SCHEDULE 14A
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 (S) 240.14a-11(c) or (S) 240.14a-12
Whirlpool Corporation
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[x] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
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[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
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(1) Amount Previously Paid:
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Notes:
[LOGO OF WHIRLPOOL APPEARS HERE]
WHIRLPOOL CORPORATION
Administrative Center
2000 N. M-63
Benton Harbor, Michigan 49022-
2692
To Our Stockholders:
It is my pleasure to invite you to attend the 2001 Whirlpool Corporation
annual meeting of stockholders to be held on Tuesday, April 17, 2001, at 9:30
a.m., Chicago time, at The Madison Room, 181 W. Madison Street, 7th Floor,
Chicago, Illinois.
The formal notice of the meeting follows on the next page. At the meeting,
stockholders will vote on the election of four directors and will transact any
other business that may properly come before the meeting. In addition, we will
discuss Whirlpool's 2000 performance and the outlook for this year, and answer
your questions.
Your vote is important. We urge you to please complete and return the enclosed
proxy whether or not you plan to attend the meeting. Promptly returning your
proxy will be appreciated, as it will save further mailing expense. You may
revoke your proxy at any time prior to the proxy being voted by filing a
written revocation with the Secretary of the Company, by providing a proxy
with a later date, or by voting in person at the meeting. If you attend the
meeting and vote in person, your proxy will not be voted.
Your vote is important and much appreciated!
[SIGNATURE OF DAVID R. WHITWAM]
DAVID R. WHITWAM
Chairman of the Board
and Chief Executive Officer March 13, 2001
NOTICE OF 2001 ANNUAL MEETING OF STOCKHOLDERS
The 2001 annual meeting of stockholders of WHIRLPOOL CORPORATION will be held
at The Madison Room, 181 W. Madison Street, 7th Floor, Chicago, Illinois on
Tuesday, April 17, 2001, at 9:30 a.m., Chicago time, for the following
purposes:
1. to elect four persons to the Company's Board of Directors; and
2. to transact such other business as may properly come before the meeting.
A list of stockholders entitled to vote at the meeting will be available for
examination by any stockholder, for any purpose germane to the meeting, during
ordinary business hours, for at least ten days prior to the meeting at
Equiserve, One North State Street, 11th Floor, Chicago, Illinois 60602.
By Order of the Board of Directors
[SIGNATURE OF ROBERT T. KENAGY APPEARS HERE]
ROBERT T. KENAGY
Associate General Counsel and
Corporate Secretary
March 13, 2001
TABLE OF CONTENTS
Page
----
Information about Whirlpool Corporation.................................... 1
Proxy Statement............................................................ 1
Directors and Nominees for Election as Directors........................... 2
The Whirlpool Board of Directors........................................... 4
Security Ownership......................................................... 5
Executive Compensation..................................................... 7
Stock Option Grants and Related Information................................ 8
Stock Option Exercises and Holdings........................................ 9
Long-Term Incentive Awards................................................. 9
Agreements With Executive Officers......................................... 10
Retirement Benefits........................................................ 10
Compensation of Directors.................................................. 12
Human Resources Committee Report on Compensation Awards.................... 13
Performance Graph.......................................................... 17
Miscellaneous.............................................................. 18
Matters Relating to Auditors............................................... 18
Stockholder Proposals for 2002 Meeting..................................... 19
Exhibit A--Audit Committee Charter......................................... A-1
INFORMATION ABOUT WHIRLPOOL CORPORATION
Whirlpool is the world's leading manufacturer and marketer of major home
appliances. We manufacture in 13 countries and market products in more than
170 countries under major brand names such as Whirlpool, KitchenAid, Roper,
Bauknecht, Ignis, Laden, Inglis, Brastemp, and Consul. We are also the
principal supplier to Sears, Roebuck and Co. of many major appliances marketed
under the Kenmore brand name. We have approximately 61,000 employees
worldwide. Our headquarters are located in Benton Harbor, Michigan, and our
address is 2000 N. M-63, Benton Harbor, Michigan 49022-2692. Our telephone
number is (616) 923-5000.
PROXY STATEMENT
Our 2001 annual meeting of stockholders will be held on Tuesday, April 17,
2001, at 9:30 a.m., Chicago time, at The Madison Room, 181 W. Madison Street,
7th Floor, Chicago, Illinois. You are welcome to attend.
Information about this Proxy Statement
We are sending this proxy statement and the enclosed proxy card because
Whirlpool's Board of Directors is seeking your permission (or proxy) to vote
your shares at the annual meeting on your behalf. This proxy statement
presents information we are required to provide to you under the rules of the
Securities and Exchange Commission. It is intended to help you in reaching a
decision on voting your shares of stock. Only stockholders of record at the
close of business on March 2, 2001 are entitled to vote at the meeting. There
were 66,578,475 outstanding shares of common stock as of the close of business
on March 2, 2001. We have no other voting securities. Stockholders are
entitled to one vote per share on each matter. This proxy statement and the
accompanying proxy form are first being mailed to stockholders on or about
March 13, 2001.
Information about Voting
Stockholders can vote their shares on matters presented at the annual meeting
in two ways.
1. By Proxy--If you sign and return the accompanying proxy form, your shares
will be voted as you direct on the proxy form. If you do not give any
direction on the proxy card, the shares will be voted FOR the nominees named
for director. You may revoke your proxy at any time before it is exercised by
providing a written revocation to Whirlpool's Corporate Secretary, Robert T.
Kenagy, by providing a proxy with a later date, or by voting in person at the
meeting.
2. In Person--You may come to the annual meeting and cast your vote there.
Whirlpool's Board of Directors has adopted a policy requiring all stockholder
votes to be kept permanently confidential and not disclosed except (i) when
disclosure is required by law, (ii) when a stockholder expressly consents to
disclosure, or (iii) when there is a contested election and the proponent
filing the opposition statement does not agree to abide by this policy.
Stockholders representing at least 50% of the common stock issued and
outstanding must be present at the annual meeting, either in person or by
proxy, for there to be a quorum at the annual meeting. Abstentions and broker
non-votes are counted as present for establishing a quorum. A broker non-vote
occurs when a broker holding shares for a beneficial owner does not vote on a
particular proposal because the nominee does not have discretionary voting
power and has not received instructions from the beneficial owner.
The four directors to be elected at the annual meeting will be elected by a
plurality of the votes cast by the stockholders present in person or by proxy
and entitled to vote. This means that the four nominees with the most votes
will be elected. Votes may be cast for or withheld from each nominee, but a
withheld vote or a broker non-vote will have no effect on the outcome of the
election. For a stockholder to nominate an individual for director at the
meeting, the stockholder must give the
Company's Secretary written notice at least 90 days in advance of the annual
meeting of the stockholder's intent to make the nomination.
The Board of Directors does not know of any other matter that will be presented
at the annual meeting other than the items covered in this proxy statement.
DIRECTORS AND NOMINEES FOR ELECTION AS DIRECTORS
Nominees For a Term to Expire in 2004
HERMAN CAIN, 55, Chairman of the Board of Godfather's
Pizza, Inc. and Chief Executive Officer of T.H.E., Inc.
