EMPLOYEES
At December 31, 1998, we employed approximately 4,735 people. The table
below shows our number of employees by geographic location at December 31, 1996,
1997 and 1998.
YEAR ENDED AT DECEMBER 31,
--------------------------
1996 1997 1998
------ ------ ------
The Americas................................................ 3,100 2,843 2,614
Europe...................................................... 1,903 1,898 1,915
Asia........................................................ 227 215 206
----- ----- -----
Total..................................................... 5,230 4,956 4,735
===== ===== =====
In the Americas, 66% of our employees were members of labor unions as of
year-end 1998, primarily the United Steel Workers' Association and the
International Association of Machinists. In Europe, membership of our employees
in labor unions varies from country to country, and a number of countries
prohibit us from keeping records of union membership. However, we estimate that
union membership among our employees in Europe is approximately 40%. We have
entered into various collective bargaining agreements in both the United States
and Europe. In most continental European countries, collective bargaining
agreements are imposed by law on the entire industry. We are not aware of any
material arrangements whose expiry is pending and which are not expected to be
satisfactorily renewed or replaced in a timely manner. Our labor relations
environment has been stable, no significant work stoppage has occurred since
1996, and we believe relations with our employees are good.
LEGAL PROCEEDINGS
In December 1993, Viskase Corporation, a subsidiary of Envirodyne
Industries, Inc., brought a patent infringement action against American National
Can Company in the U.S. District Court for the Northern District of Illinois.
Viskase alleged that we infringed its patents relating to the manufacture of
heat shrinkable bags for meat and poultry.
In November 1996, following a trial, the jury awarded Viskase $102 million
in damages and found willful infringement on our part. At December 31, 1996, we
recorded a provision in the amount of the jury's award plus estimated costs, in
addition to a $3 million reserve previously recorded. Under applicable law, the
jury's damage award may be reduced if the court finds the amount excessive, or
increased by up to a multiple of three, depending on the court's assessment of
the willful nature of the infringement. The parties filed various post-trial
motions and, among them, Viskase filed motions seeking prejudgment interest and
attorneys' fees.
On September 29, 1997, the judge ordered a new trial as to the alleged
infringement by our Affinity(TM)-containing products and on the amount of
damages. Viskase then filed a motion for summary judgment concerning the
Affinity(TM)-containing products. In August 1998, the court granted summary
judgment to Viskase on the Affinity(TM)-containing products. Viskase then filed
a motion for reinstatement of the $102 million damage award. On May 10, 1999,
the court granted reinstatement of the jury's damage award, and set a ruling
date of July 2, 1999 for Viskase's request for treble damages. Pechiney Plastic
Packaging has agreed to indemnify us on an after-tax basis for any payments we
may be required to make
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with respect to the proceedings. Pechiney has agreed to guarantee this
obligation of Pechiney Plastic Packaging.
In addition, we have requested the U.S. Patent and Trademark Office (known
as the "PTO") to re-examine the claims of two of the patents that Viskase
alleged ANC infringed. In March 1999, a PTO Examiner issued an Office Action
that re-examined and rejected claims of one of the two patents, but the Office
Action is not final. Concerning the second patent, the PTO has also issued an
Office Action rejecting the Viskase claims, but the PTO recently granted
Viskase's petition to change the inventorship of the patent. Additional
proceedings are ongoing.
Because these legal proceedings relate to plastic packaging operations that
have been transferred to Pechiney Plastics Packaging as part of the
reorganization, Pechiney Plastics Packaging has agreed to reimburse us on an
after-tax basis for any payments we may make with respect to this litigation.
Pechiney has agreed to guarantee this obligation of Pechiney Plastics Packaging.
In any event, on the basis of the current facts and circumstances, we do not
believe that the provisions we made in 1996 based on the jury's damages award
require amendment.
Pechiney has received a notice of patent infringement for a number of
patents owned by the Lemelson Medical, Education & Research Foundation, Limited
Partnership. The notice of patent infringement may cover Pechiney's
subsidiaries, including our company. Lemelson has offered to grant us a license
to use the patents they claim we infringed. We do not expect this matter to have
a material effect on our business or financial condition.
