained below the median of the market
surveys of comparison data. Annual bonus awards under the Company's Executive
Officers' Annual Incentive Compensation Plan are then targeted at a level
that, when combined with base salaries, approximates the median base salary
and annual bonus paid by companies represented in the salary data. Competitive
total compensation is achieved when target performance is met but with a
larger percent of pay at risk than is the case in the comparison companies.
Total annual compensation should exceed the median of the comparison data
when Company financial performance exceeds targets established by the
Committee and individual performance contributes to meeting strategic
objectives of the Company. Total annual compensation should be below the
median of the comparison data when Company financial performance does not meet
targets and/or individual performance does not have a positive effect on
strategic objectives.
The financial performance targets established by the Committee are based on
earnings growth, Return on Capital (ROC) and Return on Equity (ROE). On a
limited basis, the Committee may decide not to include some one-time
accounting adjustments in determining whether the financial performance
targets are met. Bonus awards are calculated using these financial targets and
an assessment of personal performance related to achievement of strategic
objectives of the Company. The personal performance assessment of the CEO is
determined by the Committee and the other Executives are assessed by the CEO.
Final awards are subject to the negative discretion of the Committee as
permitted in the PPG Industries, Inc. Executive Officers' Annual Incentive
Compensation Plan approved by the shareholders. If minimum thresholds of
earnings growth, ROC and ROE are not achieved, no awards are granted by the
Committee. The Committee has traditionally determined that 20% of the annual
bonus award be paid in Common Stock of the Company to build ownership levels
and to align the interests of the Executives more closely with those of the
shareholders.
Long-Term Incentive Programs
The Committee has established long-term incentive programs that motivate key
employees to invest in the stock of the Company and to cause the Company to
grow and profit, provide compensation levels competitive with opportunities
available elsewhere in industry and encourage key employees to continue in the
employ of the Company.
8
Long-term incentives for the Named Executives are currently provided under
the PPG Industries, Inc. Stock Plan (the "Stock Plan") and the PPG Industries,
Inc. Executive Officers' Total Shareholder Return Plan (the "TSR Plan"). These
programs, in combination, provide compensation opportunities competitive with
long-term incentive compensation opportunities for large companies identified
by independent compensation consulting firms as potential competitors for
executive talent.
The Stock Plan has been approved by shareholders and provides for the
granting of stock options to selected employees. The number of stock options
granted to Named Executives is determined so that an estimate of potential
value of the options and payments under the TSR Plan, when combined with
annual compensation discussed above, will approximate the median total annual
and long-term compensation paid to executives in the comparison companies. The
number of option shares granted is not determined by past Company performance
and is not dependent on the number granted in the past or the number presently
held. The options are performance related since the value of the option is
ultimately determined by the future performance of the Company as reflected by
stock price.
Also, as shown in the Option/SAR Grants in Last Fiscal Year table and
related footnotes on page 12, the Named Executives exercised existing options
in a manner entitling them to receive Restored Options under the Restored
Option provisions of the Stock Plan. The Restored Option provisions encourage
Optionees to exercise options earlier during the option term, thereby building
stock ownership to better align their interests with the interests of
shareholders.
The TSR Plan provides long-term incentive for Named Executives to generate
high shareholder return in relation to S&P 500 Companies. Contingent share
grants are made at the beginning of three-year plan periods and are paid at
the end of a period if the Company achieves target performance. Payments are
performance based because payments at the end of the period will be zero if
minimum performance is not achieved and may exceed the original contingent
share grant if shareholder return vs. the S&P 500 Companies is above target.
Beginning with contingent share grants issued in 2001, companies comprising
the Materials Sector of the S&P 500 are used in the performance comparison.
Please see the table on page 14 for contingent grants to Named Executives and
additional plan detail on page 13.
CEO Compensation
Mr. LeBoeuf's base salary in 2001 increased by 4.8% over the amount he
received in 2000. This change is consistent with the competitive base
compensation appropriate to his position as determined according to the
competitive salary program described above. Consistent with the Company's
philosophy, the fixed salary portion of Mr. LeBoeuf's compensation is below
the median base salary paid by the comparison companies. His annual bonus for
2001 was determined 70% on performance of the Company against financial goals
and 30% on personal performance against non-financial goals related to
strategic objectives of the Company. The Committee rated Mr. LeBoeuf's 2001
performance toward achieving strategic objectives related to growth
initiatives, strategic planning, capital allocation, responsiveness to PPG's
shareholders and the general management of corporate issues as meeting
requirements. However, the financial performance of the Company in 2001 did
not meet requirements for target compensation. Mr. LeBoeuf's 2001 annual
bonus, therefore, was below the established target level and below the prior
year. In addition, Mr. LeBoeuf received a payment with respect to his 1999
contingent share grant under the TSR Plan. At the end of the three-year
performance period, the Company's return to shareholders was above the minimum
threshold but below target set by the Committee. Mr. LeBoeuf's payment
accordingly was below target.