(leadership consulting). Director of the Company since
1992 and director of FSBuy.com, RetailDNA, LLC, and
UtiliCorp United, Inc.
[PHOTO OF HERMAN CAIN]
----------------
ALLAN D. GILMOUR, 66, former Vice Chairman of Ford
Motor Company (cars and trucks, related parts and
accessories and financial services; retired 1995).
Director of the Company since 1990 and director of The
Dow Chemical Company, DTE Energy Company, and The
Prudential Insurance Company of America.
[PHOTO OF ALLAN D. GILMOUR]
----------------
JANICE D. STONEY, 60, former Executive Vice President,
US WEST Communications Group, Inc. (telecommunications
products and services; retired 1992). Director of the
Company since 1987 (except for part of 1994 during a
bid for political office) and director of Williams
Companies Inc. and Bridges Investment Fund.
[PHOTO OF JANICE D. STONEY]
----------------
DAVID R. WHITWAM, 59, Chairman of the Board and Chief
Executive Officer of the Company. Director of the
Company since 1985 and director of PPG Industries, Inc.
[PHOTO OF DAVID R. WHITWAM]
----------------
2
Directors Whose Terms Expire in 2003
GARY T. DICAMILLO, 50, Chairman of the Board and Chief
Executive Officer of Polaroid Corporation (imaging
products). Director of the Company since 1997 and
director of 3Com Corporation, Pella Corporation, and
The Sheridan Group.
[PHOTO OF GARY T. DICAMILLO]
----------------
KATHLEEN J. HEMPEL, 50, former Vice Chairman and Chief
Financial Officer of Fort Howard Corporation (paper
products; retired 1997). Director of the Company since
1994 and director of Kennametal Inc., Oshkosh Truck
Corporation, and A.O. Smith Corporation.
[PHOTO OF KATHLEEN J. HEMPEL]
----------------
ARNOLD G. LANGBO, 63, former Chairman of the Board and
Chief Executive Officer of Kellogg Company (cereal and
other products; retired 2000). Director of the Company
since 1994 and director of Johnson & Johnson,
Weyerhaeuser Company, and The International Youth
Foundation.
[PHOTO OF ARNOLD G. LANGBO]
----------------
PHILIP L. SMITH, 67, former Chairman of the Board and
Chief Executive Officer of The Pillsbury Company
(consumer foods and beverages and other products;
retired 1987). Director of the Company since 1982 and
director of U.S. Trust Corporation.
[PHOTO OF PHILIP L. SMITH]
----------------
Directors Whose Terms Expire in 2002
JEFF M. FETTIG, 43, President and Chief Operating
Officer of the Company. Director of the Company since
1999.
[PHOTO OF JEFF M. FETTIG]
----------------
3
JAMES M. KILTS, 53, Chairman of the Board and Chief
Executive Officer of The Gillette Company (consumer
products). Director of the Company since 1999 and
director of The May Department Stores Company.
[PHOTO OF JAMES M. KILTS]
----------------
MILES L. MARSH, 53, former Chairman of the Board and
Chief Executive Officer of Fort James Corporation
(consumer paper products; retired 2000). Director of
the Company since 1990 and director of GATX Corporation
and Morgan Stanley, Dean Witter & Co.
[PHOTO OF MILES L. MARSH]
----------------
PAUL G. STERN, 62, Partner, Thayer Capital Partners,
L.L.P. and Arlington Capital Partners, L.L.P. (private
investment companies). Director of the Company since
1990 and director of The Dow Chemical Company, E-Plus
Inc., Aegis Communications, Inc., and SAGA SYSTEMS Inc.
[PHOTO OF PAUL G. STERN]
----------------
The directors have served their respective companies indicated above in various
executive or administrative positions for at least the past five years, except
for Messrs. Cain and Kilts. From 1996 through 1999, Mr. Cain was the Chief
Executive Officer and President of the National Restaurant Association
(restaurant industry), and from 1999 to 2000 he was Chief Executive Officer and
President of Digital Restaurant Solutions Corporation now known as RetailDNA,
LLC (restaurant industry). Mr. Kilts was Executive Vice President of the
worldwide food operations of the Philip Morris Companies (food, beverage and
tobacco products) from 1994 to 1997, and Chief Executive Officer and President
of Nabisco Holdings Corp. (food products) from 1998 to 2000.
BOARD OF DIRECTORS
The Board held six meetings during 2000. During 2000, each director attended at
least 75% of the total number of meetings of the Board and the Board committees
on which he or she served.
The Audit Committee (Ms. Stoney (Chair), Mr. DiCamillo, Ms. Hempel, Mr. Marsh,
and Dr. Stern) provides independent oversight of the Company's accounting
functions and monitors the objectivity of the financial statements prepared
under the direction of Whirlpool's management. In addition, the Committee
reviews major accounting policy changes by Whirlpool, reviews and approves the
scope of the annual internal and independent audit processes, monitors nonaudit
services provided by the independent auditors, and monitors Company activities
designed to assure compliance with the Company's ethical standards. The Audit
Committee held four meetings in 2000.
The Human Resources Committee (Messrs. Langbo (Chair), Gilmour, Kilts, and Ms.
Stoney) determines the terms of employment of the Company's officers,
determines the terms and recipients of awards under the Company's Omnibus Stock
and Incentive and Performance Excellence Plans, and makes recommendations to
the Board with respect to the Company's compensation plans and policies. This
Committee held four meetings in 2000.
4
The Corporate Governance and Nominating Committee (Messrs. Smith (Chair),
Cain, DiCamillo, Kilts, and Langbo) reviews with the Chairman of the Board
recommendations concerning Board committee assignments and, with input from
all Board members, the effectiveness of overall governance practices and
guidelines. This Committee also considers new nominees proposed for the Board
and will consider individuals whose names are sent to the Committee (in care
of the Chairman of the Board) by stockholders in accordance with the
provisions in Whirlpool's By-laws. This Committee held one meeting in 2000.
SECURITY OWNERSHIP
The following table presents the ownership of the only persons known by us as
of February 26, 2001 to beneficially own more than 5% of our common stock
based upon statements on Schedule 13G filed by such persons with the
Securities and Exchange Commission. Such persons have reported shared voting
and dispositive power with respect to all such shares.
Name and Address of Beneficial Shares Percent of
Owner Beneficially Owned Class
------------------------------ ------------------ ----------
Dodge & Cox 6,663,295 10.0%
35th Floor
One Sansome Street
San Francisco, CA 94104
Morgan Stanley Dean Witter & Co. 3,791,762 5.7%
1585 Broadway
New York, NY 10036
Mutuelles AXA 6,263,641 9.4%
25, avenue Matignon
75008 Paris, France
5
The following table reports beneficial ownership of common stock by each
director, nominee for director, the Chief Executive Officer and the four other
most highly compensated executive officers, and all directors and executive
officers of Whirlpool as a group, as of February 26, 2001. Beneficial
ownership includes, unless otherwise indicated, all shares with respect to
which each director or executive officer, directly or indirectly, has or
shares the power to vote or to direct the voting of such shares or to dispose
or direct the disposition of such shares.
