SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] Confidential, for Use of the
Commission Only (as Permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
AVERY DENNISON CORPORATION
(Name of Registrant as Specified In Its Charter)
AVERY DENNISON CORPORATION
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) 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:
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Avery Dennison Corporation
[LOGO OF AVERY 150 North Orange Grove Boulevard
DENNISON] Pasadena, California 91103
-----------------
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Notice of To the Stockholders:
Annual Meeting
of Stockholders The Annual Meeting of Stockholders of Avery Dennison
To be held Corporation will be held at 150 North Orange Grove
April 25, 2002 Boulevard, Pasadena, California, on Thursday, April 25,
2002, at 1:30 P.M. for the following purposes:
1. To elect three directors to hold office for a term of
three years and until their successors are elected and
have qualified; and
2. To transact such other business as may properly come
before the meeting and any adjournments thereof.
In accordance with the Bylaws, the Board of Directors has
fixed the close of business on Monday, February 25, 2002,
as the record date for the determination of stockholders
entitled to vote at the Annual Meeting and to receive
notice thereof.
All stockholders are cordially invited to attend the
meeting.
BY ORDER OF THE BOARD OF DIRECTORS
Robert G. van Schoonenberg
Secretary
Pasadena, California
Dated: March 11, 2002
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Whether or not you presently plan to attend the Annual
Meeting, in order to ensure your representation please
vote by telephone or by using the Internet as instructed
on the enclosed proxy card, or complete, sign and date the
enclosed proxy card as promptly as possible and return it
in the enclosed envelope (which does not require postage
if mailed in the United States). If you attend the meeting
and wish to vote in person, your proxy will not be used.
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AVERY DENNISON CORPORATION
150 North Orange Grove Boulevard
Pasadena, California 91103
PROXY STATEMENT
This proxy statement is furnished to the stockholders on behalf of the Board
of Directors of Avery Dennison Corporation, a Delaware corporation
(hereinafter called the "Company"), for solicitation of proxies for use at the
Annual Meeting of Stockholders to be held on Thursday, April 25, 2002 at 1:30
P.M. and at any and all adjournments thereof. A stockholder giving a proxy
pursuant to the present solicitation may revoke it at any time before it is
exercised by giving a subsequent proxy or by delivering to the Secretary of
the Company a written notice of revocation prior to the voting of the proxy at
the Annual Meeting. If you attend the meeting and wish to vote your shares in
person, your proxy will not be used. Votes cast by proxy or in person at the
Annual Meeting will be tabulated by the election inspectors appointed for the
meeting and will determine whether or not a quorum is present. Under the
Company's Bylaws and Delaware law: (1) shares represented by proxies that
reflect abstentions or "broker non-votes" (i.e., shares held by a broker or
nominee which are represented at the meeting, but with respect to which such
broker or nominee is not empowered to vote on a particular proposal) will be
counted as shares that are present and entitled to vote for purposes of
determining the presence of a quorum; (2) there is no cumulative voting and
the director nominees receiving the highest number of votes, up to the number
of directors to be elected, are elected and, accordingly, abstentions, broker
non-votes and withholding of authority to vote will not affect the election of
directors; and (3) proxies that reflect abstentions as to a particular
proposal will be treated as voted for purposes of determining the approval of
that proposal and will have the same effect as a vote against that proposal,
while proxies that reflect broker non-votes will be treated as unvoted for
purposes of determining approval of that proposal and will not be counted as
votes for or against that proposal. The Company has retained D. F. King & Co.,
Inc. to assist in soliciting proxies for this meeting at a fee estimated at
$10,000 plus out of pocket expenses. Expenses incident to the preparation and
mailing of the notice of meeting, proxy statement and form of proxy are to be
paid by the Company. This proxy statement is to be mailed to stockholders on
or about March 11, 2002.
The purpose of the meeting and the matters to be acted upon are set forth in
the foregoing attached Notice of Annual Meeting. As of the date of this
statement, other than the election of directors, management knows of no other
business that will be presented for consideration at the meeting. However, if
any such other business shall properly come before the meeting, votes will be
cast pursuant to said proxies in respect of any such other business in
accordance with the best judgment of the persons acting under said proxies.
See "GENERAL -- Stockholder Proposals" below.
ELECTION OF DIRECTORS (Proxy Item 1)
The Bylaws of the Company presently provide for thirteen directors, divided
into three classes. Three directors are to be elected at the 2002 Annual
Meeting and will hold office until the Annual Meeting in 2005 and until their
successors are elected and have qualified. It is intended that the persons so
appointed in the enclosed proxy will, unless authority is withheld, vote for
the election of the three nominees proposed by the Board of Directors, all of
whom are presently directors of the Company. In voting for the election of
directors, each share has one vote for each position to be filled. All of the
nominees have consented to being named herein and to serve if elected. In the
event that any of them should become unavailable prior to the Annual Meeting,
the proxy may be voted for a substitute nominee or nominees designated by the
Board of Directors, or the number of directors may be reduced accordingly.
1
The following information, which has been provided by the directors, shows
for each of the nominees for election to the Board of Directors and for each
director whose term continues, his or her name, age, and principal occupation
or employment during the past five years, the name of the corporation or other
organization, if any, in which such occupation or employment is or was carried
on, the period during which such person has served as a director of the
Company and the year in which each continuing director's present term as
director expires.
2002 NOMINEES
[PHOTO OF CHARLES D. MILLER]
Charles D. Miller, age 74. In May 2000, Mr. Miller retired as
Chairman of Avery Dennison Corporation, a position he had held since
May 1998. From November 1983 through April 1998, Mr. Miller was
Chairman and Chief Executive Officer of Avery Dennison Corporation.
Prior to 1983, he served as President and Chief Executive Officer. He
is Chairman and a director of Nationwide Health Properties, Inc., and
also is a director of Edison International, and Korn/Ferry
International. He has been a director of Avery Dennison Corporation
since January 1975.
[PHOTO OF RICHARD M. FERRY]
Richard M. Ferry, age 64. Since July 2001, Mr. Ferry has been Founder
Chairman of Korn/Ferry International, an international executive
search firm. In July 2001, Mr. Ferry retired as Chairman of
Korn/Ferry international, a position he had held since May 1997. From
May 1991 through May 1997, Mr. Ferry was Chairman and Chief Executive
Officer of Korn/Ferry International. He is also a director of Dole
Food Company, Korn/Ferry International, Mrs. Fields Famous Brands,
Inc., and Pacific Life Insurance Company. He has been a director of
Avery Dennison Corporation since December 1985.
[PHOTO OF KENT KRESA]
Kent Kresa, age 63. Since September 2001, Mr. Kresa has been Chairman
and Chief Executive Officer of Northrop Grumman Corporation, an
aeronautical and defense systems manufacturer. From September 1990 to
September 2001, Mr. Kresa served as Chairman, President and Chief
Executive Officer of Northrop Grumman Corporation. He is also a
director of Northrop Grumman Corporation. He has been a director of
Avery Dennison Corporation since February 1999.
The Board of Directors recommends a vote FOR the above nominees.
2
CONTINUING DIRECTORS
[PHOTO OF DWIGHT L. ALLISON, JR.]
Dwight L. Allison, Jr., age 72. Since October 1986, Mr. Allison has
been a private investor. From January 1977 to September 1986, Mr.
Allison served in various senior executive positions (including
Chairman and Chief Executive Officer, Vice Chairman and President)
with The Boston Company, a trust, banking and financial management
firm. He has been a director of Avery Dennison Corporation since
October 1990. He will retire from the Board of Avery Dennison after
the Annual Meeting of Stockholders in April.
[PHOTO OF SIDNEY R. PETERSEN]
Sidney R. Petersen, age 71. During the past five years, Mr. Petersen
has been a private investor. In 1984, he retired as Chairman and
Chief Executive Officer of Getty Oil Company, a position that he had
held since 1980. He is also a director of Sypris Solutions, Inc. He
has been a director of Avery Dennison Corporation since December
1981. His present term expires in 2003.
[PHOTO OF JOHN C. ARGUE]
John C. Argue, age 70. Mr. Argue has been Chairman of The Rose Hills
Foundation since December 1996. From January 1990 to December 1999,
he was Of Counsel to the law firm of Argue Pearson Harbison & Myers.
Mr. Argue is also a director of Apex Mortgage Capital, Inc.,
Nationwide Health Properties, Inc., and TCW/Convertible Securities
Fund, Inc., a registered investment company. He is a trustee of the
TCW Galileo family of mutual funds. He has been a director of Avery
Dennison Corporation since January 1988. His present term expires in
2003.
[PHOTO OF DAVID E. I. PYOTT]
David E. I. Pyott, age 48. Since April 2001, Mr. Pyott has been
Chairman, President and Chief Executive Officer of Allergan, Inc., a
global health care company. From January 1998 through March 2001, he
was President and Chief Executive Officer of Allergan, Inc. Prior to
1998, Mr. Pyott was with Switzerland-based Novartis AG, serving as
head of the Novartis Nutrition Division. He is also a director of
Allergan, Inc. and Edwards Lifesciences Corporation. He has been a
director of Avery Dennison Corporation since November 1999. His
present term expires in 2003.
[PHOTO OF DEAN A. SCARBOROUGH]
Dean A. Scarborough, age 46. Since May 2000, Mr. Scarborough has been
President and Chief Operating Officer of Avery Dennison Corporation.
