UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
(Rule 14a-101)
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-12
Commission File No. 1-09225
H.B. Fuller Company
--------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
--------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] 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:
-------------------------------------------------------------------------
(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:
-------------------------------------------------------------------------
[LOGO] H.B. Fuller company
Corporate Headquarters
Office: 1200 Willow Lake Boulevard
St. Paul, Minnesota 55110-5101
Mail: P.O. Box 64683
St. Paul, Minnesota 55164-0683
Phone: (651) 236-5150
Dear Shareholder:
I am pleased to invite you to our 2003 Annual Meeting. The meeting will
begin promptly at 2:00 p.m. on Thursday, April 17, 2003, at the Science Museum
of Minnesota, 120 West Kellogg Boulevard, Saint Paul, Minnesota. Admission and
parking at the Science Museum on the date of the meeting are complimentary for
shareholders.
The Notice of Annual Meeting of Shareholders and the Proxy Statement that
follow describe the business to be conducted at the meeting. This year has been
filled with challenges and changes for our Company and the world. At the
meeting we will review the past year and discuss other matters of current
interest to you as a shareholder.
Please sign and return the enclosed proxy card in the postage-paid envelope
or instruct us by telephone or via the Internet as to how you would like your
shares voted. Instructions on how to vote your shares by telephone or via the
Internet are described in the Proxy Statement and on the enclosed proxy card.
Sincerely,
/s/ ALBERT P.L. STROUCKEN
ALBERT P.L. STROUCKEN
Chairman of the Board,
President and
Chief Executive Officer
March 13, 2003
Table of Contents
Directions to the Science Museum of Minnesota
Notice of Annual Meeting of Shareholders
Proxy Statement............................................................................... 1
Questions and Answers About the Meeting and Voting......................................... 1
What is the purpose of the meeting?.................................................... 1
How does the Board recommend that I vote?.............................................. 1
Who is entitled to vote at the meeting?................................................ 1
What are the voting rights of the shareholders?........................................ 1
How many shares must be present to hold the meeting?................................... 1
What is the difference between a shareholder of record and a "street name" holder?..... 2
How do I vote my shares?............................................................... 2
What does it mean if I receive more than one proxy card?............................... 2
Can I vote my shares in person at the meeting?......................................... 2
What vote is required for the proposals to be approved?................................ 2
How are votes counted?................................................................. 3
What if I do not specify how I want my shares voted?................................... 3
Can I change my vote?.................................................................. 3
Who pays for the cost of proxy preparation and solicitation?........................... 3
Security Ownership of Certain Beneficial Owners and Management............................. 4
Section 16(a) Beneficial Ownership Reporting Compliance.................................... 6
Proposal 1--Election of Directors.......................................................... 6
Nominees............................................................................... 7
Continuing Directors................................................................... 7
Board Meetings and Committees.......................................................... 10
Compensation of Directors.............................................................. 12
Proposal 2--Ratification of Appointment of Auditors........................................ 13
Audit Committee Report and Payment of Fees to Auditors................................. 13
Proposal............................................................................... 14
Proposal 3--Approval of the H.B. Fuller Company Annual and Long-Term Incentive Plan........ 15
Introduction........................................................................... 15
Material Features of the H.B. Fuller Company Annual and Long-Term Incentive Plan....... 15
Equity Compensation Plan Information................................................... 18
Proposal............................................................................... 18
Other Matters.............................................................................. 19
Executive Compensation..................................................................... 20
Total Shareholder Return Graph............................................................. 31
Shareholder Proposals for the 2004 Annual Meeting.......................................... 32
Audit Committee Charter.................................................................... A-1
Directions to the Science Museum of Minnesota
120 West Kellogg Boulevard
St. Paul, Minnesota
[MAP]
East on I-94: If you are going east on I-94, take the Kellogg Blvd. exit. Go
right and follow Kellogg Blvd., staying in the right lane. Continue east on
Kellogg Blvd. to the upper ramp entrance (just past the museum, on your right).
North on I-35E: If you are going northbound on I-35E, take the Kellogg Blvd.
exit. Go right and follow Kellogg Blvd., staying in the right lane. Continue
east on Kellogg Blvd. to the upper ramp entrance (just past the museum, on your
right).
West on I-94: If you are going west on I-94, take the 12th Street exit and
follow to Jackson Street. Turn left and go south to Kellogg Blvd. Turn right
onto Kellogg Blvd., and continue six blocks to the parking ramp entrance (just
before the museum, on your left).
South on I-35E: If you are going southbound on I-35E, take the 10th Street
exit to Jackson Street, turn left and go south to Kellogg Blvd. Turn right onto
Kellogg Blvd., and continue six blocks to the parking ramp entrance (just
before the museum, on your left).
[LOGO] H.B. Fuller company
Corporate Headquarters
Office: 1200 Willow Lake Boulevard
St. Paul, Minnesota 55110-5101
Mail: P.O. Box 64683
St. Paul, Minnesota 55164-0683
Phone: (651) 236-5150
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
Date and Time: Thursday, April 17, 2003, at 2:00 p.m. Central Time
Place: Science Museum of Minnesota
120 West Kellogg Boulevard
St. Paul, Minnesota
Items of Business: The election of two directors for a three-year term.
The ratification of the appointment of PricewaterhouseCoopers LLP as
H.B. Fuller's independent auditors for the fiscal year ending
November 29, 2003.
The approval of the H.B. Fuller Company Annual and Long-Term
Incentive Plan.
Any other business that may properly be considered at the meeting or
any adjournment thereof.
Record Date: You may vote at the meeting if you were a shareholder of record at the
close of business on February 21, 2003.
Voting by Proxy: Whether or not you plan to attend the meeting in person, please mark,
date and sign the enclosed proxy card and mail it in the enclosed
envelope. No postage is required if the proxy card is mailed in the United
States. Instead of mailing the proxy card, you may enter your voting
instructions by telephone at 1-800-240-6326 or via the Internet at
www.eproxy.com/ful/.
Annual Report: H.B. Fuller's 2002 Annual Report on Form 10-K, which is not part of the
proxy soliciting material, is enclosed.
By Order of the Board of
Directors
/s/ Patricia Jones
Patricia L. Jones
Senior Vice President, Chief
Administrative Officer,
General Counsel and Corporate
Secretary
March 13, 2003
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
APRIL 17, 2003
The Board of Directors of H.B. Fuller Company is soliciting proxies to be
used at the Annual Meeting of Shareholders to be held on April 17, 2003, and at
any adjournment and reconvening of the meeting. We began mailing this Proxy
Statement and the enclosed form of proxy on March 13, 2003.
QUESTIONS AND ANSWERS ABOUT THE MEETING AND VOTING
What is the purpose of the meeting?
At our annual meeting, shareholders will act upon the matters disclosed in
the Notice of Annual Meeting that preceded this Proxy Statement. These include
the election of two directors and ratification of the appointment of our
independent auditors. A proposal to approve a cash compensation plan for
executives will also be considered. Approval of this plan by shareholders would
permit the Company to treat any payments under this plan as tax-deductible
compensation for U.S. federal income tax purposes.
We will also consider any other business that may properly be presented at
the meeting, and management will report on H.B. Fuller's performance during the
last fiscal year and respond to questions from shareholders.
How does the Board recommend that I vote?
The Board of Directors recommends a vote:
. FOR both of the nominees for director;
. FOR the ratification of the appointment of PricewaterhouseCoopers LLP as
the Company's independent auditors for the fiscal year ending November
29, 2003; and
. FOR the approval of the H.B. Fuller Company Annual and Long-Term
Incentive Plan.
Who is entitled to vote at the meeting?
The Board has set February 21, 2003, as the record date for the meeting. If
you were a shareholder of record at the close of business on February 21, 2003,
you are entitled to vote at the meeting.
As of the record date, 28,381,047 shares of Common Stock were outstanding
and eligible to vote.
What are the voting rights of the shareholders?
Holders of Common Stock are entitled to one vote per share. Therefore, a
total of 28,381,047 votes are entitled to be cast at the meeting. There is no
cumulative voting for the election of directors.
How many shares must be present to hold the meeting?
A quorum is necessary to hold the meeting and conduct business. The presence
of shareholders who can direct the voting of at least a majority of the
outstanding shares of Common Stock as of the record date is considered a
quorum. A shareholder is counted as present at the meeting if:
. the shareholder is present and votes in person at the meeting; or
. the shareholder has properly submitted a proxy or voted by telephone or
via the Internet.
1
What is the difference between a shareholder of record and a "street name"
holder?
If your shares are registered directly in your name, you are considered the
shareholder of record with respect to those shares.
If your shares are held in a stock brokerage account or by a bank or other
nominee, such as the H.B. Fuller 401(k) Thrift Plan, you are considered the
beneficial owner of those shares, and your shares are held in "street name."
How do I vote my shares?
If you are a shareholder of record, you can give a proxy to be voted at the
meeting either:
. over the telephone by calling 1-800-240-6326;
. electronically, using the Internet at www.eproxy.com/ful/; or
. by mailing in the enclosed proxy card.
The telephone and Internet voting procedures have been set up for your
convenience. The procedures have been designed to authenticate your identity,
to allow you to give voting instructions, and to confirm that those
instructions have been recorded properly. If you are a shareholder of record
and you would like to vote by telephone or by using the Internet, please refer
to the specific instructions on the enclosed proxy card. If you wish to vote
using the paper proxy card, please return your signed proxy card to us before
the meeting. You may also vote in person at the meeting.
If you hold your shares in street name, you must vote your shares following
the procedures indicated to you by your broker or nominee on the enclosed
voting instructions card.
What does it mean if I receive more than one proxy card?
It means you hold shares registered in more than one account. To ensure that
all of your shares are voted, sign and return each proxy card or, if you vote
by telephone or via the Internet, vote once for each proxy card you receive. If
you would like to consolidate your accounts please contact our stock transfer
agent, Wells Fargo Bank, at 1-800-468-9716.
In addition to a proxy card, you may also receive a "voting instructions"
card which appears very similar to a proxy card. Voting instructions are
prepared by brokers, banks or other nominees for shareholders who hold shares
in street name. For example, if you are a participant in the H.B. Fuller 401(k)
Thrift Plan, Wells Fargo, as the trustee for those shares, sends to you a
voting instructions card instead of a proxy card.
Can I vote my shares in person at the meeting?
Yes. If you are a shareholder of record, you may vote your shares at the
meeting by completing a ballot at the meeting. However, even if you currently
plan to attend the meeting, we recommend that you submit your proxy ahead of
time so that your vote will be counted if, for whatever reason, you later
decide to not attend the meeting.
If you are a street name holder, you may vote your shares in person at the
meeting only if you obtain a signed proxy from your broker, bank or other
nominee giving you the right to vote such shares at the meeting.
What vote is required for the proposals to be approved?
The affirmative vote of a majority of the shares of Common Stock represented
and entitled to vote at the meeting is required for the election of both
directors, the ratification of the appointment of
2
PricewaterhouseCoopers LLP and the approval of the H.B. Fuller Company Annual
and Long-Term Incentive Plan.
How are votes counted?
Shareholders may either vote "FOR" or "WITHHOLD" authority to vote for
either nominee for the Board of Directors. Shareholders may also vote "FOR,"
"AGAINST" or "ABSTAIN" on the other two proposals.
If you vote ABSTAIN or WITHHOLD, your shares will be counted as present at
the meeting for the purposes of determining a quorum.
If you ABSTAIN from voting on the proposals, your abstention has the same
effect as a vote against those proposals. If you WITHHOLD authority to vote for
either one of the directors, this has the same effect as a vote against the
director(s).
If you hold your shares in "street name" and do not provide voting
instructions to your broker or nominee, your shares may not be voted. In this
situation, a "broker non-vote" may occur. Shares that constitute broker
non-votes will be present at the meeting for the purpose of determining a
quorum, but are not considered as entitled to vote on the proposal in question.
This effectively reduces the number of shares needed to elect a director,
ratify the appointment of PricewaterhouseCoopers LLP or approve the cash
compensation plan.
What if I do not specify how I want my shares voted?
If you do not specify on your returned proxy card (or when giving your proxy
by telephone or via the Internet) how you want to vote your shares, we will
vote them:
. FOR the election of both of the nominees for director;
. FOR the ratification of the appointment of PricewaterhouseCoopers LLP as
the Company's independent auditors for the 2003 fiscal year; and
. FOR the approval of the H.B. Fuller Company Annual and Long-Term
Incentive Plan.
Can I change my vote?
Yes. You may change your vote and revoke your proxy at any time before it is
voted at the meeting in any of the following ways:
. by sending a written notice of revocation to the Corporate Secretary of
the Company;
. by submitting another properly signed proxy card at a later date to the
Corporate Secretary;
. by submitting another proxy by telephone or via the Internet at a later
date; or
. by voting in person at the meeting.
Who pays for the cost of proxy preparation and solicitation?
The Company pays for the cost of proxy preparation and solicitation,
including the charges and expenses of brokerage firms or other nominees for
forwarding proxy materials to beneficial owners. We have retained Morrow & Co.,
Inc. to assist in the solicitation of proxies for a fee of approximately $5,000
plus associated costs and expenses.
We are soliciting proxies primarily by mail. In addition, proxies may be
solicited by telephone or facsimile, or personally by directors, officers and
regular employees of the Company. These individuals will receive no
compensation (other than their regular salaries) for these services.
