1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement / / Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
Sonoco Products Company
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
2
[SONOCO(R)]
SONOCO PRODUCTS COMPANY
POST OFFICE BOX 160
ONE NORTH SECOND STREET
HARTSVILLE, SOUTH CAROLINA 29551-0160 U.S.A.
March 15, 1996
TO OUR SHAREHOLDERS:
As a shareholder of Sonoco Products Company, you are cordially invited to
attend the Annual Shareholders' Meeting to be held at the Center Theater, 212
North Fifth Street, Hartsville, South Carolina, 29550, on Wednesday, April 17,
1996, at 11:00 A.M.
The accompanying Notice of Meeting and Proxy Statement cover the details of
matters to be presented at the meeting which consists of the election of
directors, a proposal to approve the 1996 Non-Employee Directors' Stock Plan,
and the election of independent auditors.
In addition to action to be taken on the matters listed in the Notice of
Annual Meeting of Shareholders, the Company's progress will be discussed, and
attendees will be given an opportunity to ask questions of general interest to
all shareholders.
A copy of the 1995 Annual Report, which reviews the Company's past year's
events, is enclosed unless you have signed a statement indicating that you have
access to another copy at your address.
Whether or not you plan to attend the meeting, you are urged to participate
by completing and returning your proxy in the enclosed business reply envelope.
If you later find you can be present or for any reason desire to revoke your
proxy, you can do so at any time before the voting. Your vote is important and
will be greatly appreciated.
/s/ Charles W. Coker
Charles W. Coker
Chairman and Chief Executive Officer
3
SONOCO PRODUCTS COMPANY
POST OFFICE BOX 160
ONE NORTH SECOND STREET
HARTSVILLE, SOUTH CAROLINA 29551-0160
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TIME.......................... 11:00 A.M. on Wednesday, April 17, 1996.
PLACE......................... The Center Theater, 212 North Fifth Street, Hartsville, South
Carolina, 29550.
PURPOSES...................... (1) To elect six members of the Board of Directors, five to
serve for the next three years and one to serve for the next
year.
(2) To act upon a proposal to approve the 1996 Non-Employee
Directors' Stock Plan.
(3) To elect independent auditors.
(4) To transact such other business as may properly come
before the meeting or any adjournment thereof.
RECORD DATE................... Holders of Common Stock of record at the close of business
March 1, 1996, are entitled to notice of and to vote at the
meeting.
ANNUAL REPORT................. The Annual Report of the Company for the year 1995 is
enclosed unless you have signed a statement indicating that
you have access to another copy at your address.
PROXY VOTING.................. It is important that your shares be represented and voted at
the meeting. Please MARK, SIGN, DATE, and RETURN PROMPTLY the
enclosed proxy card in the envelope furnished. Any proxy so
given can be revoked in the manner described in the
accompanying Proxy Statement at any time prior to its
exercise at the meeting.
By order of the Board of Directors,
Charles J. Hupfer, Secretary
March 15, 1996
1
4
SONOCO PRODUCTS COMPANY
POST OFFICE BOX 160
ONE NORTH SECOND STREET
HARTSVILLE, SOUTH CAROLINA 29551-0160
PROXY STATEMENT
GENERAL INFORMATION
INFORMATION CONCERNING THE SOLICITATION
This statement is furnished in connection with the solicitation of proxies
to be used at the Annual Meeting of Shareholders (Annual Meeting) of Sonoco
Products Company (the "Company"), a South Carolina corporation, to be held on
April 17, 1996.
The solicitation of proxies in the enclosed form is made on behalf of the
Board of Directors of the Company.
The cost of preparing, assembling and mailing the proxy material and of
reimbursing brokers, nominees and fiduciaries for the out-of-pocket and clerical
expense of transmitting copies of the proxy material to the beneficial owners of
shares held of record by such persons will be borne by the Company. The Company
does not intend to solicit proxies otherwise than by use of the mail; however,
certain officers and regular employees of the Company or its subsidiaries,
without additional compensation, may use their personal efforts by telephone,
telefacsimile or by personal calls to obtain proxies.
The proxy materials are being mailed on March 15, 1996, to shareholders of
record at the close of business on March 1, 1996.
Any shareholder who executes and delivers a proxy has the right to revoke
it at any time before it is voted. The proxy can be revoked by giving notice of
revocation at the Annual Meeting, or by delivery to the Secretary of the
Company, Post Office Box 160, Hartsville, South Carolina, 29551-0160, of an
instrument which by its terms revokes the proxy, or by delivery to the Secretary
of a duly executed proxy bearing a later date. Any shareholder who desires to do
so can attend the meeting and vote in person in which case the proxy will not be
used.
Shares represented by all properly executed proxies delivered pursuant to
this solicitation will be voted at the Annual Meeting or any adjournment
thereof. With respect to the election of directors and to any of the proposals
for which a choice is provided, the proxy will be voted in the manner directed
by the shareholder. If no direction is made, the proxy will be voted FOR the
persons named in this Proxy Statement as the Board of Directors' nominees for
election to the Board of Directors; FOR the adoption of the 1996 Non-Employee
Directors' Stock Plan; and FOR the election of Coopers & Lybrand L.L.P. as the
Company's independent auditors for the fiscal year ending December 31, 1996. As
to any other matter of business that may be brought before the Annual Meeting, a
vote may be cast pursuant to the accompanying proxy in accordance with the
2
5
best judgment of the persons holding the proxy, but the Board of Directors
presently does not know of any other such business.
OUTSTANDING SECURITIES
The Company has authorized two classes of stock consisting of 150,000,000
authorized shares of no par value Common Stock, of which 91,167,620 shares are
outstanding and 30,000,000 authorized shares of no par value Preferred Stock of
which 3,450,000 shares of $2.25 Series A Cumulative Convertible Preferred Stock
are outstanding. Each share of the Company's Common Stock is entitled to one
vote. The shareholders of the Company's $2.25 Series A Cumulative Convertible
Preferred Stock will not be entitled to vote at the Annual Meeting.
VOTING SECURITIES
Only shareholders of record of the Company's Common Stock at the close of
business on March 1, 1996, will be entitled to vote at the Annual Meeting. As of
that date there were issued and outstanding 91,167,620 shares of Common Stock.
Each share will be entitled to one vote on each matter submitted at the Annual
Meeting.
A majority of the shares entitled to be voted at the Annual Meeting
constitutes a quorum. If a share is represented for any purpose at the Annual
Meeting by the presence of the registered owner or a person holding a valid
proxy for the registered owner, it is deemed to be present for purposes of
establishing a quorum. Therefore, valid proxies which are marked "Abstain" or
"Withhold" and shares that are not voted, including proxies submitted by brokers
that are the record owners of shares (so-called "broker non-votes"), will be
included in determining the number of votes present or represented at the Annual
Meeting.
If a quorum is present at the Annual Meeting, directors will be elected by
a plurality of the votes cast by shares present and entitled to vote at the
Annual Meeting. Votes that are withheld or that are not voted in the election of
directors will have no effect on the outcome of election of directors.
Cumulative voting is not permitted.
Approval of the proposal to adopt the 1996 Non-Employee Directors' Stock
Plan requires the affirmative vote of a simple majority of the total shares
present and entitled to vote at the Annual Meeting. With respect to shares that
are present and entitled to vote, votes that are withheld or shares that are not
voted for adoption of the plan will have the effect of votes against the plan.
Election of Coopers & Lybrand L.L.P., as independent auditors, and approval
of any other matter that may be brought before the meeting require that the
votes cast in favor of the matter exceed the votes cast against the matter.
Votes that are withheld or shares that are not voted will have no effect on the
outcome of such matters.
There is no person known by the management of the Company to own of record
or beneficially more than 5% of the outstanding voting shares of the Company.
3
6
ELECTION OF DIRECTORS
At this Annual Meeting six directors are to be elected, five of whom shall
hold office for the next three years, their terms expiring at the Annual
Shareholders' Meeting in 1999, and one of whom shall hold office for the next
year, her term expiring at the Annual Shareholders' Meeting in 1997, or until
their successors are duly elected and qualified. It is the intention of the
persons named on the enclosed form of proxy to vote such proxy FOR the election
of the six persons named herein (or if any of the persons nominated is
unexpectedly unavailable to serve, for such substitutions as the Board of
Directors may designate), unless authority to vote is withheld for all or any of
the nominees. Proxies will not be voted for a greater number of persons than the
number of nominees named. Each nominee has been recommended for election by the
Board of Directors.
INFORMATION CONCERNING NOMINEES
NAME, AGE, PRINCIPAL OCCUPATION FOR LAST FIVE SERVED AS A
YEARS AND DIRECTORSHIPS IN PUBLIC CORPORATIONS DIRECTOR SINCE
---------------------------------------------------------- --------------
- ----------------- C. J. BRADSHAW (59). Mr. Bradshaw is President and 1986
- ----------------- Director of Bradshaw Investments, Inc. (private
- ----------------- investments), Georgetown, South Carolina, a position held
[PHOTO] since 1986. He served as President and Chief Operating
- ----------------- Officer of Transworld Corporation, New York, New York,
- ----------------- from 1984 to 1986 and Chairman of the Board and Chief
- ----------------- Executive Officer of Spartan Food Systems, Inc.,
- ----------------- Spartanburg, South Carolina, from 1961 to 1986. Mr.
Bradshaw is a director of Wachovia Bank of South Carolina,
N.A.
- ----------------- R. J. BROWN (61). Mr. Brown is Founder, Chairman and Chief 1993
- ----------------- Executive Officer of B&C Associates, Inc. (a management
- ----------------- consulting, marketing research and public relations firm),
[PHOTO] High Point, North Carolina, a position held since 1973. He
- ----------------- is a director of First Union Corporation, Duke Power
- ----------------- Company and Pacific National Financial Group.
- -----------------
- -----------------
4
7
NAME, AGE, PRINCIPAL OCCUPATION FOR LAST FIVE SERVED AS A
YEARS AND DIRECTORSHIPS IN PUBLIC CORPORATIONS DIRECTOR SINCE
---------------------------------------------------------- --------------
- ----------------- *J. L. COKER (55). Mr. Coker is President of JLC 1969
- ----------------- Enterprises (private investments), Stonington,
[PHOTO] Connecticut, a position held since 1979. He was Secretary
- ----------------- of the Company from 1969 to 1995, and was President of
- ----------------- Sonoco Limited, Canada, from 1972 to 1979.