Shares
Shares Under
Beneficially Exercisable
Owned(1) Options(2) Total Percentage
------------ ----------- --------- ----------
Mark E. Brown.................... 14,702 57,400 72,102 *
Herman Cain...................... 3,581 3,600 7,181 *
Gary T. DiCamillo................ 2,692 1,800 4,492 *
Jeff M. Fettig................... 41,975 175,500 217,475 *
Allan D. Gilmour................. 5,600 4,200 9,800 *
Kathleen J. Hempel............... 3,600 2,400 6,000 *
James M. Kilts................... 2,000 1,200 3,200 *
Arnold G. Langbo................. 3,881 2,400 6,281 *
Miles L. Marsh................... 5,463 3,600 9,063 *
Paulo Periquito.................. 26,777 134,500 161,277 *
Philip L. Smith.................. 4,414 4,800 9,214 *
Paul G. Stern.................... 5,200 3,600 8,800 *
Janice D. Stoney................. 3,900 4,800 8,700 *
Michael D. Thieneman............. 13,506 91,900 105,406 *
David R. Whitwam................. 195,091 534,000 729,091 1.10%
All directors and executive
officers as a group
(16 persons).................... 338,798 1,096,900 1,435,698 2.16%
--------
* Represents less than 1% of the outstanding common stock.
(1) Does not include: (a) shares subject to currently exercisable options,
which information is set forth separately in the second column; (b)
2,157,372 shares held by the Whirlpool 401(k) Trust (but does include
27,381 shares held for the accounts of executive officers); Mr. Brown
serves as one of three individual trustees with shared voting and
investment powers; and (c) 1,040,000 shares held by the Whirlpool
Corporation and Subsidiary Employees' Retirement Trust; Mr. Brown serves
as one of three members of the committee that has voting and investment
powers.
(2) Includes shares subject to options that will become exercisable within 60
days.
6
EXECUTIVE COMPENSATION
The table below provides a summary of annual and long-term compensation for
the last three years of the Chief Executive Officer and the four other most
highly compensated executive officers of the Company.
SUMMARY COMPENSATION TABLE (1998-2000)
Long-Term
Compensation
------------------
Awards Payouts
------- ----------
Annual Compensation Other LTIP All Other
-------------------- Annual Options Payouts Compensation
Name Principal Position Year Salary Bonus Comp.(1) (#) ($)(2) ($)(3)
---- ------------------ ---- ---------- --------- -------- ------- ---------- ------------
David R. Whitwam Chairman and 2000 $1,080,833 $ 850,000 $ 0 120,000 $ 644,711 $20,382
Chief 1999 1,040,000 1,950,000 0 110,000 1,614,292 27,906
Executive 1998 1,000,000 1,400,000 0 65,000 1,254,280 34,110
Officer
Jeff M. Fettig President 2000 587,500 450,000 342,771 64,000 234,677 256
and Chief 1999 458,131 646,000 506,237 50,000 492,733 219
Operating 1998 355,068 407,000 280,534 18,000 333,141 245
Officer
Paulo Periquito Executive 2000 500,000 360,000 206,458 33,000 267,538 27,651
Vice 1999 500,000 609,000 210,843 33,000 532,265 22,840
President 1998 500,000 735,000 188,385 15,000 387,004 24,100
and
President,
Latin
America
Michael D. Thieneman Executive 2000 347,667 209,000 0 27,000 152,167 3,571
Vice 1999 324,000 337,000 0 27,000 327,529 5,108
President 1998 302,303 239,000 0 15,000 221,845 3,932
and Chief
Technology
Officer
Mark E. Brown Executive 2000 296,667 170,000 0 23,000 115,216 918
Vice 1999 247,644 302,000 0 20,000 170,779 941
President
and Chief
Financial
Officer
Vice 1998 197,500 130,000 77,396 5,000 86,989 1,030
President
and
Controller
--------
(1) The amounts paid to Mr. Fettig primarily relate to reimbursement for
expenses related to his foreign service. In 2000, 1999, and 1998, the
Company paid foreign taxes of $337,639, $88,352, and $177,816
respectively, on Mr. Fettig's behalf, and in 1999 the Company reimbursed
Mr. Fettig $331,865 for relocation related expenses. In 2000, 1999, and
1998, the Company paid Mr. Periquito $75,000, $100,000, and $100,000
respectively, to compensate him for increased living costs. In 1998, the
Company reimbursed Mr. Brown $74,526 for relocation related expenses.
(2) Amounts represent payouts under long-term, equity-based compensation
programs based on the Company's financial performance as described under
the caption Long-Term Incentives beginning on page 14. For 2000, the
payout under the Company's long-term incentive program reflected
achievement of a performance objective during the 1998-2000 performance
period relating to the awards.
(3) Amounts represent group term life insurance premiums.
7
STOCK OPTION GRANTS AND RELATED INFORMATION
Stock Option Grants in 2000
The table below provides information on grants of stock options during 2000
for the Chief Executive Officer and the four other most highly compensated
executive officers of the Company.
OPTION GRANTS IN 2000
ASSUMED STOCK PRICE APPRECIATION
Individual Grants in 2000
----------------------------------------------- Potential Realizable Value at
Number of Assumed Annual Rates of Stock
Securities % of Total Price Appreciation for 10-year
Underlying Options Option Term(1)
Options Granted to Exercise Expiration ------------------------------------
Name Granted Employees(2) Price(3) Date(4) 0% 5% 10%
---- ---------- ------------ -------- ---------- --- -------------- --------------
David R. Whitwam 120,000 5.40% $52.19 2-14-2010 0 $ 3,938,400(5) $ 9,981,600(6)
Jeff M. Fettig 64,000 2.88% 52.19 2-14-2010 0 2,100,480(5) 5,323,520(6)
Paulo Periquito 33,000 1.48% 52.19 2-14-2010 0 1,083,060(5) 2,744,940(6)
Michael D. Thieneman 27,000 1.21% 52.19 2-14-2010 0 886,140(5) 2,245,860(6)
Mark E. Brown 23,000 1.03% 52.19 2-14-2010 0 754,860(5) 1,913,140(6)
All Optionees(2) 2,223,935 100% $47.57(avg) 2010 0 66,540,135(7) 168,596,512(8)
All Stockholders N/A N/A N/A N/A 1,992,035,961 5,047,334,431
All Optionee Gain as a %
of all Stockholder Gain 3.34% 3.34%
--------
(1) Potential pre-tax realizable value is based on the assumption that the
stock price appreciates from the exercise price at the annual rates of
appreciation shown in the table over the option term (10 years). This is a
theoretical value. The actual realized value depends on the market value
of the Company's stock at the exercise date. All calculations are based on
shares outstanding as of December 31, 2000.
(2) Based on 2,223,935 options granted to 573 employees in 2000. No gain to
the optionees is possible without an increase in the common stock price.
(3) Fair market value on the date of grant.
(4) Options generally become exercisable in installments of 50% one year after
the date of grant and the remaining 50% two years after the grant date,
with all options becoming exercisable upon a Change in Control. A Change
in Control is generally defined to include the acquisition by any person
or group of 15% or more of Whirlpool's voting securities, a change in the
composition of the Board such that the existing Board or persons who were
approved by a majority of such Board members or their successors on the
existing Board cease to constitute a majority of the Board, and approval
by the stockholders of an acquisition or liquidation of Whirlpool. Options
granted on 9/19/2000 will expire in 2005, with options becoming
exercisable in three installments: 30% one year after the date of grant,
30% two years after the grant date, and the remaining 40% three years
after the grant date.