From November 1999 through April 2000, Mr. Scarborough served as
Group Vice President, Fasson Roll Worldwide. From August 1997 through
October 1999, Mr. Scarborough served as Group Vice President, Fasson
Roll North America and Europe. Prior to August 1997, Mr. Scarborough
held other executive positions with the Company. He has been a
director of Avery Dennison Corporation since May 2000. His present
term expires in 2003.
3
[PHOTO OF PHILIP M. NEAL]
Philip M. Neal, age 61. Since May 2000, Mr. Neal has served as
Chairman and Chief Executive Officer of Avery Dennison Corporation.
From May 1998 through April 2000, Mr. Neal served as President and
Chief Executive Officer of Avery Dennison Corporation. From December
1990 through April 1998, Mr. Neal was President and Chief Operating
Officer of Avery Dennison Corporation. Prior to December 1990, he
served as Executive Vice President, Group Vice President, and Senior
Vice President, Finance, respectively. He is also a director of
Edwards Lifesciences Corporation. He has been a director of Avery
Dennison Corporation since December 1990. His present term expires in
2004.
[PHOTO OF FRANK V. CAHOUET]
Frank V. Cahouet, age 69. In December 1998, Mr. Cahouet retired as
Chairman, President and Chief Executive Officer of Mellon Financial
Corporation, a position that he had held since June 1987. From
September 1986 through June 1987, Mr. Cahouet served as President of
the Federal National Mortgage Association. He is also a director of
Allegheny Technologies, Inc., Korn/Ferry International, Teledyne
Technologies, Inc., and Saint-Gobain Corporation. Mr. Cahouet has
been a director of Avery Dennison Corporation since February 1983.
His present term expires in 2004.
[PHOTO OF PETER W. MULLIN]
Peter W. Mullin, age 61. During the past five years, Mr. Mullin has
been Chairman and Chief Executive Officer of Mullin Consulting, Inc.,
an executive compensation, benefit planning and corporate insurance
consulting firm. He is also a director of Golden State Vintners,
Inc., and Mrs. Fields Famous Brands, Inc. He has been a director of
Avery Dennison Corporation since January 1988. His present term
expires in 2004.
[PHOTO OF JOAN T. BOK]
Joan T. Bok, age 72. Since April 1998, Mrs. Bok has been Chairman
Emeritus of the Board of New England Electric System Companies, a
public utility holding company and supplier of electricity. From
February 1984 through April 1998, Mrs. Bok was Chairman of the Board
of New England Electric System Companies, and from July 1988 to
February 1989, she served as Chairman, President and Chief Executive
Officer. Mrs. Bok has been a director of Avery Dennison Corporation
since October 1990. She will retire from the Board of Avery Dennison
following the Annual Meeting of Stockholders in April.
[PHOTO OF BRUCE E. KARATZ]
Bruce E. Karatz, age 56. Since October 1993, Mr. Karatz has been
Chairman, President and Chief Executive Officer of KB Home, a home
construction and finance company. From 1985 to September 1993, Mr.
Karatz served as President and Chief Executive Officer of KB Home. He
is also a director of Honeywell International, Inc., KB Home, The
Kroger Company and National Golf Properties, Inc. He has been a
director of Avery Dennison Corporation since November 2001. His
present term expires in 2004.
4
SECURITY OWNERSHIP OF MANAGEMENT
The following table shows the number of shares of the Company's common stock
beneficially owned by each director of the Company and each of the executive
officers named in the table on page 9, and the aggregate number of such shares
beneficially owned by all directors and executive officers as of December 31,
2001.
Amount and
Nature of
Beneficial Percent
Name Ownership(1) of Class
---- ------------ --------
Philip M. Neal................................. 382,588 (3) (2)
Charles D. Miller.............................. 679,657 (4) (2)
Sidney R. Petersen............................. 42,526 (5)(6) (2)
Frank V. Cahouet............................... 68,386 (7) (2)
Richard M. Ferry............................... 45,409 (5)(8) (2)
John C. Argue.................................. 45,406 (9) (2)
Peter W. Mullin................................ 46,919 (5)(10) (2)
Dwight L. Allison, Jr.......................... 69,280 (5)(11) (2)
Joan T. Bok.................................... 35,002 (12) (2)
Kent Kresa..................................... 10,288 (13) (2)
David E. I. Pyott.............................. 10,132 (14) (2)
Dean A. Scarborough............................ 120,546 (15) (2)
Bruce E. Karatz................................ -- (16) (2)
Robert G. van Schoonenberg..................... 100,900 (17) (2)
Robert M. Malchione............................ 3,032 (2)
Daniel R. O'Bryant............................. 23,929 (18) (2)
All Directors and Executive Officers as a Group
(21 persons, including those named)........... 1,781,118 (19) 1.6%
--------
(1) Except as otherwise indicated and subject to applicable community
property and similar statutes, the persons listed as beneficial owners of
the shares have sole voting and/or investment power with respect to such
shares.
(2) Less than 1%.
(3) Includes 270,484 shares with respect to which Mr. Neal holds options
exercisable within 60 days from December 31, 2001. Includes 107,197
shares held in trust in which Mr. Neal has sole voting and disposition
power.
(4) Includes 545,950 shares with respect to which Mr. Miller holds options
exercisable within 60 days from December 31, 2001. Also includes 111,873
shares held in the Miller Family Trust, as to which Mr. Miller has sole
authority to vote and to dispose of the shares. Also includes 4,195
shares held in The Candyman Trust and 4,195 shares held in the Mandycan
Trust, as to which Mr. Miller, as co-trustee, shares the authority to
vote and to dispose of the shares. Also includes 5,079 shares held by
Mrs. Miller, as to which Mr. Miller disclaims beneficial ownership. Also
includes 500 shares held by each of Mr. Miller's two dependent daughters,
as to which Mr. Miller disclaims beneficial ownership.
(5) Includes 27,000 shares with respect to which each of Messrs. Petersen,
Ferry, Mullin, and Allison holds options exercisable within 60 days from
December 31, 2001.
(6) Includes 14,529 shares held in the Petersen Family Trust, as to which Mr.
Petersen, as co-trustee, shares the authority to vote and to dispose of
the shares. Also includes 997 stock units designated for Mr. Petersen
under the director deferred equity compensation program ("DDECP"),
representing the right to receive Company shares upon retirement from the
Board.
5
(7) Includes 31,000 shares with respect to which Mr. Cahouet holds options
exercisable within 60 days from December 31, 2001. Includes 19,076 shares
held in trust with respect to which Mr. Cahouet has sole voting and
disposition power. Also includes 16,474 shares held in trust by Mrs.
Cahouet, as to which Mr. Cahouet disclaims any beneficial ownership. Also
includes 1,197 shares issuable under phantom stock units designated for
Mr. Cahouet under the Company's Capital Accumulation Plan ("CAP") trust.
Also includes 530 stock units designated for Mr. Cahouet under DDECP.
(8) Includes 1,238 shares issuable under phantom stock units designated for
Mr. Ferry under the CAP trust.
(9) Includes 28,000 shares with respect to which Mr. Argue holds options
exercisable within 60 days from December 31, 2001. Includes 3,300 shares
held in trust with respect to which Mr. Argue has sole voting power but
no disposition power. Also includes 1,650 shares held in trust with
respect to which Mr. Argue has the authority to vote and dispose of the
shares. Also includes 1,238 shares issuable under phantom stock units
designated for Mr. Argue under the CAP trust. Also includes 1,788 stock
units designated for Mr. Argue under DDECP.
(10) Includes 619 shares issuable under phantom stock units designated for Mr.
Mullin under the CAP trust.
(11) Includes 40,600 shares held in a trust in which Mr. Allison is the
primary beneficiary, but does not hold investment or voting powers. Also
includes 1,680 shares held in a trust in which Mrs. Allison is the
primary beneficiary and Mr. Allison is a contingent beneficiary without
investment or voting powers.
(12) Includes 24,500 shares with respect to which Mrs. Bok holds options
exercisable within 60 days from December 31, 2001. Also includes 302
shares issuable under phantom stock units designated for Mrs. Bok under
the CAP trust.
(13) Includes 8,000 shares with respect to which Mr. Kresa holds options
exercisable within 60 days from December 31, 2001. Also includes 1,688
stock units designated for Mr. Kresa under DDECP.
(14) Includes 8,000 shares with respect to which Mr. Pyott holds options
exercisable within 60 days from December 31, 2001. Also includes 1,732
stock units designated for Mr. Pyott under DDECP.
(15) Includes 94,255 shares with respect to which Mr. Scarborough holds
options exercisable within 60 days from December 31, 2001. Also includes
113 shares held by Mrs. Scarborough, as to which Mr. Scarborough
disclaims beneficial ownership, and 2,131 shares issuable under phantom
stock units designated for Mr. Scarborough under the CAP trust.
(16) Mr. Karatz joined the Board of Directors in November 2001.
(17) Includes 76,200 shares with respect to which Mr. van Schoonenberg holds
options exercisable within 60 days from December 31, 2001.
(18) Includes 18,400 shares with respect to which Mr. O'Bryant holds options
exercisable within 60 days from December 31, 2001.
(19) Includes 1,276,330 shares with respect to which all executive officers
and directors as a group hold options exercisable within 60 days from
December 31, 2001.
6
BOARD OF DIRECTORS AND COMMITTEE MEETINGS
During 2001, there were seven meetings of the full Board of Directors and
eleven meetings of committees of the Board. All directors of the Company
attended at least 75% of the aggregate number of meetings of the Board and
meetings of Board committees of which they were members held during the time
they served on the Board or Committee.
Standing committees of the Board of Directors include the following:
The Audit Committee, which is composed of the following directors: Sidney R.