We are involved on a regular basis in various claims and lawsuits
incidental to the ordinary course of our business. Except for the Viskase
proceedings, we are not involved in any legal or arbitration proceedings,
including environmental proceedings, which we expect could materially harm our
business, financial condition or results of operations, either individually or
in the aggregate.
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MANAGEMENT AND CERTAIN SECURITY HOLDERS
DIRECTORS AND EXECUTIVE OFFICERS
The table below shows the names and ages of the members of our board of
directors and executive officers as of the date of this offering, and their
current positions.
NAME AGE POSITION
---- --- --------
Jean-Pierre Rodier....................... 52 Chairman of the Board and Chief Executive
Officer
Edward A. Lapekas........................ 56 President, Chief Operating Officer and
Director
Christel Bories.......................... 35 Director
Frank W. Considine....................... 77 Director
Ronald J. Gidwitz........................ 54 Director
George D. Kennedy........................ 73 Director
Homer J. Livingston, Jr.................. 63 Director
Roland H. Meyer, Jr...................... 71 Director
James J. O'Connor........................ 62 Director
Alain Pasquier........................... 50 Director
Jean-Dominique Senard.................... 45 Director
James R. Thompson........................ 63 Director
Jack H. Turner........................... 64 Director
Curtis J. Clawson........................ 39 Executive Vice President and President --
Beverage Cans Americas
Michael D. Herdman....................... 49 Executive Vice President and President --
Beverage Cans Europe and Asia
Alan H. Schumacher....................... 52 Executive Vice President and Chief
Financial Officer
Dennis R. Bankowski...................... 52 Executive Vice President --
Administration and Chief Human Resources
Officer
DIRECTORS
The following individuals have agreed to serve as directors of our company.
They were elected on April 14, 1999 and will hold office until the annual
meeting of our stockholders in the year 2000, 2001 or 2002, depending upon the
director class in which they serve following the offering.
JEAN-PIERRE RODIER will serve as Chairman of the Board and Chief Executive
Officer until the completion of the offering, at which time he will resign from
these positions and be replaced by Mr. Edward Lapekas. Since 1994, Mr. Rodier
has served as Chairman and Chief Executive Officer of Pechiney, formerly our
parent company. Prior to this offering, he served as Chairman of the Board and
Chief Executive Officer of American National Can Company. Before joining
Pechiney in 1994, Mr. Rodier served as Chairman and Chief Executive Officer of
Penarroya and Managing Director of Penarroya's parent company, Imetal. He has
also held the positions of Chairman of the Executive Board for Metaleurop France
and head of Union Miniere, the Belgian affiliate of Groupe Suez.
EDWARD A. LAPEKAS is President and Chief Operating Officer and has served
as Senior Executive Vice President and Chief Operating Officer -- Beverage Cans
Worldwide of American National Can Company since November 1996. He joined
American National Can Company in June 1996 as Senior Vice President -- Beverage
Cans Americas. Prior to joining American National Can Company, Mr. Lapekas
served as Vice
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Chairman of Schmalbach-Lubeca A.G. from July 1991 through June 1996. Prior to
that time, he held senior management positions throughout the world with
Continental Can Company from 1968 through 1991.
CHRISTEL BORIES has been Senior Executive Vice President, Chief Operating
Officer, Plastic Packaging of Pechiney since January 1999 and also served in a
similar position at American National Can Company. From April 1995 through
December 1998, she was Senior Executive Vice President, Strategy and Control of
Pechiney. From 1993 until March 1995, she was employed at Union Miniere as
Director Strategy and Control and member of the Direction Committee. Prior to
that time she was a consultant with Corporate Value Associates.
FRANK W. CONSIDINE was Chairman of the Board of American National Can
Company from 1983 to 1990, Honorary Chairman and Chairman of the Executive
Committee from 1990 to present, President from 1969 to 1988, and Chief Executive
Officer from 1973 to 1988. Mr. Considine is also a director of SEI Information
Technology and Scotsman Industries, Inc. and Chairman of the Board of Trustees
of Loyola University, Chicago, Vice President of the Lyric Opera of Chicago, and
a member of the Executive Committee of the Museum of Sciences and Industry,
Chicago, and the Board of Trustees of the Field Museum of Natural History,
Chicago.