Mr. LeBoeuf was granted 160,000 option shares at Fair Market Value on the
date of grant and a contingent share grant of 80,000 shares under the TSR
Plan. These grants are consistent with the Committee's philosophy that the
estimated value of these programs combined with targeted annual compensation
will be competitive with total annual and long-term compensation provided by
companies that are potential competitors for executive talent.
Other Named Executives' Compensation
The accompanying compensation tables also list four Executives other than
Mr. LeBoeuf ("Other Named Executives"). The Other Named Executives' base
salaries were increased over 2000 base salaries consistent with our base pay
practice discussed above. The increases in base salary over 2000 for Messrs.
Archinaco, Bunch,
9
Hernandez and Diggs reflect the competitive market for their positions.
Current base salary levels are below the median base salary position of the
comparison companies. The Other Named Executives' annual bonus awards were
based on Company financial performance measures and non-financial measures
directly related to their corporate objectives. In addition, the Other Named
Executives received payments in respect to their 1999 contingent share grants
under the TSR Plan. At the end of the three-year performance period, the
Company's return to shareholders was above the minimum threshold but below
target set by the Committee. The payments accordingly were below target.
The size of the stock option grants to Other Named Executives under the
Stock Plan and contingent share grants under the TSR Plan is consistent with
the philosophy above and represents a level of long-term incentive that is
competitive with the median provided by comparison companies for individuals
with similar levels of responsibility. The Other Named Executives also
received Restored Options as stated in the Option/SAR Grants in Last Fiscal
Year table and related footnotes on page 12.
Deductibility of Compensation
All taxable income for 2001 of the CEO and Other Named Executives qualified
under Section 162(m) as deductible by the Company.
Summary
Through the programs and actions of the Committee described above, a very
significant portion of the Company's executive compensation is linked directly
to Company performance and returns to shareholders. The Officers-Directors
Compensation Committee intends to continue this policy.
The Officers-Directors Compensation Committee:
Steven C. Mason
Robert Mehrabian
Thomas J. Usher
David R. Whitwam
10
Summary of Named Executives' Compensation
There is shown below information concerning the annual and long-term
compensation for services in all capacities to the Company for the fiscal
years ended December 31, 2001, 2000 and 1999, of those persons who (i) served
as the Chief Executive Officer of the Company at any time during 2001 and (ii)
the other four most highly compensated Executive Officers of the Company at
December 31, 2001.
SUMMARY COMPENSATION TABLE
Long-Term
Annual Compensation Compensation Awards
---------------------------- --------------------
Other Securities
Annual Underlying LTIP
Name and Salary Bonus Compensation Options/SARs Payouts All Other
Principal Position Year ($) ($)(1) ($) (#) ($) Compensation($)(2)
------------------ ---- ------- ------- ------------ ------------ ------- ------------------
R. W. LeBoeuf.......... 2001 880,000 800,000 4,302 160,000 917,922 239,294
Chairman and Chief 2000 840,000 850,000 9,703 130,000 0 97,090
Executive Officer 1999 800,000 900,000 9,496 221,629 0 104,550
F. A. Archinaco........ 2001 490,000 380,000 5,001 117,327 260,078 81,177
Executive Vice 2000 470,000 400,000 7,419 98,364 0 37,874
President 1999 450,000 350,000 5,924 98,775 0 43,650
C. E. Bunch............ 2001 450,000 380,000 4,711 103,681 214,182 73,322
Executive Vice 2000 385,000 370,000 4,622 62,777 0 28,012
President 1999 315,000 240,000 3,214 53,211 0 27,872
W. H. Hernandez........ 2001 375,000 230,000 551 83,245 152,987 58,442
Sr. Vice President, 2000 360,000 240,000 876 56,317 0 24,302
Finance 1999 350,000 240,000 1,672 58,504 0 28,753
J. C. Diggs............ 2001 350,000 240,000 4,354 35,000 152,987 49,976
Sr. Vice President and 2000 305,000 240,000 18,616 25,000 0 21,951
General Counsel 1999 290,000 200,000 1,728 27,451 0 25,501
------
(1) Cash and market value of Common Stock awarded.
(2) The following are included in the amounts shown under All Other
Compensation for 2001: Company contributions for Messrs. LeBoeuf,
Archinaco, Bunch, Hernandez and Diggs, respectively, were $7,140, $7,140,
$7,140, $7,140 and $3,570, under the Company's Employee's Savings Plan and
under the Company's Benefit Account Plan for each of the Named Executives
were $300. The value of premiums paid with respect to term life insurance
for the benefit of Messrs. LeBoeuf, Archinaco, Bunch, Hernandez and Diggs,
respectively, was $636, $711, $374, $398 and $326. The amount shown for
Mr. LeBoeuf includes $16,590, and for Mr. Archinaco includes $3,318, which
are the portions of interest earned on certain deferred compensation above
120% of the applicable federal rate. The amounts shown for Messrs.