Petersen (Chairman), Dwight L. Allison, Jr., Joan T. Bok, Kent Kresa and David
E.I. Pyott, met three times during 2001. The functions of the Audit Committee
are to aid the directors in undertaking and fulfilling their responsibilities
for financial reporting to the stockholders; to support and encourage efforts
to improve the financial controls exercised by management and to ensure their
adequacy for purposes of public reporting; and to provide better avenues of
communication between the Board of Directors, management and the external and
internal auditors.
The Compensation and Executive Personnel Committee, which is composed of the
following directors: John C. Argue (Chairman), Sidney R. Petersen, Frank V.
Cahouet and David E.I. Pyott, met four times during 2001. The functions of the
Compensation and Executive Personnel Committee are to review new or modified
programs in the areas of executive salary and incentive compensation, deferred
compensation, and stock plans and to review and make recommendations to the
Board concerning management's proposed option grants, cash incentive awards
and other direct and indirect compensation matters.
The Ethics and Conflict of Interest Committee, which is composed of the
following directors: Joan T. Bok (Chairman), Sidney R. Petersen, Dwight L.
Allison, Jr., Kent Kresa, David E.I. Pyott and Dean A. Scarborough, met once
during 2001. The functions of the Ethics and Conflict of Interest Committee
are to survey, monitor and provide counsel on an ongoing basis as to the
business relationships, affiliations and financial transactions of directors,
officers and key employees, as they may relate to possible conflicts of
interest or the Company's Legal and Ethical Conduct Policy; to monitor the
Company's compliance program; and to report and make recommendations to the
full Board in instances where it is believed that possible violations of
Company policy could exist.
The Finance Committee, which is composed of the following directors: Frank
V. Cahouet (Chairman), Charles D. Miller, Peter W. Mullin, Dwight L. Allison,
Jr., Philip M. Neal, Sidney R. Petersen, Joan T. Bok, Richard M. Ferry and
Kent Kresa, met once during 2001. The functions of the Finance Committee are
to assist the Board in consideration of matters relating to the financial
affairs and capital requirements of the Company; to provide an overview of the
financial planning and policies of the Company; and to review proposed
budgets, bank loans and changes in the financial structure of the Company.
The Nominating Committee, which is composed of the following directors:
Richard M. Ferry (Chairman), Charles D. Miller, John C. Argue, Peter W. Mullin
and Philip M. Neal, met once during 2001. The functions of the Nominating
Committee are to review the qualifications of candidates for board membership,
to review the status of a director when his or her principal position and/or
primary affiliation changes, to recommend to the Board of Directors candidates
for election by stockholders at annual meetings, to recommend candidates to
fill vacancies in directorships, to recommend to the Board of Directors the
removal of a director, if in the Company's best interest, and to make
recommendations to the Board of Directors concerning selection, tenure,
retirement, and composition of the Board of Directors. Stockholders desiring
to make recommendations concerning new directors must submit the candidate's
name, together with biographical information and the candidate's written
consent to nomination, to: Secretary, Nominating Committee of the Board of
Directors, Avery Dennison Corporation, 150 North Orange Grove Boulevard,
Pasadena, California 91103. Stockholders wishing to nominate new directors for
election at an annual meeting must comply with the requirements described
under the heading "GENERAL -- Stockholder Proposals" on p. 23.
7
The Strategic Planning Committee, which is composed of all of the directors
with Philip M. Neal as Chairman, met once during 2001. The functions of the
Strategic Planning Committee are to review the Company's long-term strategic
plan, objectives, programs, and proposed acquisition candidates and
divestitures; to review steps being taken to improve shareholder value; and to
make recommendations to the Board of Directors on any of these matters.
The Executive Committee, which is composed of the following directors:
Charles D. Miller (Chairman), Richard M. Ferry, Philip M. Neal, John C. Argue,
Frank V. Cahouet, and Peter Mullin, did not meet during 2001. The function of
the Executive Committee is to act on an interim basis for the full Board and
to report all such actions to the Board for ratification at its next meeting.
Each director who is not an officer of the Company is paid an annual
retainer fee of $34,000 and attendance fees of $1,500 per Board meeting
attended, and $1,400 per committee meeting attended as Chairman of the
committee or $1,200 per committee meeting attended as a member of the
committee. The Chairmen of the Audit and Compensation and Executive Personnel
Committees are each also paid an annual retainer fee of $4,000, and the
Chairmen of the Finance, Nominating and the Ethics and Conflict of Interest
Committees are each paid an annual retainer fee of $3,000. Under the directors
variable deferred compensation plan, fees, which are deferred either accrue
interest at a fixed rate based on the 120-month rolling average of ten-year
U.S. Treasury Notes (plus, if the director ceases to be a director by reason
of death, disability or normal retirement, 25% of such rate per annum), or
accrue at the actual rate of return (less an administrative fee) of one of
five investment funds managed by an insurance company. Benefits payable by the
Company under this plan are secured with assets placed in an irrevocable
trust. Under the directors deferred equity compensation program, directors
fees may be deferred into stock units, which will be paid out in shares of
Company stock at retirement. In addition, each non-employee director received
a gift of 200 shares of the Company's common stock on April 26, 2001.
Directors are also eligible to participate in the Retirement Plan for
Directors, whereby individuals who serve on the Company's Board of Directors
after 1982 and subsequently terminate their service as a director with at
least five years' tenure, are entitled to receive an annual benefit from the
Company equal to the annual director retainer fee plus 12 times the regular
meeting fee, as such fees are in effect on the date of termination, payable to
the director (or to the director's surviving spouse of at least one year or
other designated beneficiary) for the number of full or partial years the
director served on the Company's Board. Following the death of the director's
surviving spouse, or if there is no surviving spouse living at the time of the
death of the director, any benefits will be paid to one or more secondary
beneficiaries designated by the director prior to his or her death until the
first to occur of: (i) receipt of the maximum benefit to which the director
would have been entitled had he or she survived; (ii) the death of the
secondary beneficiaries, if natural persons; or (iii) benefits have been paid
under the plan to the director, surviving spouse, and/or the secondary
beneficiaries for a combined period of ten years.
Non-employee directors also participate in the 1988 Stock Option Plan for
Non-Employee Directors ("1988 Plan"), pursuant to which options to purchase a
total of 27,000 shares (2,000 options for each non-employee director plus
5,000 options for Mr. Karatz when he joined the Board of Directors) of Company
common stock were granted in 2001 to the non-employee directors eligible to
receive grants under such plan. The option price for each such option granted
is 100% of the fair market value of Company common stock on the date of grant.
All options granted have a term of ten years, and become exercisable in two
cumulative installments of 50% of the number of shares with respect to which
the option was initially granted, on each of the first and second
anniversaries of the grant date, except that all options owned by a director
which are unexercisable on the date the director retires at or after age 72
will become fully exercisable on the date of such retirement. Under the CAP,
non-employee directors have the opportunity to defer until retirement the
receipt of gain realized on exercise of stock options. The 1988 Plan calls for
each non-employee director to receive an option grant with respect to 5,000
shares upon joining the Board of Directors, and automatic annual grants of
2,000 shares thereafter to each continuing non-employee director.
8
EXECUTIVE COMPENSATION AND OTHER INFORMATION
Executive Compensation
The following table and accompanying notes show for the Chairman and Chief
Executive Officer and the other four most highly compensated executive
officers of the Company for 2001, the compensation paid by the Company to such
persons for services in all capacities during 2001 and the preceding two
fiscal years.
SUMMARY COMPENSATION TABLE
Long-Term Compensation
--------------------------------
Annual Compensation Awards Payouts
-------------------------------- --------------------- ----------
Restricted Securities
Other Annual Stock Underlying LTIP All Other
Name and Salary Bonus Compensation Award(s) Options Payouts Compensation
Principal Position Year ($)(1) ($)(1) ($)(2) ($) (#) ($)(3) ($)(4)
------------------ ---- -------- ---------- ------------ ---------- ---------- ---------- ------------
Philip M. Neal 2001 $871,667 $ 500,000 -- -- 220,000 $1,320,000 $93,713
Chairman and Chief 2000 808,350 1,000,000 -- -- 50,000 -- 81,567
Executive Officer 1999 750,025 930,000 -- -- 85,000 1,120,000 48,716
Dean A. Scarborough 2001 $526,667 $ 200,000 $118,732 -- 85,000 $ 568,200 $27,800
President and Chief 2000 457,043 430,000 102,821 -- 40,000 -- 22,839
Operating Officer 1999 345,182 314,300 -- -- 46,600 450,300 14,425
Robert G. van Schoonenberg 2001 $421,667 $ 181,200 -- -- 46,750 $ 616,000 $22,306
Executive Vice President, 2000 376,675 337,800 -- -- 11,750 -- 33,120
General Counsel and 1999 353,340 297,000 -- -- 16,600 544,000 19,421
Secretary
Robert M. Malchione 2001 $363,333 $ 131,300 $ 55,955 -- 44,150 -- $13,492
Senior Vice President, 2000 145,833 116,400 -- -- 68,300 -- 3,933
Corporate Strategy and 1999 -- -- -- -- -- -- --
Technology
Daniel R. O'Bryant 2001 $359,333 $ 117,500 $ 66,091 -- 56,500 $ 87,500 $11,445
Senior Vice President, 2000 251,167 50,000 -- -- 6,500 -- 4,919
Finance and Chief 1999 202,171 105,800 -- -- 5,300 -- 4,899
Financial Officer
--------
(1) Amounts shown include amounts earned but deferred at the election of
executive officers under the Company's deferred compensation plans and
Employee Savings Plan, a qualified defined contribution plan under Section
401(k) of the Code.