(5) Using the option exercise price ($52.19), per share price of common stock
would be $85.01 assuming no stock splits or stock dividends.
(6) Using the option exercise price ($52.19), per share price of common stock
would be $135.37 assuming no stock splits or stock dividends.
(7) Using the average option exercise price for the year ($47.57), per share
price of common stock would be $77.49 assuming no stock splits or stock
dividends.
(8) Using the average option exercise price for the year ($47.57), per share
price of common stock would be $123.38 assuming no stock splits or stock
dividends.
8
STOCK OPTION EXERCISES AND HOLDINGS
The table below provides information on shares underlying options exercisable
at the end of 2000 and options exercised during 2000 for the Chief Executive
Officer and the four other most highly compensated executive officers of the
Company.
AGGREGATED OPTION EXERCISES AND YEAR-END VALUE FOR 2000
Securities Underlying Value of Unexercised
Shares Unexercised Options Held In-the-Money Options Held
Acquired at Fiscal Year End at Fiscal Year End
on Value ------------------------- -------------------------
Name Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
---- -------- -------- ----------- ------------- ----------- -------------
David R. Whitwam........ 14,300 223,895 419,000 175,000 $566,057 0
Jeff M. Fettig.......... 4,700 88,125 118,500 89,000 112,159 0
Paulo Periquito......... 0 0 101,500 49,500 42,195 0
Michael D. Thieneman.... 1,300 18,485 64,900 40,500 70,450 0
Mark E. Brown........... 2,900 54,375 35,900 33,000 56,341 0
LONG-TERM INCENTIVE AWARDS
The table below provides information regarding grants of long-term incentive
compensation awards in 2000 for the Chief Executive Officer and the four other
most highly compensated executive officers of the Company.
LONG-TERM INCENTIVE PLAN AWARDS IN 2000
Performance Estimated Future Payouts
Period From Under Non-Stock Price
Number of Grant Until Based Plan(2)
Performance Maturation ---------------------------
Name Shares(1) or Payout Target(#) Maximum(#)
---- ----------- ----------- ------------ ------------
David R. Whitwam.......... 33,317 2000-2002 33,317 33,317
Jeff M. Fettig............ 14,296 2000-2002 14,296 14,296
Paulo Periquito........... 6,189 2000-2002 6,189 12,378
Michael D. Thieneman ..... 8,611 2000-2002 8,611 8,611
Mark E. Brown ............ 7,176 2000-2002 7,176 7,176
--------
(1) During 2000, Whirlpool made one award that has a three-year performance
period under its Executive Stock Appreciation and Performance Program to
each participant. Performance share awards are for a number of "contingent
shares" and are based on a participant's base salary and the market price
of the common stock. All awards identified in this table were made
pursuant to one or more of Whirlpool's Omnibus Stock and Incentive Plans.
(2) Final awards for Messrs. Whitwam, Fettig, Thieneman, and Brown will not
exceed the contingent shares shown in column 1 and will be made based on
the Company achieving an improvement target in the economic value added
("EVA") financial measurement. The final award for Mr. Periquito will be
determined by multiplying the number of contingent shares by 0% to 200%
(100% is the target award amount and 200% is the maximum award amount)
based on the Company meeting certain financial, customer, and employee
related objectives for each cycle. Future payouts, if any, will be made in
common stock, cash, or a combination of both, as determined by the Human
Resources Committee of the Board of Directors. If all or any portion of
the award is paid in cash, the amount will be determined by multiplying
the final number of shares earned by the percentage of the award to be
paid in cash and multiplying this product by the market price of the
common stock at the end of the performance period. Payments may be
deferred with the Committee's consent.
9
AGREEMENTS WITH EXECUTIVE OFFICERS
Whirlpool has agreements with its executive officers that provide severance
benefits if, within two years following a Change in Control, the executive
officer's employment is terminated either by Whirlpool (other than for cause,
as defined) or by the officer for good reason (as defined), or, voluntarily
during the 13th month following a Change in Control. Benefits include
continuation of salary for at least 90 days after notification of termination
of employment, severance pay equal to three times annual compensation,
(generally defined as base salary plus target annual bonus), plus an amount to
compensate the individual for excise taxes, if any, arising out of the
severance pay. Under certain circumstances, the agreements provide for
continuing participation for up to three years in insurance and other employee
welfare benefit plans and, in the case of defined benefit retirement plans,
provide for three years additional age and service credits for purposes of
vesting and computing benefits. The term of each agreement is two years and
thereafter the agreement may be terminated as of the end of any year upon 90
days prior notice but not for 24 months after a Change in Control. A Change in
Control is generally defined to include the acquisition by any person or group
of 15% or more of Whirlpool's voting securities, a change in the composition
of the Board such that the existing Board or persons who were approved by a
majority of such Board members or their successors on the existing Board cease
to constitute a majority of the Board, and approval by the stockholders of an
acquisition or liquidation of Whirlpool.
RETIREMENT BENEFITS
Whirlpool's non-contributory defined benefit retirement plan (the "Retirement
Plan") covers substantially all of our U.S. based salaried employees. Upon
reaching the normal retirement age of 65, each vested participant is eligible
to receive an annual pension for life equal to 2% of annual base salary,
averaged over the 60 consecutive calendar months during which pay was highest
out of the last 120 months completed before age 65, for each year of credited
service (up to a maximum of 30 years). For participants with five or more
years of service, reduced benefits are payable upon early retirement or
termination of employment after age 55. For five years following a Change in
Control, Whirlpool may not terminate the retirement plan or amend or merge it
with another plan in a manner that would reduce benefits. If the Retirement
Plan is terminated (including a termination by operation of law) during this
five-year period, any assets held under the plan in excess of the amount
needed to fund accrued benefits would be used to provide additional benefits
to plan participants. We also have supplemental retirement plans that (i)
provide to certain employees, including executive officers, additional
benefits generally similar to those under the Retirement Plan but based upon
an average of the five highest total amounts of bonuses paid from our bonus
plans during the ten years prior to retirement and (ii) maintain benefits at
the levels set forth in the table below which are otherwise limited under the
Retirement Plan by the Employment Retirement Income Security Act of 1974.
10
The following table sets forth the estimated annual pension benefits payable
under the Retirement Plan and supplemental plans (as described above) upon
retirement at age 65 after selected periods of service.