LeBoeuf, Archinaco, Bunch, Hernandez and Diggs include $29,808, $13,428,
$11,748, $8,604 and $3,780, respectively, in Company contributions under
the Company's Deferred Compensation Plan in lieu of Company contributions
which could not be made under the Savings Plan because of the Internal
Revenue Code and Regulations. The figure also includes for Messrs.
LeBoeuf, Archinaco, Bunch, Hernandez and Diggs, respectively, $184,800,
$56,280, $53,760, $42,000 and $42,000 for dividends accrued but not paid
under the Long-Term Plan.
11
Option Grants
Shown below is further information on grants of Options under the Company's
Stock Plan during fiscal year 2001 to the Named Executives. All of the Options
granted in 2001 were Nonqualified Options, as are all outstanding Options. No
Stock Appreciation Rights were granted in 2001 and none are outstanding.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
Potential Realizable Value at Assumed
Annual Rates of Stock Price
Individual Grants Appreciation for Option Term(2)
----------------------------------------------- --------------------------------------
Percent of
Number of Total
Securities Options/SARs Exercise
Underlying Granted to or Base
Options/SARs Employees in Price Expiration
Name Granted(#)(1) Fiscal 2001 ($/Share) Date 0%($)(3) 5%($) 10%($)
---- ------------- ------------ --------- ---------- -------- ------------- --------------
R. W. LeBoeuf........... 160,000 5.93 50.350 2/13/2011 0 5,065,600 12,838,400
F. A. Archinaco......... 60,000 2.22 50.350 2/13/2011 0 1,899,600 4,814,400
5,049 .19 59.220 2/16/2009 0 142,735 341,918
52,278 1.94 59.220 2/15/2010 0 1,706,877 4,204,197
------- ------------- --------------
117,327 3,749,212 9,360,515
C. E. Bunch............. 60,000 2.22 50.350 2/13/2011 0 1,899,600 4,814,400
10,413 .39 59.220 2/16/2009 0 294,376 705,168
33,268 1.23 59.220 2/15/2010 0 1,086,200 2,675,413
------- ------------- --------------
103,681 3,280,176 8,194,981
W. H. Hernandez......... 45,000 1.67 50.350 2/13/2011 0 1,424,700 3,610,800
14,202 .53 51.170 2/15/2004 0 114,610 240,582
1,443 .05 51.170 2/14/2005 0 15,916 34,271
2,928 .11 51.170 2/13/2006 0 41,402 91,471
19,672 .73 54.850 2/13/2006 0 298,031 658,815
------- ------------- --------------
83,245 1,894,659 4,635,939
J. C. Diggs............. 35,000 1.30 50.350 2/13/2011 0 1,108,100 2,808,400
All Shareholders(4)..... 5,334,710,000 13,520,440,000
Named Executive
Officers'
Gain as % of All
Shareholders' Gain..... 0% .283% .280%
------
(1) All Options were granted at Fair Market Value (the closing price for the
Company's Common Stock as reported on the New York Stock Exchange-
Composite Transactions) on the date of grant. Five of the Options shown
were granted on February 14, 2001, at an Exercise Price of $50.350 and
become exercisable one year after the date of grant. The other Options
shown on the table were granted to certain of the Named Executives under
the Restored Option provisions of the Stock Plan that were approved by the
shareholders. Under the Restored Option provisions, which apply to
Nonqualified Options outstanding on December 1, 1992, or granted
thereafter, an Optionee who surrenders (or certifies ownership of) shares
of Common Stock in payment of the Option Price of an Option is granted a
new Nonqualified Option (a "Restored Option") covering the number of
shares equal to the number of shares surrendered (or certified as to
ownership) and surrendered or withheld to satisfy tax obligations.
Restored Options have the same expiration date as the original Option, the
exercise of which generated the Restored Option, an Exercise Price equal
to the Fair Market Value of the Common Stock on the date of grant of the
Restored Option and become exercisable six months after the date of grant.
(2) The dollar amounts under these columns are the result of calculations at
0%, and at the 5% and 10% rates set by the Securities and Exchange
Commission and, therefore, are not intended to forecast possible future
appreciation, if any, of PPG's Common Stock price. PPG did not use an
alternative formula for a grant date valuation, as the Company is not
aware of any formula which will determine with reasonable accuracy a
present value based on future unknown or volatile factors.
12
(3) No gain to the Optionees is possible without an increase in stock price. A
0% gain in stock price will result in zero gain for the Optionee.
(4) Based on approximately 168,500,000 issued shares (other than Treasury
shares), these amounts are the total increase in shareholder value using
the 0%, 5%, and 10% assumed annual appreciation rates and the price and
terms of the February 14, 2001 grant.