- ----------------- PAUL FULTON (61). Mr. Fulton is Dean of The Kenan-Flagler 1989
- ----------------- Business School, The University of North Carolina, Chapel
- ----------------- Hill, North Carolina, a position held since 1994. He was
[PHOTO] President of Sara Lee Corporation (manufacturer and
- ----------------- marketer of consumer products), Chicago, Illinois, from
- ----------------- 1988 through 1993. He served as Executive Vice President
- ----------------- from 1987 to 1988 and as Senior Vice President of Sara Lee
- ----------------- Corporation and President of the Hanes Group of Sara Lee
Corporation from 1981 to 1986. Mr. Fulton is a director of
NationsBank Corporation, Bassett Furniture Industries,
Inc., Cato Corporation and Winston Hotels, Inc.
- ----------------- H. L. MCCOLL, JR. (60). Mr. McColl is Chairman of the 1972
- ----------------- Board and Chief Executive Officer and Director of
- ----------------- NationsBank Corporation, Charlotte, North Carolina, and
- ----------------- Chief Executive Officer of each of its subsidiary banks.
[PHOTO] He has served as Chief Executive Officer of NationsBank
- ----------------- Corporation since 1983. He is a director of CSX
- ----------------- Corporation, Ruddick Corporation, Jefferson-Pilot
- ----------------- Corporation and Jefferson-Pilot Life Insurance Company.
- ---------------
* C. W. Coker and F. L. H. Coker are brothers and are first cousins of J. L.
Coker and of P. C. Coggeshall, Jr., an executive officer of the Company.
5
8
NAME, AGE, PRINCIPAL OCCUPATION FOR LAST FIVE SERVED AS A
YEARS AND DIRECTORSHIPS IN PUBLIC CORPORATIONS DIRECTOR SINCE
---------------------------------------------------------- --------------
- ----------------- DONA DAVIS YOUNG (42). Mrs. Young is Executive Vice 1995
- ----------------- President, Individual Insurance, General Counsel, and
- ----------------- Secretary of the Board of Directors of Phoenix Home Life
[PHOTO] Mutual Insurance Company, Hartford, Connecticut, positions
- ----------------- held since 1995. She served as Executive Vice President,
- ----------------- Individual Sales and Marketing, and General Counsel from
- ----------------- 1994 to 1995, Senior Vice President and General Counsel
- ----------------- from 1989 to 1994, Vice President and Assistant General
Counsel from 1987 to 1989, and Second Vice President and
Insurance Counsel from 1985 to 1987.
All nominees previously have been elected to the Board of Directors by the
Common Shareholders except Mrs. Young.
At its meeting on October 18, 1995, the Board of Directors decided it was
in the best interest of the Company to increase the size of the Board of
Directors from seventeen to eighteen; and pursuant to Article III, Section 1, of
the By-Laws of the Company, amendment of which was approved by the shareholders
at their Annual Meeting in 1994, the Board fixed the number of directors of the
corporation at eighteen.
Mrs. Young was elected by the Board of Directors at its October 18, 1995,
meeting, and has been nominated for election by the shareholders at this Annual
Meeting, to serve a one-year term which will expire at the Annual Shareholders'
Meeting in 1997. Although Mrs. Young has been nominated for election at the 1996
Annual Meeting to serve only a one-year term, which will expire in 1997, it
presently is anticipated that she will be nominated by the Board of Directors
for election at the 1997 Annual Meeting to serve an additional three-year term,
which will expire in 2000. Mrs. Young's terms are being bifurcated in this
manner to cause the distribution of directors among the three classes to be as
nearly equal as possible in future years, as required by South Carolina
corporate law and the Company's By-Laws. The Nominating Committee of the Board
of Directors recommends Mrs. Young for election by the Common Shareholders.
The Nominating Committee recommends to the Board of Directors nominees to
fill vacancies on the Board as they occur and recommends candidates for election
as directors at Annual Meetings of Shareholders. The committee will consider
persons recommended to be nominees by shareholders upon submission in writing to
the Nominating Committee of the Company of the names of such persons, together
with their qualifications for service and evidence of their willingness to
serve. The Company's Restated Articles of Incorporation require that nominations
for any person who is not then a director of the Company, whether made by the
Nominating Committee or any shareholder, be submitted to the Secretary not less
than sixty days prior to the Annual Meeting for which such nominations are made.
6
9
Members of the Board of Directors whose terms of office will continue until
the Annual Shareholders' Meeting in 1997 are:
NAME, AGE, PRINCIPAL OCCUPATION FOR LAST FIVE SERVED AS A
YEARS AND DIRECTORSHIPS IN PUBLIC CORPORATIONS DIRECTOR SINCE
---------------------------------------------------------- --------------
- ----------------- *C. W. COKER (62). Mr. Coker is Chairman and Chief 1962
- ----------------- Executive Officer of the Company. He was President of the
[PHOTO] Company from 1970 to 1990 and was reappointed President in
- ----------------- May 1994, serving until February 1996. He is a director of
- ----------------- NationsBank Corporation, Springs Industries, Inc., Sara
- ----------------- Lee Corporation and Carolina Power and Light Company.
- ----------------- A. T. DICKSON (64). Mr. Dickson is President and Director 1981
- ----------------- of Ruddick Corporation (a diversified holding company),
[PHOTO] Charlotte, North Carolina, a position held since 1968. He
- ----------------- is a director of Lance, Inc., NationsBank Corporation and
- ----------------- Bassett Furniture Industries, Inc.
- ----------------- R. E. ELBERSON (67). Mr. Elberson is a retired executive 1985
- ----------------- officer and director of Sara Lee Corporation (manufacturer
- ----------------- and marketer of consumer products), Chicago, Illinois. He
[PHOTO] served as Vice Chairman of Sara Lee Corporation from 1986
- ----------------- to 1989 and as President and Chief Operating Officer from
- ----------------- 1983 to 1986. Mr. Elberson is a director of W. W.
- ----------------- Grainger, Inc.
- -----------------
- ---------------
* C. W. Coker and F. L. H. Coker are brothers and are first cousins of J. L.
Coker and of P.C. Coggeshall, Jr., an executive officer of the Company.
7
10
NAME, AGE, PRINCIPAL OCCUPATION FOR LAST FIVE SERVED AS A
YEARS AND DIRECTORSHIPS IN PUBLIC CORPORATIONS DIRECTOR SINCE
---------------------------------------------------------- --------------
- ----------------- J. C. FORT (69). Mr. Fort is President and Director of 1969
- ----------------- Trust Company of South Carolina, Inc. (insurance brokers),
[PHOTO] Hartsville, South Carolina. Until his retirement from the
- ----------------- Company in 1987, Mr. Fort was Senior Vice President, a
- ----------------- position held since 1986. He served as Senior Vice
- ----------------- President -- International Group from 1983 to 1986.
- ----------------- R. C. KING, JR. (61). Mr. King is an independent 1991
- ----------------- consultant. Until his retirement from the Company in 1994,
[PHOTO] he was President and Chief Operating Officer, a position
- ----------------- held since 1990. He served as Senior Vice President from
- ----------------- 1987 to 1990. He is a director of United Dominion
- ----------------- Industries.
Members of the Board of Directors whose terms of office will continue until the
Annual Shareholders' Meeting in 1998 are:
NAME, AGE, PRINCIPAL OCCUPATION FOR LAST FIVE SERVED AS A
YEARS AND DIRECTORSHIPS IN PUBLIC CORPORATIONS DIRECTOR SINCE
---------------------------------------------------------- --------------
- ----------------- LEO BENATAR (66). Mr. Benatar is Senior Vice President of 1993
- ----------------- the Company, a position held since 1993, and Chairman of
- ----------------- Engraph, Inc. (printer and fabricator of roll labels,
[PHOTO] decals, and specialty paperboard items), Atlanta, Georgia,
- ----------------- a position held since 1981. He also was Chief Executive
- ----------------- Officer of Engraph, Inc. from 1981 to 1995. Engraph, Inc.
- ----------------- became a wholly-owned subsidiary of the Company on October
- ----------------- 21, 1993. He was President of Mead Packaging, a division
of the Mead Corporation, from 1972 to 1981. Mr. Benatar is
a director of Interstate Bakeries Corporation, Aaron
Rents, Inc., Mohawk Industries, Inc. and Riverwood
International Corporation, and is past Chairman of the
Federal Reserve Bank of Atlanta. Mr. Benatar has announced
his intention to retire from the Company in the spring of
1996.
8
11
NAME, AGE, PRINCIPAL OCCUPATION FOR LAST FIVE SERVED AS A
YEARS AND DIRECTORSHIPS IN PUBLIC CORPORATIONS DIRECTOR SINCE
---------------------------------------------------------- --------------
- ----------------- P. C. BROWNING (54). Mr. Browning is President and Chief 1995
- ----------------- Operating Officer of the Company, a position held since
- ----------------- February 1996. He was Executive Vice President of the
[PHOTO] Company from 1993 to 1996. He served as President,
- ----------------- Chairman and Chief Executive Officer of National Gypsum
- ----------------- Company (manufacturer and supplier of products and
- ----------------- services used in building and construction), Charlotte,
- ----------------- North Carolina, from 1990 to 1993 and as President-Gold
Bond Division, National Gypsum Company, from 1989 to 1990.
Prior to 1989 he spent twenty-four years with Continental
Can Company, serving as President of Continental's
Bondware and White Cap Divisions and later as the
company's Executive Vice President. Mr. Browning is a
director of Phoenix Home Life Mutual Insurance Company,
Loctite Corporation and First Union National Bank of South
Carolina.
- ----------------- *F. L. H. COKER (60). Mr. Coker is retired. He was 1964
- ----------------- President and Director of Sea Corporation of Myrtle Beach,
- ----------------- Inc. (private investments), Myrtle Beach, South Carolina,
[PHOTO] from 1983 to 1989. Until his retirement from the Company
- ----------------- in 1979, Mr. Coker was Senior Vice President, a position
- ----------------- held since 1976.
