SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, For Use of the Commission
[X] Definitive Proxy Statement Only (as permitted by Rule 14a-6(e)(2))
[ ] Definitive Additional Materials
[ ] Soliciting Material Under Rule 14a-12
UNIVERSAL CORPORATION
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(Name of Registrant as Specified in Its Charter)
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(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
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to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is
calculated and state how it was determined):
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previously. Identify the previous filing by registration statement number,
or the form or schedule and the date of its filing.
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[UNIVERSAL LOGO]
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ANNUAL MEETING OF SHAREHOLDERS
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September 20, 2002
Dear Shareholder:
You are cordially invited to attend the 2002 Annual Meeting of
Shareholders of Universal Corporation, which is to be held in the Company's
headquarters building located at 1501 North Hamilton Street, Richmond, Virginia,
on Tuesday, October 22, 2002, commencing at 2:00 p.m. At the meeting, you will
be asked to elect three directors to serve three-year terms and to approve the
Universal Corporation 2002 Executive Stock Plan.
Whether or not you plan to attend the meeting, it is important that
your shares be represented and voted at the meeting. You can vote by signing,
dating and returning the enclosed proxy card or voting instruction. Also,
registered shareholders and participants in plans holding shares of the
Company's Common Stock may vote by telephone or over the Internet. Instructions
for using these convenient services are set forth on the voting instructions
that are attached to the proxy card. Beneficial owners of shares held in street
name should follow the enclosed instructions for voting their shares. I hope you
will be able to attend the meeting, but even if you cannot, please vote your
shares as soon as you can.
Sincerely,
/s/ Henry H. Harrell
HENRY H. HARRELL
Chairman and Chief
Executive Officer
Universal Corporation
P.O. Box 25099
Richmond, Virginia 23260
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
The Annual Meeting of Shareholders of Universal Corporation (the
"Company") will be held in the Company's headquarters building located at 1501
North Hamilton Street, Richmond, Virginia, on Tuesday, October 22, 2002, at 2:00
p.m., for the following purposes:
(1) to elect three directors to serve three-year terms;
(2) to approve the Universal Corporation 2002 Executive Stock Plan; and
(3) to act upon such other matters as may properly come before the meeting
or any adjournments thereof.
Only holders of record of shares of the Company's Common Stock at the
close of business on September 4, 2002, shall be entitled to vote at the
meeting.
By Order of the Board of Directors,
George C. Freeman, III
Secretary
September 20, 2002
PROXY STATEMENT
The enclosed proxy is solicited by the Board of Directors of the
Company. A shareholder may revoke the proxy at any time prior to its use.
Proxies properly executed and received by the Secretary prior to the Annual
Meeting of Shareholders ("Annual Meeting"), and not revoked, however, will be
voted in accordance with the terms thereof. Registered shareholders and
participants in plans holding shares of the Company's Common Stock ("Common
Stock") are urged to deliver proxies and voting instructions by calling a
toll-free telephone number, by using the Internet or by completing and mailing
the enclosed proxy or voting instruction. The telephone and Internet voting
procedures are designed to authenticate shareholders' and plan participants'
identities, to allow shareholders and plan participants to give their voting
instructions and to confirm that such instructions have been recorded properly.
Instructions for voting by telephone or over the Internet are set forth on the
enclosed proxy card or voting instruction. Registered shareholders and plan
participants may also send their proxies or voting instructions by completing,
signing and dating the enclosed proxy or voting instruction and returning it as
promptly as possible in the enclosed postage-paid envelope. If your shares are
held in street name with your bank or broker, please follow the voting
instructions attached to the proxy card that is enclosed with this Proxy
Statement.
The Company will pay all of the costs associated with the proxy
solicitation. Proxies are being solicited by mail and may also be solicited in
person or by telephone, telefacsimile or other means of electronic transmission
by directors, officers and employees of the Company. The Company will reimburse
banks, brokerage firms, and other custodians, nominees and fiduciaries for their
reasonable expenses in forwarding proxy materials to the beneficial owners of
the shares of the Company's Common Stock. It is contemplated that additional
solicitation of proxies will be made by D. F. King & Co., Inc., 77 Water Street,
New York, New York 10005, at an anticipated cost to the Company of approximately
$4,500, plus reimbursement of out-of-pocket expenses.
This Proxy Statement will be mailed on or about September 20, 2002, to
registered holders of the Company's Common Stock.
VOTING RIGHTS
The Company had outstanding, as of September 4, 2002, 26,050,996 shares
of Common Stock, each of which is entitled to one vote. A majority of the shares
entitled to vote, represented in person or by proxy, will constitute a quorum
for the transaction of business at the Annual Meeting. Only shareholders of
record at the close of business on September 4, 2002, will be entitled to vote.
The Company is not aware of any matters that are to come before the
meeting other than those described in this Proxy Statement. However, if other
matters do properly come before the meeting, it is the intention of the persons
named in the enclosed proxy card to exercise the discretionary authority
conferred by the proxy to vote such proxy in accordance with their best
judgment.
ELECTION OF DIRECTORS
Three directors are to be elected at the 2002 Annual Meeting for terms
of three years. Seven other directors have been elected to terms expiring in
2004 or 2003, as indicated below. The following pages set forth certain
information for each nominee and each incumbent director as of June 30, 2002.
All of the nominees and incumbent directors listed below were directors
previously elected by the shareholders. William W. Berry, a director from 1986
to 2001, and Dr. Ronald E. Carrier, a director from 1979 to 2001, have reached
retirement age and will not stand for reelection.