Option Exercises and Fiscal Year-End Values
Shown below is information with respect to exercises during 2001 of Options
granted under the Stock Plan and information with respect to unexercised
Options granted in 2001 and prior years under the Stock Plan.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION/SAR
VALUES
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money Options/SARs
Options/SARs at at December 31,
December 31, 2001(#) 2001($)(1)
------------------------- -------------------------
Shares
Acquired on Value
Name Exercise(#) Realized($) Exercisable Unexercisable Exercisable Unexercisable
---- ----------- ----------- ----------- ------------- ----------- -------------
R. W. LeBoeuf........... 0 0 626,099 160,000 0 219,200
F. A. Archinaco......... 60,152 365,754 292,771 60,000 0 82,200
C. E. Bunch............. 45,748 267,581 180,613 60,000 0 82,200
W. H. Hernandez......... 40,247 233,962 203,650 64,672 24,388 61,650
J. C. Diggs............. 0 0 83,783 35,000 0 47,950
------
(1) Based on the closing price on the New York Stock Exchange-Composite
Transactions of the Company's Common Stock on December 31, 2001 (last
trading day of fiscal year), which was $51.72 per share.
Long-Term Incentive Plan Awards
During 2001, the Officers-Directors Compensation Committee made contingent
grants of PPG Common Stock to the Named Executives under the Long-Term Plan.
Under the Long-Term Plan, contingent share grants are made for three year plan
periods and paid out at the end of the period if the Company achieves target
performance. Performance is measured by determining where the total
shareholder return of PPG Common Stock (stock price plus accumulated
dividends) ranks among the total shareholder return for each of the companies
in the Standard & Poor's Materials Sector Index. If target performance is met
at the end of the award period, payments will equal the original contingent
share grant. Payments at the end of the period will be zero if threshold
performance is not achieved and may exceed the original targeted contingent
grant if PPG total shareholder return is above objective, predetermined
performance standards but may not exceed the maximums stated in the Long-Term
Plan. Contingent share awards earn dividend equivalents during the award
period which are credited in the form of stock equivalents under the PPG
Deferred Compensation Plan. Any payments made at the end of the award period
under the Long-Term Plan may be in the form of stock, cash (based on the
market value of the number of contingent shares paid in the form of cash) or a
combination of both, and may be deferred into the PPG Deferred Compensation
Plan.
13
LONG-TERM INCENTIVE PLANS--AWARDS IN LAST FISCAL YEAR
Estimated Future Payouts
Under Non-Stock Price-Based Plans
-------------------------------------------------------
Number of Performances or
Shares, Units Other Period Until
or Other Maturation or Minimum Threshold Target Maximum
Name Rights(#) Payout (# of shares) (# of shares) (# of shares) (# of shares)
---- ------------- ------------------- ------------- ------------- ------------- -------------
R. W. LeBoeuf........... 80,000 1/1/2001-12/31/2003 0 32,000 80,000 176,000
F. A. Archinaco......... 25,000 1/1/2001-12/31/2003 0 10,000 25,000 55,000
C. E. Bunch............. 25,000 1/1/2001-12/31/2003 0 10,000 25,000 55,000
W. H. Hernandez......... 20,000 1/1/2001-12/31/2003 0 8,000 20,000 44,000
J. C. Diggs............. 20,000 1/1/2001-12/31/2003 0 8,000 20,000 44,000
Retirement Plans
The Company's qualified retirement plan for salaried employees and
nonqualified retirement plan provide benefits after retirement. The annual
benefits payable upon retirement under those plans to persons in hypothetical
five-year average annual covered compensation and credited years-of-service
classifications (assuming retirement as of January 1, 2002, and date of birth
in 1936) are estimated in the following table.
Pension Plan Table
Base and
Incentive
5-Year Avg.
Total
Compensation Credited Years-of-Service
------------ -----------------------------------------------------------------------------
15 20 25 30 35
------- ------- ------- ------- ---------
$ 300,000 63,988 85,570 107,151 128,732 150,313
500,000 111,428 149,010 186,591 224,172 261,753
750,000 170,728 228,310 285,891 343,472 401,053
1,000,000 230,028 307,610 385,191 462,772 540,353
1,300,000 301,188 402,770 504,351 605,932 707,513
1,600,000 327,348 497,930 623,511 749,092 874,673
1,900,000 443,508 593,090 742,671 892,252 1,041,833
The compensation covered by the Company's qualified retirement plan for
salaried employees, which is compulsory and noncontributory, is the salary of
a participant as limited by applicable Internal Revenue Service ("IRS")
regulations. The compensation covered by the Company's nonqualified retirement
plan, which is available only to those employees who participate in the
qualified retirement plan for salaried employees and in the Company's
Incentive Compensation Plan or Management Award Plan, is the compensation paid
under the latter two plans, which for the Named Executives in the Summary
Compensation Table on page 11 is shown in the "Bonus" column under "Annual
Compensation." Additional benefits may be paid to certain participants under
the Company's nonqualified retirement plan equal to any benefit which cannot
be paid under the Company's qualified retirement plan for salaried employees
because of the restrictions of any applicable IRS regulations. The benefit
payable under the Company's qualified retirement plan for salaried employees
is a function of a participant's highest consecutive five-year average annual
covered compensation during the ten years immediately prior to retirement and
credited years-of-service while a plan participant. The benefit payable under
the Company's nonqualified retirement plan is a function of the participant's
five-year average annual covered compensation for the highest five years out
of the final ten years immediately prior to retirement and credited years-of-
service. The highest five-year average annual covered compensation under both
plans through 2001 for Messrs. LeBoeuf, Archinaco, Bunch, Hernandez and Diggs
is $1,570,167, $781,433, $594,170, $606,333 and $453,241, respectively. The
annual benefits payable under the plans as shown in the table above are
estimated on the basis of a straight life annuity notwithstanding the
availability of a joint and survivor annuity or lump sum benefit and are not
subject to reduction for social security benefits. For purposes of the plans,
Mr. LeBoeuf has twenty-one years of service, Mr. Archinaco thirty-six and one-
half years, Mr. Bunch twenty-two and one-half years, Mr. Hernandez eleven
years and Mr. Diggs five years.