- ----------------- T. C. COXE, III (65). Mr. Coxe retired on February 29, 1982
- ----------------- 1996. He was Senior Executive Vice President of the
[PHOTO] Company from 1993 to 1996 and was Executive Vice President
- ----------------- from 1985 to 1993. He is a director of Wachovia Bank of
- ----------------- South Carolina, N.A.
- ---------------
* C. W. Coker and F. L. H. Coker are brothers and are first cousins of J. L.
Coker and of P.C. Coggeshall, Jr., an executive officer of the Company.
9
12
NAME, AGE, PRINCIPAL OCCUPATION FOR LAST FIVE SERVED AS A
YEARS AND DIRECTORSHIPS IN PUBLIC CORPORATIONS DIRECTOR SINCE
---------------------------------------------------------- --------------
- ----------------- B. L. M. KASRIEL (49). Mr. Kasriel is Vice Chairman and 1995
- ----------------- Chief Operating Officer of Lafarge (a construction
- ----------------- materials group), Paris, France, a position held since
[PHOTO] January 1995. He served as Managing Director of Lafarge
- ----------------- Coppee from 1989 to 1994 and as Senior Executive Vice
- ----------------- President from 1987 to 1989. Mr. Kasriel temporarily was
- ----------------- detached to National Gypsum Company, Charlotte, North
- ----------------- Carolina, as President and Chief Operating Officer from
1987 to 1989. He served as Executive Vice President of
Lafarge Coppee from 1984 to 1987. Mr. Kasriel is a
director of Lafarge and Lafarge Corporation.
- ----------------- E. H. LAWTON, JR. (66). Mr. Lawton is President and 1968
- ----------------- Director of Hartsville Oil Mill (vegetable oils
[PHOTO] processor), Darlington, South Carolina, a position held
- ----------------- since 1962. He is a director of NationsBank, N.A.,
- ----------------- formerly NationsBank, N.A. (Carolinas).
- ----------------- E. C. WALL, JR. (58). Mr. Wall is President and Director 1976
- ----------------- of Canal Industries (forest products), Conway, South
[PHOTO] Carolina, a position held since 1969. He is a director of
- ----------------- Ruddick Corporation, SCANA Corporation, NationsBank
- ----------------- Corporation and Blue Cross-Blue Shield of South Carolina.
10
13
BOARD COMMITTEES
During 1995 the Board of Directors held four regularly scheduled meetings
and one special meeting to review significant developments affecting the Company
and to act on matters requiring Board approval. To assist it in the discharge of
its responsibilities, the Board has established four committees:
NUMBER OF
COMMITTEE CURRENT 1995
NAME PURPOSE MEMBERS MEETINGS
- ----------------- --------------------------------------- -------------------- ----------
Audit Committee Responsible for the scope of both E. C. Wall, Jr. -- 2
internal and external audit programs in Chairman
order to fully protect assets of the R. J. Brown
Company. A. T. Dickson
J. C. Fort
R. C. King, Jr.
B. L. M. Kasriel
D. D. Young
Executive Responsible for establishing and A. T. Dickson -- 5
Compensation maintaining officer-level salaries and Chairman
Committee administering executive compensation C. J. Bradshaw
plans. R. E. Elberson
Paul Fulton
B. L. M. Kasriel
E. H. Lawton, Jr.
D. D. Young
Nominating Responsible for recommending to the F. L. H. Coker -- 2
Committee directors qualified candidates to fill Chairman
vacancies on the Board. J. L. Coker
R. E. Elberson
J. C. Fort
E. H. Lawton, Jr.
H. L. McColl, Jr.
Finance Committee Responsible for evaluating the H. L. McColl, Jr. -- 2
Company's financial status, advising Chairman
corporate management and the full Board R. J. Brown
on financial matters, and reviewing the F. L. H. Coker
Company's long-term financial J. L. Coker
requirements and plans. A. T. Dickson
Paul Fulton
R. C. King, Jr.
E. C. Wall, Jr.
During 1995 all directors attended 75% or more of the aggregate number of
meetings of the Board and committees except Mr. F. L. H. Coker who attended 67%.
11
14
SECURITY OWNERSHIP OF MANAGEMENT AS OF DECEMBER 31, 1995
COMMON STOCK
BENEFICIALLY OWNED
--------------------------
NAME POSITION NUMBER(1) PERCENTAGE(2)
- --------------------- ------------------------------------------------ --------- -------------
C. J. Bradshaw Director 22,659
R. J. Brown Director 1,438
F. L. H. Coker Director 1,204,831 1.3
J. L. Coker Director 292,048
A. T. Dickson Director 62,596
R. E. Elberson Director 26,150
J. C. Fort Director 1,172,399 1.3
Paul Fulton Director 7,560
B. L. M. Kasriel Director 105
R. C. King, Jr. Director 285,955
E. H. Lawton, Jr. Director 737,269(3)
H. L. McColl, Jr. Director 18,207
E. C. Wall, Jr. Director 86,824
D. D. Young Director 300
C. W. Coker Chairman, President, Chief Executive Officer 1,515,159 1.7
and Director
P. C. Browning Executive Vice President and Director 226,400
T. C. Coxe, III Senior Executive Vice President and Director 348,716
Leo Benatar Senior Vice President and Director 188,813
H. E. DeLoach, Jr. Group Vice President 510,092(4)
All Executive Officers and Directors (28 persons) 7,839,792(5) 8.6
- ---------------
(1) Shareholdings represent the number of shares beneficially owned directly or
indirectly by each named director and executive officer as of December 31,
1995. The number includes shares subject to currently exercisable options,
granted by the Company under the 1983 Key Employee Stock Option Plan (the
"1983 Plan") and the 1991 Key Employee Stock Plan (the "1991 Plan"), for
the following directors and named executive officers: C. W.
Coker -- 460,035; P. C. Browning -- 223,965; T. C. Coxe, III -- 94,755; Leo
Benatar -- 156,924; H. E. DeLoach, Jr. -- 120,015; and R. C. King,
Jr. -- 216,510. Shareholdings do not include Restricted Stock Rights, which
begin to vest in 1997, granted under the 1991 Plan for the following named
executive officers: C. W. Coker -- 86,547; P. C. Browning -- 64,911; and H.
E. DeLoach, Jr. -- 43,274. Shareholdings also do not include 21,637 shares
of Restricted Stock Rights granted to T.C. Coxe, III and 21,637 shares of
Restricted Stock Rights granted to Leo Benatar under the 1991 Plan, which
will fully vest in October 1996.
12
15
Also included are shares held in the Company's Dividend Reinvestment Plan
(1,606), the Employee Savings and Stock Ownership Plan (47,995), and share
equivalents in deferred compensation plans (41,227).
(2) Percentages not shown are less than 1%.
(3) Includes 636,027 shares of Common Stock owned by trusts for which Mr. Lawton
is trustee. Mr. Lawton disclaims beneficial ownership of such shares.
(4) Includes 330,118 shares of Common Stock owned by trusts and an estate for
which Mr. DeLoach is trustee and executor, respectively. Mr. DeLoach
disclaims beneficial ownership of such shares.
(5) Includes 2,093,081 shares of Common Stock which the executive officers and
two directors have a right to acquire pursuant to options granted by the
Company under the 1983 and 1991 Plans.
13
16
EXECUTIVE COMPENSATION COMMITTEE'S REPORT TO SHAREHOLDERS
The Executive Compensation Committee of the Board of Directors (the
"Committee") is responsible for setting the remuneration levels for executives
of the Company. It also oversees the Company's various executive compensation
plans, as well as the overall management compensation program. Additionally, the
Committee reviews and plans for top management succession and reviews executive
job performance. The Committee periodically evaluates the Company's executive
compensation program in terms of appropriateness, including competitive
positioning relative to other companies' practices. The Committee obtains
independent and impartial advice from external compensation consulting firms in
order to maintain objectivity in executing its responsibilities. The Committee
met five times during 1995, and had met once in 1996 as of the printing of this
report.
PHILOSOPHY
The executive compensation program has been designed to attract, motivate,
reward, and retain senior management by providing competitive total compensation
opportunities based on performance, teamwork, and the creation of shareholder
value. The basic program consists of salary, annual cash bonus awards, annual
stock option awards, perquisites, and employee benefits.
In order to determine competitive compensation levels, the Company
participates in a number of surveys conducted by independent consulting firms,
and from time to time contracts with these firms to perform customized studies
of companies in its industry groups and/or with companies showing similar
long-term financial performance results. In these surveys executive compensation
levels are developed by looking at large numbers of similar positions across
American industry and reflect adjustments based upon company revenues. The Dow
Jones Containers and Packaging Group Index, which includes the Company, was used
in the five-year shareholder return performance graph that appears on Page 17.
The companies in this Index also are included, as available, among the companies
whose survey data is used in the Company's compensation studies.
The total compensation package for executives is generally structured to be
competitive with the median total pay practices for executives of other large
corporations. The base salary midpoints are targeted to be at the median of
surveyed market rates. Incentive compensation, consisting of the annual cash
bonus plan and the annual stock option awards, is targeted at the median of
surveyed market compensation for expected Company performance, and provides
opportunities to motivate and reward executives for exceptional performance.
Executive perquisites are limited and provide a lower benefit than the market
median. The benefits program for executives provides a benefit that is somewhat
higher than the market median. This benefits program, in particular the
retirement and life insurance plans, is designed to enhance retention of
executives until normal retirement age.
Following is a discussion of the elements of the executive compensation
program, along with a description of the decisions and actions taken by the
Committee with regard to 1995 compensation. Also included is a specific
discussion of the decisions regarding Mr. Coker's compensation for performing
the duties of Chairman, President and Chief Executive Officer ("CEO"). The
tables and accompanying narrative and footnotes which follow this report reflect
the decisions covered by the discussions below.
14
17
SALARY
The Company's salary ranges and resulting salaries are based on a relative
valuing of the duties and responsibilities of each position. The Company reviews
the base salaries of all salaried employees on an annual basis.
Merit salary increases are based on a table which considers each
individual's performance rating and position in his or her salary range.
Promotional salary increases are awarded to recognize increased responsibilities
and accountabilities. The Committee used this table to determine salary
adjustments for each of the executive officers, including Mr. Coker, whose most
recent increase was effective June 1, 1995.