(2) Amounts paid to Mr. Scarborough, Mr. Malchione and Mr. O'Bryant include
$82,070, $21,000 and $31,500, respectively, for mortgage differential
payments related to relocation expenses.
(3) Amounts for 2001 and 1999 consist of cash payments under the Company's
Executive Long-Term Incentive Plan ("LTIP") for the cycles completed on
December 31, 2000 and December 31, 1998, respectively.
(4) Amounts consist of (i) Company contributions to deferred compensation
plans and Company contributions to the Company's Employee Savings Plan, a
401(k) plan ("Savings Plan"); and (ii) interest earned on deferred
compensation accounts above 120% of the applicable federal rate ("above
market interest") for Mr. Neal and Mr. van Schoonenberg. These amounts for
2001 are $55,250 and $38,463, respectively, for Mr. Neal; $27,800 for Mr.
Scarborough; $5,169 and $17,138, respectively, for Mr. van Schoonenberg,
$13,492 for Malchione; and $11,445 for Mr. O'Bryant.
Option Grants
The table on the next page shows information regarding options granted in
2001 to each of the named executive officers under the 1990 Stock Option and
Incentive Plan (the "1990 Plan") or the 1996 Stock Incentive Plan (the "1996
Plan").
9
OPTION GRANTS IN LAST FISCAL YEAR
Individual Grants
------------------------------------------------------------------
Number of
Securities % of
Underlying Total Options Exercise
Options Granted to or Base
Granted Employees in Price Expiration Grant Date
Name (#)(1)(2) Fiscal Year ($/Share) Date Present Value ($)(3)
---- ---------- ------------- --------- ---------- --------------------
Philip M. Neal 50,000 2.63% $50.72 7/26/2011 $ 823,500
170,000 8.94 55.71 12/6/2011 3,267,400
Dean A. Scarborough 20,000 1.05 50.72 7/26/2011 329,400
65,000 3.42 55.71 12/6/2011 1,249,300
Robert G. van
Schoonenberg 11,750 0.62 50.72 7/26/2011 193,523
35,000 1.84 55.71 12/6/2011 672,700
Robert M. Malchione 9,150 0.48 50.72 7/26/2011 150,701
35,000 1.84 55.71 12/6/2011 672,700
Daniel R. O'Bryant 6,500 0.34 50.72 7/26/2011 107,055
20,000 1.05 50.72 7/26/2011 372,000
30,000 1.58 55.71 12/6/2011 576,600
--------
(1) Non-qualified stock options were granted at fair market value for a term
of ten years under the 1990 or the 1996 Plan. With the exception of Mr.
O'Bryant's second grant, which vests ratably over 4 years, the options
vest nine years and nine months from the date of grant, but are eligible
for accelerated vesting, beginning three years from the date of grant, if
the Company meets a return on total capital test, which measures the
Company's return on total capital against that of a specified group of
other companies approved by the Compensation and Executive Personnel
Committee.
(2) The Compensation and Executive Personnel Committee may accelerate the time
at which an option becomes exercisable, and in the event of a "change of
control" of the Company (as defined in the option agreement) options
become immediately exercisable.
(3) Option grant date values were determined using a Black-Scholes option-
pricing model adapted for use in valuing executive stock options. In
determining the Black-Scholes value, the following underlying assumptions
were used: (i) stock price volatility is measured as the standard
deviation of the Company's stock price over the three years prior to grant
(ranges from .3299 to .3516); (ii) dividend yield is measured as the
cumulative dividends paid the last twelve months as a percentage of the
twelve-month average of the month-end closing prices (for the month in
which the dividend was declared) prior to grant of the option (ranges from
2.204% to 2.337%); (iii) the risk-free rate of return represents the
weekly average of the ten-year Treasury bond rates for the 52 weeks
immediately preceding the grant date of the options (ranges from 5.03% to
5.45%); (iv) option term represents the period from the date of grant of
each option to the expiration of the term of each option (10 years); (v)
vesting restrictions are reflected by reducing the value of the option
determined by the Black-Scholes model by 5% for each full year of vesting
restrictions, assuming that exercisability of the options were accelerated
to the fifth anniversary of the option grant date as a result of meeting
the performance condition described in footnote (1) as of that date (i.e.,
25%). In the event that the performance condition described in footnote
(1) is met later than the fifth anniversary of the grant date, or is not
met during the term of the options, the grant date present value of the
options would be lower. In the event that such performance condition is
not met at all and the options become exercisable nine years and nine
months after the options are granted, the grant date present value of the
options would be $544,500 and $2,160,700, respectively, for Mr. Neal;
$217,800 and $826,150, respectively, for Mr. Scarborough; $127,958 and
$444,850, respectively, for Mr. van Schoonenberg, $99,644 and $444,850,
respectively, for Mr. Malchione, and $70,785 and $381,300, respectively,
for Mr. O'Bryant. The Black-Scholes option pricing model calculates a cash
equivalent value for an option on the date of grant. The Company's use of
such model is not intended to forecast any future appreciation in the
price of the Company's stock. In addition, no gain to the optionees is
possible without appreciation in the price of the Company's common stock,
which will benefit all stockholders. If the market price of the stock does
not exceed the exercise price of the options at some time after the
options become exercisable or if they terminate unvested or unexercised,
the value of the options will ultimately be zero.
10
Option Exercises and Fiscal Year-End Values
The following table shows for each of the named executive officers the
shares acquired on exercise of options during 2001, the difference between the
option exercise price and the market value of the underlying shares on the
date of such exercise, and (as to outstanding options at December 31, 2001)
the number of unexercised options and the aggregate unrealized appreciation on
"in-the-money," unexercised options held at such date.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
Number of
Securities Value of
Underlying Unexercised
Unexercised In-the-Money
Options at Options at
Fiscal Year-End Fiscal Year-End
(#) ($)(2)
--------------- --------------------
Shares Acquired Value Exercisable/ Exercisable/
Name on Exercise (#) Realized ($)(1) Unexercisable Unexercisable
---- --------------- --------------- --------------- --------------------
Philip M. Neal -- -- 270,484/440,804 $8,234,453/1,646,647
Dean A. Scarborough 13,634 $ 551,908 94,255/222,600 2,308,148/1,132,742
Robert G. van
Schoonenberg 36,000 1,219,200 76,200/102,100 1,635,739/ 460,537
Robert A. Malchione -- -- 0/103,300 0/ 688,407
Daniel R. O'Bryant -- -- 18,400/ 67,600 273,755/ 240,761
--------
(1) Market value of the common stock at the exercise date minus the exercise
price of the options exercised. Amounts in this column represent the value
realized by the named executive upon the exercise of stock options granted
in prior years. All options had exercise prices equal to the market price
of the Company's stock on the date the options were granted, and vested on
the basis of the executive's continued employment with the Company. Thus,
the amount realized upon exercise of the options resulted directly from
appreciation in the Company's stock price during the executives' tenure
with the Company.
(2) Market value of the common stock at December 31, 2001 minus the exercise
price of "in-the-money" options.
Long-Term Incentive Plan Awards
Under the LTIP, key executives recommended by the Company's Chief Executive
Officer and designated by the Compensation and Executive Personnel Committee
of the Board of Directors (the "Committee") are eligible to earn a deferred
cash incentive award based on the financial performance of the Company and, in
some cases, its business units. Participants in the LTIP are eligible to earn
a deferred cash incentive award after the end of each performance cycle, which
cycles generally begin every other year. The current three-year cycle
commenced in 2000 (2000-2002), and future cycles will commence every other
year (e.g., 2002 and 2004). Cash payments made in 2001 under the LTIP for the
performance cycle ended in 2000 are set forth in the table on page 9. No
deferred cash incentive awards were made under the LTIP in 2001.
11
Retirement Plan
The Company provides retirement benefits for employees under the Retirement
Plan for Employees of Avery Dennison Corporation (the "Retirement Plan") and
the Benefit Restoration Plan (the "BRP") described below. Benefits under the
Retirement Plan are based on compensation and are calculated separately for
each year of service using the formula 1.25% times compensation up to the
breakpoint (currently $35,100, which is the average of the Social Security
wage bases for the preceding 35 years) plus 1.75% times compensation in excess
of the breakpoint. The results of the calculation for each year of service are
added together to determine the annual single life annuity Retirement Plan
benefit for an employee at normal retirement (age 65). The benefit is not
subject to reductions for Social Security payments or other offsets.
Amounts payable under the Retirement Plan may be reduced in accordance with
certain Code provisions which, as applied to plan years beginning on or after
December 1, 1994, limited the amount of compensation used to determine annual
benefit accruals under the Retirement Plan to the first $170,000 of covered
compensation and which limited the annual pension benefit payable under the
Retirement Plan to $135,000. The Company established the BRP in December 1994
to provide for the payment of supplemental retirement benefits to eligible
employees, including each of the individuals listed in the table on page 9,
whose Retirement Plan benefits are limited under the foregoing Code
provisions. The BRP is an unfunded excess benefit plan, which is administered
by the Company. Benefits are payable under the BRP in amounts equal to the
amount by which a participant's benefits otherwise payable under the
Retirement Plan, with respect to periods from and after December 1, 1994, are
reduced under the applicable provisions of the Code.
Compensation covered by the Retirement Plan includes both salary and bonus
amounts, less amounts deferred at the election of employees under the
Company's deferred compensation plans and the Company's Employee Savings Plan.