Estimated Annual Pension Benefits at Age 65*
---------------------------------------------------------
Covered 5 Years 10 Years 15 Years 20 Years 25 Years 30 Years
Compensation Service Service Service Service Service Service
------------ -------- -------- -------- -------- ---------- ----------
$ 400,000 $ 40,000 $ 80,000 $120,000 $160,000 $ 200,000 $ 240,000
600,000 60,000 120,000 180,000 240,000 300,000 360,000
800,000 80,000 160,000 240,000 320,000 400,000 480,000
1,000,000 100,000 200,000 300,000 400,000 500,000 600,000
1,200,000 120,000 240,000 360,000 480,000 600,000 720,000
1,400,000 140,000 280,000 420,000 560,000 700,000 840,000
1,600,000 160,000 320,000 480,000 640,000 800,000 960,000
1,800,000 180,000 360,000 540,000 720,000 900,000 1,080,000
2,000,000 200,000 400,000 600,000 800,000 1,000,000 1,200,000
2,200,000 220,000 440,000 660,000 880,000 1,100,000 1,320,000
2,400,000 240,000 480,000 720,000 960,000 1,200,000 1,440,000
--------
* The amounts set forth in the table are on the basis of a straight life
annuity and are not subject to reduction for Social Security benefits or
other payments. The maximum number of years of service for which pension
benefits accrue is 30. Messrs. Whitwam, Fettig, Thieneman, and Brown had
approximately 33, 20, 24, and 27 years respectively, of eligible service at
December 31, 2000, and their covered compensation under the plans for 2000
was equal to the base salary and bonus set forth in the Summary
Compensation Table.
Mr. Periquito is entitled to a Brazilian pension benefit under the employment
agreement with Whirlpool that will provide him with a retirement payment of
85% of his basic monthly salary at age 60 assuming he is a participant under
the relevant Brazilian pension plan for 10 years. Under that plan, Mr.
Periquito would receive a disability retirement payment of 70% of the value of
the retirement benefit, and if he dies, his widow would receive a pension
payment of 50% of the value of the retirement benefit. In addition, underage
children would receive 30% of the value of the retirement benefit in the event
of Mr. Periquito's death. Mr. Periquito is required to participate in the cost
of his pension benefit at the rate of 15% of the monthly cost of the plan, up
to a limit of 8% of his basic salary.
11
COMPENSATION OF DIRECTORS
Directors who are not employees of Whirlpool are paid an annual fee of $24,000
and $1,000 for each Board and committee meeting attended ($1,500 if
chairperson). A nonemployee director may elect to defer any portion of
director compensation until he or she ceases to be a director, at which time
payment is made in a lump sum or in monthly or quarterly installments.
Interest on deferred amounts accrues quarterly at a rate equal to the prime
rate in effect from time to time. Each director may elect to relinquish all or
a portion of the annual fee, in which case Whirlpool may at its sole
discretion then make an award of up to $1 million to a charitable organization
upon the director's death. Under the program, the election to relinquish
compensation is irrevocable, and Whirlpool may choose to make contributions in
the director's name to as many as three charities. Each director may also
elect to have a portion of the annual fee used to purchase term life insurance
in excess of that described in the next paragraph.
Whirlpool provides each nonemployee director who elects to participate with
term life insurance while a director in an amount equal to one-tenth of the
annual director's fee times such director's months of service (not to exceed
120) and a related income tax reimbursement payment. We also provide each
nonemployee director with travel accident insurance of $1 million with the
premiums paid by us, and directors are reimbursed for the related income tax.
For evaluation purposes, appliances sold by us are made available to each
nonemployee director for use at home, and the director receives an income tax
reimbursement payment to compensate for any additional tax obligation. The
cost to Whirlpool of this arrangement in 2000 (based on distributor price of
products and delivery, installation, and service charges) did not exceed
$13,500 for any one nonemployee director or $19,500 for all nonemployee
directors as a group.
Whirlpool also has a Nonemployee Director Stock Ownership Plan. This plan
provides, effective on the date of each annual stockholders meeting, for an
automatic grant to each nonemployee director of 400 shares of common stock and
an option to purchase 600 shares of common stock if our earnings from
continuing operations for the immediately preceding year increased by at least
10% over such earnings for the prior year. The exercise price under each
option is the average fair market value (as defined) of the common stock for
the third through fifth trading days after the public release of our earnings
for such prior year. These options may be exercised for 20 years after
issuance (except that they must be exercised within five years after ceasing
to be a director and within one year after the death of the director). The
exercise price may be paid in cash or common stock. In addition, each
nonemployee director is awarded annually 400 shares of phantom common stock,
payable on a deferred basis. The shares of phantom common stock earn phantom
dividends and the total accumulated phantom stock awards and phantom dividends
are converted into Whirlpool's common stock on a one-for-one basis and paid
out to the nonemployee director following completion of service on the Board.
12
HUMAN RESOURCES COMMITTEE REPORT ON COMPENSATION AWARDS
The Human Resources Committee of the Board of Directors has furnished the
following report on executive compensation for 2000.
Whirlpool is dedicated to global leadership and to delivering superior
stockholder value. Whirlpool's executive compensation philosophy is designed
to support these objectives by attracting and retaining the best possible
management talent and by motivating these employees to achieve business and
financial goals that create value for stockholders in a manner consistent with
Whirlpool's focus on four enduring values: respect, integrity, diversity, and
teamwork. Our "pay for performance" philosophy is centered around the
following points:
. Compensation should be incentive driven with both short and long-term
focus;
. More pay should be at risk than with the average company;
. Components of compensation should be tied to increasing stockholder
value; and
. Compensation should be tied to a balanced evaluation of corporate and
individual performance measured against financial, customer, and employee
related objectives--a "balanced scorecard" approach.
The Committee is responsible for the design, administration, and effectiveness
of the compensation plans for management employees, including senior
executives.
SALARY
Salary levels and salary increase guidelines are based on competitive market
reviews conducted with the assistance of outside consultants. Comparison
companies are blue chip companies that are similar to Whirlpool in a variety
of respects, such as companies that compete with Whirlpool; tend to have
national and international business operations; or are similar in sales
volumes, market capitalizations, employment levels, lines of business, and
business organization and structure. This group of companies ("peer group") is
used to define the market for each component of pay as well as total
compensation. The peer group companies chosen for the competitive market
review are not entirely the same as those that comprise Standard & Poor's
Household Furniture and Appliance Group shown in the Performance Graph because
the Committee believes that Whirlpool's most direct competitors for executive
talent are not necessarily limited to the companies included in the published
industry index. Base salary for Mr. Whitwam and other executive officers is
targeted at the median of the base salaries for officers in the peer group
companies, after adjusting for size of the companies. Base salary increases
for the year ranged between 0% and 14.3% for the named executive officers. Mr.
Whitwam received a 4.7% salary increase on March 1, 2000. The increases
reflected both moves in market salaries as well as the executives' individual
performance (as discussed below) against specific objectives. With respect to
Mr. Whitwam's individual performance objectives during 2000, the Committee
assessed his performance in the areas of leadership, managerial and
organizational effectiveness, value creation, Whirlpool's overall financial
performance, and executive talent development. The Committee determined that
Mr. Whitwam had met his objectives on balance in these areas.
ANNUAL INCENTIVE COMPENSATION
The Performance Excellence Plan ("PEP") provides all regular exempt and some
non-exempt employees with an annual incentive designed to focus their
attention on stockholder value creation, drive performance in support of this
goal and other business goals, and reflect individual performance (except for
designated executive officers) as measured against financial, customer, and
employee related objectives. For 2000, target awards ranging from 5% to 110%
of base salary were established by the Committee.