ANNUAL BONUS AWARDS
The Company has a bonus plan which provided for cash incentive
opportunities for 1995, based upon achievement of pre-determined annual
financial performance goals, as well as attainment of key individual strategic
and operational objectives. The purpose of this plan is to link a significant
portion of executive pay to both the Company's operating performance for the
year and to critical issues affecting the long-term health of the Company. The
Incentive Compensation Terms that were utilized for Messrs. Coker and Browning
were based solely on operating performance measured in earnings per share (EPS),
and were designed to obtain tax deductibility for their resulting annual
incentive compensation payments.
Financial performance goals were weighted from 73% to 100% of total bonus
opportunity. For executives with corporate responsibility, including the Group
Vice Presidents, the plan's financial goals were based on corporate EPS from
ongoing operations. For executives with business unit responsibility, one half
of the bonus opportunity available for financial performance was based on
corporate EPS and the remainder was based on business unit profit before
interest and taxes.
The key strategic and operational objectives for 1995, which were weighted
from 0% to 27% of total bonus opportunity, varied by individual and were in
areas such as employee safety, Vision 2000, customer satisfaction, business
development, strategic acquisitions, technology innovation, management
succession and employee development, process improvement, total quality
management, and environmental protection.
On February 6, 1996, the Committee reviewed and approved the 1995 annual
bonus awards for executive officers. Initial bonus amounts were assigned to each
executive officer (except Messrs. Coker and Browning) based on the scoring of
financial goal attainment and subjective evaluations of how well the
personalized objectives were met. In some cases the Committee used additional
discretion based on its assessment of individual performance and internal equity
in the determination of final bonus amounts. Mr. Coker's bonus, which reflects
the Committee's assessment of his contribution and efforts in 1995, is included
among the values listed under the "Bonus" caption in the Summary Compensation
Table on Page 18. In setting the amount, the Committee considered, in addition
to the record level of EPS, his performance in leading the Company and his role
in establishing strategic initiatives and implementing operational tactics. The
amount of Mr. Coker's bonus was less than the maximum that could have been paid
under the EPS schedule adopted for him by the Committee in early 1995. Mr.
Browning's bonus award also was determined in the same manner as Mr. Coker's
bonus award.
15
18
STOCK OPTIONS
In 1995 Mr. Coker, the executive officers, and other key management
employees were granted options to purchase shares of Common Stock by the
Committee under a plan which previously had been approved by the Company's
shareholders. The price of these options was set at the prevailing market price
on the date the options were awarded. Accordingly, these options will be
valuable to the recipients only if the market price of Company stock increases.
Stock option awards and annual cash bonus opportunities are the Company's
performance-based compensation elements. The level of the combined award
opportunities, including Mr. Coker's, reflects median competitive total annual
incentive compensation opportunities as reported by the independent consulting
firms. Stock option awards for Mr. Coker and the other four named officers are
included in the Summary Compensation Table on Page 18 under the caption "Number
of Securities Underlying Options Granted" and in the Option Grants Table on Page
20.
OTHER
As a result of recent changes to tax law, companies cannot deduct certain
types of compensation paid to the CEO or to the other executive officers named
in the Summary Compensation Table for individual amounts in excess of one
million dollars unless such compensation is approved by the shareholders and
meets certain other requirements. In 1995 shareholders approved Annual Incentive
Compensation Terms for Executive Officers and ratified amendments to the
Company's 1991 Key Employee Stock Plan. These actions were intended to ensure
tax deductibility of all executive compensation payments in 1995 and in future
years based on current regulations.
A.T. Dickson (Chairman) C.J. Bradshaw R. E. Elberson
P. Fulton B.L.M. Kasriel E.H. Lawton, Jr. D.D. Young
16
19
COMPARATIVE COMPANY PERFORMANCE
The following line graph compares cumulative total shareholder return for
the Company with the cumulative total return of the S&P 500 Stock Index and a
nationally recognized industry index, the Dow Jones Containers and Packaging
Group (which includes the Company), from December 31, 1990, through December 31,
1995.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN*
AMONG SONOCO PRODUCTS COMPANY, THE S&P 500 STOCK INDEX,
AND THE DOW JONES CONTAINERS & PACKAGING GROUP**
DOW JONES
CONTAINERS &
MEASUREMENT PERIOD S&P 500 STOCK PACKAGING SONOCO PRODUCTS
(FISCAL YEAR COVERED) INDEX GROUP COMPANY
1990 100 100 100
1991 130 157 109
1992 140 172 154
1993 155 164 146
1994 157 163 148
1995 215 176 192
ASSUMES $100 INVESTED ON DECEMBER 31, 1990, IN SONOCO PRODUCTS COMPANY COMMON
STOCK, THE S&P 500 STOCK INDEX, AND THE DOW JONES CONTAINERS & PACKAGING GROUP.
* TOTAL RETURN ASSUMES REINVESTMENT OF DIVIDENDS
** FISCAL YEAR ENDING DECEMBER 31
17
20
SUMMARY COMPENSATION TABLE
LONG-TERM COMPENSATION
------------------------------------
AWARDS
-----------------------
NUMBER OF
ANNUAL SECURITIES PAYOUTS
COMPENSATION(2) RESTRICTED UNDERLYING ----------
NAME AND PRINCIPAL --------------------- STOCK OPTIONS LTIP ALL OTHER
POSITION YEAR SALARY BONUS RIGHTS(3) GRANTED(4) PAYOUTS(5) COMPENSATION(6)
- --------------------- ---- -------- ---------- ---------- ---------- ---------- ---------------
C. W. Coker 1995 $634,169 $1,000,000 $ -0- 79,275 $ -0- $ 229,571
Chairman, President 1994 602,835 691,416 1,820,000 66,360 -0- 205,936
and Chief Executive 1993 575,834 451,567 -0- 65,100 -0- 184,233
Officer
P. C. Browning 1995 466,791 600,000 -0- 40,215 -0- 92,309
Executive Vice 1994 449,759 360,241 1,365,000 26,250 -0- 56,228
President 1993 73,666 221,000 -0- 157,500 -0- 55,366
T. C. Coxe, III 1995 353,790 450,000 -0- 36,330 -0- 79,771
Senior Executive 1994 340,891 324,109 455,000 30,450 -0- 62,813
Vice President 1993 316,668 200,999 -0- 27,930 -0- 48,975
L. Benatar(1) 1995 380,100 380,100 -0- 23,835 -0- 91,294
Senior Vice 1994 368,579 230,000 455,000 21,000 -0- 87,078
President 1993 360,818 169,106 -0- -0- 55,200 13,832
H. E. DeLoach, Jr. 1995 309,585 340,415 -0- 23,835 -0- 56,647
Group Vice 1994 259,586 230,512 910,000 21,000 -0- 41,422
President 1993 220,351 172,690 -0- 13,230 -0- 25,398
- ---------------
(1) Includes amounts paid by Engraph, Inc. for services as Chairman and CEO for
the period from January 1, 1993, through October 21, 1993, the date that
Engraph, Inc. merged with the Company.
(2) None of the executive officers received perquisites or personal benefits
which totaled the lesser of $50,000 or 10% of their respective salary plus
bonus payments.
(3) Dollar amounts shown equal the number of units of restricted stock rights
granted multiplied by the $22.75 per share stock price on October 21, 1994,
the date of grant. The number and dollar value of restricted stock rights
held, including dividend equivalents, adjusted for the 1995 stock dividend,
based on the closing stock price on December 31, 1995, of $26.25 per share
were: C. W. Coker -- 86,547 shares ($2,271,859); P. C. Browning -- 64,911
shares ($1,703,914); T. C. Coxe, III -- 21,637 shares ($567,971); L.
Benatar -- 21,637 shares ($567,971); and H. E. DeLoach, Jr. -- 43,274 shares
($1,135,943). Restrictions lapse over a five-year vesting period for Messrs.
Coker, Browning, and DeLoach with one-third of the shares vesting on each of
the third, fourth, and fifth anniversary dates of the grant. The
restrictions lapse and all shares vest for Messrs. Coxe and Benatar in
October 1996.
(4) Number of securities adjusted for the 5% stock dividend paid June 9, 1995.
18
21
(5) This award was pursuant to the Engraph Long Range Incentive Plan for the
1991-1993 performance period. There are no other potential payment
obligations under this plan.
(6) All other compensation for 1995 consisted of the following components:
COMPANY CONTRIBUTIONS AND
SPLIT-DOLLAR ABOVE-MARKET DEFERRED ACCRUALS TO DEFINED CONTRIBUTION
NAME LIFE INSURANCE COMPENSATION ACCRUALS(2) RETIREMENT PLANS
- ------------------- -------------- ------------------------ --------------------------------
C. W. Coker $145,110(1) $ 44,693 $ 39,768(3)
P. C. Browning 67,498 -0- 24,811(3)
T. C. Coxe, III 26,498 32,936 20,337(3)
L. Benatar 81,544 -0- 9,750(4)
H. E. DeLoach, Jr. 28,553 11,885 16,209(3)
---------------
(1) Includes additional insurance which was purchased for Mr. Coker during
December 1992 in exchange for cancellation of stock options that, at
the time of the transaction, had a market price gain of $497,875.
(2) Represents the above-market portion of interest credits on
previously-earned compensation for which payment has been deferred.
(3) Comprised of contributions to the Company's Employee Savings and Stock
Ownership Plan (ESSOP) and accruals to individual accounts in the
Company's non-qualified benefits restoration plan, in order to keep
employees whole with respect to Company contribution amounts that were
limited by tax law.
(4) Comprised of contributions to the Engraph, Inc. Retirement Plus Plan.
OPTION EXERCISES AND YEAR-END VALUES TABLE
AGGREGATED OPTION EXERCISES IN 1995 AND 1995 YEAR-END VALUES
NUMBER OF SHARES
UNDERLYING
NUMBER OF UNEXERCISED OPTIONS VALUE OF UNEXERCISED
SHARES AS OF IN-THE-MONEY OPTIONS
ACQUIRED 12/31/95 AS OF 12/31/95(2)
ON VALUE --------------------------- ---------------------------
NAME EXERCISE REALIZED(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- -------------------- ---------- ----------- ----------- ------------- ----------- -------------
C. W. Coker 30,000 $ 314,286 380,760 79,275 $ 2,715,952 $ 504,902
P. C. Browning -0- -0- 183,750 40,215 1,082,813 256,129
T. C. Coxe, III 45,000 336,544 58,425 36,330 581,316 231,386
L. Benatar -0- -0- 133,090 23,835 1,799,073 151,805
H. E. DeLoach, Jr. -0- -0- 96,180 23,835 679,124 151,805
- ---------------
(1) The difference between the exercise price paid and the value of the acquired
shares based on the closing price of the Company's stock on the exercise
date.