14
Change In Control Arrangements
The Company has entered into arrangements with certain key executives,
including the Named Executives, providing for the continued employment of such
executives for a period of up to three years following a change in control of
the Company. The arrangements contemplate that during such three-year period,
such executives would continue to be employed in capacities, and compensated
on a basis, commensurate with their capacities and compensation before the
change in control occurred. The arrangements contemplate, further, that in the
event the executive's employment is terminated (a) for any reason by the
executive during a thirty day window period beginning one year after a change
in control, (b) at any time during the three years following a change in
control by the executive because either he has not been employed in a
commensurate capacity or he has not been commensurately compensated or (c) by
the Company at any time during the three years following a change in control
other than for cause, the executive would be entitled to receive, subject to
certain conditions, a payment. This payment would basically be the salary and
the awards under the Incentive Compensation Plan that the Executive would have
received for (i) the next two years (or until the executive's retirement date
if earlier) if the termination was under situation (a) above or (ii) for three
years (or until the executive's retirement date if earlier) if the termination
was under situations (b) or (c) above.
BOARD PROPOSAL
PROPOSAL--AMEND AND REAPPROVE THE PPG INDUSTRIES, INC. STOCK PLAN
The Board unanimously recommends that the shareholders approve an amendment
to the PPG Industries, Inc. Stock Plan (the "Stock Plan") to reauthorize the
pool of shares available for grants under the Stock Plan and to reapprove the
amended Plan to preserve the deductibility of compensation paid under the Plan
under Section 162(m) of the Internal Revenue Code.
Background and Brief Description of Amendment
The PPG Industries, Inc. Stock Plan (sometimes referred to in this Proxy
Statement as the "Stock Plan" or the "Plan") was initially adopted as the "PPG
Industries, Inc. 1984 Stock Option Plan" (the "1984 Stock Option Plan") by the
Board of Directors on February 16, 1984 and approved by the shareholders on
April 19, 1984. The Plan was amended by the Board of Directors on February 18,
1988 and February 20, 1992, and those amendments were approved by the
shareholders on April 21, 1988 and April 16, 1992, respectively. The Plan was
amended and restated by the Board of Directors on December 16, 1996, and that
amendment and restatement was approved by the shareholders on April 17, 1997.
Pursuant to such amendment and restatement, the 1984 Stock Option Plan was
renamed the "PPG Industries, Inc. Stock Plan."
The Plan is designed to promote the growth and profitability of the Company
and its subsidiaries by giving Plan participants an opportunity to invest in
and hold the Common Stock and thereby (1) provide them with additional
incentive to cause the Company and its subsidiaries to grow and profit, (2)
make their compensation competitive with opportunities available in competing
industries, and (3) encourage them to continue in the employ of the Company or
a subsidiary.
The Board continues to consider the Plan an important tool for promoting the
interests of the Company and its shareholders. The Board believes that the
goals served by the Plan are as important today as ever and that the Plan
should continue.
Accordingly, on February 21, 2002 the Board adopted the following amendment
to the Plan in order to increase the maximum number of shares of Common Stock
that may be issued, and as to which Options and Restricted Stock may be
granted, under the Plan.
Authorization of Shares
The amended Plan authorizes the grant of Restricted Stock, Stock
Appreciation Rights and Options (collectively "Awards") with respect to a
maximum of 14,000,000 shares of Common Stock (of which no more
15
than 250,000 shares may be Restricted Stock) from and after April 18, 2002
(the "Grant Authorization"). The issuance of 30,600,000 shares of Common Stock
is authorized from and after April 18, 2002 (the "Issuance Authorization"). As
of February 19, 2002 there were outstanding 16,635,479 unexercised Options
under the Plan. The Issuance Authorization would cover all exercises of Awards
after April 18, 2002, including exercise of outstanding unexercised Options,
and all Restricted Stock awarded after that date. Common Stock will be
registered as required by the Securities and Exchange Commission regulations
prior to issuance. The amended Plan also provides that from and after April
18, 2002, the shares of Common Stock subject to Awards granted to any one
person over the remaining life of the Plan will not exceed 2,000,000 shares.