13
For 2000, performance measures were established for the following financial
indicators: economic value added (EVA), net earnings, and cash flow. To align
with the Company's brand-focused value creation strategy (BFVC), the Committee
established performance measures addressing customer results in the areas of
brand value, brand drivers, and brand equity (all indicators or drivers of the
"strength" of our brands in the marketplace). The Committee also established
measurements for employee results in the areas of education and training
linked to the BFVC strategy implementation and transition to the Customer
Focused Performance Model, as well as valuing diversity, and the development
of Whirlpool's talent pool. These performance measures were selected based on
the Committee's belief that improving such measures correlates to increasing
value to stockholders. Achievement of individual business and behavioral
performance goals is also a factor in determining PEP payouts for all
employees other than designated executive officers. In addition, up to 10% of
PEP eligible employees (excluding officers) are eligible for an outstanding
contributor bonus equal to 25%, 50%, or 75% of their target PEP bonus.
Unlike other employees, individual performance cannot be recognized under PEP
for designated executive officers except for purposes of reducing an award
because of Section 162(m) of the Internal Revenue Code (discussed further at
the end of this report). Because the Committee strongly believes that
individual performance assessment has been and will continue to play a
critical role in driving the Company's successful performance, the Committee
adopted in 1994 the Executive Officer Bonus Plan ("EOBP") which provides the
Committee with discretion to grant bonus payouts to designated executive
officers in recognition of strong individual performance. In 2000, only
Messrs. Whitwam, Fettig, Thieneman, and Brown were designated as executive
officers for purposes of PEP and eligible to participate in the EOBP.
The PEP plan is designed to provide total direct compensation that is above
the mean of the peer group when the target level of stretch performance is
achieved. The plans utilized for designated executive officers are designed to
achieve the same compensation objective.
For Messrs. Whitwam, Fettig, Thieneman, and Brown, a corporate performance
target based on return on equity was established. Because the Company exceeded
this financial performance target, these executive officers earned a PEP award
for 2000 as set forth in the Summary Compensation Table based on the
Committee's evaluation of the Company's performance measured against the
financial, customer and employee objectives and the individual performance of
the officer under the Committee's balanced scorecard approach. No awards were
made under EOBP for 2000.
LONG-TERM INCENTIVES
Our long-term incentive programs are comprised of the Stock Option Program,
the Executive Stock Appreciation and Performance Program, the Restricted Stock
Value Program, and the Career Stock Program, all of which are authorized under
one or more of Whirlpool's Omnibus Stock and Incentive Plans. Grants under
both the Stock Option and Executive Stock Appreciation and Performance
Programs are typically made each year. The long-term incentive programs are
intended to provide rewards to executives only if significant additional value
is created for stockholders over time. Further, these stock-based plans are
designed to encourage a significant ownership interest in Whirlpool to help
assure that the interests of the executives are closely aligned to those of
other stockholders and to provide incentives for the executives to remain with
Whirlpool.
Stock Option Program Option grants in 2000 were made under one or more of
Whirlpool's Omnibus Stock and Incentive Plans and were based on our analysis
of competitive award sizes, along with adjustments reflecting individual
performance as evaluated by the Committee with respect to the Chief Executive
Officer, and by the Chief Executive Officer as approved by the Committee with
respect to the other four named executive officers. In making final awards,
the Committee considered the optionee's scope of responsibility and
opportunity to affect Whirlpool's future success, strategic and operational
goals, individual contributions, and the number of options previously awarded
and currently held. Grants were issued with an exercise price equal to the
fair market value of the stock at the time of grant.
14
Mr. Whitwam's 2000 option grant, as noted in the Summary Compensation Table,
was made separately and at the sole discretion of the Committee primarily
based on its competitiveness with the marketplace, but also taking into
account the Committee's assessment of his individual performance.
Executive Stock Appreciation and Performance Program ("ESAP") ESAP provides
senior management with incentives to significantly improve the long-term
performance of Whirlpool and increase stockholder value over time. The
compensation opportunities under the program are tied directly to the
financial performance of Whirlpool over a preset period, normally three years,
beginning each January 1. In combination with other elements of compensation,
award sizes are designed to provide competitive total compensation that
exceeds the market when stretch target performance is met. A payout was earned
by Mr. Whitwam under the 1998-2000 ESAP cycle based on the Committee's
evaluation of the Company's performance measured against the EVA improvement
financial target established at the beginning of the performance period. The
final payout of this grant, along with those of other named executive
officers, is included in the column labeled "LTIP Payouts" in the Summary
Compensation Table and is based on the Committee's evaluation of Company
performance against the financial, customer, and employee objectives
established for the Company and the individual effort of each officer. The
payout was made in 2001.
In 2000, a grant was made under this program from one or more of Whirlpool's
Omnibus Stock and Incentive Plans. The grant is for a three-year cycle ending
December 31, 2002, and payout is contingent upon achieving a specific EVA
target over the performance period. The contingent shares granted to the named
executive officers in 2000 under the 2000-2002 ESAP cycle (as disclosed in the
Long-Term Incentive Plan Awards table) were calculated based on the
competitive objective for ESAP target award sizes.
Restricted Stock Value Program (the "RSVP Program") Under the RSVP Program,
selected senior management employees are granted restricted stock to link
their performance with the long term financial success of the Company and the
creation of shareholder value. Recipients of restricted stock are selected by
the Committee based on their organizational level and ability to affect
Company performance. The Committee can set restrictions based upon the lapse
of time and/or achievement of performance goals, and grants can be made under
one or more of Whirlpool's Omnibus Stock and Incentive Plans. There were no
grants of restricted stock under the RSVP Program to the named executive
officers in 2000, and there were no shares of restricted stock granted to all
executive officers as a group in 2000.
Career Stock Program (the "Career Stock Program") The Career Stock Program was
established to provide one-time grants of phantom stock to select key
executives as a means of retaining those executives and encouraging long-term
employment. Recipients and award sizes are based on subjective determinations
relating to a broad range of factors. The shares do not represent an equity
interest in Whirlpool, and no voting rights attach to the shares until and
unless they are distributed to the participant. Grants are made under one or
more of Whirlpool's Omnibus Stock and Incentive Plans. The value of a share of
Career Stock on any given date is equal to the fair market value of a share of
common stock on that date. Recipients of Career Stock will receive one share
of common stock for each share of phantom stock on a one-for-one basis upon
retirement after attaining the age of 60 or upon termination of employment,
based on individual vesting schedules and subject to certain non-competition
provisions in the contract. Phantom Career Stock dividends are invested in
additional phantom shares to be awarded in the same manner as the original
awards. Mr. Whitwam does not participate in this program. There were no shares
of Career Stock grants to the named executive officers in 2000, and no shares
of Career Stock were granted to all executive officers as a group in 2000.
OWNERSHIP GUIDELINES
In 1995, management adopted, with the Committee's approval, stock ownership
guidelines to support the objective of increasing the amount of stock owned by
the most senior group of executives
15
(approximately 100 individuals). The guidelines for stock ownership are based
on an individual's level in the organization and range from seven times base
salary for the Chief Executive Officer to one times base salary for lower
level executives.