(2) Based on $26.25 per share, the December 31, 1995, closing price.
19
22
OPTION GRANTS TABLE
1995 STOCK OPTION GRANTS
POTENTIAL REALIZABLE VALUE
INDIVIDUAL GRANTS AND RESULTING COMPANY
- -------------------------------------------------------------------------------- STOCK PRICE AT ASSUMED
NUMBER OF % OF TOTAL ANNUAL RATES OF
SECURITIES OPTIONS STOCK PRICE APPRECIATION
UNDERLYING GRANTED TO EXERCISE FOR 10 YEAR OPTION TERM(2)
OPTIONS EMPLOYEES PRICE EXPIRATION ---------------------------------
NAME GRANTED(1) IN 1995 (PER SHARE) DATE 5% ($32.384) 10% ($51.566)
- ------------------- ---------- ----------- ----------- ---------- -------------- --------------
C. W. Coker 79,275 7.4 $19.881 2/1/2005 $ 991,175 $ 2,511,828
P. C. Browning 40,215 3.8 19.881 2/1/2005 502,808 1,274,212
T. C. Coxe, III 36,330 3.4 19.881 2/1/2005 454,234 1,151,116
L. Benatar 23,835 2.2 19.881 2/1/2005 298,009 755,212
H. E. DeLoach, Jr. 23,835 2.2 19.881 2/1/2005 298,009 755,212
Comparable gain in shareholder value for the 91,304,643 shares outstanding as of
February 1, 1995, the grant date. $1,141,581,951 $2,892,987,613
- ---------------
(1) These options were granted on February 1, 1995, at the closing market price,
became exercisable on February 1, 1996, and were granted for a period of
ten years, subject to earlier expiration in certain events related to
termination of employment. The exercise price can be paid by cash or the
delivery of previously-owned shares. Tax obligations also can be paid by an
offset of the underlying shares.
(2) The amounts in these columns are the result of calculations based on the
assumption that the market price of the Common Stock will appreciate in
value from the date of grant to the end of the ten-year option term at the
rates of 5% and 10% per year. The 5% and 10% annual appreciation
assumptions are required by the rules of the Securities and Exchange
Commission; they are not intended to forecast possible future appreciation,
if any, of the Company's stock price.
20
23
PENSION TABLE
Named executive officers participate in a non-contributory defined benefit
program which provides for a maximum annual lifetime retirement benefit equal to
60% of final average compensation, computed as a straight life annuity based on
the highest three of the last seven calendar years. In order to receive the full
benefit, the executive must have at least 15 years of service and retire no
earlier than age 65. Eligible spouses (married one year or longer at the
executive's retirement date) receive survivor benefits at a rate of 75% of the
benefit paid to the executives. The total benefit provided by the Company is
offset by 100% of primary U.S. Social Security.
AGE 65 RETIREMENT
FINAL YEARS OF SERVICE
AVERAGE --------------------------------------------------------------------------------------
COMPENSATION(1) 5 10 15 20 25 30 35
- --------------- -------- -------- -------- -------- -------- -------- --------
$ 300,000 $ 60,000 $120,000 $180,000 $180,000 $180,000 $180,000 $180,000
400,000 80,000 160,000 240,000 240,000 240,000 240,000 240,000
500,000 100,000 200,000 300,000 300,000 300,000 300,000 300,000
600,000 120,000 240,000 360,000 360,000 360,000 360,000 360,000
700,000 140,000 280,000 420,000 420,000 420,000 420,000 420,000
800,000 160,000 320,000 480,000 480,000 480,000 480,000 480,000
900,000 180,000 360,000 540,000 540,000 540,000 540,000 540,000
1,000,000 200,000 400,000 600,000 600,000 600,000 600,000 600,000
1,100,000 220,000 440,000 660,000 660,000 660,000 660,000 660,000
1,200,000 240,000 480,000 720,000 720,000 720,000 720,000 720,000
1,300,000 260,000 520,000 780,000 780,000 780,000 780,000 780,000
1,400,000 280,000 560,000 840,000 840,000 840,000 840,000 840,000
1,500,000 300,000 600,000 900,000 900,000 900,000 900,000 900,000
1,600,000 320,000 620,000 960,000 960,000 960,000 960,000 960,000
- ---------------
(1) Final average compensation includes salary, bonus, and cash awards from the
Company's former long-term incentive plan. Age, years of service, and final
average compensation as of December 31, 1995, for the named officers are as
follows:
FINAL
YEARS OF AVERAGE
NAME AGE SERVICE COMPENSATION
- ------------------- --- -------- ------------
C. W. Coker 62 38 $1,012,403
P. C. Browning 54 2 523,819
T. C. Coxe, III 65 43 582,622
L. Benatar 65 15 692,132
H. E. DeLoach, Jr. 51 10 434,404
21
24
EMPLOYMENT AGREEMENT
On September 12, 1993, in conjunction with the Company's tender offer for
Engraph, Inc. Common Stock, the Company entered into an employment agreement
with Mr. Leo Benatar, an executive officer and director of the Company. This
agreement, which superseded the employment agreement of May 7, 1992, between
Engraph, Inc. and Mr. Benatar, secured the continued service of Mr. Benatar
until March 31, 1995. The Company has extended the term of this agreement until
March 31, 1996. This agreement provides for a minimum annual base salary of
$362,500 (Mr. Benatar's then present salary as Chairman and CEO of Engraph,
Inc.), subject to annual review by the Board's Executive Compensation Committee,
and participation in the Company's executive officer bonus plan, Engraph benefit
plans, and the Company's executive benefit and perquisite programs. The
agreement stipulates that during the term of his employment and for two years
thereafter, Mr. Benatar will not compete with the Company, will not solicit its
customers or employees, and will not use or disclose its trade secrets and
proprietary information.
DIRECTORS' COMPENSATION
Employee directors receive no additional compensation for their services as
members of the Board of Directors. Effective July 1, 1994, non-employee
directors were paid a $9,250 quarterly retainer fee and a $1,000 attendance fee
for special meetings. On July 1, 1995, the quarterly retainer fee was increased
to $10,000.
Directors are able to defer part or all of their fees. Directors can choose
to earn market rate interest credits on their deferrals or have their deferrals
treated as if invested in equivalent units of Sonoco Products Company Common
Stock. In the latter account they earn dividend equivalent credits which are
reinvested in stock equivalent units. The directors can choose a fixed period,
commencing the January following termination from the Board of Directors, over
which the account balances will be paid in annual installments.
In accordance with the terms and conditions of the 1996 Non-Employee
Directors' Stock Plan, each non-employee director was awarded 2,000
non-qualified stock options at a price of $27.00 per share, 100% of fair market
value on February 7, 1996. Likewise, Mr. T.C. Coxe, III, was awarded 2,000
non-qualified stock options at a price of $27.25 per share, 100% of fair market
value on March 1, 1996, the date he became an eligible non-employee director.
These grants are subject to approval of shareholders at the Annual Shareholders'
Meeting on April 17, 1996.
Mr. R. C. King, Jr. elected to take early retirement from the Company
effective May 31, 1994, following over thirty-seven years of distinguished
service. To secure his advice and counsel, the Company entered into an agreement
with Mr. King under which he will provide consulting services to the Company on
an as-needed basis through December 31, 1996. Under this agreement, Mr. King
received consulting fees of $331,308 during 1995, and Sonoco arranged for a
third party purchase of Mr. King's home in Hartsville for his basis value in the
home. The cost to the Company was $66,684. In recognition of Mr. King's
innumerable and invaluable contributions to the Company in the past, the Company
provided to him certain benefits under the terms of a retirement agreement. Mr.
King's retirement benefit, including payments from Primary Social Security or
equivalents, Sonoco's Retirement Plan, and Sonoco's Supplemental Executive
Retirement Plan, totals $32,536 per month.
22
25
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Messrs. A. T. Dickson, C. J. Bradshaw, R. E. Elberson, Paul Fulton, B. L.
M. Kasriel, E. H. Lawton, Jr. and Mrs. D. D. Young served on the Company's
Executive Compensation Committee during the year ended December 31, 1995. Mr.
Kasriel was appointed to the committee on April 19, 1995, and Mrs. Young was
appointed on October 18, 1995.
Mr. A. T. Dickson and Mr. Paul Fulton are directors of NationsBank
Corporation; Mr. E. H. Lawton, Jr., is a director of NationsBank, N.A., formerly
NationsBank, N.A. (Carolinas); and Mr. C. J. Bradshaw is a director of Wachovia
Bank of South Carolina, N.A. On October 1, 1993, NationsBank of North Carolina,
N.A., subsequently NationsBank, N.A. (Carolinas), and now NationsBank N.A.,
extended to the Company, as a backstop facility for its commercial paper program
and general corporate purposes, a five-year committed line of credit for
$75,000,000. Wachovia Bank of South Carolina, N.A. has extended a similar line
for $65,000,000. These committed lines of credit from NationsBank, N.A. and
Wachovia Bank of South Carolina, N.A. have been in place since 1987 and have
been renewed and increased or decreased according to the Company's needs.
Additionally, NationsBank, N.A. has extended other lines of credit to the
Company as support for letters of credit, overdrafts and other corporate needs.
NationsBank, N.A. also provides treasury management services to the Company and
investment management services through its trust department. The Company pays
fees to NationsBank, N.A. for these services and for the availability of the
lines of credit, as well as interest on borrowed funds. All transactions were
handled on a competitive basis. Management is convinced that the rates and
provisions were as favorable to the Company as otherwise could have been
obtained.
Mr. H. L. McColl, Jr., an executive officer of NationsBank Corporation, is
a member of the Company's Board but is not a member of the Company's Executive
Compensation Committee. Mr. C. W. Coker, Chairman and Chief Executive Officer of
the Company, is a member of NationsBank Corporation's Compensation Committee.