However, the BRP covers compensation without deduction of amounts deferred
under such plans. Hence the retirement benefits payable to each of the
individuals listed in the table on page 9 under the Retirement Plan and the
BRP, taken together, will be based (for each year of service from and after
December 1, 1994) on the sum of the salary and bonus amounts (including all
deferred amounts), earned in each such year. The estimated annual benefits
payable to each of these individuals at normal retirement are $350,440 for
Mr. Neal, $379,970 for Mr. Scarborough, $219,040 for Mr. van Schoonenberg,
$206,670 for Mr. Malchione and $237,020 for Mr. O'Bryant, respectively. These
estimated benefits do not include any assumption for annual increases in
compensation.
The Supplemental Executive Retirement Plan (the "SERP"), adopted in 1983, is
designed to provide its participants with additional incentives to further the
Company's growth and development and as an inducement to remain in its
service. Participants designated by the Committee of the Board of Directors
are offered benefits under this plan to supplement those to which they may be
entitled at the time of their retirement. The Committee has designated Mr.
Neal as a participant in this plan. Mr. Neal's benefits will commence upon his
retirement at a benefit level which, when added to the benefits to which he
will be entitled from the Retirement Plan, the BRP and the SHARE Plan at the
time of his retirement, Company contributions to the Employee Savings Plan and
Social Security, will equal 62.5% of his final average compensation (average
of his annual salary plus annual bonus for the last three years of
employment). Assuming benefits commence in 2005, Mr. Neal's estimated annual
retirement benefit under the SERP would be $604,600. Survivor and disability
benefits are also payable under the SERP under certain circumstances. Benefits
payable under the SERP are secured with assets placed in an irrevocable trust.
The cost of benefits payable under the SERP will be recovered from the
proceeds of life insurance purchased by the Company, if assumptions made as to
life expectancy, policy dividends, and other factors are realized.
Other Information
On April 15, 1997, the Company entered into an agreement with Mr. Neal,
which agreement was amended on May 1, 2000 to reflect his promotion to
Chairman and Chief Executive Officer, providing that, if his employment is
terminated for any reason other than for death, disability, cause or voluntary
resignation without
12
good reason (as such terms are defined in the agreement), he (i) will receive
a payment equivalent to a pro-rated annual bonus for the year of termination;
salary and bonus (based on his highest combined annual base salary plus bonus
in any of the three previous years) for three years or until he reaches age 65
(the "severance period"); and additional retirement and supplemental
retirement benefits which would have accrued during the severance period; (ii)
will continue to participate in welfare benefit plans (such as medical,
dental, and life insurance) for three years (but reduced to the extent such
benefits are provided by another employer); (iii) will receive three
additional years of age and service credit under the Company's deferred
compensation plans; (iv) will receive payments under the LTIP for performance
cycles which commence during the severance period; and (v) his unvested stock
options will be accelerated. Upon any such termination, Mr. Neal will be
entitled to purchase the Company automobile, if any, then being provided for
his use at its depreciated book value, and to have assigned to him at no cost
(although Mr. Neal must reimburse the Company for the cash value of the
policy, if any) and with no apportionment of prepaid premiums, any assignable
insurance policy then owned by the Company specifically relating to him. If
such termination occurs after a change of control, the Company will pay for
outplacement services not to exceed $50,000. Amounts to which Mr. Neal would
be entitled under the agreement are reduced to the extent of any compensation
which he earns from any new employment or services performed during the
severance period. Mr. Neal will be reimbursed for any excise taxes that are
imposed under Section 4999 of the Code.
On August 1, 1997, the Company entered into an agreement with Mr.
Scarborough, which was amended on May 1, 2000 to reflect his promotion to
President and Chief Operating Officer. On September 1, 2000, the Company
entered into an agreement with Mr. Malchione and on January 2, 2001, with Mr.
O'Bryant. These agreements are substantially the same as Mr. Neal's described
above, except (i) the severance period following termination is one year
before a change of control and three years after a change of control; (ii)
coverage under welfare benefit plans and additional age and service credit
under the Company's deferred compensation plans following termination is one
year before a change of control and three years (or the minimum age and
service credit required for early retirement benefits and the retirement
interest rate) after a change of control; and (iii) there are no comparable
provisions relating to payments under the LTIP or assumption of insurance
policies. On March 16, 1996, the Company entered into an agreement with Mr.
van Schoonenberg providing that, if his employment with the Company is
terminated for any reason other than for death, disability, cause, or
voluntary resignation without good reason (as such terms are defined in the
agreement), he will receive a payment equivalent to two years salary and
bonus, continue to participate in benefit and incentive plans for a two-year
period, his unvested options will be accelerated, and he will receive the
minimum age and service credit required for early retirement eligibility and
other purposes; in the event of such termination within two years of a change
of control, he will receive a payment equal to three times salary and bonus,
payment for LTIP and reimbursement for excise taxes.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934, as amended (the "1934
Act") requires the Company's executive officers and directors, and persons who
own more than ten percent of a registered class of the Company's equity
securities (collectively, "Insiders"), to file initial reports of ownership
and reports of changes in ownership with the Securities and Exchange
Commission (the "SEC") and the New York Stock Exchange. Insiders are required
by SEC regulations to furnish the Company with copies of all Section 16(a)
forms they file. To the Company's knowledge, based solely on its review of the
copies of such reports furnished to the Company and written representations
from certain Insiders that no other reports were required for such Insiders,
the Company believes that, during the 2001 fiscal year, Insiders complied with
the Section 16(a) filing requirements applicable to Insiders.
13
REPORT OF COMPENSATION AND EXECUTIVE PERSONNEL COMMITTEE
ON EXECUTIVE COMPENSATION
The Committee has furnished the following report on executive compensation.
Overall Policy
The Company's executive compensation program is designed to be closely
linked to Company performance and returns to stockholders. To this end, the
Company developed several years ago overall compensation strategy and specific
compensation plans that tie a significant portion of executive compensation to
the Company's success in meeting specified performance goals and to
appreciation in the Company's stock price. The overall objectives of this
strategy are to attract and retain the best possible executive talent, to
motivate these executives to achieve the goals inherent in the Company's
business strategy, to link executive and stockholders' interests through
equity based plans and finally to provide a compensation package that
recognizes individual contributions as well as overall business results.
Each year the Committee, which is comprised exclusively of non-employee
directors, conducts a review of the Company's executive compensation program.
This review includes an assessment of the effectiveness of the Company's
compensation program and a comparison of the Company's executive compensation
and performance to comparable public corporations, including companies within
the Peer Group described under "Stockholder Return Performance." The Company
retains from time to time the services of executive compensation consultants
to provide to the Company and the Committee comparative data, benefit design
advice and analysis of the cost of incentives provided.
The Committee determines the compensation of the Company's 10 executive
officers, including the individuals whose compensation is detailed in this
proxy statement, and sets policies for and reviews the compensation awarded to
another approximately 65 highly compensated executives. This is designed to
ensure consistency throughout the executive compensation program. In reviewing
the individual performance of the 9 executive officers (other than Mr. Neal),
the Committee takes into account the detailed performance reviews and
recommendations of Mr. Neal.
The key elements of the Company's executive compensation program consist of
base salary, annual bonus, stock options, and, for certain executives,
participation in the LTIP. The Committee's policies with respect to each of
these elements, including the basis for the compensation paid and awarded to
Mr. Neal, Chairman and Chief Executive Officer, are discussed below. In
addition, while the elements of compensation described below are considered
separately, the Committee takes into account the full compensation package
afforded by the Company to the individual executive.
Under the 1993 Omnibus Budget Reconciliation Act ("OBRA") and Section 162(m)
of the Code, income tax deductions of publicly-traded companies may be limited
to the extent total compensation for certain executive officers exceeds $1
million (less the amount of any "excess parachute payments" as defined in
Section 280G of the Code) in any one year, except for compensation payments
which qualify as "performance-based." To qualify as "performance-based,"
compensation payments must be based solely upon the achievement of objective
performance goals and made under a plan that is administered by a committee of
outside directors. In addition, the material terms of the plan must be
disclosed to and approved by stockholders, and the Committee must certify that
the performance goals were achieved before payments can be made. The Committee
has designed certain of the Company's compensation programs to conform with
the Section 162(m) of the Code and related regulations so that total
compensation paid to any employee covered by the Section 162(m) should not
exceed $1 million in any one year, except for compensation payments which
qualify as "performance-based." However, the Company may pay compensation,
which is not deductible in certain circumstances, when sound management of the
Company so requires.
14
Base Salaries
Base salaries for new executive officers are initially determined by
evaluating the responsibilities of the position to be held and the experience
of the individual, and by reference to the competitive marketplace for
executive talent, including a comparison to base salaries for comparable
positions at other companies. The Company participates each year in two
nationwide salary surveys of between approximately 350 and 400 large public
companies performed by nationally recognized compensation consulting firms.
The Committee uses the data compiled from these surveys to assist it in
establishing base salaries. In general, base salaries and total compensation
for executives are targeted to a range that is within the third quartile (the
fourth quartile being the highest) of the compensation paid by such other
companies. Mr. Neal's base salary is also targeted in this range, and his
total compensation is targeted to a range within the fourth quartile. In
addition, in establishing salary levels within that range, the Committee
considers the competitiveness of the executive's entire compensation package.
For 2001, his salary level was within or below this range, based on
competitive salary data compiled in 2000 and updated for use in 2001.