3
SECURITY OWNERSHIP
OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table shows how much H.B. Fuller Common Stock each director
and executive officer listed in the Summary Compensation Table in this Proxy
Statement beneficially owned as of January 31, 2003 (unless otherwise noted).
The table also shows the beneficial ownership of H.B. Fuller Common Stock by
all directors and executive officers of H.B. Fuller as a group.
In addition to the shares listed in this table, certain directors hold
phantom stock units that will be paid out in shares of H.B. Fuller Common
Stock. These units are subject to the same economic risk as a direct investment
in H.B. Fuller Common Stock. As of January 31, 2003, in addition to the amounts
shown below, the directors, as a group, held phantom stock units representing
87,617 shares of H.B. Fuller Common Stock.
To the best of the Company's knowledge, except for Barclays Private Bank and
Trust Limited, no other shareholder, director or officer beneficially owned
more than 5% of H.B. Fuller's Common Stock as of January 31, 2003.
Unless otherwise noted, the shareholders listed in the table have sole
voting and investment powers with respect to the shares of Common Stock owned
by them.
Amount and Percent of
Nature of Common Stock
Name of Beneficial Owner Beneficial Ownership Outstanding
------------------------ -------------------- ------------
Barclays Global Investors, NA and Fund Advisors 1,444,794/(1)/ 5.1%
Norbert R. Berg................................ 6,526/(2)(3)/ *
Freeman A. Ford................................ 10,910/(2)(3)/ *
Gail D. Fosler................................. 9,180/(2)(3)/ *
Reatha Clark King.............................. 13,198/(2)(3)/ *
Knut Kleedehn.................................. 4,167/(2)(3)/ *
J. Michael Losh................................ 6,167/(2)(3)/ *
John J. Mauriel, Jr............................ 22,910/(2)(3)/ *
Lee R. Mitau................................... 14,304/(2)(3)/ *
Alfredo L. Rovira.............................. 1,300/(2)/ *
R. William Van Sant............................ 5,175/(2)(3)/ *
Albert P.L. Stroucken.......................... 449,962/(4)/ 1.6%
Raymond A. Tucker.............................. 109,903/(5)/ *
Linda J. Welty................................. 92,166/(6)/ *
Alan R. Longstreet............................. 64,966/(7)/ *
Peter M. Koxholt............................... 46,535/(8)/ *
All directors and executive officers as a group
(23 people).................................. 1,169,198/(9)/ 4.1%
--------
* Indicates less than 1%.
(1) As of February 10, 2003. This information is in accordance with Schedule
13G filed by the holder. The holder has sole voting and dispositive powers
as to all the reported shares. The shares are held by the holder in trust
accounts for the economic benefit of the beneficiaries of those accounts.
The holders address is 45 Fremont Street, San Francisco, California 94105.
(2) Includes the following shares of Common Stock that were awarded under the
1998 Directors' Stock Incentive Plan, including shares acquired upon
reinvestment of dividends:
Norbert R. Berg.... 5,052 Freeman A. Ford.... 5,052
Gail D. Fosler..... 5,052 Reatha Clark King.. 5,052
Knut Kleedehn...... 4,167 J. Michael Losh.... 4,167
John J. Mauriel, Jr 5,052 Lee R. Mitau....... 12,446
Alfredo L. Rovira.. 1,300 R. William Van Sant 4,175
4
(3) Excludes Common Stock units credited to the accounts of directors who
participate in the Directors' Deferred Compensation Plan, described under
the heading "Compensation of Directors." These Common Stock units are not
entitled to vote at the meeting. The number of units credited to each
director participating in this plan is as follows:
Norbert R. Berg.... 27,729 Freeman A. Ford.. 1,081
Gail D. Fosler..... 1,608 Reatha Clark King 12,524
Knut Kleedehn...... 1,780 J. Michael Losh.. 1,686
John J. Mauriel, Jr 28,848 Lee R. Mitau..... 10,740
R. William Van Sant 1,621
(4) Includes 1,021 shares held in trust under H.B. Fuller's 401(k) Thrift Plan
and 178,529 shares that could be issued pursuant to stock options which are
currently exercisable. Excludes 28,902 Common Stock units credited to Mr.
Stroucken's H.B. Fuller Common Stock account under the Key Employee
Deferred Compensation Plan described in the "Executive Compensation"
section of this proxy statement. These units are not entitled to vote at
the meeting.
(5) Includes 63,860 shares that Mr. Tucker has pledged to an unaffiliated third
party pursuant to the terms of a prepaid forward contract. Under this
contract, Mr. Tucker is required to dispose of not fewer than 53,007 shares
and not more than 63,860 shares in November, 2003 depending on satisfaction
of conditions specified in the contract. This number also includes 342
shares held in trust under H.B. Fuller's 401(k) Thrift Plan and 45,261
shares that could be issued pursuant to stock options which are currently
exercisable. Excluded from this number are 14,821 Common Stock units
credited to Mr. Tucker's H.B. Fuller Common Stock account under the Key
Employee Deferred Compensation Plan. These units are not entitled to vote
at the meeting.
(6) Includes 2,155 shares of restricted Common Stock subject to forfeiture, 687
shares held in trust under H.B. Fuller's 401(k) Thrift Plan, and 41,324
shares that could be issued pursuant to stock options which are currently
exercisable. Excludes 3,732 Common Stock units credited to Ms. Welty's H.B.
Fuller Common Stock account under the Key Employee Deferred Compensation
Plan. These units are not entitled to vote at the meeting.
(7) Includes 10,358 shares of restricted Common Stock subject to forfeiture,
7,310 shares held in trust under H.B. Fuller's 401(k) Thrift Plan, and
47,298 shares that could be issued pursuant to stock options which are
currently exercisable. Excludes 9,893 restricted stock units which are
subject to forfeiture, and 1,346 Common Stock units credited to Mr.
Longstreet's H.B. Fuller Common Stock account under the Key Employee
Deferred Compensation Plan. Neither the restricted stock units nor Common
Stock units are entitled to vote at the meeting.
(8) Includes 34,536 shares that could be issued pursuant to stock options which
are currently exercisable.
(9) Includes 51,515 shares of stock that were awarded under the 1998 Directors'
Stock Incentive Plan, 37,950 shares of restricted Common Stock subject to
forfeiture, 29,109 shares held in trust under H.B. Fuller's 401(k) Thrift
Plan, and 494,535 shares that could be issued pursuant to stock options
which are currently exercisable. Excludes 33,715 restricted stock units
which are subject to forfeiture, and 154,086 Common Stock units credited to
the directors and executive officers as a group under the Directors'
Deferred Compensation Plan and the Key Employee Deferred Compensation Plan.
Neither the restricted stock units nor Common Stock units are entitled to
vote at the meeting.
5
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors and executive officers to file initial reports of ownership and
reports of changes in ownership of H.B. Fuller's securities with the Securities
and Exchange Commission. Executive officers and directors are required to
furnish H.B. Fuller with copies of these reports. Based solely on a review of
these reports and written representations from the executive officers and
directors, we believe that all executive officers and directors complied with
all Section 16(a) filing requirements for fiscal year 2002.
PROPOSAL 1--ELECTION OF DIRECTORS
The Board of Directors is currently composed of 11 directors and divided
into three classes. Each year one class of directors stands for election for a
three-year term. The term of office for Class I directors, consisting of Gail
D. Fosler, Reatha Clark King, Alfredo L. Rovira and Albert P.L. Stroucken will
expire at the meeting.
At the meeting, two persons are to be elected as Class I directors to hold a
three-year term of office from the date of their election until the 2006 Annual
Meeting and until their successors are duly elected and qualified. The two
nominees for election as Class I directors are Alfredo L. Rovira and Albert
P.L. Stroucken, both of whom are currently directors. Both of the nominees have
agreed to serve as a director if elected. Following the meeting, the Board will
be composed of nine directors. Pursuant to the Company's Bylaws, no more than
15 persons may serve on the Board.
Dr. King and Ms. Fosler, both after years of dedicated service, will retire
from the Board and not stand for reelection. Dr. King has been a director of
H.B. Fuller since 1978, and Ms. Fosler has served the Company since 1992. The
Company is grateful and appreciative of their contributions and counsel.
The term of office for Class II directors, consisting of Norbert R. Berg,
Freeman A. Ford, Knut Kleedehn and John J. Mauriel, Jr., will expire at the
2004 Annual Meeting, and the term of the Class III directors, consisting of J.
Michael Losh, Lee R. Mitau and R. William Van Sant will expire at the 2005
Annual Meeting. The Board has adopted guidelines which generally require a
director to retire from the Board after 15 years of service, or upon reaching
age 72.
We will vote your shares as you specify when providing your proxy or voting
instructions. You may either vote FOR or WITHHOLD authority to vote for both
nominees for the Board of Directors. If you submit your proxy without voting
instructions, we will vote your shares FOR the election of both nominees. If,
for any reason, either nominee becomes unable to serve before the election, we
will vote your shares for a substitute nominee selected by the Board of
Directors. Alternatively, the Board of Directors, at its option, may reduce the
number of directors constituting Class I directors.
The election of each director requires an affirmative vote of a majority of
the shares of Common Stock represented and entitled to vote at the meeting.
The Board of Directors recommends a vote FOR election of both of the
nominees.
As specified by the rules of the SEC, the nominees and directors provided
the following information about themselves as of January 31, 2003. Except for
Mr. Stroucken, all directors are considered by the Board to be "independent" as
that term has been described by the New York Stock Exchange.
6
Nominees
Class I (Term Ending in 2006)
----------------------------------------------------------------------------------------
Alfredo L. Rovira
Age: 58
Director Since: 2003
Principal Occupation: Managing partner of the law firm of Brons & Salas, and Co-
Chairman of the Corporate Law Department of that firm, located
in Buenos Aires, Argentina.
Business Experience: Mr. Rovira has been associated with Brons & Salas since 1970.
At Brons & Salas, Mr. Rovira has had extensive experience as
an arbitrator involving both domestic and multinational
companies. He has also written and taught extensively on legal
topics.
----------------------------------------------------------------------------------------
Albert P.L. Stroucken
Age: 55
Director Since: 1998
Principal Occupation: Chairman of the Board, President and Chief Executive Officer,
H.B. Fuller Company.
Business Experience: Mr. Stroucken was elected Chairman of the Board in October,
1999. He has been President and Chief Executive Officer of H.B.
Fuller since April, 1998. He was General Manager, Inorganics
Division of Bayer AG from 1997 to 1998. Prior to that position, he
was Executive Vice President and President of Industrial
Chemicals Division, Bayer Corporation from 1992 to 1997.
Continuing Directors
Class II (Term Ending in 2004)
----------------------------------------------------------------------------------------
Norbert R. Berg
Age: 71
Director Since: 1976
Principal Occupation: President of Boyer Creek Ranch located in Barronett, Wisconsin.
Business Experience: Mr. Berg was Deputy Chairman of the Board of Control Data
Corporation, a computer manufacturing and data services
company headquartered in Bloomington, Minnesota, from 1980
to 1988. He was a director of First Trust National Association
from 1970 to 1996 and a director of Control Data Corporation
from 1977 to 1990.
7
--------------------------------------------------------------------------------------
Freeman A. Ford
Age: 62
Director Since: 1975
Principal Occupation: Chairman and Chief Executive Officer, Fafco, Inc. Chico,
California, a manufacturer of energy conservation equipment.
Business Experience: Mr. Ford has been Chairman and Chief Executive Officer of
Fafco, Inc., since 1972.
--------------------------------------------------------------------------------------
John J. Mauriel, Jr.
Age: 70
Director Since: 1968
Principal Occupation: Faculty Member, The Carlson School of Management, University
of Minnesota, Minneapolis, Minnesota.
Business Experience: Dr. Mauriel has been a member of the faculty of the Carlson
School since 1965. Dr. Mauriel has also served on the faculty of
the Harvard Business School, the North European Management
Institute, and the Warsaw Executive MBA Program and was the
founder of the Carlson School's Executive Development Center,
which he directed from 1972 to 1984. He was also Director of
The Bush Educator Program from 1975 to 2000.
--------------------------------------------------------------------------------------
Knut Kleedehn
Age: 65
Director Since: 2001
Principal Occupation: Private investor
Business Experience: Mr. Kleedehn was with Bayer AG from 1960 to 2001. At Bayer,
he served in a series of senior management roles as President
and Senior Country Representative of Bayer for Japan and
Korea, co-chair of Bayer do Brasil, General Manager of Bayer's
Pigments and Ceramics Division, and CEO of three Bayer
chemical divisions and several subsidiaries.
8
Class III (Term Ending in 2005)
----------------------------------------------------------------------------------------
J. Michael Losh
Age: 56
Director Since: 2001
Principal Occupation: Private investor
Business Experience: Mr. Losh was the Chairman of Metaldyne Corporation, a global
designer and supplier of high quality, metal-formed components,
assemblies and modules for the transportation industry
headquartered in Plymouth, Michigan from 2000 to 2002. Prior to
that position, Mr. Losh was employed by General Motors
Corporation from 1964 to 2000. At General Motors he served in
a variety of operating and financial posts in the U.S., Mexico and
Brazil, including general manager of both the Pontiac and
Oldsmobile divisions. From 1994 to 2000, Mr. Losh was Chief
Financial Officer of General Motors.
Mr. Losh is also considered to be the "audit committee financial
expert" as that term is defined in the rules of the SEC.