The Grant Authorization and the Issuance Authorization and the individual
limit on awards would be subject to adjustment in certain events, including
stock dividends and stock splits as more fully described later. The amended
Plan continues to provide that shares of Common Stock tendered to the Company
by participants in exercising Options or paying withholding taxes would be
restored to both Authorizations but not to the individual limit on awards. Any
shares of Common Stock subject to unexercised Options, and remaining
unexercised at the expiration or termination thereof, would be restored to the
Grant Authorization but not to the individual limit on awards. Restricted
Stock issued under the amended Plan and thereafter forfeited to the Company
would be restored to both the Grant Authorization and the Issuance
Authorization but not to the individual limit on awards. No Options, Stock
Appreciation Rights or Restricted Stock may be granted under the amended Plan
after December 31, 2007 although Common Stock may be issued after that date
with respect to Options and SARs outstanding on that date.
Eligible Recipients
Eligible recipients of Awards would include the Company's Directors and such
Employees of the Company and the Company's Subsidiaries who are determined to
have the ability to make a substantial contribution to the growth and
profitability of the Company or any of its subsidiaries. Other Employees
selected to receive Awards as well as the terms of such Awards will be
determined by the Board or the Committee or by others designated by the Board
or the Committee. (The granting entities are hereinafter referred to
individually or collectively as the "Award Grantor.") The number of
participants who may be granted Options, Stock Appreciation Rights and
Restricted Stock in the future is not presently known because in each instance
it is in the discretion of the Award Grantor. However, it is presently
contemplated that the number will be less than 3% of the number of Employees
of PPG and its Subsidiaries. Neither the existence of the amended Stock Plan
nor the grant of Options, Stock Appreciation Rights or Restricted Stock
pursuant to the Stock Plan shall create in any recipient the right to continue
to be employed by the Company or a Subsidiary.
Estimated Benefits
No Awards have been made under the amended Stock Plan and it is impossible
to determine the amount of Awards that will be received in the future by any
of the persons eligible to receive an award under the amended Stock Plan.
However, the Awards granted under the Stock Plan in 2001 would not have been
affected had this amendment been in effect in 2001.
Information regarding Stock Option awards to the Company's Chief Executive
Officer and the other four most highly compensated Executive Officers in 2001
pursuant to the Stock Plan is provided on page 12 of this Proxy Statement. In
addition, 360,000 original Options were granted in 2001 under the Stock Plan
to all current Executive Officers as a group and 1,803,600 original Options
were granted to all employees, including all current officers who are not
Executive Officers. No Incentive Options or Restricted Stock were granted in
2001. Each non-employee Director was granted 2,500 Options under the Stock
Plan in 2001. All Options are granted at Fair Market Value on the date of
grant.
Amendment and Termination
The Board of Directors may amend, suspend or terminate the Stock Plan, in
whole or in part, at any time, but no amendment may, without shareholder
approval, (1) increase the maximum number of shares which may be issued and
for which Awards for which Options may be granted (either in the aggregate or
to any one
16
employee), (2) change the manner of determining the minimum Option Price
(other than to make any such change as may be necessary to conform to any
then-applicable provision of the Internal Revenue Code or any regulations
thereunder), (3) extend the date upon which the Stock Plan will terminate or
(4) increase the maximum period during which Options may be exercised. The
Stock Plan will terminate on December 31, 2007, unless earlier terminated by
the Board. No amendment, suspension or termination may affect adversely,
without the Optionee's consent, the rights of such Optionee with respect to an
Option previously granted.
THE BOARD RECOMMENDS THAT SHAREHOLDERS VOTE FOR THE PROPOSAL TO AMEND AND
---
REAPPROVE THE PPG INDUSTRIES, INC. STOCK PLAN.
AUDITORS
The Board of Directors, based on the recommendation of the Audit Committee,
has appointed Deloitte & Touche LLP as Auditors for the Company for the year
2002. Deloitte & Touche LLP have been regularly engaged by the Company for
many years to audit the Company's annual financial statements and to perform
other services, primarily related to tax matters. Representatives of Deloitte
& Touche LLP are expected to be present at the Meeting and, while they do not
plan to make a statement (although they will have the opportunity if they
desire to do so), they will be available to respond to appropriate questions
from shareholders.