RONALD J. GIDWITZ is a partner in GCG Partners, a private investment firm,
a position he has held since 1998. He previously served as President and Chief
Executive Officer of Helene Curtis Industries, Inc. from 1979 to 1998. He is
also a director of Continental Materials Corporation, Prairie Packaging
Corporation and SEI Consulting. Mr. Gidwitz is also a member of the Board of
Governors of Boys and Girls Clubs of America, the board of directors of Lyric
Opera of Chicago, the Field Museum of Natural History, the Museum of Sciences
and Industry, and the Board of Trustees of Rush-Presbyterian Medical Center.
GEORGE D. KENNEDY was Chairman and a director of Mallinckrodt Group Inc., a
producer of medical products and chemicals, from 1991 until his retirement in
October, 1994. He was Chairman and Chief Executive Officer of Mallinckrodt Group
Inc. from 1986 to 1991. Mr. Kennedy is also a director of the Kemper National
Insurance Companies and Scotsman Industries, Inc.
HOMER J. LIVINGSTON, JR. served as President and Chief Executive Officer
of the Chicago Stock Exchange in Chicago, Illinois from November 1992 until his
retirement in May 1995. From 1988 through 1992, Mr. Livingston was Chairman of
the Board and Chief Executive Officer of Livingston Financial Group. He has also
held the positions of Executive Vice President of First National Bank of
Chicago, Partner at Lehman Bros., Partner at William Blair & Co., President and
Chief Executive Officer of LaSalle National Bank and Trustee of Southern Pacific
Railroad. Mr. Livingston is also a director of EVEREN Capital Corporation and
Peoples Energy Corporation.
ROLAND H. MEYER, JR. served as President and Chief Operating Officer of
American National Can Company from 1989, and Chief Operating Officer from 1988,
until his retirement in 1992. Mr. Meyer joined American National Can Company in
1972 and from that time held various management positions in the Metal Container
Division including Manager -- Manufacturing, Vice President -- Operations, and
Vice Chairman -- Operations. Mr. Meyer is also a director of Uniroyal Technology
Corporation and Vice Chairman of First Commercial Bank of Tampa.
JAMES J. O'CONNOR is the retired Chairman and Chief Executive Officer of
Commonwealth Edison Company and Unicom Corporation, a holding company, where he
served from June 1994 until March 1998, and of Edison Company, an electric
utility, where he served from 1980 to March 1998. He is also a Director of
Corning Incorporated, EVEREN Capital Corporation, Scotsman Industries Inc.,
Smurfit-Stone Container Corporation, Tribune Company and UAL Corporation.
ALAIN PASQUIER has held various senior corporate management positions
within Pechiney's finance department since 1993. He currently serves as Senior
Vice President -- Corporate Finance of Pechiney, a position he has held since
1997. He is also a director of Impress Metal Packaging Holdings B.V. and Paribas
Capital Markets Ltd.
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JEAN-DOMINIQUE SENARD is Senior Executive Vice President and Chief
Financial Officer, and member of the Executive Committee of Pechiney since
October 1996. Prior to joining Pechiney in 1996, Mr. Senard was employed by the
French company Saint-Gobain as Director of Treasury and Financing from 1987
through 1994 and from 1995 until 1996 as Financial Director of Saint-Gobain's
General Delegation for Germany and Central Europe and member of the Management
Committee of Vegla GmbH. He commenced his career at Total where he served as
financial controller and later financial risk manager within the treasury group.
JAMES R. THOMPSON was Governor of Illinois during the period 1977 through
1991. Since January 1991, Mr. Thompson has been a partner in, and Chairman of
the Executive Committee of, Winston & Strawn, a Chicago, Illinois law firm, and
since January 1993, he has been Chairman of the firm. Mr. Thompson is also a
director of FMC Corporation, Prime Retail, Inc., Hollinger International, Inc.,
Jefferson Smurfit Group, Metzler Group, Prime Group Realty Trust and Union
Pacific Resources. He also serves as a Public Governor of the Chicago Board of
Trade and is the Chairman of the Public Review Board of the Hotel and Restaurant
Employees International Union. He is Chairman of the Board of Trustees of the
Illinois Mathematics and Science Academy Foundation, and serves as a trustee of
the Chicago Historical Society, Lyric Opera of Chicago, Museum of Contemporary
Art, the Art Institute of Chicago and the Economic Club of Chicago.