Other Directorships: AMB Property Corp.; Cardinal Health, Inc.; Metaldyne
Corporation
----------------------------------------------------------------------------------------
Lee R. Mitau
Age: 54
Director Since: 1996
Principal Occupation: Executive Vice President and General Counsel, U.S. Bancorp, a
bank holding company headquartered in Minneapolis,
Minnesota.
Business Experience: Mr. Mitau has been Executive Vice President of U.S. Bancorp
since 1995. He was a partner in the Corporate Department of the
law firm of Dorsey & Whitney LLP from 1983 to 1995.
Other Directorships: Mr. Mitau is Chairman of the Board of Graco Inc.
----------------------------------------------------------------------------------------
R. William Van Sant
Age: 64
Director Since: 2001
Principal Occupation: Operating Partner at Norwest Equity Partners, a venture capital
firm headquartered in Minneapolis, Minnesota.
Business Experience: Mr. Van Sant was Chairman, Director and Chief Executive
Officer of Nortrax, Inc., a distributor of John Deere construction
equipment in Minneapolis, Minnesota, from 1999 to March, 2001.
He was Chairman, Director and Chief Executive Officer of
Lukens, Inc., a specialty steel producer from 1991 to 1998.
Other Directorships: Mr. Van Sant is a Director of Amcast Industrial Corporation.
9
Board Meetings and Committees
The Board of Directors is responsible for the overall affairs of the
Company. The Board conducts its business through meetings of the Board and four
standing committees: Audit; Compensation; Corporate Governance and Nominating;
and Finance. The Board has adopted a written charter for each committee. When
necessary, the Board also establishes ad hoc committees to address specific
issues.
The Board held five scheduled meetings during the 2002 fiscal year. Each
director attended at least 95% of the total meetings of the Board and Board
committees on which the director served during the fiscal year.
Audit Committee
Members:
John J. Mauriel, Jr.
(Co-Chair) J. Michael Losh (Co-Chair)
Freeman A. Ford Gail D. Fosler
Knut Kleedehn Alfredo L. Rovira
Number of Meetings in
2002: Six
Functions: The Audit Committee appoints the
independent auditors to audit the Company's
consolidated financial statements, oversees the
audit and the independence and performance of
independent public auditors, and reviews the annual
audited consolidated financial statements,
accounting principles and practices and the adequacy
of internal controls. This Committee also monitors
compliance with the Company's codes of conduct.
All of the Audit Committee members meet the
independence and experience requirements of the SEC
and the New York Stock Exchange. The Audit Committee
Report for fiscal year 2002 and its current charter
are included in this Proxy Statement.
Compensation Committee
Members:
Lee R. Mitau (Chair) Norbert R. Berg
Gail D. Fosler Knut Kleedehn
R. William Van Sant
Number of Meetings in
2002: Six
Functions: The Compensation Committee establishes
overall compensation programs and practices for
executives and directors, reviews and approves
compensation, including salary, incentive programs,
stock-based awards, perquisites and supplemental
benefits for executives who report to the Chief
Executive Officer and the directors, and monitors
the competitiveness, fairness and equity of the
Company's retirement plans. This Committee also has
the authority to administer the Company's
stock-based compensation plans and individual awards.
All of the members of the Compensation Committee are
considered "independent" as that term is described
by the New York Stock Exchange. The report of the
Compensation Committee on Executive Compensation for
fiscal year 2002 is included in this Proxy Statement.
10
Corporate Governance and Nominating Committee
Members:
Norbert R. Berg (Chair) Reatha Clark King
Lee R. Mitau R. William Van Sant
Number of Meetings in
2002: Five
Functions: The Corporate Governance and Nominating
Committee reviews matters of corporate governance,
including reviewing the Company's organizational
structure and succession planning, and policies and
practices relating to significant issues of
corporate, social and public concern. This Committee
evaluates and recommends new director nominees and
evaluates each current director prior to nominating
such person for reelection. The Corporate Governance
and Nominating Committee reviews a director's
continued service if a director's occupation changes
during his or her term. This Committee also
evaluates the performance of the Chairman of the
Board, President and Chief Executive Officer, and
directors, and makes recommendations to the Board
regarding any shareholder proposals.
This Committee also considers shareholder
recommendations for potential director nominees.
Suggestions may be sent to the Corporate Governance
and Nominating Committee in care of the Corporate
Secretary of H.B. Fuller.
All of the members of the Corporate Governance and
Nominating Committee are considered "independent" as
that term is described by the New York Stock
Exchange.
The Chair of the Corporate Governance and Nominating
Committee acts as the Presiding Director of the
Board. At each regularly scheduled meeting of the
Board of Directors, the Presiding Director leads a
discussion at which only "independent" (as that term
is described by the New York Stock Exchange)
directors are present.
Finance Committee
Members:
Freeman A. Ford (Chair) Reatha Clark King
J. Michael Losh John J. Mauriel, Jr.
Alfredo L. Rovira Albert P.L. Stroucken
Number of Meetings in
2002: Five
Functions: The Finance Committee reviews and makes
recommendations to the Board regarding the Company's
financial performance, plans and organization,
including long-range financial strategic plan and
asset allocations, financial aspects of acquisitions
and divestitures, major financing programs, dividend
policy, capital and operating budgets and policy,
the purchase and sale of H.B. Fuller's securities,
third-party guarantees, the level of overall
borrowing authority, information systems, and
funding level and performance of retirement plans.
11
Compensation of Directors
Fees. The following fees are paid, in cash, to all directors who are not
employees of the Company:
Annual Board retainer.............................. $31,000
Annual retainer for Committee Chair................ $ 4,000
Daily attendance fee for each Board meeting........ $ 1,000
Attendance fee for each Committee in person meeting $ 1,000
Attendance fee for each Committee telephone meeting $ 500
Mr. Stroucken, as the Company's President and Chief Executive Officer, does
not receive separate compensation for serving as Chairman of the Board of
Directors nor for attendance at any meeting.
Directors' Deferred Compensation Plan. Under this plan, directors may elect
to defer all or a percentage of their retainer, attendance or meeting fees.
Deferred amounts are credited with gains and losses based on the performance of
certain mutual funds or H.B. Fuller Common Stock as selected by the director
prior to deferring any retainer or fees. Directors who select H.B. Fuller
Common Stock as an investment are credited with phantom stock units that will
be paid out in shares of Common Stock. Phantom stock units are credited with
dividend equivalents equal to the amount of dividends paid on an equal number
of shares of H.B. Fuller Common Stock. The dividend equivalents are converted
into additional phantom stock units based on the fair market value of H.B.
Fuller Common Stock on the dividend payment date. If a participant elects to
defer amounts to the H.B. Fuller Common Stock account in this plan, the Company
makes a 10% matching contribution of additional phantom stock units to the
amount invested in H.B Fuller Common Stock by the director. The phantom stock
units credited to the directors' accounts do not have voting rights.
Any amounts deferred under this plan are paid in shares of Common Stock or
cash at the earliest to occur of:
. the last date on which the director serves as a director (that is, the
date of resignation or removal from the Board or the end of the
director's elected term) or on the first, second, third, fourth or fifth
anniversary of such date, as may be selected by the director in advance;
. disability;
. death; or
. the date of a change in control of the Company.
Directors' Retirement Plan. In fiscal year 1997, the Compensation Committee
terminated the Directors' Retirement Plan for any director elected to the Board
after October 16, 1997 and replaced it with the Directors' Stock Incentive
Plan. The retirement plan remains in effect for all eligible non-employee
directors as of October 16, 1997. This plan provides for payment of a
retirement benefit to each director with a minimum of ten years service.
Payments begin on the later of the director's retirement from the Board or the
director's 60th birthday. The amount of the annual retirement benefit equals
the aggregate amount of the director's last annual retainer. The retirement
benefit is payable for the lesser of 15 years or the number of years the
director served on the Board. In lieu of a series of payments, a director may
receive a one-time payment of an actuarial equivalent amount. This retirement
plan is unfunded, but H.B. Fuller has placed funds in a trust to provide
benefits under this plan. These funds are, however, subject to the claims of
H.B. Fuller's creditors.
Directors Berg, Ford, Fosler, King and Mauriel are eligible to receive
retirement benefits under this plan.
12
Directors' Stock Incentive Plan. The Board believes that awards of
stock-based compensation provide an effective means of linking director and
shareholder interests. Under this plan, the Company may issue to non-employee
members of the Board of Directors restricted stock, restricted stock units,
options, stock appreciation rights, performance awards or other stock-based
instruments. In fiscal year 2002, the Compensation Committee granted to each
non-employee director 1,300 shares of restricted stock, which will vest on the
earlier of four years from the date of grant or the date on which the director
retires from the Board in accordance with established guidelines. Restricted
stock represents shares of Common Stock held by H.B. Fuller on behalf of the
participant. Dividends are paid on the shares of restricted stock and
reinvested in additional shares of restricted stock.
Shares of H.B. Fuller Common Stock are also issued under this plan to
satisfy any requirements under the Directors' Deferred Compensation Plan.
Physical Examinations. Non-employee directors are reimbursed for an annual
physical examination. During the 2002 fiscal year, H.B. Fuller paid
reimbursements of $19,683 for director physical examinations and related
expenses.
Matching Gifts to Education Program. Under this program, H.B. Fuller
matches a non-employee director's contributions (up to $1,000) to eligible
educational institutions. During the 2002 fiscal year, H.B. Fuller matched
$4,000 of eligible contributions.
PROPOSAL 2--RATIFICATION OF APPOINTMENT OF AUDITORS
Audit Committee Report and Payment of Fees to Auditors
Audit Committee Report
The Audit Committee of the Board is composed solely of independent directors
who satisfy all applicable requirements of federal law and the listing
standards of the New York Stock Exchange in effect as of the date of this Proxy
Statement. Except in our capacity as directors, no member of the Committee
receives, directly or indirectly, any consulting, advisory or other
compensatory fee from the Company, and no member is otherwise "affiliated" with
the Company or any subsidiary, as such term is defined by applicable federal
law and regulations. In addition to the foregoing, Mr. J. Michael Losh,
Co-Chair of the Committee, based upon his experience in the preparation and
auditing of the financial statements of comparable companies and his
understanding of generally accepted accounting principles, internal accounting
controls and audit committee functions, is deemed to satisfy the requirements
of an "audit committee financial expert" as such term is defined under
applicable federal law and regulation.
Pursuant to our charter we are responsible for the appointment, compensation
and oversight of the work of H.B. Fuller's independent auditors. A copy of our
current charter is included with this Proxy Statement.
Management is responsible for H.B. Fuller's internal controls and the
financial reporting process. PricewaterhouseCoopers LLP, as the Company's
independent auditors for fiscal years 2002, 2001 and 2000 were responsible for
performing an independent audit of the consolidated financial statements in
accordance with auditing standards generally accepted in the United States of
America and to issue a report. We oversee this process.
Management represented to us that H.B. Fuller's consolidated financial
statements were prepared in accordance with accounting principles generally
accepted in the United States of America. We have reviewed and discussed the
audited consolidated financial statements with management and
13
PricewaterhouseCoopers LLP. We have also discussed with PricewaterhouseCoopers
LLP the matters required to be discussed by Statement on Auditing Standards No.
61 (Communications with Audit Committees), and they have discussed with us
their independence and provided to us the written disclosure required by
Independence Standards Board Standard No. 1 (Independence Discussions with
Audit Committees). We have also considered and determined that the provisions
of non-audit services by PricewaterhouseCoopers LLP during the 2002 fiscal year
were compatible with maintaining their independence.
Based upon our discussions and our review of the representations of
management and the report of the independent auditors, we recommended to the
Board of Directors that the audited consolidated financial statements be
included in H.B. Fuller's Annual Report on Form 10-K for the fiscal year ended
November 30, 2002 filed with the SEC.
John J. Mauriel, Jr. (Co-Chair) J. Michael Losh (Co-Chair)
Freeman A. Ford Gail D. Fosler Knut Kleedehn Alfredo L. Rovira
Audit Fees. Audit fees billed or expected to be billed to H.B. Fuller by
PricewaterhouseCoopers LLP for the audit of H.B. Fuller's consolidated
financial statements for the fiscal year ended November 30, 2002 and for
reviews of H.B. Fuller's financial statements included in H.B. Fuller's
quarterly reports on Form 10-Q for the last fiscal year totaled $1,161,000.
Financial Information Systems Design and Implementation Fees. There were no
services provided by PricewaterhouseCoopers LLP for the design and
implementation of financial information systems during fiscal year 2002.
All Other Fees. Fees billed or expected to be billed to H.B. Fuller by
PricewaterhouseCoopers LLP during fiscal year 2002 totaled $1,414,000. This
amount includes $392,000 of audit related, and $1,000,000 of tax related
services.
Proposal
The Board of Directors has appointed PricewaterhouseCoopers LLP, independent
certified public accountants, to be H.B. Fuller's independent auditors for the
fiscal year ending November 29, 2003. PricewaterhouseCoopers LLP served as H.B.
Fuller's independent auditors for the fiscal year ended November 30, 2002. If
the Board of Directors' appointment of independent auditors is not ratified by
the shareholders, the Board of Directors intends to reconsider that
appointment. A representative of PricewaterhouseCoopers LLP is expected to be
present at the meeting and will have the opportunity to make a statement if he
or she desires to do so and to respond to appropriate questions from
shareholders.