Mr. P. C. Browning, President and Chief Operating Officer of the Company,
serves as a director of Phoenix Home Life Mutual Insurance Company. Mrs. D. D.
Young, who is an executive officer of Phoenix Home Life Mutual Insurance
Company, serves on the Company's Executive Compensation Committee.
TRANSACTIONS WITH MANAGEMENT
Mr. H. L. McColl, Jr. is Chairman, Chief Executive Officer and Director of
NationsBank Corporation. Mr. C. W. Coker, Mr. A. T. Dickson, Mr. Paul Fulton and
Mr. E. C. Wall, Jr. are directors of NationsBank Corporation and Mr. E. H.
Lawton, Jr. is a director of NationsBank, N.A. Mr. C. J. Bradshaw and Mr. T. C.
Coxe, III are directors of Wachovia Bank of South Carolina, N.A. See the
"Compensation Committee Interlocks and Insider Participation" section above.
During 1995 the Company purchased lumber from a company of which Mr. E. C.
Wall, Jr., a director of the Company, is Chairman of the Board and more than a
10% beneficial owner. Mr. T. C. Coxe, III, a director and former executive
officer of the Company, also is a director of this company. The aggregate
purchase price of the lumber was $878,960.
23
26
The Company also purchased timber during the year from a trust of which Mr.
T. C. Coxe, III, a director and former executive officer of the Company, is
trustee and more than a 10% beneficial owner. The aggregate purchase price of
the timber was $433,514.
The Company purchased wooden pallets from a company of which Mr. J. C.
Fort, a director of the Company, is more than a 10% beneficial owner. The
aggregate purchase price of the pallets was approximately $683,244. The Company,
in turn, sold to the same company approximately $719,000 in hardwood timbers.
Management of the Company believes the prices and terms were comparable to
those the Company could have obtained from unaffiliated third parties.
ADOPTION OF THE 1996 NON-EMPLOYEE DIRECTORS' STOCK PLAN
On February 7, 1996, the Board of Directors (the "Board") adopted the 1996
Non-Employee Directors' Stock Plan (the "Plan"), subject to the approval of
shareholders at this Annual Meeting. The full text of this Plan is appended to
this Proxy Statement as Exhibit I. The following summary of the Plan's terms is
qualified in its entirety by the Plan.
The Board believes that the Plan enhances the Company's ability to attract
and retain talented individuals to serve as members of the Board and to promote
a greater alignment of interests between non-employee members of the Board and
the shareholders of the Company. Under the Plan, non-employee directors will
receive non-qualified stock options as a part of their compensation package. The
Plan also permits non-employee directors to elect to receive all or a portion of
their annual retainers and meeting fees in the form of stock options or deferred
stock units.
The Board of Directors recommends that you vote FOR ratification of the
1996 Non-Employee Directors' Stock Plan.
The following is a summary description of the Plan.
Term. If approved by the shareholders, the Plan shall be effective
February 7, 1996, and will remain in effect for an indefinite period of time,
until terminated by the Board.
Common Shares Available for Issuance. For each calendar year the Plan is
in effect, beginning in 1996, subject to adjustments discussed below, 125,000
shares of Common Stock will be made available for issuance under the Plan.
Accordingly, the number of shares available for issuance under the Plan will
increase annually without further shareholder approval. If any grants under the
Plan are settled in cash or in any form other than shares, or if any stock
options expire without being exercised, then the shares covered by such
settlements or expirations shall not be deemed issued and shall remain available
for issuance under the Plan. Any shares of Common Stock exchanged as payment
upon the exercise of stock options also shall be available for future issuance
under the Plan. Additionally, the crediting of dividend equivalents in
conjunction with outstanding awards shall not be counted against the shares
available for issuance. Any shares issued under the Plan may be either
authorized but unissued shares, or previously-issued shares reacquired by the
Company.
Adjustments and Reorganizations. The Board may make such adjustments as it
deems appropriate in the event of changes that impact the Company's share price
or share status, provided that any such actions are
24
27
consistently and equitably applied to all affected directors and are not
inconsistent with adjustments made to stock options and other stock-based awards
held by employees of the Company. Such events include stock dividends, stock
splits, combination or exchange of shares, merger, consolidation, spin-off or
other distribution (other than normal cash dividends) of Company assets to
shareholders, or any other change affecting shares. In the event the Company is
not the surviving company of a merger, consolidation or amalgamation with
another company or in the event of a liquidation, reorganization or significant
change of control of the Company, and in the absence of any surviving
corporation's assumption of outstanding awards made under the Plan, the Board
may provide for appropriate settlements of such awards either at the time of
grant or at a subsequent date.
Plan Operation. The Plan is intended to permit non-employee directors to
qualify as "disinterested" persons under Rule 16b-3 promulgated by the
Securities and Exchange Commission under the Securities Exchange Act of 1934
("1934 Act"). Accordingly, in many respects the Plan is self-governing and
requires no discretionary action by the Board. However, should any questions of
interpretation arise, they shall be resolved by the Board or such committee of
the Board as may be designated from time to time.
Stock Options. The Plan provides for the granting of two types of stock
options: annual stock option awards and deferred compensation stock options. A
stock option entitles the recipient to purchase a specified number of shares of
Common Stock at a fixed price, subject to terms and conditions of the Plan.
Commencing in 1997, stock options issued under the Plan will carry restoration
rights whereby, if an active non-employee director exercises an option by
tendering previously-acquired shares of Common Stock, such individual will
receive another stock option covering the number of shares tendered with the
term equal to the remaining term of the original stock option and with a per
share exercise price equal to the fair market value of the Common Stock (as
determined under the Plan) as of the date of exercise of such original stock
option.
Each non-employee director will receive an annual stock option grant
covering 2,000 shares at the Board's first regularly scheduled meeting of each
calendar year ("Annual Stock Option"). A person who becomes a non-employee
director during any year after the Board's first regularly scheduled meeting for
such year shall receive a pro-rata Annual Stock Option grant on the date such
person becomes a non-employee director with the number of shares covered by the
option prorated for the number of fiscal quarters remaining in the calendar year
including any partial fiscal quarters. The exercise price of each such Annual
Stock Option shall be the fair market value of the Common Stock on the grant
date and each Annual Stock Option shall generally have a ten-year term and may
be exercised no sooner than six months after the grant date. The number of
shares covered by the Annual Stock Option granted to each non-employee director
in any calendar year may be increased to up to 10,000 shares (subject to the
overall Plan share limitation) without additional shareholder approval provided
that the Board determines that such an amendment would not prevent non-employee
directors from being "disinterested persons" for the purposes of Rule 16b-3 of
the 1934 Act.
If permitted by the Board, non-employee directors may elect to take a
portion or all of their retainers and fees in deferred compensation stock
options. Such options are intended to serve as a deferred payment vehicle for
compensation earned by non-employee directors. The per share exercise price of
each such stock option shall be seventy-five percent of the fair market value of
Common Stock on the grant date, and the total purchase price of the option grant
shall be three times the amount deferred. This results in a total stock option
gain at the time of grant that is equal to the amount of compensation deferred.
The number of such stock
25
28
options shall be the amount of retainers and fees deferred divided by 25% of the
fair market value of the Common Stock on the grant date. Each deferred
compensation stock option shall have a term that ends five years after the
non-employee director ends his or her service on the Board, and shall be
credited with partial dividend equivalent rights when dividends are paid on
shares of Common Stock.
Deferred Stock Units. If permitted by the Board, non-employee directors
may defer their retainers and fees into deferred stock units. A deferred stock
unit is a bookkeeping entry, equivalent in value to a share of Common Stock
("Deferred Stock Unit"). Such units are intended to serve as a deferred payment
vehicle for compensation earned by non-employee directors. The number of
Deferred Stock Units credited shall be equal to the amount of compensation
deferred divided by the fair market value of Common Stock on the grant date.
Deferred Stock Units shall be credited with dividend equivalent rights when
dividends are paid on shares of Common Stock and shall be paid out in one to
fifteen annual installments, commencing no sooner than the first business day
following the six-month anniversary of the individual's termination of Board
service. The payments may be in the form of shares of Common Stock equal in
number to the amount of Deferred Stock Units credited to the individual's
account and/or in cash based on the fair market value of the Common Stock at
time of payment.
General. Stock options and Deferred Stock Units shall be transferable or
assignable only by will, by the laws of descent and distribution, pursuant to a
qualified domestic relations order; or to the extent permitted by Rule 16b-3
under the 1934 Act to either a trust or estate in which the non-employee
director or his or her spouse or other relative has a substantial interest, or
to a spouse or other immediate relative.
The Board may amend the Plan no more frequently than once every six months,
as it deems necessary or appropriate, to better achieve the purposes of the Plan
unless such amendment is necessary to comport with changes in the Internal
Revenue Code, the Employee Retirement Income Security Act or the rules
thereunder. No amendment without the approval of the Company's shareholders
shall be made which would (i) increase the total number of shares available for
issuance, (ii) except as discussed above, increase the maximum individual Annual
Stock Option limit, (iii) materially increase benefits to participants under the
Plan, (iv) materially modify eligibility requirements or (v) cause the Plan not
to comply with the then-existing Rule 16b-3 or any successor rule under the 1934
Act.
Under the Internal Revenue Code of 1986, the granting of a stock option
does not produce income to the participant or a tax deduction for the Company
unless the option itself has a determinable market value and is not an incentive
stock option. Upon exercise of a stock option, the excess of the fair market
value of the shares over the option exercise price is taxable to the participant
as ordinary income and deductible as an expense by the Company.
Subject to shareholder approval of the Plan, each current non-employee
director has been granted an Annual Stock Option covering 2,000 shares of Common
Stock. Except for the option granted to Mr. Coxe, the exercise price per share
for these options is $27.00, the fair market value of the Common Stock on the
first regularly scheduled meeting of the Board held on February 7, 1996, the
date the options were granted. Mr. Coxe's option was granted on March 1, the
date he became a non-employee director as a result of his retirement. The
exercise price per share for his option is $27.25, the fair market value of the
Common Stock on March 1, 1996. Each of these annual stock options will expire
ten years after the grant date, except in the
26
29
event of the participant's death while the option is outstanding, in which case
the option will expire no sooner than one year following the date of death. The
amount of any future benefits to be received by non-employee directors under the
Plan is not determinable.