Annual salary adjustments are determined by evaluating the performance of
the Company and of each executive officer, reviewing base salaries for
comparable positions at other companies contained in the salary surveys
described above, and, for selected senior executives, including Mr. Neal,
comparing the total compensation packages of the executive, including base
salary, with those of the companies in the Peer Group described under
"Stockholder Return Performance." In addition, the Committee takes into
account any new responsibilities. In the case of executive officers with
responsibility for a particular business unit, such unit's financial results
are also considered. The Committee, where appropriate, also considers non-
financial performance measures. These include increases in market share,
manufacturing efficiency gains, improvements in product quality, customer
service, working capital management, employee safety, relations with employees
and leadership development.
With respect to the base salary granted to Mr. Neal in 2001, the Committee
took into account a comparison of base salaries of chief executive officers of
the other companies contained in the salary surveys described above; the total
compensation packages of the executives, including base salary, of the
companies in the Peer Group described under "Stockholder Return Performance,"
the Company's success in exceeding several financial goals in 2000, including
return on total capital ("ROTC") and earnings per share ("EPS"); the
performance of the Company's common stock against the Peer Group; and the
assessment by the Committee of Mr. Neal's performance, including his
individual leadership with respect to the development of long-term business
strategies for the Company to improve its economic value, leadership
development, succession planning and management continuity. The Committee also
took into account Mr. Neal's considerable experience in both operating and
corporate positions, which has enabled him to make significant contributions
to the Company. Mr. Neal was granted a base salary of $895,000 in 2001
(effective May 2001), which was an increase of 8.5% over his $825,000 base
salary for 2000.
Annual Bonus
The Company's executive officers, other than Mr. Neal, are eligible for an
annual cash bonus under the Company's Executive Leadership Compensation Plan
(the "Executive Bonus Plan"). Under the Executive Bonus Plan, individual and
corporate performance objectives are established at the beginning of each
year. Eligible executives are assigned threshold, target and maximum bonus
levels. The Company performance measure for bonus payments is based on several
financial goals, including, in 2001: ROTC and EPS. In 2001, the Company
exceeded the minimum of each of its targeted financial goals, each of which is
given approximately equal weight for the senior executive officers. For other
executive officers with responsibility for a particular group, each of which
consists of several business units, the performance measure is based on the
group's net income, economic value added and sales. The sales performance
measure is weighted more heavily than the group's net income and economic
value added for determining bonuses. The Committee weighs these financial
goals very heavily. The Committee also considers the individual non-financial
performance measures described above under "Base Salaries" in determining
bonuses under the Executive Bonus Plan, but to a much lesser extent than the
financial goals described above.
15
Mr. Neal is eligible for an annual cash bonus under the Company's Senior
Executive Leadership Compensation Plan (the "Senior Executive Bonus Plan")
which, along with the Executive Bonus Plan was approved by stockholders in
1999 as part of the Company's policy to design certain of the Company's
compensation programs to conform with Section 162(m) of the Code and related
regulations. Payments under the Senior Executive Bonus Plan are based solely
on the achievement of one or more of the following pre-established objective
performance goals: ROTC, EPS, return on sales ("ROS"), economic value added
("EVA"), return on equity ("ROE"), net income, cash flow, sales and total
shareholder return (defined as cumulative shareholder return, including the
reinvestment of dividends, on the Company's common stock), subject to the
Committee's discretion to decrease awards which would otherwise be payable
under the Senior Executive Bonus Plan. In addition, no bonuses are payable to
the chief executive officer, chief operating officer or chief financial
officer (who is currently a participant in the Executive Bonus Plan) unless
the Company's pre-tax return on stockholders' equity exceeds a minimum
threshold and, in such event, the total of such executives' bonuses may not
exceed a specified percentage of the Company's pre-tax return on stockholders'
equity in excess of that minimum threshold. In 2001, the Company exceeded the
minimum for each of its targeted performance goals (ROTC and EPS) under the
Senior Executive Bonus Plan. Based on this performance, Mr. Neal was awarded a
cash bonus of $500,000, which is 50% lower than the bonus paid for 2000.
Stock Options
Under the 1990 Plan and 1996 Plan, stock options are granted to the
Company's executive officers. The size of stock option awards is determined by
the Committee using as a guideline a formula, which takes into account
competitive compensation data. The formula does not take into account the
amount of stock options previously awarded to the executive officers, although
the Committee may do so. In the event of poor Company or individual
performance, the Committee may elect not to award options or to grant options
on fewer shares.
Stock options are designed to align the interests of executives with those
of the stockholders. The Committee believes that significant equity interests
in the Company held by the Company's management align the interests of
stockholders and management. The Company has adopted a stock ownership
philosophy for officers and directors, which encourages each officer and
director to achieve and maintain certain specified levels of stock ownership
during his or her tenure with the Company.
Stock options are granted with an exercise price equal to the market price
of the common stock on the date of grant and with a ten-year term. Except for
special grants, such as Mr. O'Bryant's second grant of 20,000 options in 2001,
which vest 25% per year, options for the executive officers (including the
individuals whose compensation is detailed in this proxy statement) vest nine
years and nine months from the date of grant, subject to accelerated vesting
beginning three years from the date of grant if the Company meets a return on
total capital, which measures Company's return on total capital against that
of a specified group of other companies approved by the Compensation and
Executive Personnel Committee. Options for executives who do not participate
in the LTIP vest 25% per year over four years. This approach is designed to
promote the creation of stockholder value over the long-term since the full
benefit of the compensation package cannot be realized unless stock price
appreciation occurs over a number of years.
In 2001, Mr. Neal received options to purchase 50,000 shares with an
exercise price of $50.72 per share and options to purchase 170,000 shares with
an exercise price of $55.71. As of December 31, 2001, Mr. Neal held in trust
107,197 shares of the Company's common stock and, with the 2001 grant, holds
options to purchase an additional 711,288 shares, of which options to purchase
270,484 shares were exercisable at December 31, 2001.
LTIP
Under the LTIP, key executives recommended by the Company's Chief Executive
Officer and designated by the Committee are eligible to earn a deferred cash
incentive award based on the financial performance of the Company and, in some
cases, its business units. Participants in the LTIP are eligible to earn a
deferred cash
16
incentive award after the end of each multi-year performance cycle, which
cycles generally begin every other year. Cash payments made in 2001, under the
LTIP for the performance cycle ended in 2000, are set forth in the table on
page 9. No deferred cash incentive awards were made under the LTIP in 2001.
Conclusion
Through the programs described above, a very significant portion of the
Company's executive compensation is linked directly to individual and Company
performance and stock price appreciation. In 2001, approximately 50% of the
Company's executive compensation (approximately 72% for the individuals listed
in the table on page 9) consisted of these performance-based variable
elements. For Mr. Neal, approximately 87% of his 2001 compensation consisted
of performance-based variable elements. The Committee intends to continue the
policy of linking executive compensation to Company performance and returns to
stockholders, recognizing that the ups and downs of the business cycle from
time to time may result in an imbalance for a particular period.
February 28, 2002 John C. Argue, Chairman
Sidney R. Petersen
Frank V. Cahouet
David E.I. Pyott
17
STOCKHOLDER RETURN PERFORMANCE
The graph on the next page compares the Company's cumulative stockholder
return on its common stock, including the reinvestment of dividends, with the
return on the Standard & Poor's 500 Stock Index (the "S&P 500 Index") and the
average return, weighted by market capitalization, of a peer group of
companies (the "Peer Group"). In addition, the Company has included the median
return of the Peer Group in the graph because, under the Company's LTIP,
Company performance is measured against the performance of other companies
using a percentile approach in which each company is given equal weight
regardless of its size.
The Peer Group is comprised of Air Products & Chemicals Inc., Armstrong
Industries Inc., ArvinMeritor, Inc., Baker-Hughes, Incorporated, Bemis
Company, Incorporated, Black & Decker Corporation, Boise Cascade Corporation,
Cabot Corporation, Crane Company, Dana Corporation, Danaher Corporation, Dover
Corporation, Eaton Corporation, Ecolab Incorporated, Engelhard Corporation,
Ethyl Corporation, Federal-Mogul Corporation, Ferro Corporation, FMC
Corporation, H. B. Fuller Company, The B. F. Goodrich Company, W. R. Grace &
Company, Great Lakes Chemical Corporation, Harris Corporation, Harsco
Corporation, Hercules Incorporated, Illinois Tool Works Incorporated,
Ingersoll-Rand Company, MASCO Corporation, The Mead Corporation, Moore
Corporation Limited, NACCO Industries, National Service Industries,
Incorporated, Newell Rubbermaid Incorporated, Olin Corporation, P.P.G.
Industries Incorporated, Parker-Hannifin Corporation, Pentair Incorporated,
Pitney Bowes Incorporated, PolyOne Corporation, Sequa Corporation, The
Sherwin-Williams Company, Snap-On Tools Corporation, Sonoco Products Company,
Stanley Works, Tecumseh Products Company, Thermo Electron Corporation, Thomas
& Betts Corporation, Timken Company, and Westvaco Corporation.
During 2001, one company was removed from the Peer Group for all periods due
to merger/acquisition activity. Union Carbide Corporation was acquired by Dow
Chemical. FMC Corporation was added and has been included for all periods.
18
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN(1)
OF AVERY DENNISON, S&P 500 INDEX AND PEER GROUP,
WEIGHTED AVERAGE(2) AND MEDIAN
as of December 31, 2001
[PERFORMANCE GRAPH APPEARS HERE]
12/96 12/97 12/98 12/99 12/00 12/01
------------------------------------------------------------------
Avery Dennison $100 $129 $132 $217 $167 $176
------------------------------------------------------------------
S&P 500 Index $100 $133 $171 $208 $189 $166
------------------------------------------------------------------
Peer Group (Wt. Average)(2) $100 $133 $144 $137 $137 $145
------------------------------------------------------------------
Peer Group (Median) $100 $129 $108 $106 $101 $114
--------
(1) Assumes $100 invested on December 31, 1996, and the reinvestment of
dividends; chart reflects performance on a calendar year basis.