We will vote your shares as you specify when providing your proxy. If you
submit your proxy without voting instructions, we will vote your shares FOR the
ratification of the appointment of PricewaterhouseCoopers LLP.
The affirmative vote of a majority of the outstanding shares of Common Stock
represented and entitled to vote at the meeting is required to approve the
proposal.
The Board of Directors recommends a vote FOR
ratification of the appointment of PricewaterhouseCoopers LLP.
14
PROPOSAL 3--APPROVAL OF THE H.B. FULLER COMPANY
ANNUAL AND LONG-TERM INCENTIVE PLAN
Introduction
Subject to shareholder approval, the Board of Directors adopted the H.B.
Fuller Company Annual and Long-Term Incentive Plan. Shareholder approval of
this plan is being sought to qualify compensation paid under this plan as
"qualified performance-based compensation," as defined in Section 162(m) of the
Internal Revenue Code. Section 162(m) of the Code generally limits to
$1,000,000 the amount that a publicly-held corporation, like H.B. Fuller, is
allowed each year to deduct for the compensation paid to its chief executive
officer and the other four most highly compensated executive officers
(sometimes referred to as "Covered Employees"). However, qualified
"performance-based compensation" is not subject to the $1,000,000 deduction
limit.
To qualify as "performance-based compensation," the following requirements
need to be satisfied:
. payments must be based on objective, performance-based standards
determined by a committee consisting solely of two or more "outside"
directors,
. the material terms under which the compensation is to be paid, including
a limit on the maximum bonus that may be paid to any participant with
respect to any performance period, must be approved by a majority of the
corporation's shareholders, and
. the committee of "outside" directors must certify that the applicable
performance goals were satisfied before payment is made.
The H.B. Fuller Company Annual and Long-Term Incentive Plan is intended to
comply with the requirements of Section 162(m). If this plan is approved at the
meeting, the Company's payments under this plan should be deductible for
federal income tax purposes for the next five fiscal years (at which time,
shareholder approval will again be required).
The material features of this plan are summarized below. In general this
plan determines the maximum amount of annual and long-term bonuses the Company
may pay to Covered Employees under this plan. In accordance with the terms of
their charter, the Compensation Committee of the Board of Directors will
determine the actual amount of any short or long-term bonus paid. The policies
and practices that the Compensation Committee uses in determining these amounts
are discussed each year in this Proxy Statement under the heading "Compensation
Committee Report on Executive Compensation." The actual amount paid by the
Company is described under the heading "Summary Compensation Table."
Material Features of the H.B. Fuller Company Annual and Long-Term Incentive Plan
Awards. The H.B. Fuller Company Annual and Long-Term Incentive Plan permits
the grant of annual cash incentive awards, called "Covered Employee Annual
Incentive Awards," and long-term cash incentive awards, called "Performance
Units." It also may be used to qualify certain stock-based awards, called
"Stock Incentive Awards," granted under the H.B. Fuller Company Year 2000 Stock
Incentive Plan as "performance-based compensation" under Section 162(m) of the
Code.
Administration. The Annual and Long-Term Incentive Plan is administered by
the Compensation Committee of the Board of Directors, which is composed solely
of "outside" directors within the meaning of Section 162(m). This Committee has
the authority to determine when awards will be granted, select participants,
determine the amounts of the awards, and set the terms and conditions of the
awards, including allowing participants to elect to defer receipt of payments
of awards. The Compensation Committee also has the authority to interpret this
plan and establish rules for its administration.
15
Covered Employee Annual Incentive Awards. Persons eligible to receive
Covered Employee Annual Incentive Awards are the Company's chief executive
officer and the other four most highly compensated executive officers of the
Company for any fiscal year (each a "Covered Employee"). Each year an incentive
pool equal to the greater of 5% of the Company's operating income or cash flow
for a specified fiscal year will be available to the Compensation Committee to
fund all Covered Employee Annual Incentive Awards. The Compensation Committee
will allocate a percentage of that fiscal year's incentive pool to each Covered
Employee. No Covered Employee may be allocated a percentage in excess of 75% of
the total pool. As soon as possible after determination of the total amount of
the incentive pool for the applicable fiscal year, the Compensation Committee,
in its sole discretion, shall then determine the actual amount of each Covered
Employee's Annual Incentive Award to be paid for that fiscal year. In no event
can the amount paid exceed a Covered Employee's allocated portion of the
incentive pool.
For fiscal year 2003, the Compensation Committee designated Mr. Stroucken,
President and Chief Executive Officer of the Company, as a Covered Employee.
Consistent with the terms of the Annual and Long-Term Incentive Plan, Mr.
Stroucken's Covered Employee Annual Incentive Award may not exceed 75% of the
available incentive pool. The actual annual bonus, if any, paid to Mr.
Stroucken for 2003 will be determined by the Compensation Committee. At this
time, it is not possible to determine the amount that will be paid for fiscal
year 2003 or later years in the form of Covered Employee Annual Incentive
Awards since actual amounts will depend on the performance of the Company as
well as the Compensation Committee's exercise of its discretion to adjust any
such award downward. However, the fiscal year 2002 annual bonus paid to Mr.
Stroucken is disclosed in the Summary Compensation Table in this Proxy
Statement.
Performance Unit. A Performance Unit is an award which the Compensation
Committee can grant to any employee of the Company entitling the employee to
receive a cash payment at some future date or dates. The Compensation Committee
selects the employees to whom Performance Units will be granted and determines
the nature and amount of each Unit. All employees of the Company and its
affiliates are eligible under this plan to receive Performance Units, however,
long-term incentive awards similar to Performance Units have been typically
limited to a senior management level consisting of approximately 50-60
employees. The Compensation Committee sets performance goals which, depending
on the extent to which they are met, will determine the value and/or size of a
Performance Unit award that will be paid out.
Pursuant to the terms of this plan, the performance criteria for any
Performance Unit are limited to the following performance measures: (a)
earnings per share; (b) return on equity; (c) economic value added; (d) stock
price; (e) return on investment; (f) return on invested capital; (g) return on
assets; (h) cash flow; (i) pre-tax income; (j) net revenue; (k) return on
sales; (l) total shareholder return; and (m) value creation sum. These
performance measures may be used by the Compensation Committee in defining a
Performance Unit to measure the performance of the Company as a whole or any
business unit of the Company or any combination, and any of the above
performance measures can also be used to compare the Company's performance to
the performance of a group of comparative companies, or a published or special
index that the Compensation Committee, in its sole discretion, deems
appropriate. Payments under any Performance Unit could also be based upon any
measured improvement (actual or relative) of any of the above performance
measures as the Compensation Committee may deem appropriate. Pursuant to this
plan, no recipient may receive in excess of $5,000,000 for any one fiscal year
pursuant to the terms of a Performance Unit or Units under this plan. The
Compensation Committee also retains the discretion to adjust any amount due
pursuant to the terms of a Performance Unit downward.
For the 2003 fiscal year, the Compensation Committee granted Performance
Units under this plan for a three-year performance period covering fiscal years
2003 through 2005. Such Units are subject to shareholder approval of the Annual
and Long-Term Incentive Plan. The performance criteria for the
16
three-year performance period covering fiscal years 2003 through 2005 is H.B.
Fuller's relative percentage improvement in return on invested capital (ROIC)
in comparison to an established peer group of 19 other specialty chemical
companies. The Compensation Committee will be comparing average performance in
fiscal years 2003 through 2005 versus average performance in fiscal years 2000
through 2002. The ROIC improvement for each company will be ranked from 1 to
20, highest to lowest. If the Company falls within the first quartile of
ranking (positions 1-5) the Performance Units will be paid at the "Superior"
level. If the Company falls within the second quartile of ranking (positions
6-10), the Performance Units will be paid at the "Target" level. If the Company
falls within the third or fourth quartiles (positions 11-20), no amounts will
be paid under the Performance Units.
The number of Performance Units awarded in fiscal year 2003 and the
estimated cash payout in fiscal year 2006 if the Target or Superior performance
goals are achieved are shown below for the persons and the groups identified.
Estimated Payouts
2003-2005
Performance Period
Number ---------------------
Name and Position or Group* of Units Target Superior
--------------------------- -------- ---------- ----------
Albert P.L. Stroucken....................... 7,000 $ 700,000 $1,050,000
Chairman of the Board, President and
Chief Executive Officer
Linda J. Welty.............................. 1,750 $ 175,000 $ 262,500
Group President and General
Manager Full-Valu/Specialty
Alan R. Longstreet.......................... 1,500 $ 150,000 $ 225,000
Group President and General
Manager, North America
Peter J. Koxholt............................ 1,750 $ 175,000 $ 262,500
Group President and General
Manager, Global Adhesives
All current executive officers.............. 19,250 $1,925,000 $2,887,500
All current non-employee directors.......... 0 $ 0 $ 0
All employees who are not executive officers 13,875 $1,387,500 $2,081,250
--------
* Since Mr. Tucker, Senior Vice President and Chief Financial Officer,
announced that he would retire during the 2003 fiscal year, no Performance
Units for the period 2003-2005 were awarded.
In addition, the Compensation Committee and Mr. Stroucken agreed to amend
his existing Performance Units for the period covering fiscal years 2002
through 2004 (granted in January, 2002 under the H.B. Fuller Company
Performance Unit Plan) to ensure that any payment under those Units would
qualify as performance-based compensation under Section 162(m), and to make
payment of any Performance Units hereunder subject to shareholder approval of
this plan. Mr. Stroucken's existing Performance Units for fiscal years 2002
through 2004 is described in this Proxy Statement under the headings
"Compensation Committee's Report on Executive Compensation" and under "Long
Term Incentive Plan--Awards in Last Fiscal Year."
Stock Incentive Awards. Subject to the terms of the H.B. Fuller Company
Year 2000 Stock Incentive Plan, the Compensation Committee may grant Stock
Incentive Awards to any employee in such amounts and upon such terms as it may
in its discretion determine. All employees of the Company and its affiliates
are eligible to receive Stock Incentive Awards. The performance measures
17
for payment of any Stock Incentive Award are the same as those for a
Performance Unit Award. It is the Company's intention that any Stock Incentive
Awards made pursuant to the Annual and Long-Term Incentive Plan qualify as
performance-based compensation under Section 162(m) of the Code. The maximum
aggregate amount payable to any one participant for any one fiscal year
pursuant to the terms of a Stock Incentive Award or Awards may not exceed
100,000 shares of Company Common Stock or an amount equal to the value of
100,000 shares of Company Common Stock. No Stock Incentive Awards have been
granted pursuant to this plan. The types and amounts of such awards that may be
granted in the future pursuant to this plan are not determinable as the
Compensation Committee will make such determinations in its discretion.
Amendment and Termination. The Compensation Committee may, at any time and
from time to time, alter, amend, modify, suspend or terminate the Annual and
Long-Term Incentive Plan in whole or in part. No amendment of this plan may be
made without shareholder approval if shareholder approval is required by law,
regulation or stock exchange rule.
Equity Compensation Plan Information
In connection with our proposal to approve the Annual and Long-Term
Incentive Plan, we are required by federal regulation to provide you with
certain information relating to H.B. Fuller's equity compensation plans. The
following table gives information about our Common Stock that may be issued
upon the exercise of options, warrants and rights under all of our existing
equity compensation plans as of November 30, 2002.
(c)
(a) Number of
Number of securities remaining
securities to available for future
be issued upon (b) issuance under
exercise of Weighted-average equity
outstanding exercise price of compensation plans
options, outstanding (excluding
warrants and options, warrants securities reflected
Plan Category rights and rights in column (a))
------------- -------------- ----------------- --------------------
Equity compensation plans approved by security
holders..................................... 1,756,530 $22.63 2,644,602
Equity compensation plans not approved by
security holders............................ NONE -- NONE
Total......................................... 1,756,530 $22.63 2,644,602
Proposal
Shareholder approval of the H.B. Fuller Company Annual and Long-Term
Incentive Plan is being sought to qualify compensation paid under this plan as
qualified "performance-based compensation," as defined in Section 162(m) of the
Internal Revenue Code.
We will vote your shares as you specify when providing your proxy. If you
submit your proxy without voting instructions, we will vote your shares FOR the
approval of the H.B. Fuller Company Annual and Long-Term Incentive Plan.
Approval of this plan requires the affirmative vote of the holders of a
majority of the shares of Common Stock present in person or by proxy and
entitled to vote at the meeting.
The Board of Directors recommends a vote FOR
approval of the H.B. Fuller Company Annual and Long-Term Incentive Plan.
18
OTHER MATTERS
We do not know of any other business to be presented for consideration at
the meeting. If any other business does properly come before the meeting, the
persons named as proxies on the enclosed proxy card will vote in accordance
with their best judgment as to the best interests of H.B. Fuller and its
shareholders.
19
EXECUTIVE COMPENSATION
Compensation Committee Report on Executive Compensation
Introduction. It is the purpose of the Compensation Committee to establish,
monitor and administer compensation policies, plans and provisions to ensure
the Company's ability to attract, retain and motivate qualified executives and
directors. In order to achieve these objectives, we establish targets for base
pay, short-term and long-term incentives, including stock-based awards with an
emphasis on market-based competitiveness and alignment with the mission,
strategies, and financial objectives of the Company. Each year, we review
national and regional compensation surveys to determine and establish
competitive levels of compensation. Certain of these surveys include comparable
companies from the specialty chemical peer group referred to in the Total
Shareholder Return Graph in this Proxy Statement. From time to time, we also
hire experienced outside consultants to analyze and review the Company's
compensation programs. The purpose of these reviews is to satisfy ourselves
that H.B. Fuller's compensation programs meet our objectives.