In order to be approved, the Plan must receive the affirmative vote of a
majority of the outstanding shares of Common Stock present, or represented, and
eligible to vote at the Annual Meeting.
The Board of Directors recommends that you vote FOR ratification of the
1996 Non-Employee Directors' Stock Plan.
ELECTION OF INDEPENDENT AUDITORS
Independent auditors are to be elected by the shareholders for the calendar
year 1996. The firm of Coopers & Lybrand L.L.P., Certified Public Accountants,
has audited the books and records of the Company for many years, and the Audit
Committee of the Board of Directors recommends continuing the services of this
firm. Representatives of Coopers & Lybrand L.L.P. will be present and available
to answer any questions that may arise at the Annual Meeting and may make a
statement if they so desire.
The Board of Directors recommends that you vote FOR the election of Coopers
& Lybrand L.L.P. as independent auditors for the Company for the current year.
COMPLIANCE WITH THE SECURITIES EXCHANGE ACT OF 1934
As required by Section 16(a) of the Securities Exchange Act of 1934, the
Company's directors, its executive officers and certain individuals are required
to report periodically their ownership of the Company's Common Stock and any
changes in ownership to the Securities and Exchange Commission and the New York
Stock Exchange.
The Company failed to file on a timely basis three reports for Mr. E. C.
Wall, Jr. Mr. Wall made three small purchases for a Keogh Pension Plan on April
19, 1984, January 30, 1989, and February 12, 1990. Mr. Wall is a director of the
Company. This information should have been filed with the Securities and
Exchange Commission on Forms 4 due May 10, 1984, February 10, 1989, and March
10, 1990, but was reported on February 9, 1996, on Form 5.
SHAREHOLDER PROPOSALS FOR NEXT ANNUAL MEETING
A shareholder proposal to be presented at the next Annual Meeting must be
received by the Company not later than November 1, 1996, in order to be included
in the Proxy Statement and Proxy.
27
30
OTHER MATTERS
As of the date of this statement management knows of no business which will
be presented for consideration at the meeting other than that stated in the
notice of the meeting. As to other business, if any, that may properly come
before the meeting, it is intended that proxies in the accompanying form will be
voted in respect thereof in accordance with the best judgment of the person or
persons voting the proxies.
TO ASSURE YOUR REPRESENTATION AT THE MEETING, PLEASE MARK, SIGN, DATE, AND
RETURN YOUR PROXY AS PROMPTLY AS POSSIBLE. PLEASE SIGN EXACTLY AS YOUR NAME
APPEARS ON THE ACCOMPANYING PROXY.
Charles J. Hupfer, Secretary
March 15, 1996
28
31
EXHIBIT 1
SONOCO PRODUCTS COMPANY
1996 NON-EMPLOYEE DIRECTORS' STOCK PLAN
1. Purpose. The Sonoco Products Company Non-Employee Directors' Stock
Plan (the "Plan") is intended to enhance the Company's ability to attract and
retain talented individuals to serve as members of the Board and to promote a
greater alignment of interests between non-employee members of the Board and the
shareholders of the Company.
2. Definitions. As used in the Plan, the following terms have the
respective meanings:
(a) "Annual Stock Option" means the Stock Option granted to each
Eligible Director pursuant to Section 7.
(b) "Board" means the Company's Board of Directors.
(c) "Common Stock" means the Company's no par value Common Stock.
(d) "Company" means Sonoco Products Company, a corporation established
under the laws of the State of South Carolina.
(e) "Deferred Stock Unit" means a bookkeeping entry, equivalent in
value to a share of Common Stock, credited in accordance with an election
made by an Eligible Director pursuant to Section 8.
(f) "Election Date" means the date on which an Eligible Director files
an election with the Secretary of the Company pursuant to Section 8(a).
(g) "Eligible Director" means any director who is not an employee of
the Company or any subsidiary or affiliate of the Company on the applicable
Grant Date for purposes of Section 7 and on the applicable Election Date
for purposes of Section 8.
(h) "Exercise Price" shall mean (a) the Fair Market Value for a Stock
Option granted pursuant to Section 7 of the Plan and (b) the Fair Market
Value less the per share amount of compensation deferred for a Stock Option
granted pursuant to Section 8(c) of the Plan.
(i) "Fair Market Value" means the closing price of a share of Common
Stock as reported on the composite tape for securities listed on the New
York Stock Exchange (the "Exchange") for the specific Grant Date or other
date in question. If no sales of Common Stock were made on the Exchange on
that date, the closing price of a share of Common Stock as reported on said
composite tape for the preceding day on which sales of Common Stock were
made on the Exchange shall be used.
(j) "Grant Date" means the date specified in Section 7 and Sections
8(b) and 8(c) as shall be applicable.
(k) "Plan" means the 1996 Non-Employee Directors' Stock Plan.
(l) "Stock Option" means a right granted pursuant to either Section 7
or 8(c) of the Plan to an Eligible Director to purchase Common Stock at the
applicable Exercise Price.
(m) "1934 Act" means the Securities Exchange Act of 1934.
29
32
3. Effective Date. Subject to the approval by the shareholders of the
Company prior to December 31, 1996, the Plan shall be effective as of February
7, 1996.
4. Common Shares Available for Issuance. Subject to any adjustments
contemplated by Section 5, for each calendar year the Plan is in effect, 125,000
shares of Common Stock shall be cumulatively available for Stock Options and the
settlement of Deferred Stock Units. Thus, any shares which are not issued in the
year they become available shall be available in subsequent years for the
settlement of Stock Options and Deferred Stock Units. In addition, any shares of
Common Stock which may be exchanged, either actually or by attestation, as full
or partial payment to the Company upon the exercise of a Stock Option, shall be
available for future awards under the Plan. If a Stock Option expires without
being exercised, the shares of Common Stock covered by such option shall remain
available for issuance under the Plan. If a Stock Option or Deferred Stock Unit
is settled in cash or in any form other than shares, then the shares covered by
these settlements shall not be deemed issued and shall remain available for
issuance under the Plan. The crediting of dividend equivalents in conjunction
with outstanding Deferred Stock Units or Stock Options shall not be counted
against the shares available for issuance. Any shares issued under the Plan may
be either authorized but unissued shares, or previously-issued shares reacquired
by the Company.
5. Adjustments and Reorganizations. The Board may make such adjustments
as it deems appropriate to meet the intent of the Plan in the event of changes
that impact the Company's share price or share status, provided that any such
actions are consistently and equitably applied to all affected Eligible
Directors (and are not inconsistent with adjustments made to Stock Options and
other stock-based awards held by employees of the Company).
Accordingly, in the event of any stock dividend, stock split, combination
or exchange of shares, merger, consolidation, spin-off or other distribution
(other than normal cash dividends) of Company assets to shareholders, or any
other change affecting shares, such proportionate adjustments, if any, as the
Board in its discretion may deem appropriate to reflect such change, shall be
made with respect to:
(i) he aggregate number of shares that may be issued under the Plan;
(ii) the number of shares covered by each outstanding award made
under the Plan;
(iii) the Exercise Price for each outstanding Stock Option; and
(iv) the limit on the number of shares that may be covered by each
Annual Stock Option grant set forth in Section 7.
In the event the Company is not the surviving company of a merger,
consolidation or amalgamation with another company or in the event of a
liquidation, reorganization or significant change of control of the Company, and
in the absence of any surviving corporation's assumption of outstanding awards
made under the Plan, the Board may provide for appropriate settlements of such
awards either at the time of grant or at a subsequent date.
6. Plan Operation. The Plan is intended to permit Eligible Directors to
qualify as "disinterested" persons under Rule 16b-3 promulgated by the
Securities and Exchange Commission under the 1934 Act. Accordingly, in many
respects the Plan is self-governing and requires no discretionary action by the
Board except as contemplated by the language herein. However, should any
questions of interpretation arise, they shall be resolved by the Board or such
committee of the Board as may be designated from time to time.
30
33
7. Annual Stock Option Grants.
a. Grants to be Made at the First Regularly Scheduled Meeting of the
Board. Commencing with calendar year 1996, at the first regularly
scheduled Board meeting of each calendar year the Plan is in effect, each
Eligible Director will receive an Annual Stock Option to purchase 2,000
shares of Common Stock or such higher number as may be established pursuant
to Section 17. The Exercise Price of each such option shall be the Fair
Market Value on the Grant Date, and each such option shall have a ten-year
term.
b. Grants to be Made Subsequent to the First Regularly Scheduled
Meeting of the Board. A person who becomes an Eligible Director,
subsequent to The Board's initial regularly scheduled meeting of a calendar
year during which the Plan is in effect, shall receive an Annual Stock
Option grant on the date such person becomes an Eligible Director. The
number of shares covered by the Annual Stock Option granted to such
individual shall be the product of multiplying:
(i) the number of shares to be covered by the Annual Stock Option
grant received by each Eligible Director for such calendar year pursuant
to subsection (a) above by
(ii) (A) 100% if the person becomes an Eligible Director during the
first calendar quarter, (B) 75% if the person becomes an Eligible
Director during the second calendar quarter, (C) 50% if the person
becomes an Eligible Director during the third calendar quarter, or (D)
25% if the person becomes an Eligible Director during the fourth
calendar quarter. If such calculation results in a fractional share, the
number of shares shall be increased to the next whole number.