JACK H. TURNER served as President of American National Can Company and
Chief Operating Officer from 1992 until his retirement in 1995. From September
1989 through June 1992, he was Executive Vice President and Chief Operating
Officer of the beverage worldwide business. Mr. Turner joined American National
Can Company in February 1969 and has held numerous financial and operations
positions.
EXECUTIVE OFFICERS
In addition to Mr. Rodier and Mr. Lapekas, who are also Directors, the
following persons are executive officers of ANC. The executive officers were
appointed on April 14, 1999 and will hold office until the first annual meeting
of our stockholders following the offering.
CURTIS J. CLAWSON is Executive Vice President and President -- Beverage
Cans Americas. He joined American National Can Company in June 1998 as Senior
Vice President -- Beverage Cans Americas. From 1995 through 1997, he was an
employee of Allied Signal, Incorporated. From 1995 through 1996, his position
was President Filters and Spark Plugs, and in 1997 his position was President
Laminates. Prior to his employment with Allied Signal, he was an employee of
Arvin Industries, Incorporated. He held the positions of General Manager in
1994, Vice President in 1993 and Sales Manager in 1992.
MICHAEL D. HERDMAN is Executive Vice President and President -- Beverage
Cans Europe and Asia. Since 1991, Mr. Herdman has held the position of Senior
Vice President -- Beverage Cans Europe. In January 1997, he also assumed
responsibility for the beverage can business in Asia. Since joining American
National Can Company in 1972, Mr. Herdman's prior positions have included
Managing Director of Nacanco Ltd, Vice President of Business Development, Vice
President and General Manager -- Plastics, Managing Director -- Iberica, and
other sales and manufacturing management positions.
ALAN H. SCHUMACHER is Executive Vice President and Chief Financial Officer.
He has held this position in American National Can Company since July 1997. From
January 1988 through June 1997, he held the positions of Vice President,
Controller and Chief Accounting Officer. Positions held at American National Can
Company prior to 1988 include Assistant Corporate Controller, and Manager
Corporate Accounting. Prior to joining American National Can Company, Mr.
Schumacher was employed in the audit function of Price Waterhouse and Company.
DENNIS R. BANKOWSKI is Executive Vice President -- Administration and Chief
Human Resources Officer. He joined American National Can Company in 1991 as
Senior Vice President -- Human Resources. In January 1997, he was named Senior
Vice President -- Corporate Services. Before joining American National Can
Company, Mr. Bankowski was employed by BP America, a subsidiary of British
Petroleum, from 1981 through 1990 where he served in the positions of Director
of Compensation, Director of Organizational Development and Vice President of
Human Resources.
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BOARD OF DIRECTORS, DIRECTORS' COMPENSATION AND COMMITTEES OF THE BOARD
The company's board of directors consists of 13 members. Directors are
elected to serve until the expiration date of their terms as determined by their
respective classes, and until their successors are elected and qualified.
Officers of the company are elected or appointed by, and serve at the discretion
of, the board of directors.
As of the date of this offering, the board of directors is divided into
three staggered classes. The initial board will consist of the following:
- four Class I directors: Madame Bories and Messrs. Meyer, Pasquier and
Turner
- four Class II directors: Messrs. Considine, Kennedy, Livingston and
Senard
- five Class III directors: Messrs. Gidwitz, Lapekas, O'Connor, Rodier and
Thompson.
At each annual meeting of stockholders, a class of directors will be
elected for a three-year term to succeed the directors of the same class whose
terms are then expiring. The terms of the Class I directors, Class II directors
and Class III directors will expire upon the election and qualification of
successor directors at the annual meeting of stockholders to be held during
calendar years 2000, 2001 and 2002, respectively.
Each officer serves at the discretion of the board of directors and holds
office until his or her successor is elected and qualified or until his or her
earlier resignation or removal. There are no family relationships among any of
our directors or executive officers.
COMPENSATION OF DIRECTORS
Directors who are officers or employees of the company do not receive
compensation other than reimbursement for out-of-pocket expenses incurred by
them in connection with their travel to and attendance at meetings of the board
of directors or its committees.
In addition to the reimbursement of expenses, directors of our company who
are not officers or employees receive an annual cash retainer of $25,000 and an
annual grant of non-transferable stock with a fair market value of $15,000.