TAX CODE LIMITATION ON EXECUTIVE COMPENSATION DEDUCTIONS
The Internal Revenue Code imposes a $1 million deduction limit on compensation
paid to executives named in the compensation section of the proxy statements
of public companies, subject to certain transition rules and exceptions for
non-discretionary performance based plans approved by stockholders.
The Committee intends to preserve the tax deductibility of executive
compensation to the extent practicable while focusing on consistency with its
compensation policies, the needs of Whirlpool, and stockholder interests.
The Committee retains the discretion to reward strong individual performance
of designated executive officers under the EOBP. The Committee believes this
ability to exercise discretion is in the best interest of Whirlpool and its
stockholders and outweighs the need to qualify the EOBP so that amounts paid
from this plan are exempt from the deductibility limits of Section 162(m).
Accordingly, pay for individual performance under EOBP will generally not
qualify under Section 162(m) and may not be fully deductible.
SUMMARY
We, the Human Resources Committee of Whirlpool, believe a strong link exists
between executive pay and performance at Whirlpool.
Arnold G. Langbo, Chair
Allan D. Gilmour
James M. Kilts
Janice D. Stoney
16
PERFORMANCE GRAPH
The graph below depicts the yearly dollar (and percentage) change in the
cumulative total stockholder return on our common stock with the cumulative
total return of Standard & Poor's ("S&P") Composite 500 Stock Index and the
cumulative total return of the S&P Household Furniture & Appliance Group Index
for the years 1996 through 2000. The graph assumes $100 was invested on
December 31, 1995 in Whirlpool common stock, the S&P 500, and the S&P
Household Furniture & Appliance Group.
Comparison of Five Year Cumulative Total Return*
Whirlpool Corporation, S&P 500 Index, and
S&P Household Furniture & Appliance Group
Cumulative Investment Value
[Graph]
12/31/95 12/31/96 12/31/97 12/31/98 12/31/99 12/31/00
Whirlpool $100.00 89.948 108.748 112.059 134.486 101.460
S&P 500 $100.00 122.902 163.849 210.578 254.829 231.617
S&P Household $100.00 92.549 136.016 181.404 165.150 129.296
--------
* Cumulative total return is measured by dividing: (1) the sum of (a) the
cumulative amount of the dividends for the measurement period, assuming
dividend reinvestment, and (b) the difference between share price at the
end and the beginning of the measurement period by (2) the share price at
the beginning of the measurement period.
17
MISCELLANEOUS
Whirlpool will pay the expenses of the solicitation of proxies. We expect to
pay fees of approximately $10,500 plus certain expenses for assistance by
Georgeson Shareholder Communications Inc. in the solicitation of proxies.
Proxies may be solicited by directors, officers, and employees of the Company
and by Georgeson Shareholder Communications Inc. personally and by mail,
telegraph, telephone, or other electronic means.
If any nominee named herein for election as a director is not available to
serve, the accompanying proxy may be voted for a substitute person. Whirlpool
expects all nominees to be available and knows of no matter to be brought
before the annual meeting other than those referred to in the accompanying
notice of the annual meeting. If, however, any other matter properly comes
before the annual meeting, we intend that the accompanying proxy will be voted
thereon in accordance with the judgment of the persons voting such proxy.
MATTERS RELATING TO AUDITORS
Representatives of Ernst & Young LLP, our auditors, are expected to be present
at the annual meeting to respond to questions and may make a statement if they
so desire.
FEES
In the year 2000, the Company paid Ernst & Young the following fees (in
millions):
. Audit Fees:......................................................... $ 2.3
. Audit Related Fees (outsourced internal audit services, and other
services including certain statutory audits and audits of benefit
plans):............................................................. $ 4.1
. Financial Information Systems, Design, and Implementation Fees:..... $ 1.2
. All Other Fees (including worldwide tax consulting services, and
outsourced tax compliance and expatriate services):................. $ 6.3
-----
Total............................................................... $13.9
=====
AUDIT COMMITTEE REPORT
The Audit Committee provides independent oversight of the Company's accounting
functions and monitors the objectivity of the financial statements prepared
under the direction of Whirlpool's management. In addition, the Committee
reviews major accounting policy changes by Whirlpool, reviews and approves the
scope of the annual internal and independent audit processes, monitors
nonaudit services provided by the independent auditors, and monitors Company
activities designed to assure compliance with the Company's ethical standards.
The Committee is composed of five directors who are "independent" as that term
is defined under the New York Stock Exchange listing requirements. The
Committee operates under a written charter (included in this proxy statement
as Exhibit A) adopted by the Company's Board of Directors.
The Committee has reviewed the audited consolidated financial statements of
the Company for 2000 with management, who has represented to the Committee
that these financial statements were prepared in accordance with generally
accepted accounting principles. The Committee discussed with management the
quality and the acceptability of the accounting principles employed, the
reasonableness of judgments made, and the clarity of the disclosures included
in the statements.
The Committee also reviewed the consolidated financial statements of the
Company for 2000 with Ernst & Young, the Company's independent auditors for
2000, who are responsible for expressing an opinion on the conformity of those
audited financial statements with generally accepted accounting principles.
Further, the Committee reviewed with Ernst & Young their judgments as to the
quality, not just the acceptability, of the Company's accounting principles.
In addition, the Committee met with Ernst & Young, with and without management
present, to discuss the results of their examinations,
18
their valuations of the Company's internal controls, and the overall quality
of the Company's financial reporting. The Committee discussed with Ernst &
Young the matters required to be discussed by the Statement on Auditing
Standards No. 61, Communication with Audit Committees.
The Committee has received the written disclosures and the letter from Ernst &
Young required by Independence Standards Board Standard No. 1 (Independence
Discussion with Audit Committees) and has discussed with Ernst & Young its
independence. The Committee considered the compatibility of nonaudit services
provided by Ernst & Young to the Company with Ernst & Young's independence.
In reliance on the reviews and discussions referred to above, the Committee
recommended to the Board of Directors, and the Board has approved, the
inclusion of the consolidated financial statements in the Annual Report on
Form 10-K for the year ended 2000 for filing with the Securities and Exchange
Commission. The Committee has recommended, and the Board has approved, the
selection of Ernst & Young as the Company's independent auditors for 2001.
Janice D. Stoney, Chair
Gary T. DiCamillo
Kathleen J. Hempel
Miles L. Marsh
Paul G. Stern
STOCKHOLDER PROPOSALS FOR 2002 MEETING
Our annual meeting of shareholders is generally held the third Tuesday in
April. Assuming our 2002 annual meeting is held on that date, we must receive
notice of your intention to introduce a nomination or other item of business
at that meeting by January 16, 2002. This notice must be received by the
Secretary of Whirlpool personally or by registered or certified mail. In
addition, any proposal that you intend to have us include in a proxy statement
for the annual meeting of stockholders in 2002 must be received by us by
November 13, 2001, and must otherwise comply with the Securities and Exchange
Commission's rules, in order to be eligible for inclusion in the proxy
statement and proxy form relating to this meeting.
19
EXHIBIT A
WHIRLPOOL CORPORATION
BOARD OF DIRECTORS
AUDIT COMMITTEE CHARTER
MISSION
To fulfill responsibilities to the Company's shareholders, potential
shareholders, and the investment community, the Audit Committee will provide
independent and objective oversight of the Company's accounting functions and
internal controls and will monitor the objectivity of the Company's financial
statements. In addition, the Committee will provide an open avenue of
communication between the financial management, internal auditors, independent
auditors, and the Board of Directors.