(2) Weighted average is weighted by market capitalization.
Stock price performance of the Company reflected in the above graph is not
necessarily indicative of future price performance.
19
CERTAIN TRANSACTIONS
Peter W. Mullin is the chairman and chief executive officer and a director
of MC Insurance Services, Inc. ("MC"), Mullin Insurance Services, Inc.
("MINC") and PWM Insurance Services, Inc. ("PWM"), executive compensation and
benefit consultants and insurance agents. Mr. Mullin is also the largest
stockholder of MC and the majority stockholder of MINC and PWM. During 2001,
the Company paid insurance companies premiums for life insurance placed by MC,
MINC and PWM in 2001 and prior years in connection with various Company
employee benefit plans. In 2001, MC, MINC and PWM earned commissions from such
insurance companies in an aggregate amount of approximately $1,666,400 for the
placement and renewal of this insurance, in which Mr. Mullin had direct and
indirect interests of approximately $1,033,600. In addition, in 2001 PWM had a
minority interest in SCA Consulting, L.L.C. ("SCA"). During 2001, the Company
paid SCA approximately $16,000 for consulting assignments from which Mr.
Mullin will receive an indirect benefit of approximately $200. PWM sold its
interest in SCA in October 2001.
VOTING SHARES
Stockholders of record, at the close of business on February 25, 2002, are
entitled to notice of, and to vote at, the Annual Meeting. There were
109,864,032 shares of common stock of the Company outstanding on February 25,
2002.
Principal Stockholders
Whenever in this proxy statement information is presented as to "beneficial
ownership," please note that such ownership indicates only that the person
shown, directly or indirectly, has or shares with others the power to vote (or
to direct the voting of) or the power to dispose of (or to direct the
disposition of) such shares; such person may or may not have any economic
interest in the shares. The reporting of information herein does not
constitute an admission that any such person is, for the purpose of Section 13
or 16 of the 1934 Act, the "beneficial owner" of the shares shown herein.
To the knowledge of the Company, the following were the only persons who, as
of December 31, 2001, owned beneficially 5% or more of the outstanding common
stock of the Company.
Name and Address Number of Shares Percent
of Beneficial Owner Beneficially Owned of Class
------------------- ------------------ --------
Avery Dennison Corporation
Employee Stock Benefit Trust ("ESBT") 12,008,123(1) 10.9%
Wachovia Bank, N.A., Trustee
Executive Services
100 Main Street
Winston-Salem, NC 27150
FMR Corp. 6,650,351(2) 6.1%
82 Devonshire Street
Boston, MA 02109
--------
(1) The ESBT and Wachovia Bank, N.A., as Trustee, disclaim beneficial
ownership of these shares.
(2) Based on information contained in the Schedule 13G of FMR Corp. for the
period ending December 31, 2001. FMR Corp is the parent holding company of
a group of investment management companies (including Fidelity Management
and Research Company) that hold investment power and, in some cases,
voting power over the securities referred to herein. The investment
management companies, which also include a "bank" as defined in Section
3(a)6 of the 1934 Act and several investment advisers registered under
Section 203 of the Investment Advisers Act of 1940, provide investment
advisory and management services for their respective clients, which
include registered investment companies and institutional accounts.
20
The Company's Employee Savings Plan, SHARE Plan and Retirement Plan (the
"Plans") together owned a total of 8,249,522 shares of Company common stock on
December 31, 2001, or 7.5% of the common stock then outstanding. Although the
Company is the Administrator of the Plans, each plan was established and is
administered to achieve the different purposes for which it was created for
the exclusive benefit of its participants, and employees participating in the
Plans are entitled to vote all shares allocated to their accounts.
Accordingly, such plans do not constitute a "group" within the meaning of
Section 13(d) of the 1934 Act.
21
INDEPENDENT AUDITORS
The Board of Directors has selected PricewaterhouseCoopers LLP ("PwC") to
serve as the Company's independent auditors for the fiscal year 2002.
Representatives of PwC will be present at the Annual Meeting and will have the
opportunity to make a statement, if they so desire. They will also be
available to respond to appropriate questions.
Fees billed to the Company by PwC for fiscal year 2001 were as follows:
Audit Fees. The aggregate fees billed by PwC for professional services
rendered for the audit of the Company's financial statements for fiscal year
2001 were $3.0 million.
Financial Information Systems Design and Implementation Fees. The aggregate
fees billed by PwC for professional services rendered for design and
implementation of financial, payroll and human resources information systems
for fiscal year 2001 were $9.9 million. This project was awarded to PwC on the
basis of a competitive bidding process. Services for this limited-term
project, which were completed during November 2001, included systems and
process design, as well as implementing centralized shared service operations
in Europe and North America. These new systems are designed to drive common
processes, consolidate information systems and improve operational
efficiencies and information sharing.
All Other Fees. The aggregate fees billed by PwC for professional services
(other than the services described above) for fiscal year 2001 were $4.5
million, and included various services of which approximately two-thirds
related to tax support with the remaining services related to benefit plan
audits, technical accounting, and mergers and acquisitions.
AUDIT COMMITTEE REPORT
The following Report of the Audit Committee of the Board of Directors does
not constitute soliciting material and should not be deemed filed or
incorporated by reference into any other Company filing under the Securities
Act of 1933 or the Securities Exchange Act of 1934, except to the extent the
Company specifically incorporates this Report by reference therein.
The Audit Committee of the Company's Board of Directors (the "Audit
Committee") is composed of five independent directors set forth below, each of
whom meets the independence standards of the New York Stock Exchange. The
Audit Committee has a written charter adopted by the Board of Directors, which
was attached as Exhibit A to last year's proxy statement.
Management is responsible for the Company's internal controls and the
financial reporting process. The independent auditors are responsible for
performing an independent audit of the Company's consolidated financial
statements in accordance with auditing standards generally accepted in the
United States and to issue an opinion thereon. The Audit Committee's
responsibility is to monitor and oversee these processes. The members of the
Audit Committee are not professionally engaged in the practice of auditing or
accounting. Members of the Audit Committee rely without independent
verification on the information provided to them and the representations made
by management and the independent auditors.
Management has represented to the Audit Committee that the Company's
consolidated financial statements were prepared in accordance with accounting
principles generally accepted in the United States. The Audit Committee has
reviewed and discussed the consolidated financial statements for the year
ended December 29, 2001 with management and the independent auditors. The
Audit Committee has also discussed with the independent auditors the matters
required to be discussed by Statement on Auditing Standards No. 61
(Communication with Audit Committees), as amended. The Company's independent
auditors have also provided to the Audit Committee the written disclosures and
the letter from the independent auditors required by Independence Standards
Board No. 1 (Independence Discussions with Audit Committees). The Audit
Committee
22
has discussed independence matters with the independent auditors and
management, and, based on its discussion and review, the Audit Committee is
satisfied that the provision of non-audit services, described above, is
compatible with maintaining PwC's independence.
Based on the Audit Committee's discussions with management and the
independent auditors and on the Audit Committee's review of the
representations of management and the report of the independent auditors, the
Audit Committee has recommended that the Board of Directors include the
audited consolidated financial statements in the Company's Annual Report on
Form 10-K for the year ended December 29, 2001, filed with the Securities and
Exchange Commission.
February 28, 2002 Sidney R. Petersen (Chairman)
Dwight L. Allison, Jr.
Joan T. Bok
Kent Kresa
David E.I. Pyott
GENERAL
Stockholder Proposals
Stockholder proposals for presentation, at the annual meeting scheduled to
be held on April 24, 2003, must be received at the Company's principal
executive offices on or before November 9, 2002. The Company's Bylaws provide
that stockholders desiring to nominate persons for election to the Board of
Directors or to bring any other business before the stockholders at an annual
meeting must notify the Secretary of the Company thereof in writing 60 to 90
days prior to the first anniversary of the preceding year's annual meeting
(or, if the date of the annual meeting is more than 30 days before or more
than 60 days after such anniversary date, 60 to 90 days prior to such annual
meeting or within 10 days after the public announcement of the date of such
meeting is first made by the Company; or, if the number of directors to be
elected to the Board of Directors is increased and the Company does not make a
public announcement naming all of the nominees for director or specifying the
size of the increased Board of Directors at least 70 days prior to the first
anniversary of the preceding year's annual meeting, within 10 days after such
public announcement is first made by the Company (with respect to nominees for
any newly created positions only)). Such notice must include (a) as to each
person whom the stockholder proposes to nominate for election or reelection as
a director, all information relating to such person that is required to be
disclosed in solicitations of proxies for election of directors in an election
contest, or is otherwise required, in each case pursuant to Regulation 14A
under the 1934 Act and Rule 14a-11 thereunder, (b) as to any other business
that the stockholder proposes to bring before the meeting, a brief description
of such business, the reasons for conducting such business at the meeting and
any material interest in such business of such stockholder and the beneficial
owner, if any, on whose behalf the proposal is made, and (c) the name and
record address, and class and number of shares owned beneficially and of
record, of such stockholder and any such beneficial owner.
Annual Report
The Company's 2001 Annual Report to Stockholders has recently been mailed to
all stockholders of record.