No member of the Compensation Committee is a current or former employee of
the Company. The membership of the Committee satisfies all applicable
requirements for a corporation listed on the New York Stock Exchange and all
members are considered "independent" as that term has been described by the
Exchange.
Compensation of the Chief Executive Officer. Mr. Stroucken's total
compensation package is designed to be competitive with compensation provided
to chief executive officers at chemical manufacturing and allied products
companies with total revenues comparable to H.B. Fuller's net revenues. Mr.
Stroucken's employment compensation is governed by his employment agreement,
described under the heading, "Executive Compensation--Employment Agreements" in
this Proxy Statement. Since the components of Mr. Stroucken's total
compensation package (base salary, short-term incentives, and long-term
incentives, including stock-based awards), are the same as those for all other
executives, the specifics of his fiscal year 2002 compensation are discussed
under each heading.
Compensation for Fiscal Year 2002.
Base Salary. Generally, base salary reflects an executive's job grade. Job
grades are set to reflect the complexity and importance of a position as
well as the market rate paid for such positions. Merit increases in base
salary are tied to annual performance reviews and are generally subject to
salary ranges based on market surveys of companies with total revenues
comparable to H.B. Fuller's net revenues. We review and consider the annual
performance of and proposed merit increase for each executive annually. For
the most recent fiscal year, the budget guideline for base salary merit
increases was 3.7%. Base salary increases due to promotions, as well as
merit increases, for executives named in this Proxy Statement (other than
the CEO) averaged 3.5% for fiscal year 2002. Mr. Stroucken's base salary
increased 8% from fiscal 2001 to 2002.
Short-Term Incentive Awards. Consistent with our overall philosophy and
objectives, aggregate short-term incentive awards are set for each executive
so that the expected payout at target performance levels, together with the
executive's base salary, would result in base salary and short-term
incentive compensation at least equal to the compensation for similar
positions at comparable companies. Target award opportunities for executives
named in this Proxy Statement (other than the CEO) ranged from 40% to 56% of
base salary for fiscal 2002. The maximum opportunity ranged from 60% to 84%.
For fiscal 2002, Mr. Stroucken was eligible to earn an award of up to 113%
of his base salary under the Company's short-term incentive program.
20
The actual amount of each short-term award in 2002 was based upon a
subjective evaluation of each executive's performance. For all executives
named in this Proxy Statement (other than the CEO), we reviewed and approved
the award recommended by Mr. Stroucken. Based upon his recommendations,
these executives received an annual bonus ranging from 32% to 50% of base
salary for fiscal 2002. For fiscal year 2002, Mr. Stroucken received 62% of
his base salary as an annual bonus.
Long-Term Incentive Awards. The Company has also established a long-term
incentive program that includes annual grants of cash-based Performance
Units and non-qualified stock options. The aggregate amount of these
long-term incentive awards is set for each executive so that the expected
payout would result in compensation at least equal to competitive market
levels of such compensation for similar positions at comparable companies.
Performance Units. Since the Company introduced its long-term, cash based,
Performance Unit program in fiscal year 1999, the basis for performance
measurement and determining payout has been the Company's actual cumulative
Value Creation relative to an internally established objective. Value
Creation is the Company's own measurement of economic profit. After studying
the efficiency of this approach, the Committee decided beginning in fiscal
2002 to move to a new basis for measuring performance and determining
whether or not Performance Units would pay out. That measurement compares
the Company's percentage improvement in return on invested capital (ROIC)
relative to the ROIC of a group of 19 industry peers. The Committee
determined that employing ROIC, which is based on publicly available
information, instead of Value Creation, would provide consistent results
that can be measured across the peer group of companies. These peer
companies are identified under the Total Shareholder Return Graph in this
Proxy Statement.
For detailed information regarding the Performance Units awarded to Mr.
Stroucken and the other executives named in this Proxy Statement for fiscal
year 2002, please refer to the table under the heading "Long Term Incentive
Plan--Awards in the Last Fiscal Year" in this Proxy Statement.
Since 1999, each annual award of Performance Units specified a three-year
measurement period for determining the amount to be paid with respect to the
award. For example, the Performance Units awarded during fiscal year 2002
are based upon the Company's performance from 2002 through 2004. It was
expected that annual awards of Performance Units would result in a series of
overlapping three-year performance periods. However, before awarding the
2002 Performance Units, the Committee decided that the Performance Units
granted in years prior to fiscal year 2002 were unlikely to pay out. As a
result, the next possible incentive payment would not be until April, 2005
unless the Committee made special provisions in 2002. Therefore, as part of
the Performance Units awarded in fiscal year 2002, in addition to an award
based upon the full three-year measuring period covering fiscal years
2002-2004, there is an opportunity to receive an incentive payment for the
fiscal years 2002 and 2003 separately. The incentive payment opportunities
for fiscal year 2002 and 2003 are equal to 1/3 and 2/3 of the potential
award for the 2002-2004 measuring period. Any payments earned for the
distinct performance periods 2002 and 2003 will be offset against any
payments covering similar periods under previous Performance Unit awards. As
a result, the separate performance periods 2002 and 2003 offer a partial
incentive opportunity until other three-year performance cycles are in
place. Because of the need to compare the Company's ROIC performance against
other peer group companies, it is expected that final determination on
whether the fiscal year 2002 performance period results warrant any payment
will not be able to be determined until after the date of this Proxy
Statement.
Stock-Based Programs. The Committee believes that ownership of H.B. Fuller
Common Stock by executives encourages long-term, strategic decision-making
that is in the balanced best
21
interests of H.B. Fuller's constituents. Goals for recommended levels of
executive stock ownership were established several years ago. An executive's
stock ownership goal ranges in dollar amount from one to five times their
annual salary, depending on job grade.
To foster stock ownership by executives, in addition to Performance Units,
50% of each executive's long-term incentive award is provided through the
grant of nonqualified stock options. For detailed information regarding the
options awarded to Mr. Stroucken and the other executives named in this
Proxy Statement for fiscal year 2002, please refer to the table under the
heading "Option Grants in Last Fiscal Year" in this Proxy Statement.
Deductibility of Executive Compensation. Section 162(m) of the Internal
Revenue Code generally limits the tax deductibility of compensation paid by a
public company, like H.B. Fuller, to its chief executive officer and other
executives. We consider the deductibility of compensation arrangements in
executive compensation decisions, but deductibility has never been the sole
factor used in determining the appropriate level of compensation. In order to
preserve the Company's tax deduction under Section 162(m), the Board has
recommended that the shareholders approve the H.B. Fuller Annual and Long-Term
Incentive Plan (as described under Proposal 3 of this Proxy Statement).
Approval of this plan will not necessarily alter our approach to compensation
but will assure that the Company will be able to deduct the short term and long
term cash compensation it pays to its executives. The Committee intends to act
to preserve the Company's ability to deduct executive compensation to the
extent possible without compromising the ability to motivate and reward the
excellent performance of its executives.
Conclusion. We believe that the policies and programs described in the
report maintain an appropriate balance between motivating achievement of
short-term goals and strategically leading the Company in a direction to
provide long-term success and therefore serve the interests of the shareholders
and the Company.
Lee R. Mitau, Chair
Norbert R. Berg Gail D. Fosler
Knut Kleedehn R. William Van Sant
22
Summary Compensation Table
The following table shows, in the format required by the SEC, the cash and
non-cash compensation for each of the last three fiscal years awarded to or
earned by Mr. Stroucken, as CEO of the Company, and each of the other four most
highly compensated executives at the end of fiscal year 2002.
Long-Term
Annual Compensation Compensation Awards
------------------------------- ---------------------
Restricted Securities
Other Annual Stock Underlying All Other
Name and Principal Fiscal Salary(1) Bonus(2) Compensation(3) Awards(4) Options Compensation(5)
Position Year ($) ($) ($) ($) (#) ($)
------------------ ------ --------- -------- --------------- ---------- ---------- ---------------
Albert P.L. Stroucken 2002 704,487 435,750 12,602 0 71,721 190,118
Chairman of the Board, 2001 648,945 225,000 16,224 0 103,896 99,424
President and Chief 2000 648,945 0 14,755 0 56,684 143,702(6)
Executive Officer
Raymond A. Tucker 2002 307,373 153,929 27,672 0 17,930 65,079
Senior Vice President 2001 292,263 70,922 5,358 0 30,304 26,355
and Chief Financial 2000 283,750 42,563 0 0 14,170 0
Officer
Linda J. Welty 2002 305,886 136,164 961 0 17,930 38,252
Group President, 2001 287,555 54,764 2,377 0 25,974 18,823
General Manager 2000 269,610 47,182 1,236 0 14,170 21,825
Full Valu/Specialty
Alan R. Longstreet 2002 295,512 123,324 0 0 15,369 153,635
Group President, 2001 283,426 83,823 625 0 25,974 39,381
General Manager 2000 275,171 41,276 344 0 14,170 16,307
North America
Peter M. Koxholt (7) 2002 287,938 97,744 137,847(8) 0 17,930 1,250
Group President, 2001 250,905 35,457 159,614(9) 0 19,480 18,675
General Manager 2000 249,027 22,051 0 0 9,448 0
Global Adhesives
--------
(1) Includes cash compensation deferred at the election of the executive under
H.B. Fuller's Thrift Plan and Key Employee Deferred Compensation Plan.
(2) The bonus amounts were paid pursuant to H.B. Fuller's short-term incentive
plans described in the Compensation Committee Report on Executive
Compensation. Includes cash compensation deferred at the election of the
executive under the Key Employee Deferred Compensation Plan.
(3) Includes the dollar value of H.B. Fuller's 10% matching contribution
relating to Common Stock units credited to the executive's account under
the Key Employee Deferred Compensation Plan. The amounts for fiscal year
2002 were as follows:
Albert P.L. Stroucken $12,602
Raymond A. Tucker.... $27,672
Linda J. Welty....... $ 961
(4) H.B. Fuller issued restricted stock and restricted stock units under its
1992 Stock Incentive Plan. Each restricted stock unit represents the right
to receive one share of H.B. Fuller Common Stock. Dividends are paid on
restricted stock and then reinvested in additional shares of restricted
stock. Dividend equivalents accrue with respect to restricted stock units
at the same rate as dividends are paid on Common Stock, and the dividend
equivalents are then credited as additional restricted stock units. Shares
of restricted stock are entitled to vote at the meeting. Restricted stock
units are not entitled to vote at the meeting.
Listed below are the total numbers of shares of restricted stock and
restricted stock units held by each executive as of December 2, 2002.
Amounts shown include accrued dividend shares or dividend equivalents.
Restricted
Restricted Market Stock Market
Stock Value Units Value
---------- -------- ---------- --------
Linda J. Welty.... 2,155 $ 63,357
Alan R. Longstreet 10,358 $304,525 9,893 $290,854
Peter M. Koxholt.. 2,135 $ 62,769
23
(5) Amounts include H.B. Fuller's matching contributions for fiscal year 2002
under the terms of H.B. Fuller's Thrift Plan (a 401(k) plan):
Albert P.L. Stroucken $5,993
Raymond A. Tucker.... $3,899
Linda J. Welty....... $3,745
Alan R. Longstreet... $4,742
A participant's account in the Thrift Plan is fully vested upon the
occurrence of certain specified circumstances, including a change in control
of H.B. Fuller or after three years of credited service. The account
balances for each of the executives listed in the Summary Compensation Table
are fully vested. Distribution of a participant's vested account balance is
made only upon the termination of employment.
For fiscal year 2002, the amounts also include certain matching
contributions under the Key Employee Deferred Compensation Plan as follows:
Albert P.L. Stroucken $29,093
Raymond A. Tucker.... $11,479
Linda J. Welty....... $12,576
Alan R. Longstreet... $10,973
Amounts also include premiums paid for fiscal year 2002, on a tax-protected
basis, on term life and personal excess liability insurance covering each
executive as follows:
Albert P.L. Stroucken $43,290
Raymond A. Tucker.... $14,462
Linda J. Welty....... $ 4,397
Alan R. Longstreet... $26,684
Peter M. Koxholt..... $ 1,250
The term life insurance covers the amount of the executive's outstanding
loan under the Executive Stock Purchase Loan Program.
The amount for Mr. Stroucken also includes $30,976 of life insurance
premiums paid, on a tax-protected basis, by the Company for fiscal year
2002. The death benefit to be paid under this policy is the amount required
to provide the full amount of coverage required by Mr. Stroucken's
employment agreement. The amount of any death benefit in excess of this
required amount is payable to the Company. If terminated during his
lifetime, Mr. Stroucken may purchase the policy for the greater of the
aggregate amount of premiums paid by the Company or the policy's cash
surrender value.
During fiscal year 2002, the Company made a one-time payment to all
employees to satisfy its liability to its employees for vacation accrued but
not taken in prior years and carried forward in accordance with applicable
policies. After this payment, the amount of vacation any employee could use
in the year after it was earned was limited.