COMPOSITION OF THE COMMITTEE
The Committee shall be composed of at least three but not more than five
Directors appointed by the Board of Directors. Committee members shall not be
officers or employees of the Company or one of its subsidiaries and shall, in
the opinion of the Board, meet the independence and experience requirements of
the New York Stock Exchange. Under these requirements, each member of the
Committee shall be free from any relationship that would interfere with the
exercise of independent judgment as a Committee member. All members of the
Committee shall have an understanding of basic finance and accounting
practices, and at least one member of the Committee shall have accounting or
related financial management experience.
COMMITTEE MEETINGS
The Committee shall meet as appropriate to review financial information prior
to the release of annual financial statements. The Committee shall meet at
least annually with Management, Internal Audit, and the independent auditors
in separate executive sessions to discuss matters privately. All meetings
shall be conducted pursuant to the applicable provisions of the Company's By-
laws.
ROLE AND RESPONSIBILITIES
1. Review and approve the annual audit and its scope for the Company and its
wholly-owned or majority-owned subsidiaries; monitor the annual audit and
its scope for affiliates; and review the annual audit results with respect
to (a) the Company's financial statements, including appropriately
addressing risks related to litigation, foreign exchange, taxes, contingent
liabilities, and similar matters, and (b) the Company's internal controls,
including electronic data processing controls, and the extent to which such
controls are evaluated by the independent auditors for adequacy and
protection.
2. Review audited financial statements and discuss with Management and
independent auditors to monitor adequacy of disclosure. The Committee Chair
or another Committee Member shall discuss quarterly financial information
with Management and the independent auditors prior to the release of
earnings as appropriate.
3. Review the independent auditors' Management Letter and recommendations and
Management's response.
4. Review and approve annual audit fees and monitor the nature, extent, and
cost of non-audit services provided by independent auditors.
5. Make regular reports to the Board and recommend to the Board the annual
appointment of independent auditors who shall ultimately be accountable to
the Committee and the Board. Review periodic reports from the independent
auditors regarding their independence, discuss such reports with the
auditors, and recommend that the Board take appropriate action to satisfy
itself of the independence of the auditors.
A-1
6. Review major accounting policy changes adopted by the Company. Maintain
current knowledge on major new or proposed technical requirements,
regulations, or legislation affecting the Company.
7. Review codes of conduct and Management reports on employee compliance,
including compliance with the Foreign Corrupt Practices Act, to guard
against significant conflicts of interest and dishonest, unethical, or
illegal activities. Monitor Company activities that are designed to assure
compliance with such codes and review Management findings involving
significant lapses of ethical conduct, fraud, or criminal conduct.
8. Review with Management situations where new activities, major changes in
operations, or other developments may create significant financial exposure
for the Company. Review Management reports on the Company's processes to
manage and report risks related to litigation, foreign exchange, taxes,
contingent liabilities, and similar matters.
9. Review activities of the Company's internal audit function, audit plans,
procedures and results, and coordination with independent auditors.
Regularly review the continued overall effectiveness of the internal audit
function.
10. Annually review the Committee's charter and operations and recommend any
proposed changes to the Board for its approval.
11. The Committee may conduct or authorize investigations into any matters
within the Committee's scope of responsibilities and, in connection
therewith, may retain independent counsel, accountants, or others to
assist it.
While the Committee has the responsibilities and powers set forth in the
Company's By-laws and this Charter, the Committee does not have the duty to
plan or conduct audits or to determine that the Company's financial statements
are complete and accurate and are in accordance with generally accepted
accounting principles. This is the responsibility of Management and the
independent auditors. Further, it is not the duty of the Committee to conduct
investigations, to resolve disagreements, if any, between Management and the
independent auditors, or to assure compliance with laws and regulations and
the Company's codes of conduct.
A-2
It is important that your stock be represented so that the presence of a
quorum at the annual meeting may be assured. Accordingly, whether or not you
expect to attend in person, please sign and date the enclosed proxy and mail
it PROMPTLY in the enclosed envelope. Your postage is prepaid if mailed in
the United States.
-------------------------------------------------------------------------------
P R O X Y
WHIRLPOOL CORPORATION
Administrative Center
2000 N. M-63
Benton Harbor, Michigan 49022-2692
The undersigned hereby appoints David R. Whitwam, Jeff M. Fettig and Daniel F.
Hopp, and each of them, proxies, with power of substitution and revocation,
acting by a majority of those present and voting or if only one is present and
voting then that one, to vote the stock of Whirlpool Corporation which the un-
dersigned is entitled to vote, at the annual meeting of stockholders to be held
on April 17, 2001 and at any adjournment thereof, with all the powers the un-
dersigned would possess if present, with respect to the election of directors
and such other business as may properly come before this meeting.
This proxy shall be voted in accordance with such instructions as may be given
on the reverse side of this proxy card. If no instructions are given, this
proxy will be voted for the election as directors of the nominees listed below
unless contrary instructions are specified, and in the proxies' discretion upon
such other business as may properly come before the meeting. Please vote, sign,
and date this proxy as indicated below and return promptly in the enclosed en-
velope. This proxy is solicited on behalf of the Board of Directors.
Election of Directors, Nominees:
01) Herman Cain, 02) Allan D. Gilmour, 03) Janice D. Stoney
and 04) David R. Whitwam
PLEASE VOTE, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
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SEE REVERSE
SIDE
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. FOLD AND DETACH HERE .
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2679
[X] Please mark your votes as in this example.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" ITEMS 1 AND 2.
1. Election of Directors (see reverse)
FOR WITHHELD
[_] [_]
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(Except Nominee(s) written above)
2. In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the meeting.
FOR AGAINST ABSTAIN
[_] [_] [_]
Please sign exactly as name(s) appear(s) on this proxy. Joint owners, trustees,
executors, etc. should indicate the capac-ity in which they are signing.
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SIGNATURE(S) DATE
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. FOLD AND DETACH HERE .
Dear Shareholder:
We encourage you to vote your shares electronically this year either by
telephone or via the Internet. This will eliminate the need to return your
proxy card. You will need your proxy card and Social Security Number (where
applicable) when voting your shares electronically. The Voter Control Number
that appears in the box above, just below the perforation, must be used in
order to vote by telephone or via the Internet.
The EquiServe Vote by Telephone and Vote by Internet systems can be accessed
24-hours a day, seven days a week up until the day prior to the meeting.
To Vote by Telephone:
Using a touch-tone phone call Toll-free: 1-877-PRX-VOTE (1-877-779-8683)
From outside the United States, call direct: 1-201-536-8073
To Vote by Internet:
Log on to the Internet and go to the website: http://www.eproxyvote.com/whr
Note: If you vote over the Internet, you may incur costs such as
telecommunication and Internet access charges for which you will be
responsible.
THANK YOU FOR VOTING YOUR SHARES
YOUR VOTE IS IMPORTANT!
Do Not Return this Proxy Card if you are Voting by Telephone or the Internet.
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