8. Deferred Stock Units and Deferred Compensation Stock Options. Each
Eligible Director may elect to take a portion or all of his or her annual
retainer and committee and meeting fees in either the form of Deferred Stock
Units or in the form of Stock Options, provided that the Board has determined to
permit either or both such forms of deferred payment to be available for such an
election. However, in no event may the portion of the Eligible Director's annual
compensation affected by such an election be less than 25%.
a. Method of Electing. In order to elect either such form of deferred
payment, the Eligible Director must complete and deliver to the Secretary
of the Company a written election designating the portion of his or her
compensation that is to be deferred and the form of deferral. Such an
election shall be effective beginning with compensation earned for the
first calendar quarter commencing six months after the applicable Election
Date. Such election may be subsequently amended or revoked, but any such
change shall not be effective until the first calendar quarter commencing
six months after the Eligible Director has filed such a change in writing
with the Secretary of the Company. Any such election shall be effective
only to the extent that there are sufficient shares of Common Stock
available under the Plan pursuant to Section 4.
b. Deferred Stock Units. If an Eligible Director elects to receive
compensation in the form of Deferred Stock Units, such individual will have
Deferred Stock Units credited to his or her account on
31
34
the first business day of each calendar quarter during which his or her
election is effective. The number of Deferred Stock Units covered by each
such crediting shall be determined by the following formula:
Number of Amount of Compensation to be Deferred
Deferred Stock = -------------------------------------------------------------
Units Fair Market Value
Deferred Stock Units shall be credited with dividend equivalents when
dividends are paid on shares of Common Stock and such dividend equivalents
shall be converted into additional Deferred Stock Units based on the Fair
Market Value on the date credited.
c. Deferred Compensation Stock Options. If an Eligible Director
elects to receive compensation in the form of Stock Options, such
individual shall be granted a Stock Option on the first business day of
each calendar quarter during which his or her election is effective. The
per share Exercise Price shall be seventy-five percent of the Fair Market
Value of Common Stock on the Grant Date. The number of shares covered by
each such Stock Option shall be determined by the following formula:
Amount of Compensation to be Deferred
Number of Shares = -------------------------------------------------------------
25% of the Fair Market Value
If this calculation results in a fractional share, the number of
shares covered by the resulting Stock Option shall be increased to the next
whole number.
Each such option shall expire five years after termination of Board
service. Individuals who hold outstanding Stock Options awarded under this
Section shall be credited with dividend equivalents based upon 25% of the
per share dividend when dividends are paid on shares of Common Stock, and
such dividend equivalents shall be converted into Deferred Stock Units
based on the Fair Market Value on the date credited.
9. Option Exercisability and Restoration. A Stock Option shall not be
exercisable until the later of six months following its Grant Date, or six
months following the date that the Plan is approved by the shareholders. The
following terms and conditions also shall apply, if applicable:
a. Participant's Death. In the event of the participant's death
during the final year of the term of an outstanding Stock Option, such
option shall remain exercisable for one full year after the participant's
death.
b. Exercise Payment. A Stock Option, or portion thereof, may be
exercised by written notice of exercise delivered to the Secretary of the
Company, accompanied by payment of the aggregate Exercise Price. Such
payments may be made in cash, personal check or with Common Stock (either
actually or by attestation) already owned by the individual, valued at the
Fair Market Value on the date of exercise, or a combination of such payment
methods. The Board, however, may deny the exercise of Stock Options during
a period of time that it deems necessary to prevent any possible violation
of federal securities laws or any other laws. As soon as practicable after
notice of exercise and receipt of full payment for shares of Common Stock
being acquired, the Company shall deliver to the individual a certificate
representing the Common Stock purchased through the Stock Option.
32
35
c. Restoration Option Right. Commencing in 1997, each Stock Option
granted pursuant to the Plan will contain a restoration right whereby, if
an optionee, who is an Eligible Director on the date of exercise, exercises
the option by tendering, either actually or by attestation,
previously-acquired shares of Common Stock, such individual will receive a
Stock Option covering the number of shares tendered with the term equal to
the remaining term of the original Stock Option and with a per share
Exercise Price equal to the Fair Market Value as of the date of exercise of
the original stock option. Stock Options granted pursuant to such
restoration rights also will carry restoration Stock Option rights.
10. Termination of Board Service. Upon termination of Board service by an
individual holding awards granted under the Plan, the following conditions shall
apply:
a. Stock Options. Each Stock Option shall continue to remain
outstanding for the duration of its term, subject to the extension of such
term in the event of a participant's death while holding the option as
provided in Section 9(a).
b. Deferred Stock Units. Unless the Eligible Director has elected,
prior to termination of Board service, to receive payment in fifteen or
fewer annual installments, commencing no sooner than the first business day
following the six-month anniversary of the individual's termination of
Board service, he or she will receive a lump sum payment equal to the
aggregate Fair Market Value of the Deferred Stock Units credited to his or
her account as of such date. This payment may be in the form of shares of
Common Stock equal in number to the amount of Deferred Stock Units credited
to the Eligible Director's account. Installment payments may similarly be
made in shares of Common Stock. However, the Board may determine to settle
a portion or all of an award payment in cash based on the Fair Market Value
at time of payment.
11. No Fractional Shares. No fractional shares shall be issued under the
Plan and cash shall be paid based on the Fair Market Value at time of payment in
lieu of any fractional shares in settlement of Deferred Stock Units granted
under the Plan pursuant to Section 8.
12. Transferability of Awards. Stock Options and Deferred Stock Units
shall not be transferable or assignable other than (a) by will or the laws of
descent and distribution; (b) pursuant to a qualified domestic relations order;
or (c), to the extent permitted by Rule 16b-3 under the 1934 Act, as then
applicable to the Company's employee benefit plans, by gift or other transfer to
either (i) any trust or estate in which the original award recipient or such
person's spouse or other immediate relative has a substantial beneficial
interest, or (ii) a spouse or other immediate relative, provided that such a
transfer would continue to require such awards to be disclosed pursuant to Item
403 of Regulation S-K under the Securities Act of 1933, as amended from time to
time.
13. Award Documentation. Each award granted under the Plan shall be
evidenced by written documentation which shall contain the terms and conditions
governing such award. Directors need not execute any instrument or
acknowledgment of notice of an award under the Plan, in which case acceptance of
such an award by the respective participant will constitute agreement to the
terms of the award.
14. No Right to Service. Neither participation in the Plan nor any action
under the Plan shall be construed to give any Eligible Director a right to be
retained in the service of the Company.
33
36
15. Unfunded Plan. Unless otherwise determined by the Board, the Plan
shall be unfunded and shall not create (or be construed to create) a trust or a
separate fund or funds. The Plan shall not establish any fiduciary relationship
between the Company or any participant or other individual. To the extent any
individual holds any rights by virtue of a grant awarded under the Plan, such
rights (unless otherwise determined by the Board) shall be no greater than the
rights of an unsecured general creditor of the Company.
16. Successors and Assigns. The Plan shall be binding on all successors
and assigns of a participant, including without limitation, the estate of such
participant and the executor, administrator or trustee of such estate, or any
receiver or trustee in bankruptcy or representative of the participant's
creditors.
17. Plan Amendment. The Board may amend the Plan as it deems necessary or
appropriate to better achieve the purposes of the Plan, except that no amendment
without the approval of the Company's shareholders shall be made which would:
(i) Subject to adjustments contemplated by Section 5, increase the
total number of shares available for issuance under Section 4 or the
individual Annual Stock Option limit set forth in Section 7, except that
such individual limit may be increased to up to 10,000 shares of Common
Stock if the Board has determined that such an amendment would not prevent
Eligible Directors from being "disinterested persons" for purposes of Rule
16b-3, if required by such rule or any successor rule under the 1934 Act;
or
(ii) To the extent such amendment would be inconsistent with the
then-existing Rule 16b-3 or any successor rule under the 1934 Act,
materially increase the benefits accruing to participants under the Plan or
materially modify the requirements as to eligibility for participation in
the Plan; or
(iii) Otherwise cause the Plan not to comply with Rule 16b-3 or any
successor rule under the 1934 Act.
In addition, the Plan may not be amended more than once every six months,
other than to comport with changes in the Internal Revenue Code, the Employee
Retirement Income Security Act, or the rules thereunder.
18. Plan Termination. The Board may terminate the Plan at any time.
However, if so terminated, prior awards shall remain outstanding and in effect
in accordance with their applicable terms and conditions.
19. Governing Law. The validity, construction and effect of the Plan and
any actions taken or relating to the Plan shall be determined in accordance with
the laws of the State of South Carolina and applicable federal laws.
34
37
APPENDIX A
P
R
O
X
Y
DIRECTORS
RECOMMEND
VOTING
FOR 1,
2 AND 3
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
SONOCO PRODUCTS COMPANY
POST OFFICE BOX 160 - ONE NORTH SECOND STREET - HARTSVILLE, SOUTH CAROLINA
29551-0160
The undersigned hereby appoints Charles W. Coker, Chairman and Chief Executive
Officer, or Peter C. Browning, President and Chief Operating Officer, as
Proxies, each with the power to appoint his substitute, and hereby authorizes
them to represent and to vote, as designated below, all the shares of Common
Stock of Sonoco Products Company held of record by the undersigned on March 1,
1996, at the Annual Meeting of Shareholders to be held on April 17, 1996, or any
adjournment thereof.
(1) ELECTION OF DIRECTORS
/ / FOR All Nominees / / WITHHOLD on All Nominees
/ / Withhold On The Following Nominees
Only
---------------------------------------------------------------------------------------
Nominees -- Three-Year Terms: C. J. Bradshaw, R. J. Brown, J. L. Coker,
Paul Fulton, H. L. McColl, Jr.
One-Year Term: Dona Davis Young
(2) PROPOSAL TO APPROVE THE 1996 NON-EMPLOYEE DIRECTORS' STOCK PLAN.
/ / FOR / / AGAINST / / ABSTAIN
(3) PROPOSAL TO APPROVE THE ELECTION OF COOPERS & LYBRAND L.L.P., CERTIFIED
PUBLIC ACCOUNTANTS, AS THE INDEPENDENT AUDITORS OF THE CORPORATION.
/ / FOR / / AGAINST / / ABSTAIN
(Continued and to be signed and dated on the reverse side)
(Continued from other side)
(4) In their discretion the Proxies are authorized to vote upon such other
business as may properly come before the meeting.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY
WILL BE VOTED FOR PROPOSALS 1, 2 AND 3.
Date 19
------------------------ --
------------------------------------
------------------------------------
Please sign this proxy exactly
as your name appears hereon. When
shares are held by joint tenants,
both should sign. When signing as
attorney, executor, administrator,
trustee or guardian, please give
full title as such. If a
corporation, please sign in full
corporate name by President or
other authorized officer. If a
partnership, please sign in
partnership name by authorized
person. PLEASE MARK, SIGN, DATE
AND RETURN THE PROXY CARD PROMPTLY
USING THE ENCLOSED ENVELOPE.