During 2001, the Company retained its principal accounting firm, Deloitte &
Touche LLP, the member firms of Deloitte Touche Tohmatsu, and their respective
affiliates (collectively, "Deloitte") to provide services in the following
categories and amounts:
Audit Fees:
Audit of the consolidated financial statements of PPG Industries,
Inc.............................................................. $1,740,848
Financial Information Systems Design/Implementation................. $ 0
Other Fees:
Audit-related fees(1)............................................. $1,112,310
Tax Related Fees.................................................. $1,815,403
Other Non-audit Related Fees...................................... $ 171,988
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Total Other Fees(2)................................................. $3,099,701
------
(1) This amount primarily includes fees for foreign statutory audits of
approximately $885,000.
(2) The Audit Committee has considered whether the provision of these services
is compatible with maintaining the principal accountant's independence.
17
SHAREHOLDER RETURN PERFORMANCE GRAPH
Set forth below is a line graph comparing the yearly percentage change in
the cumulative total shareholder return on the Company's Common Stock with the
cumulative total return of the Standard & Poor's Composite--500 Stock Index
("S&P 500 Index") and the Standard and Poor's Materials Sector Index ("S&P
Materials Sector Index" (formerly the S&P Basic Materials Index)) for the five
year period beginning December 31, 1996 and ending December 31, 2001. The
graph was prepared on February 7, 2002. The information presented in the graph
assumes that the investment in the Company's Common Stock and each Index was
$100 on December 31, 1996 and that all dividends were reinvested.
Comparison of Five-Year Cumulative Total Shareholder Return
PPG Industries, Inc., S&P Materials Sector Index and S&P 500 Index
[Graph appears here]
'96 '97 '98 '99 '00 '01
PPG $100 $105 $110 $122 $ 94 $110
S&P Materials $100 $108 $110 $126 $106 $110
S&P 500 $100 $133 $171 $207 $188 $166
MISCELLANEOUS
Vote Required
The Annual Meeting of Shareholders will not be organized for the transaction
of business unless a quorum is present. The presence in person or by proxy of
shareholders entitled to cast at least a majority of the votes that all
shareholders are entitled to cast shall constitute a quorum. Votes withheld
and abstentions will be counted but broker non-votes will not be counted in
determining the presence of a quorum.
In the election of Directors, the number of nominees to be elected in each
class who receive the greatest number of votes cast at the Annual Meeting by
the holders of the Common Stock present in person or by proxy and entitled to
vote, assuming the presence of a quorum, will be elected as Directors for a
term of three years or their earlier resignation or retirement. Since no
written notice was received by the Company from a shareholder that a
nomination would be made by the shareholder at the Meeting pursuant to the
nomination procedure provided for in the Company's bylaws, votes may only be
cast for, or withheld from, the Company's nominees.
Pennsylvania law provides that abstentions, votes withheld and broker non-
votes are not votes cast. Therefore, with respect to the election of
Directors, abstentions, votes withheld and broker non-votes do not count
either for or against such election.
18
Solicitation Costs
The costs of the solicitation of proxies will be borne by the Company.
Arrangements may be made by the Company with brokerage houses and other
custodians, nominees and fiduciaries for them to forward solicitation
materials to the beneficial owners of the shares such brokerage houses and
other custodians, nominees and fiduciaries hold of record, and the Company may
reimburse them for the reasonable expenses they incur in so doing. To assist
in the solicitation of proxies, the Company has engaged D. F. King & Co. for a
fee of $12,000, plus out-of-pocket expenses. Directors, Officers or regular
employees of the Company may, without additional compensation therefor, also
make solicitations.
Shareholder Proposals for the Next Annual Meeting
Shareholders intending to present business for consideration at the year
2003 Annual Meeting of Shareholders must give notice to the Secretary of the
Company within the same time limits as set forth on page 6 for nomination of
Directors and such business must otherwise be a proper matter for shareholder
action. If, as expected, the year 2003 Annual Meeting of Shareholders is held
on April 17, 2003 (the third Thursday of April, 2003), then to be timely the
notice must be received by the Secretary of the Company not later than January
16, 2003, in order to be brought before the Meeting. To be eligible for
inclusion in the Proxy Statement and Proxy Card relating to such Annual
Meeting the notice must be received by the Secretary of the Company not later
than November 5, 2002.
Section 16(a) Reporting
The Directors and Executive Officers of the Company are required to file
reports of initial ownership and changes of ownership of PPG securities with
the Securities and Exchange Commission and the New York Stock Exchange. To the
Company's knowledge, based solely on review of copies of such reports
furnished to the Company and written representations that no other reports
were required, the required filings of all such Directors and Executive
Officers were filed timely, except that the Company was inadvertently 35 days
late in filing one Form 4 on behalf of Mr. R. L. Crane (a retired Executive
Officer of the Company) reporting one transaction in January 2001.
Other Matters
So far as is known, no matters other than those described herein are
expected to come before the Meeting. It is intended, however, that the proxies
solicited hereby will be voted on any other matters which may properly come
before the Meeting, or any adjournment thereof, in the discretion of the
person or persons voting such proxies unless the shareholder has indicated on
the Proxy Card that the shares represented thereby are not to be voted on such
other matters.