For fiscal 2002, the amount in this column also includes the following
payments by the Company to the named executives in connection with this
one-time program:
Albert P.L. Stroucken $ 80,766
Raymond A. Tucker.... $ 35,239
Linda J. Welty....... $ 17,534
Alan R. Longstreet... $111,236
(6) This amount includes a $100,000 contribution to Mr. Stroucken's H.B. Fuller
Common Stock account under the Key Employee Deferred Compensation Plan.
(7) Mr. Koxholt's salary and bonus were converted from euros to U.S. dollars
using the foreign exchange rates in effect during the period when the
salary and bonus were paid.
(8) This amount includes payments made to Mr. Koxholt under H.B. Fuller's
international service assignment policy for fiscal year 2002.
(9) This amount includes payments made to Mr. Koxholt under H.B. Fuller's
international service assignment policy for fiscal year 2001.
24
Option Grants in Last Fiscal Year
H.B. Fuller provides long-term incentive compensation to its executives in
the form of stock options. The following table provides information on the
stock options granted during fiscal year 2002 to the executives listed in the
Summary Compensation Table.
Potential Realizable Value
at Assumed Annual Rates
of Stock Price Appreciation
Individual Grants for Option Term
-------------------------------- ---------------------------
Number of
Securities % of Total
Underlying Options Exercise
Options Granted to or Base
Granted Employees in Price Expiration 5%(2) 10%(2)
Name (#)(1) Fiscal Year ($/Sh) Date ($) ($)
---- ---------- ------------ -------- ---------- --------- ---------
Albert P.L. Stroucken 71,721 20.0% 25.95 1/17/12 1,170,473 2,966,210
Raymond A. Tucker.... 17,930 5.0% 25.95 1/17/12 292,614 741,542
Linda J. Welty....... 17,930 5.0% 25.95 1/17/12 292,614 741,542
Alan R. Longstreet... 15,369 4.3% 25.95 1/17/12 250,819 635,625
Peter M. Koxholt..... 17,930 5.0% 25.95 1/17/12 292,614 741,542
--------
(1) The options have an exercise price equal to the market price of H.B. Fuller
Common Stock on the date of grant. Beginning one year after the date of
grant, 25% of the annual grant can be exercised. An additional 25% of the
annual grant vests each year. The options vest earlier upon retirement or a
change in control of the Company. Change in control circumstances are
defined as certain changes in H.B. Fuller's Board of Directors, certain
concentrations of voting power, certain mergers, sales of corporate assets,
statutory share exchanges or similar transactions, or a liquidation or
dissolution of the Company.
(2) The assumed 5% and 10% annual rates of appreciation over the terms of the
options are shown in accordance with rules and regulations of the SEC and
do not represent H.B. Fuller's estimates of stock price appreciation.
Aggregated Option Exercises in Fiscal Year 2002 and Fiscal Year End Option
Values
The following table summarizes information with respect to stock option
exercises by the executives listed in the Summary Compensation Table during
fiscal year 2002 and the value of stock options held by such executives at the
end of fiscal year 2002.
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money Options at
Shares Value Options at Fiscal Year End Fiscal Year End(1)
Acquired Realized ------------------------- -------------------------
Name on Exercise ($) Exercisable Unexercisable Exercisable Unexercisable
---- ----------- -------- ----------- ------------- ----------- -------------
Albert P.L. Stroucken 0 0 103,919 194,520 $941,692 $1,487,632
Raymond A. Tucker.... 0 0 29,661 52,743 $ 95,978 $ 321,100
Linda J. Welty....... 0 0 23,499 47,803 $162,685 $ 312,239
Alan R. Longstreet... 0 0 28,549 46,896 $201,869 $ 316,470
Peter M. Koxholt..... 0 0 19,515 40,571 $121,194 $ 248,566
--------
(1) The value was determined by subtracting the exercise price per share from
$29.40, the closing market price per share of H.B. Fuller Common Stock on
December 2, 2002.
Long Term Incentive Plan--Awards in Last Fiscal Year
Historically, the Company has made an annual award of units whose payout is
determined at the end of a specified three-year period. Such annual awards have
resulted in a series of overlapping three-year performance periods. No cash
awards were paid for the three-year performance period covering fiscal years
2000-2002 since H.B. Fuller's financial results over the 2000-2002 performance
period did not meet the targets specified in such awards.
25
The following table shows awards under the H.B. Fuller Performance Unit Plan
made during fiscal year 2002 to the executives listed in the Summary
Compensation Table. Any payout for units awarded in 2002 will be made in 2005
and will be based upon the Company's relative percentage improvement in return
on invested capital in comparison to an established peer group of 19 specialty
chemical companies. The average performance in fiscal years 2002 through 2004
will be compared to the average performance in fiscal years 1999 through 2001.
The ROIC improvement for each company will be ranked from 1 to 20, highest to
lowest. If H.B. Fuller falls within the first quartile of ranking (positions
1-5) the Performance Units will be paid at the "Maximum" level. If the Company
falls within the second quartile of ranking (positions 6-10), the Performance
Units will be paid at the "Target" level. If the Company falls within the third
or fourth quartiles (positions 11-20), no amounts will be paid under the
Performance Units.
Performance or
Other Period Estimated Future Payouts
Until Maturation Under Non-Stock
or Payout Price-Based Plan (2)
Number of ---------------- ------------------------
Name Units(1) Fiscal Years(2) Target Maximum
---- --------- ---------------- -------- ----------
Albert P.L. Stroucken 7,000 2002-2004 $700,000 $1,050,000
Raymond A. Tucker.... 1,750 2002-2004 $175,000 $ 262,500
Linda J. Welty....... 1,750 2002-2004 $175,000 $ 262,500
Alan R. Longstreet... 1,500 2002-2004 $150,000 $ 225,000
Peter M. Koxholt..... 1,750 2002-2004 $175,000 $ 262,500
--------
(1) The performance units are denominated and payable in dollars. As of the
last day of the performance period, the participant's performance units are
converted to a dollar value and paid in cash.
(2) Performance units granted in 2002, in addition to providing for payments
based upon the Company's percentage improvement in return on invested
capital in comparison to an established peer group of specialty chemical
companies for the fiscal years 2002-2004 also provided for a payment based
upon the same formula over one- year measuring periods covering fiscal
years 2002 and 2003. The target and maximum payouts, if any, for the fiscal
year 2002 measuring period and fiscal year 2003 measuring period would be
equal to one-third and two thirds, respectively, of the estimated payouts
for the three-year performance period. As of the date of this Proxy
Statement, the Company was not yet able to calculate if any amounts for the
fiscal year 2002 measuring period were payable. If any amount is paid for
fiscal year 2002, it will be disclosed in next year's Proxy Statement.
Retirement Plans
H.B. Fuller's Retirement Plan is a defined benefit, tax qualified plan that
provides benefits for U.S. employees and is sometimes referred to as a pension
plan. Employees do not make contributions to this plan. The plan provides an
annual benefit equal to a percentage of the employee's average annual
compensation (including annual incentive compensation) during the highest five
years of compensation in the final ten years of an employee's service, based on
the employee's length of service with the Company.
H.B. Fuller has established a Supplemental Executive Retirement Plan to
provide additional benefits to executives who may be affected by limits that
are imposed by the Internal Revenue Code and the Employee Retirement Income
Security Act of 1974 on the amount of benefits that may be paid from tax
qualified pension plans. This supplemental plan provides an annual benefit
equal to a percentage of the executive's average annual compensation (including
annual incentive compensation) during the highest five years of compensation in
the final ten years of an executive's service, based on the executive's length
of service with H.B. Fuller. This supplemental amount is offset by retirement
26
income from certain other sources. The supplemental plan is an unfunded plan.
However, the Company has placed funds in a trust that is intended to provide
plan benefits. The funds are subject to the claims of H.B. Fuller's creditors.
The following table shows the estimated annual benefits on a straight-line
annuity basis payable to the executives listed in the Summary Compensation
Table who have 15 or more years of credited service upon normal retirement (age
65 or later) under the pension plan and the Supplemental Executive Retirement
Plan. The compensation considered in determining the benefits payable under the
plans is the compensation shown in the "Salary" and "Bonus" columns of the
Summary Compensation Table.
Final Final
Five-Year Five-Year
Average Average
Annual Annual Annual Annual
Compensation ($) Benefit ($) Compensation ($) Benefit ($)
---------------- ----------- ---------------- -----------
225,000 92,580 900,000 430,080
300,000 130,080 975,000 467,580
375,000 167,580 1,050,000 505,080
450,000 205,080 1,125,000 542,580
525,000 242,580 1,200,000 580,080
600,000 280,080 1,275,000 617,580
675,000 317,580 1,350,000 655,080
750,000 355,080 1,425,000 692,580
825,000 392,580
Mr. Longstreet had more than 15 years of service as of December 1, 2002.
Mr. Stroucken, Mr. Tucker, Ms. Welty, Mr. Longstreet and Mr. Koxholt
participate in the pension plan and the Supplemental Executive Retirement Plan.
At the time of their hiring, Mr. Stroucken, Mr. Tucker and Mr. Koxholt were
each credited with years of service under the Supplemental Executive Retirement
Plan for the number of years served with their prior employer.
Mr. Koxholt, as a German employee, also participates in a German pension
plan. Benefits under the German plan will be set off against any benefits
payable under the pension plan in the United States.
Key Employee Deferred Compensation Plan
H.B. Fuller's Key Employee Deferred Compensation Plan permits eligible
employees to defer annually a portion of their base salary and any annual
incentive payment or payments under H.B. Fuller's Performance Unit Plan.
Deferred compensation is payable on the earlier of the participant's
termination of employment, reaching age 65, disability, death or the date for
payment selected by the participant. Deferred amounts are credited with
interest based on the prime rate, or gains and losses based on the performance
of certain mutual funds or H.B. Fuller Common Stock, all as selected by the
participant. If a participant elects to defer amounts to the H.B. Fuller Common
Stock account, the Company makes a matching contribution equal to 10% of the
value of such amount.
H.B. Fuller also makes matching contributions to a participant's stock
account to restore certain matching contributions under the H.B. Fuller Thrift
Plan (a 401(k) plan) that are limited by tax regulations. In addition, the
Compensation Committee may make discretionary contributions to a participant's
Common Stock account under this plan.
27
Employment Agreements
Albert P.L. Stroucken. Mr. Stroucken's employment as President and Chief
Executive Officer of the Company is governed by the terms of an employment
agreement dated April 16, 1998. This agreement addresses Mr. Stroucken's base
salary, annual and long-term incentive compensation, specified perquisites and
participation in the Company's employee benefit plans. The employment agreement
terminates on March 31, 2004.
In the event of Mr. Stroucken's death or disability during the term of this
agreement, the Company agrees to pay his spouse or estate for the following
three years an annual amount equal to the sum of his average base salary during
the two years preceding his death or disability plus his average annual bonus
during the preceding two years. The Company will pay a similar amount for three
years following his termination of employment if the Company terminates his
employment without cause, Mr. Stroucken terminates his employment for "good
reason" (as defined in the agreement), or his employment terminates on March
31, 2004. The Company will also provide him and/or his spouse with certain
benefits and perquisites during this three-year period. Pursuant to the terms
of his agreement, Mr. Stroucken is prohibited from disclosing confidential
information and engaging in certain activities competitive with H.B. Fuller for
a period following his employment with the Company.
Mr. Stroucken's employment agreement contains provisions which may trigger a
lump-sum payment in the event of a change in control of the Company. This
payment is triggered if within one year after a change in control, Mr.
Stroucken terminates his employment or the Company terminates his employment
for any reason (other than cause), or if within three years after a change in
control, the Company terminates Mr. Stroucken's employment without cause, or he
terminates his employment due to a reduction in his position, responsibilities
or compensation from what existed prior to the change of control. The payment
is equal to three times the amount of Mr. Stroucken's base salary plus his
largest annual bonus in any of the three years before the change in control. In
addition, the Company will provide Mr. Stroucken with certain benefits and
perquisites for a three-year period following the termination of employment. In
the event that these payments are subject to any excise tax, the Company will
reimburse Mr. Stroucken for the amount of the excise tax and for any taxes
imposed upon such reimbursement.
Other Executive Officers. The Company has agreements with Mr. Tucker,
Mr. Longstreet and Mr. Koxholt that prohibit disclosure of confidential
information. Mr. Longstreet's and Mr. Koxholt's agreements prohibit each of
them from competing with the Company for a period of time after termination of
employment. In certain circumstances the agreements with Mr. Longstreet and
Mr. Koxholt require the Company to pay the executive during any noncompetition
period the difference between his monthly income and his monthly income
immediately prior to leaving the Company.
During fiscal year 2002, the Company entered into a letter agreement with
Mr. Tucker. Pursuant to the terms of this letter agreement, in exchange for Mr.
Tucker's agreement to continue his service with the Company through July 7,
2003, the Company agreed to increase the amount that would otherwise be paid to
Mr. Tucker under the Supplemental Executive Retirement Plan, pay an annual
bonus for the portion of 2003 in which he worked for the Company, and provide
certain standard relocation benefits with respect to the sale of his home.
Mr. Koxholt's employment is governed by the terms of an international
service agreement similar to that negotiated with any employee of H.B. Fuller
who undertakes an expatriate assignment (Mr. Koxholt is a German citizen and
employee). In connection with his international assignment, Mr. Koxholt's
agreement with the Company was amended to restrict the Company or Mr. Koxholt
from terminating his employment (except for cause) prior to 2004.