ALL STOCKHOLDERS ARE URGED TO VOTE BY TELEPHONE OR ELECTRONICALLY THROUGH
THE INTERNET BY FOLLOWING THE INSTRUCTIONS ON THE PROXY CARD, OR TO COMPLETE,
SIGN, AND RETURN THE ACCOMPANYING PROXY SOLICITATION/VOTING INSTRUCTION CARD
PROMPTLY IN THE ENCLOSED ENVELOPE.
Robert G. van Schoonenberg
Secretary
Dated: March 11, 2002
23
PROXY SOLICITATION/ Avery Dennison Corporation
VOTING INSTRUCTION CARD 150 North Orange Grove Boulevard
ANNUAL MEETING - APRIL 25, 2002 Pasadena, California 91103
PASADENA, CALIFORNIA
The undersigned hereby appoints Frank V. Cahouet, Philip M. Neal and Peter
W. Mullin, or each or any of them with power of substitution, proxies for the
undersigned to act and vote at the 2002 Annual Meeting of Stockholders of Avery
Dennison Corporation and at any adjournments thereof as indicated upon the
matters referred to on the reverse side and described in the proxy statement for
the meeting, and, in their discretion, upon any other matters which may properly
come before the meeting. This card provides voting instructions, as applicable,
to (i) the appointed proxies for shares held of record by the undersigned
including those held under the Company's DirectSERVICE(TM) Investment and Stock
Purchase Program, and (ii) the Trustee for shares held on behalf of the
undersigned in the Company's Savings Plan and SHARE Plan.
1. Election of Directors
Nominees: (01) Charles D. Miller, (02) Richard M. Ferry and (03) Kent
Kresa
IF NO OTHER INDICATION IS MADE, THE PROXIES SHALL VOTE FOR THE ELECTION
OF THE DIRECTOR NOMINEES
(OVER)
(continued and to be signed on other side)
[ ] PLEASE FOLD AND DETACH HERE [ ]
NOTICE
If you plan to attend the Annual Meeting of Stockholders, please so indicate by
marking the appropriate box on this card. Space limitations make it necessary
to limit attendance to stockholders. Registration for the Annual Meeting will
begin at 12:30 p.m. on April 25, 2002.
Please mark your
[X] votes as indicated in
this example.
A vote FOR ALL nominees is recommended by the Board of Directors.
FOR ALL WITHHELD FROM ALL
1. Election of
Directors [ ] [ ]
(page 1)
FOR ALL EXCEPT the following nominee(s):
________________________________________
PLEASE DO NOT FOLD OR
PERFORATE THIS CARD
IMPORTANT--PLEASE MARK, SIGN, DATE AND
RETURN THIS CARD PROMPTLY IN THE ENCLOSED
ENVELOPE. THANK YOU.
Send admission ticket for meeting [ ]
Signature of Stockholder(s)/Plan Participant(s)______________________
Date _______________ , 2002
NOTE: If acting as attorney, executor, trustee, or in other representative
capacity, please sign name and title.
. PLEASE FOLD AND DETACH HERE .
Dear Stockholder/Plan Participant:
You may vote the shares held in this account in any one of the following three
ways:
. Vote by mail. Complete, sign, date and mail your proxy card (above) in
the enclosed postage-paid envelope.
. Vote by phone. Call toll-free 1-877-PRX-VOTE (1-877-779-8683) 24 hours a
day, 7 days a week from the U.S. and Canada.
. Vote by Internet. Access the Web site at http://www.eproxyvote.com/avy
-----------------------------
24 hours a day, 7 days a week.
If you vote by phone or via the Internet, please have your social security
number and proxy card available. The sequence of numbers appearing in the box
above, just below the perforation, and your social security number are necessary
to verify your vote. A phone or Internet vote authorizes the named proxies in
the same manner as if you marked, signed, dated and returned this proxy card.
U.S. Trust Company, N.A., as Trustee of the Avery Dennison Corporation Savings
Plan and SHARE Plan, will vote shares of Company Stock that have not been
allocated to the account of any participant in proportion to the manner in which
allocated shares of Company Stock are voted by participants who timely furnish
voting instructions. The card should be returned no later than April 18, 2002.
If you vote by phone or vote using the Internet, please do not mail back your
proxy card.
YOUR VOTE IS IMPORTANT. THANK YOU FOR VOTING.
CONFIDENTIAL VOTING INSTRUCTIONS Avery Dennison Corporation
150 North Orange Grove Boulevard
Pasadena, California 91103
TO: EQUISERVE TRUST COMPANY, N. A., AS TABULATING AGENT FOR THE TRUSTEE OF THE
AVERY DENNISON CORPORATION EMPLOYEE STOCK BENEFIT TRUST
VOTING INSTRUCTIONS SOLICITED BY THE TRUSTEE ON BEHALF OF THE BOARD OF
DIRECTORS OF AVERY DENNISON CORPORATION FOR THE ANNUAL MEETING OF
STOCKHOLDERS, APRIL 25, 2002.
The undersigned hereby authorizes Wachovia Bank, N.A., as Trustee, to act
and vote at the 2002 Annual Meeting of Stockholders of Avery Dennison
Corporation and at any adjournments thereof as indicated upon the matters
referred to on the reverse side and described in the proxy statement for the
meeting, and, in its discretion, upon any other matters which may properly come
before the meeting.
1. Election of Directors
Nominees: (01) Charles D. Miller, (02) Richard M. Ferry and (03) Kent
Kresa
IF NO OTHER INDICATION IS MADE, THE PROXIES SHALL VOTE FOR THE ELECTION
OF THE DIRECTOR NOMINEES
(OVER)
. (continued and to be signed on other side) .
PLEASE FOLD AND DETACH HERE
Please mark your
[X] votes as indicated in
this example.
A vote FOR ALL nominees is recommended by the Board of Directors.
FOR ALL WITHHELD FROM ALL
1. Election of [ ] [ ]
Directors
(page 1)
FOR ALL EXCEPT the following nominee(s):
________________________________________
PLEASE DO NOT FOLD OR
PERFORATE THIS CARD
IMPORTANT--PLEASE MARK, SIGN, DATE AND
RETURN THIS CARD PROMPTLY IN THE ENCLOSED
ENVELOPE. THANK YOU.
Signature of Optionee__________________________ Date ____________________,2002
NOTE: If acting as attorney, executor, trustee, or in other representative
capacity, please sign name and title.
. PLEASE FOLD AND DETACH HERE .
Dear Avery Dennison Optionee:
Under the terms of the Avery Dennison Corporation Employee Stock Benefit Trust,
you are entitled, as an employee and a holder of vested stock options from Avery
Dennison, to instruct the Trustee how to vote shares held by the Trust.
You may vote the shares held in this account in any one of the following three
ways:
. Vote by mail. Complete, sign, date and mail your proxy card (above) in
the enclosed postage-paid envelope.
. Vote by phone. Call toll-free 1-877-PRX-VOTE (1-877-779-8683) 24 hours a
day, 7 days a week from the U.S. and Canada.
. Vote by Internet. Access the Web site at http://www.eproxyvote.com/avy1
------------------------------
24 hours a day, 7 days a week.
If you vote by phone or via the Internet, please have your social security
number and proxy card available. The sequence of numbers appearing in the box
above, just below the perforation, and your social security number are necessary
to verify your vote. A phone or Internet vote authorizes the named proxies in
the same manner as if you marked, signed, dated and returned this proxy card.
If you vote by phone or vote using the Internet, please do not mail back your
proxy card.
YOUR VOTE IS IMPORTANT. THANK YOU FOR VOTING.
PROXY
SOLICITED BY BOARD OF DIRECTORS Avery Dennison Corporation
ANNUAL MEETING - APRIL 25, 2002 150 North Orange Grove Boulevard
PASADENA, CALIFORNIA Pasadena, California 91103
The undersigned hereby appoints Frank V. Cahouet, Philip M. Neal and Peter
W. Mullin, or each or any of them with power of substitution, proxies for the
undersigned to act and vote at the 2002 Annual Meeting of Stockholders of Avery
Dennison Corporation and at any adjournments thereof as indicated upon the
matters referred to on the reverse side and described in the proxy statement for
the meeting, and, in their discretion, upon any other matters which may properly
come before the meeting.
1. Election of Directors
Nominees: (01) Charles D. Miller, (02) Richard M. Ferry and (03) Kent
Kresa
IF NO OTHER INDICATION IS MADE, THE PROXIES SHALL VOTE FOR THE ELECTION
OF THE DIRECTOR NOMINEES
(OVER)
(continued and to be signed on other side)
. PLEASE FOLD AND DETACH HERE .
Please mark your
[X] votes as indicated in
this example.
A vote FOR ALL nominees is recommended by the Board of Directors.
FOR ALL WITHHELD FROM ALL
1. Election of [ ] [ ]
Directors
(page 1)
FOR ALL EXCEPT the following nominee(s):
________________________________________
PLEASE DO NOT FOLD OR
PERFORATE THIS CARD
IMPORTANT--PLEASE MARK, SIGN, DATE AND
RETURN THIS CARD PROMPTLY IN THE ENCLOSED
ENVELOPE. THANK YOU.
Space limitations for the Annual
Meeting make it necessary to limit
attendance to stockholders. "Street
name" holders wishing to attend need to
bring to the Annual Meeting a copy of a
brokerage statement reflecting stock
ownership as of February 25, 2002.
Signature of Stockholder_____________________ Date ________________ ,2002
NOTE: If acting as attorney, executor, trustee, or in other representative
capacity, please sign name and title.
. PLEASE FOLD AND DETACH HERE .