Pittsburgh, Pennsylvania
March 5, 2002
19
YOUR VOTE IS IMPORTANT!
If you do not vote by telephone or Internet, please sign and date this proxy
card and return it promptly in the enclosed postage-paid envelope, or otherwise
to Corporate Election Services, PO Box 1150, Pittsburgh, PA 15230, so that your
shares may be represented at the Meeting. If you vote by telephone or Internet,
it is not necessary to return this proxy card.
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THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF PPG INDUSTRIES, INC.
FOR THE ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON APRIL 18, 2002.
The undersigned, having received the Notice of Annual Meeting of Shareholders
and Proxy Statement, each dated March 5, 2002, hereby appoints R.W. LeBoeuf,
J.C. Diggs and M.C. Hanzel, or any of them, with full power of substitution to
each, proxies to represent the undersigned and to vote all of the shares of the
Common Stock of PPG Industries, Inc., (the "Company") that the undersigned would
be entitled to vote if personally present at the 2002 Annual Meeting of
Shareholders of the Company, or any adjournment thereof, as directed on the
reverse side hereof and in their discretion on such other matters as may
properly come before the meeting or any adjournment thereof.
The shares represented by this proxy will be voted as directed on the reverse
side hereof. If no direction is given, however, the shares represented by this
proxy will be voted FOR the election of the nominees for Director proposed by
the Board of Directors (those nominees are Michele J. Hooper, Raymond W. LeBoeuf
and Robert Mehrabian) and FOR the proposal to amend and reapprove the PPG
Industries, Inc. Stock Plan. Shares to be voted FOR the election of the nominees
proposed by the Board of Directors will be voted cumulatively in the discretion
of the proxies for any nominees other than nominees with respect to whom
authority to vote FOR has been withheld. This card votes all of the shares of
the Common Stock of the Company held under the same registration in any one or
more of the following manners: as a shareholder of record; in the Shareholder
Investor Services Program; in the PPG Industries Employee Savings Plan and in
the PPG Canada Inc. Employee Savings Plan.
Please complete, sign and date this Card on the reverse side and return it
promptly in the enclosed reply envelope if you do not vote by telephone or
Internet.
=====================
PPG Industries, Inc.
P. O. Box 1150
Pittsburgh, PA 15230
=====================
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V O T E B Y T E L E P H O N E
----------------------------------------------
Have your proxy card available when you call
the Toll-Free number 1-800-542-1160 using a
touch-tone telephone. You will be prompted to
enter your Control Number and then you can
follow the simple prompts that will be presented
to you to record your vote.
----------------------------------------------
V O T E B Y I N T E R N E T
----------------------------------------------
Have your proxy card available when you
access the website http://www.votefast.com.
You will be prompted to enter your Control
Number and then you can follow the simple
prompts that will be presented to you to record
your vote.
----------------------------------------------
V O T E B Y M A I L
----------------------------------------------
Please mark, sign and date your proxy card
and return it in the postage-paid envelope
provided or return it to: Corporate Election
Services, PO Box 1150, Pittsburgh, PA 15230.
-----------------------------------------------
---------------------- ---------------------- -----------------------------
Vote by Telephone Vote by Internet Vote by Mail
Call Toll-Free using a Access the Website and Return your proxy/instruction
touch-tone telephone: cast your vote: Card in the postage-paid
1-800-542-1160 http://www.votefast.com envelope provided.
---------------------- ----------------------- -----------------------------
Vote 24 hours a day, 7 days a week!
Your telephone or internet vote must be received by
11:59 p.m. Eastern Daylight Time
on April 17, 2002 to be counted in the final tabulation.
===================================
Your Control Number is:
===================================
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................................................................................
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[LOGO] PPG INDUSTRIES, INC. To obtain an Admission card to the Annual
One PPG Place Meeting, place an "X" in the box to the
Pittsburgh, PA 15272 right. [ ]
----------------------------------------
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PPG'S DIRECTORS RECOMMEND A VOTE "FOR" ITEMS 1 AND 2.
-------------------------------------------------------------------------------
FOR WITHHELD
1. ELECTION OF THREE DIRECTORS [ ] [ ]
(01) MICHELE J. HOOPER
(02) RAYMOND W. LEBOEUF
(03) ROBERT MEHRABIAN
FOR, EXCEPT VOTE WITHHELD FROM THE FOLLOWING NOMINEE(S):
--------------------------------------------------------
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FOR AGAINST ABSTAIN
2. PROPOSAL TO AMEND AND REAPPROVE [ ] [ ] [ ]
THE PPG INDUSTRIES, INC. STOCK PLAN
--------------------------------------------------------------------------------
SIGNATURE(S)
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NOTE: Please sign as name(s) appear hereon. Give full title if signing for a
corporation or partnership or as attorney, agent or in another
representative capacity.