28
Change in Control Arrangements
H.B. Fuller has a change in control arrangement with each of the executives
listed in the Summary Compensation Table (Mr. Stroucken's arrangement is
described above). The one-year term of these agreements automatically extends
on a daily basis, so that the term continues to be one year, unless H.B. Fuller
gives notice that the term will not be extended. Upon the occurrence of a
change in control of the Company, the term of the agreement is automatically
extended to three years from the date of the change in control. If during this
three-year period, H.B. Fuller terminates the executive's employment for any
reason other than cause or disability, the executive terminates his or her
employment for good reason (as defined in the agreement), or the executive
terminates his or her employment for any reason during the 90-day period
following the first anniversary of the change in control, the executive is
entitled to receive a lump sum payment from H.B. Fuller. The payment is equal
to three times the amount of the executive's annual base salary plus the
executive's largest annual bonus in any of the three years before the change in
control. In addition, the executive is entitled to medical and dental benefits
for a three-year period following the termination of employment and certain
perquisites. H.B. Fuller will adjust the payments and benefits in the event
that they are subject to an excise tax imposed by the Internal Revenue Code and
do not exceed 330% of the executive's base amount. Under these circumstances,
the payments and benefit will be adjusted so that the amount of the payments
equals 299% of the base amount, which is the maximum amount that can be paid
without imposition of an excise tax. In the event that the payments and
benefits are subject to an excise tax and exceed 330% of the executive's base
amount, the Company has agreed to reimburse the executive for the amount of the
excise tax and for any taxes imposed upon the reimbursement.
H.B. Fuller has other compensatory arrangements with its executives which
will result from a change in control. H.B. Fuller's Supplemental Executive
Retirement Plan provides that if within three years after a change in control,
H.B. Fuller terminates a participant's employment without cause or the
participant terminates his or her employment for good reason (as defined in
this plan), or if the participant terminates his or her employment for any
reason during the 90-day period following the first anniversary of the change
in control, then five years shall be added to both the participant's age and
years of credited service for purposes of determining benefits under this plan.
If a participant's employment terminates as described above and the participant
is not entitled to a benefit under the supplemental retirement plan, then the
participant will be paid an annual benefit equal to 25% of his or her final
average compensation, regardless of age or years of credited service.
In addition, in the event of a change in control, all shares of restricted
stock, all restricted stock units and any unvested stock options outstanding
under H.B. Fuller's stock incentive plans immediately vest in full.
Executive Stock Purchase Loan Program
In July, 2000, the Board of Directors adopted the Executive Stock Purchase
Loan Program. Under the program, H.B. Fuller arranged for U.S. Bank to provide
full-recourse, personal loans to eligible management employees to purchase
shares of H.B. Fuller Common Stock in the open market. Each eligible employee
was allowed to obtain a loan equal to the dollar amount of the participant's
stock ownership goal plus capitalization of interest for the term of the loan.
An executive's stock ownership goal ranges in dollar amount from one to five
times his or her annual salary, depending on the executive's position with the
Company. The loans bear interest at the Applicable Federal Rate and mature in
five years, with principal and interest due at that time. The loans are
guaranteed by H.B. Fuller only in the event of the participant's default. The
Company pays the premiums on a term life insurance policy for each participant
in an amount necessary to repay the outstanding loan in the event of the
participant's death. H.B. Fuller also pays the administrative fees and expenses
of the program. During fiscal year 2002, ten management employees participated
in the program, and the aggregate
29
amount of loans outstanding under the program on November 30, 2002 was $8,
810,397. As of November 30, 2002, executives listed in the Summary Compensation
Table participated in the Executive Stock Purchase Loan Program as follows:
Loan
Amount
----------
Albert P.L. Stroucken $3,473,093
Raymond A. Tucker.... 942,842
Linda J. Welty....... 827,401
Alan R. Longstreet... 825,513
This program ended during fiscal year 2001. In accordance with applicable
law, the Company will not extend, directly or indirectly any similar loans in
the future.
30
TOTAL SHAREHOLDER RETURN GRAPH
Shown below is the shareholder return graph required by SEC rules. The graph
compares the yearly cumulative total shareholder return on H.B. Fuller Common
Stock with the cumulative total return of Standard & Poor's 500 Composite Stock
Index and an index of 19 selected peer companies. The peer index is included,
since these are the companies the Company uses most to benchmark its
performance, including for determination of performance under the Company's
Performance Awards. SEC rules require us to also present data for the Standard
& Poor's Midcap 400 and Specialty Chemicals Index. Both of these indexes had
been included in last year's proxy statement. The graph includes data for the
Midcap 400; however, since Standards & Poor's discontinued the Specialty
Chemical Index during 2002 no data is presented.
CUMULATIVE TOTAL RETURN
Based on reinvestment of $100 beginning November 28, 1997
TOTAL SHAREHOLDER RETURNS
[CHART]
H.B. FULLER CO. S&P 500 INDEX S&P 400 MIDCAP PEER GROUP
--------------- ------------- -------------- ----------
Nov-97 $100.00 $100.00 $100.00 $100.00
Nov-98 90.13 123.66 110.40 95.09
Nov-99 114.55 149.50 133.99 102.80
Nov-00 74.53 143.22 154.95 104.99
Nov-01 130.56 125.59 154.29 124.53
Nov-02 128.59 104.86 144.66 135.40
The following publicly traded companies are included in the peer group: 3M
Co., Air Products & Chemical Inc., Albemarle Corp., Arch Chemicals Inc., Avery
Dennison Corp., Bemis Co., Ecolab Inc., Engelhard Corp., Ferro Corp., Great
Lake Chemical Corp., Intertape Polymer Group Inc., Lubrizol Corp, OM Group
Inc., Polyone Corp., Rohm & Haas Co., RPM International Inc., A. Schulman Inc.,
Solutia Inc. and Valspar Corp.
31
SHAREHOLDER PROPOSALS FOR 2004 ANNUAL MEETING
In order for a shareholder proposal to be considered for inclusion in H.B.
Fuller's proxy statement for the 2004 Annual Meeting, the written proposal must
be received at the principal executive offices of the Company by the close of
business on November 7, 2003. The proposal must comply with SEC regulations
regarding the inclusion of shareholder proposals in company-sponsored proxy
materials.
H.B. Fuller's Bylaws provide that a shareholder may present a proposal at
the 2004 Annual Meeting that is not included in the proxy statement if proper
written notice is received by H.B. Fuller's CEO or CFO at the principal
executive offices of the Company by the close of business on November 7, 2003.
The proposal must contain the specific information required by H.B. Fuller's
Bylaws. You may obtain a copy of the Bylaws by writing to the Corporate
Secretary of H.B. Fuller.
/s/ Patricia Jones
Patricia L. Jones
Senior Vice President, Chief
Administrative Officer, General
Counsel
and Corporate Secretary
Dated: March 13, 2003
32
H.B. FULLER COMPANY
AUDIT COMMITTEE CHARTER
Purpose
The Committee is appointed by the Board to assist the Board in monitoring:
. the integrity of the financial statements of the Company,
. the compliance by the Company with legal and regulatory requirements,
. the independence, qualifications and performance of the Company's
internal and external auditors,
. the adequacy of internal controls, and
. the adequacy of risk management policies and procedures.
Membership
. The Committee shall have a minimum of three directors as members.
. The members of the Committee shall meet the independence and experience
requirements of the New York Stock Exchange ("NYSE").
. At least one member shall meet the "financial expert" requirements of
federal law and applicable regulations. The member who serves as the
"financial expert" on the Committee shall not serve on more than three
audit committees of publicly traded corporations, unless the Board
determines such service is consistent with the member's duties to the
Company and discloses such reasons in the Company's annual proxy
statement.
. The Board will appoint a Chairperson(s) and other members to this
Committee annually.
Duties and Responsibilities
In addition to such other matters the Board or Corporate Governance and
Nominating Committee may assign, the Committee shall perform the following
duties and responsibilities. In the event that any deficiencies are noted by
the Committee, the Committee shall monitor the process of corrections and
follow up and report any significant unresolved issues to the Board for
appropriate action.
Review of Financial Information and Disclosure
. Discuss with management the Company's regular earnings press releases,
as well as the Company's approach to earnings guidance and other
financial presentations provided to analysts, rating agencies and
investors.
. Review a summary prepared by management and the independent auditor of
significant financial reporting issues and judgments made in connection
with the preparation of the Company's financial statements.
. Review with the independent auditor all critical accounting policies and
practices used by the Company and alternative treatments of financial
information within GAAP that would result in material differences from
the current presentation. This review will include all alternative
treatments of financial information within GAAP that have been discussed
with management, the ramifications of the use of such alternative
treatments and the treatment preferred by the independent auditor, as
well as any material written communications between the auditor and
management of the Company, including the independent auditor's
assessment of management's annual report on the adequacy of the
Company's internal controls.
A-1
. Review, through its Chairman or the Committee as a whole, prior to the
filing thereof, the Company's quarterly reports on Form 10-Q and the
matters required to be discussed by the applicable Statement of Auditing
Standards.
. Review the certifications of the Chief Executive Officer and Chief
Financial Officer of the periodic reports of the Company as filed with
the Securities and Exchange Commission, including any reported
significant internal control defects and acts of fraud.
. Review the annual audited financial statements and annual report on Form
10-K with management and the independent auditor.
. Prepare the report required by the rules of the Securities and Exchange
Commission to be included in the Company's annual proxy statement and
disclose the name of the member who meets the "financial expert"
requirements of federal law and applicable regulations.
Independent Auditor
. Appoint the independent auditor.
. Approve the scope of the independent auditor's annual engagement
examination.
. Approve the terms and fees of all audit and non-audit engagements with
the independent auditors, such approval to occur prior to the provision
of any such services.
. Receive periodic reports from the independent auditor regarding the
auditor's independence, discuss such reports with the auditor, and, if
so determined by the Committee, take appropriate action to satisfy
itself of the independence of the auditor.
. Evaluate, together with the Board, the experience, qualifications and
performance of the independent auditor and, if so determined by the
Committee, replace the independent auditor.
. Obtain from the independent auditor assurance that they are not aware of
any illegal act or other facts implicating Section 10A of the Securities
Exchange Act of 1934, as amended.
. Discuss with the independent auditor the matters required to be
discussed by Statement on Auditing Standards No. 61 relating to the
conduct of the audit, including: the adoption of, or change to, the
Company's significant auditing and accounting principles and practices,
the management letter provided by the independent auditor and the
Company's response to that letter, any difficulties encountered in the
course of the audit work, including any restrictions on the scope of
activities or access to requested information and any significant
disagreements with management.
. Recommend policies to the Board with respect to the Company hiring
current or former employees of the independent auditor.
Internal Audit
. Review and approve the appointment and replacement of the senior
internal auditing executive; and review the performance of the senior
internal auditing executive and make recommendations to appropriate
Company management.
. Review and discuss with the independent auditors the internal audit
department responsibilities, budget and staffing.
. Review significant internal audit reports to management.
A-2
Compliance
. Advise the Board with respect to the Company's (including subsidiaries
and foreign affiliated entities) policies and procedures and compliance
with applicable laws and regulations and with the Company's code of
conduct.
. Review with the Company's General Counsel legal matters that may have a
material impact on the financial statements, the Company's compliance
policies and any material reports or inquiries received from regulators
or governmental agencies.
. Insure the Board establishes and maintains a code of business conduct
and ethics, including procedures to verify compliance with such code and
the receipt, retention and resolution of violations, including any
complaints regarding accounting and auditing matters. These procedures
must include the ability for an employee or other persons to report on a
direct confidential and/or anonymous basis to the Committee.
Risk Management
. Review the Company's risk management policies and procedures to assess
their adequacy and appropriateness in the context of the Company's
business and operating environment.
Governance
. The Committee shall review and reassess the adequacy of this charter at
least once each year and recommend any proposed changes to the Board for
approval.
. The Committee shall make regular reports to the Board.
While the Committee has the responsibilities and powers set forth in this
charter, it is not the duty of the Committee 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 auditor. Nor is it the duty of
the Committee to conduct investigations or to assure compliance with laws and
regulations and the Company's code of conduct.
In connection with the exercise of its duties and responsibilities, the
Committee shall have the authority to retain special legal, accounting or other
consultants to advise the Committee. The Committee may request any officer or
employee of the Company or the Company's outside counsel or independent auditor
to attend a meeting of the Committee or to meet with any members of, or
consultants to, the Committee.
Last Revised January 17, 2003
A-3
[LOGO] H.B. Fuller Company
[GRAPHIC OMITTED]
[GRAPHIC OMITTED]
ANNUAL MEETING OF SHAREHOLDERS
THURSDAY, APRIL 17, 2003
2:00 P.M.
SCIENCE MUSEUM OF MINNESOTA
120 WEST KELLOGG BOULEVARD
SAINT PAUL, MINNESOTA
[GRAPHIC OMITTED]
H.B. FULLER COMPANY
P.O. BOX 64683
ST. PAUL, MN 55164-0683 VOTING INSTRUCTIONS TO TRUSTEE
--------------------------------------------------------------------------------
H.B. FULLER COMPANY THRIFT PLAN
AND EFTEC SAVINGS PLAN
I hereby direct Wells Fargo Bank Minnesota, N.A., as Trustee of the H.B. Fuller
Company Thrift Plan Trust and the EFTEC Savings Plan Trust to vote at the Annual
Meeting of Shareholders of H.B. Fuller Company (the "Company") to be held on
April 17, 2003, and at any adjournment thereof, the shares of common stock of
the Company allocated to my accounts.