These shares cannot be sold or transferred until retirement from the board of
directors. The non-employee directors will also receive an annual stock option
grant with a Black-Scholes value equal to $30,000. The options will be granted
at the fair market value, will become exercisable immediately, and will have a
ten-year term. In addition, non-employee directors who chair any committee of
the board will receive a fee of $3,000 per year for each committee they chair.
Directors can elect to defer the receipt of their annual cash retainers and
chairman fees until retirement from the board of directors. Until distribution
of the deferred amounts following retirement, the deferred amounts will earn
interest based on mutual funds selected by the director from a company listing
of mutual funds approved for the deferral plan. The company provides each
non-employee director with $250,000 of accidental death and dismemberment
insurance coverage on a 24-hour basis for any period a non-employee director is
travelling on company business.
COMMITTEES OF THE BOARD OF DIRECTORS
The board of directors has established an audit committee, a compensation
committee and an executive committee. The functions of each of these committees
are described below.
The audit committee is responsible for reviewing the propriety and accuracy
of our consolidated financial statements. The audit committee is also
responsible for:
- reviewing the internal accounting controls and annual consolidated
financial statements
- reviewing the scope of the independent certified public accountants'
audit, their report and their recommendations
- considering the possible effect on the independence of the accountants in
approving non-audit services requested of them
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- recommending the action to be taken with respect to the appointment of
the independent certified public accountants.
James J. O'Connor is chairman of the audit committee, and the other members
are Homer J. Livingston, Jr. and Jean-Dominique Senard.
The compensation committee is responsible for:
- approving the compensation of all elected officers
- reviewing, advising and making recommendations with respect to elected
officer compensation plans, their benefits and standards and taking all
related actions that are not reserved for the board
- administering our annual incentive plan and the other salary,
compensation or benefit plans that it is designated to administer.
George D. Kennedy is chairman of the compensation committee. The other
members are Frank W. Considine, Ronald J. Gidwitz and Jean-Pierre Rodier.
During intervals between meetings of the board, the executive committee has
and exercises all the powers and authority of the board in the management of our
business and affairs, except as specifically limited in our by-laws. Frank W.
Considine is chairman of the executive committee. The other members are Edward
A. Lapekas and Jean-Pierre Rodier.
EXECUTIVE COMPENSATION
The following table shows information concerning the compensation paid for
services rendered in all capacities to American National Can Company and its
subsidiaries for the fiscal year ended December 31, 1998, for the individual
serving as Chief Executive Officer and the other four most highly compensated
executive officers, based on their employment by American National Can Company
or an affiliate of American National Can Company at December 31, 1998. The
compensation described in this table was paid by American National Can Company,
or an affiliate of American National Can Company.
The positions reflected in the table are the positions to be held by the
named executive officers with the company following the offering and were not
the positions held by the named executive officers during 1998, the period
covered by the table. Compensation reflected in the table for 1998 was paid by
American National Can Company to the named executive officers in the following
capacities:
- Mr. Lapekas, Senior Executive Vice President and Chief Operating Officer
-- Beverage Cans Worldwide
- Mr. Herdman, Senior Vice President -- Beverage Cans Europe and Asia
- Mr. Schumacher, Senior Vice President and Chief Financial Officer
- Mr. Bankowski, Senior Vice President -- Corporate Services.
Mr. Curtis J. Clawson, who is not listed here, joined American National Can
Company in June 1998. The pro-rata salary paid to Mr. Clawson for his seven
months of employment in 1998 was $ . A bonus of $ was paid
reflecting 1998 financial and individual performance. If Mr. Clawson had been
employed for the full fiscal year, his level of compensation would qualify him
as a named executive officer.
References to stock options relate to awards of Pechiney Options under the
Pechiney Stock Option Plan. This plan grants options to purchase Pechiney stock
on the Paris stock exchange. References to stock appreciation rights or SARs
relate to awards of Pechiney Stock Appreciation Rights under the American
National Can Company Long-Term Incentive Plan. SARs reflect the appreciation of
Pechiney American Depositary Shares as traded on the New York Stock Exchange.
The American Depositary Shares trade at a ratio of 2:1 to the Pechiney French
shares.
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