THIS CARD IS FURNISHED IN CONNECTION WITH THE SOLICITATION OF PROXIES BY THE
BOARD OF DIRECTORS OF THE COMPANY. I UNDERSTAND THIS CARD MUST BE RETURNED TO
THE TRUSTEE IF MY VOTING INSTRUCTIONS ARE TO BE HONORED. IF IT IS NOT RECEIVED
BY THE TRUSTEE, OR IF IT IS RECEIVED BUT THE VOTING INSTRUCTIONS ARE INVALID,
THE SHARES OF STOCK WITH RESPECT TO WHICH I COULD HAVE DIRECTED THE TRUSTEE
SHALL BE VOTED BY THE TRUSTEE IN ACCORDANCE WITH THE TERMS OF THE PLANS. THE
TRUSTEE IS HEREBY DIRECTED TO VOTE AS INDICATED ON THE FOLLOWING PROPOSALS WHICH
ARE MORE FULLY DESCRIBED IN THE COMPANY'S NOTICE OF ANNUAL MEETING OF
SHAREHOLDERS AND PROXY STATEMENT. THE UNDERSIGNED HEREBY ACKNOWLEDGES RECEIPT OF
THE PROXY STATEMENT FOR THE ANNUAL MEETING.
SEE REVERSE FOR VOTING INSTRUCTIONS.
COMPANY #
CONTROL #
THERE ARE THREE WAYS TO VOTE YOUR VOTING INSTRUCTION CARD
YOUR TELEPHONE OR INTERNET VOTE AUTHORIZES THE TRUSTEE TO VOTE YOUR SHARES IN
THE SAME MANNER AS IF YOU MARKED, SIGNED AND RETURNED YOUR VOTING INSTRUCTION
CARD.
VOTE BY PHONE -- TOLL FREE -- 1-800-240-6326 -- QUICK --- EASY --- IMMEDIATE
o Use any touch-tone telephone to vote your proxy 24 hours a day, 7 days a
week.
o You will be prompted to enter your 3-digit Company Number, your 7-digit
Control Number (these numbers are located on the proxy card) and the last
4-digits of the U.S. Social Security Number or Tax Identification Number for
this account. If you do not have a U.S. SSN or TIN please enter 4 zeros.
o Follow the simple instructions the voice provides you. DEADLINE FOR VOTING BY
PHONE IS 11:00 A.M., CENTRAL TIME, ON WEDNESDAY, APRIL 16, 2003.
VOTE BY INTERNET -- WWW.EPROXY.COM/FUL/ -- QUICK --- EASY --- IMMEDIATE
o Use the Internet to vote your proxy 24 hours a day, 7 days a week.
o You will be prompted to enter your 3-digit Company Number, your 7-digit
Control Number (these numbers are located on the proxy card) and the last
4-digits of the U.S. Social Security Number or Tax Identification Number
for this account to obtain your records and create an electronic ballot.
If you do not have a U.S. SSN or TIN please leave blank.
o Follow the simple instructions. DEADLINE FOR VOTING BY INTERNET IS 12:00
P.M., CENTRAL TIME, ON WEDNESDAY, APRIL 16, 2003.
VOTE BY MAIL
Mark, sign and date your proxy card and return it in the postage-paid envelope
we've provided or return it to H.B. FULLER COMPANY, C/O SHAREOWNER SERVICES-,
P.O. Box 64873, St. Paul, MN 55164-0873.
IF YOU VOTE BY PHONE OR INTERNET, PLEASE DO NOT MAIL YOUR VOTING INSTRUCTION
CARD
[GRAPHIC OMITTED]
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ITEMS 1, 2 AND 3
1. Election of directors:
01 Alfredo L. Rovira
02 Albert P. L. Stroucken
[_] Vote FOR both nominees (except as specified below)
[_] Vote WITHHELD from both nominees
(INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR EITHER INDICATED NOMINEE,
WRITE THE NUMBER OF THE NOMINEE IN THE BOX PROVIDED TO THE RIGHT.)
2. To ratify the appointment of PricewaterhouseCoopers LLP as the Company's
independent auditors for the fiscal year ending November 29, 2003. [_] For [_] Against [_] Abstain
3. To approve the H.B. Fuller Annual and Long-Term Incentive Plan. [_] For [_] Against [_] Abstain
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED AS DIRECTED OR, IF NO DIRECTION
IS GIVEN, WILL BE VOTED FOR ITEMS 1, 2 AND 3.
Address Change? Mark Box [_]
Indicate changes below:
Date _____________________________________________
Signature(s) in Box
Please sign exactly as your name(s) appear on this Proxy. If held in joint
tenancy, all persons must sign. Trustees, administrators, etc., should include
title and authority. Corporations should provide full name of corporation and
title of authorized officer signing the proxy.
[GRAPHIC OMITTED]
ANNUAL MEETING OF SHAREHOLDERS
THURSDAY, APRIL 17, 2003
2:00 P.M.
SCIENCE MUSEUM OF MINNESOTA
120 WEST KELLOGG BOULEVARD
SAINT PAUL, MINNESOTA
IMPORTANT NOTICE
IF YOU WOULD LIKE TO ACCESS
THE PROXY MATERIALS ELECTRONICALLY
NEXT YEAR, YOU MAY DO SO BY
GIVING YOUR CONSENT AT THE
FOLLOWING WEBSITE:
WWW.ECONSENT.COM/FUL
[GRAPHIC OMITTED]
H.B. FULLER COMPANY
P.O. BOX 64683
ST. PAUL, MN 55164-0683 PROXY
--------------------------------------------------------------------------------
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE COMPANY
The undersigned, revoking all prior proxies, appoints Albert P.L. Stroucken,
Raymond A. Tucker, Patricia L. Jones, and Steven E. Suckow, or any one or more
of them, as proxies, with full power of substitution, to represent the
undersigned and to vote, as indicated on the reverse side and otherwise in their
discretion, upon such other matters as may properly come before the meeting, all
shares of the common stock of H.B. Fuller Company which the undersigned is
entitled to vote at the Annual Meeting of Shareholders of the Company to be held
at the Science Museum of Minnesota, 120 West Kellogg Boulevard, Saint Paul,
Minnesota on Thursday, April 17, 2003, at 2:00 p.m. and at any adjournment
thereof. The undersigned hereby acknowledges receipt of the Proxy Statement for
the Annual Meeting.
SEE REVERSE FOR VOTING INSTRUCTIONS.
COMPANY #
CONTROL #
THERE ARE THREE WAYS TO VOTE YOUR PROXY
YOUR TELEPHONE OR INTERNET VOTE AUTHORIZES THE NAMED PROXIES TO VOTE YOUR SHARES
IN THE SAME MANNER AS IF YOU MARKED, SIGNED AND RETURNED YOUR PROXY CARD.
VOTE BY PHONE -- TOLL FREE -- 1-800-240-6326 -- QUICK --- EASY --- IMMEDIATE
o Use any touch-tone telephone to vote your proxy 24 hours a day, 7 days a
week. You will be prompted to enter your 3-digit Company Number, your 7-digit
Control Number (these numbers are located on the proxy card) and the last
4-digits of the U.S. Social Security Number or Tax Identification Number for
this account. If you do not have a U.S. SSN or TIN please enter 4 zeros.
o Follow the simple instructions the voice provides you. DEADLINE FOR VOTING BY
PHONE IS 11:00 A.M., CENTRAL TIME, ON WEDNESDAY, APRIL 16, 2003.
VOTE BY INTERNET -- WWW.EPROXY.COM/FUL/ -- QUICK --- EASY --- IMMEDIATE
o Use the Internet to vote your proxy 24 hours a day, 7 days a week.
o You will be prompted to enter your 3-digit Company Number, your 7-digit
Control Number (these numbers are located on the proxy card) and the last
4-digits of the U.S. Social Security Number or Tax Identification Number
for this account to obtain your records and create an electronic ballot.
If you do not have a U.S. SSN or TIN please leave blank.
o Follow the simple instructions. DEADLINE FOR VOTING BY INTERNET IS 12:00
P.M., CENTRAL TIME, ON WEDNESDAY, APRIL 16, 2003.
VOTE BY MAIL
Mark, sign and date your proxy card and return it in the postage-paid envelope
we've provided or return it to H.B. FULLER COMPANY, C/O SHAREOWNER SERVICES-,
P.O. Box 64873, St. Paul, MN 55164-0873.
IF YOU VOTE BY PHONE OR INTERNET, PLEASE DO NOT MAIL YOUR PROXY CARD
[GRAPHIC OMITTED]
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ITEMS 1, 2 AND 3
1. Election of directors:
01 Alfredo L. Rovira
02 Albert P. L. Stroucken
[_] Vote FOR
both nominees
(except as specified below)
[_] Vote WITHHELD
from both
nominees
(INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR EITHER INDICATED NOMINEE,
WRITE THE NUMBER OF THE NOMINEE IN THE BOX PROVIDED TO THE RIGHT.)
2. To ratify the appointment of PricewaterhouseCoopers LLP as the Company's
independent auditors for the fiscal year ending November 29, 2003. [_] For [_] Against [_] Abstain
3. To approve the H.B. Fuller Annual and Long-Term Incentive Plan. [_] For [_] Against [_] Abstain
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED AS DIRECTED OR, IF NO DIRECTION
IS GIVEN, WILL BE VOTED FOR ITEMS 1, 2 AND 3.
The proxies are also authorized to vote upon such other business as may properly
come before the meeting in accordance with the recommendation of the Board of
Directors, or in absence of a recommendation, in the proxies' discretion.
Address Change? Mark Box [_]
Indicate changes below:
Date _____________________________________________
Signature(s) in Box
Please sign exactly as your name(s) appear on this Proxy. If held in joint
tenancy, all persons must sign. Trustees, administrators, etc., should include
title and authority. Corporations should provide full name of corporation and
title of authorized officer signing the proxy.
[GRAPHIC OMITTED]
ANNUAL MEETING OF SHAREHOLDERS
THURSDAY, APRIL 17, 2003
2:00 P.M.
SCIENCE MUSEUM OF MINNESOTA
120 WEST KELLOGG BOULEVARD
SAINT PAUL, MINNESOTA
[GRAPHIC OMITTED]
H.B. FULLER COMPANY
P.O. BOX 64683
ST. PAUL, MN 55164-0683 VOTING INSTRUCTIONS TO TRUSTEE
--------------------------------------------------------------------------------
H.B. FULLER COMPANY CANADIAN ESPP
AND H.B. FULLER COMPANY GERMAN ESPP
The undersigned hereby constitutes and appoints Wells Fargo Bank Minnesota,
N.A., as trustee for the H.B. Fuller Company Canadian ESPP and/or the H.B.
Fuller Company German ESPP, the true and lawful attorney and proxy of the
undersigned, with full power of substitution, to attend the Annual Meeting of
H.B. Fuller Company to be held at 2:00 p.m. Thursday, April 17, 2003, at the
Science Museum of Minnesota, 120 West Kellogg Boulevard, Saint Paul, Minnesota,
and at any adjournment thereof, and to vote the common shares of said
corporation standing in the name of the undersigned, as designated on the
reverse side.
THIS CARD IS FURNISHED IN CONNECTION WITH THE SOLICITATION OF PROXIES BY THE
BOARD OF DIRECTORS OF THE COMPANY. I UNDERSTAND THIS CARD MUST BE RETURNED TO
THE TRUSTEE IF MY VOTING INSTRUCTIONS ARE TO BE HONORED. THE TRUSTEE IS HEREBY
DIRECTED TO VOTE AS INDICATED ON THE FOLLOWING PROPOSALS WHICH ARE MORE FULLY
DESCRIBED IN THE COMPANY'S NOTICE OF ANNUAL MEETING OF SHAREHOLDERS AND PROXY
STATEMENT. THE UNDERSIGNED HEREBY ACKNOWLEDGES RECEIPT OF THE PROXY STATEMENT
FOR THE ANNUAL MEETING.
SEE REVERSE FOR VOTING INSTRUCTIONS.
[GRAPHIC OMITTED]
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ITEMS 1, 2 AND 3
1. Election of directors:
01 Alfredo L. Rovira
02 Albert P. L. Stroucken
[_] Vote FOR
both nominees
(except as specified below)
[_] Vote WITHHELD
from both nominees
(INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR EITHER INDICATED NOMINEE,
WRITE THE NUMBER OF THE NOMINEE IN THE BOX PROVIDED TO THE RIGHT.)
2. To ratify the appointment of PricewaterhouseCoopers LLP as the Company's
independent auditors for the fiscal year ending November 29, 2003. [_] For [_] Against [_] Abstain
3. To approve the H.B. Fuller Annual and Long-Term Incentive Plan. [_] For [_] Against [_] Abstain
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED AS DIRECTED OR, IF NO DIRECTION
IS GIVEN, WILL BE VOTED FOR ITEMS 1, 2 AND 3.
Address Change? Mark Box [_]
Indicate changes below:
Date ________________________________________________
Signature(s) in Box
Please sign exactly as your name(s) appear on this Proxy. If held in joint
tenancy, all persons must sign. Trustees, administrators, etc., should include
title and authority. Corporations should provide full name of corporation and
title of authorized officer signing the proxy.