The election of each nominee for director requires the affirmative vote
of the holders of a plurality of the shares of Common Stock cast in the election
of directors. With a plurality vote, the nominees that receive the highest vote
totals for the director positions up for election will be elected. Votes that
are withheld and shares held in street name ("Broker Shares") that are not voted
in the election of directors will not be included in determining the number of
votes cast. Unless otherwise specified in the accompanying form of proxy, it is
intended that votes will be cast for the election of all of the nominees as
directors. If, at the time of the Annual Meeting, any nominee should be
unavailable to serve as a director, it is intended that votes will be cast,
pursuant to the enclosed proxy, for such substitute nominee as may be nominated
by the Board of Directors. Each nominee has consented to being named in this
Proxy Statement and to serve if elected.
Nominees for Election Whose Terms Expire in 2005
ALLEN B. KING, 55, is President and Chief Operating Officer of the
Company and of Universal Leaf Tobacco Company, Incorporated ("Universal Leaf"),
a subsidiary of the Company. He has held these positions for more than five
years. He is a member of the Executive Committee and the Finance Committee. Mr.
King has been a director since 1989. Mr. King has been elected by the Board of
Directors to serve as Chief Executive Officer effective December 31, 2002, upon
the retirement of Henry H. Harrell, the current Chief Executive Officer of the
Company.
EDDIE N. MOORE, JR., 54, is President of Virginia State University, a
position he has held for more than five years. He is a member of the Audit
Committee and the Pension Investment Committee and has been a director since
2000.
HUBERT R. STALLARD, 65, retired as President and Chief Executive
Officer of Bell-Atlantic Virginia, Inc. (now Verizon Virginia Inc.)
(telecommunications) on February 29, 2000. Mr. Stallard is Chairman of the
Pension Investment Committee and a member of the Executive Committee and the
Executive Compensation and Nominating Committee. He has been a director since
1991.
The Board of Directors recommends that the shareholders vote for the
nominees set forth above.
Incumbent Directors Whose Terms Expire in 2004
CHARLES H. FOSTER, JR., 59, is Chairman and Chief Executive Officer of
LandAmerica Financial Group, Inc. ("LandAmerica") (title insurance holding
company). He has held these positions for more than five years. He has served in
a similar capacity for Lawyers Title Insurance Corporation for more than five
years, and for Commonwealth Land Title Insurance Company and Transnation Title
Insurance Company since June 1, 1999. All of these companies are subsidiaries of
LandAmerica. Mr. Foster is a director of LandAmerica. He is Chairman of the
Finance Committee and a member of the Executive Committee and the Executive
Compensation and Nominating Committee. Mr. Foster has been a director since
1995.
THOMAS H. JOHNSON, 52, is Chairman, Chief Executive Officer and
President of Chesapeake Corporation ("Chesapeake") (specialty packaging). From
1997 to 2000, he was President and Chief Executive Officer of Chesapeake, and
from 1996 to 1997, he was Vice Chairman of Riverwood International (forest
products and packaging). Mr. Johnson is a director of Chesapeake. He is a member
of the Audit Committee and the Pension Investment Committee and has been a
director since 2001.
JEREMIAH J. SHEEHAN, 63, retired as Chairman of the Board and Chief
Executive Officer of Reynolds Metals Company on May 4, 2000. From 1994 to
October 1996, he was President and Chief Operating Officer of Reynolds Metals
Company. Mr. Sheehan is a director of the Federal Reserve Bank of Richmond. He
is a member of the Audit Committee, the Executive Committee and the Executive
Compensation and Nominating Committee. Mr. Sheehan has been a director since
1998.
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Incumbent Directors Whose Terms Expire in 2003
JOSEPH C. FARRELL, 66, retired as Chairman, President and Chief
Executive Officer of The Pittston Company (coal, mineral products,
transportation and security services) on March 1, 1998. He is a director of ASA
Limited. Mr. Farrell is a member of the Executive Committee, the Executive
Compensation and Nominating Committee and the Pension Investment Committee. He
has been a director since 1996.
HENRY H. HARRELL, 63, is Chairman and Chief Executive Officer of the
Company and of Universal Leaf, positions he has held for more than five years.
He is Chairman of the Executive Committee and a member of the Finance Committee.
Mr. Harrell has been a director since 1984. Mr. Harrell has announced that he
will retire as Chief Executive Officer of the Company on December 31, 2002, and
will remain as Chairman of the Board through October 2003.
WALTER A. STOSCH, 65, is a principal in the accounting firm of Stosch,
Dacey & George PC, a position he has held for more than five years. He is a
member of the Audit Committee and the Finance Committee and has been a director
since 2000.
EUGENE P. TRANI, 62, is President of Virginia Commonwealth University,
a position he has held for more than five years. He is a director of LandAmerica
Financial Group, Inc. Dr. Trani is a member of the Finance Committee and the
Pension Investment Committee and has been a director since 2000.
3
STOCK OWNERSHIP
Principal Shareholders
The following table sets forth certain information with respect to the
beneficial ownership of shares of the Company's Common Stock by each person or
group known by the Company to beneficially own more than 5% of the outstanding
shares of such stock.
Name of Beneficial Owner Number of Shares Percent of Class(1)
------------------------ ---------------- -----------------
Deutsche Bank Aktiengesellschaft 3,907,871(2) 14.89%
Taunusanlage 12
60325 Frankfurt am Main, Germany
Taunus Corporation
31 West 52nd Street
New York, NY 10019
Deutsche Investment Management Americas Inc.
345 Park Avenue
New York, NY 10154
Dreman Value Management, L.L.C.
10 Exchange Place, Suite 2150
Jersey City, NJ 07302-3913
Ross Financial Corporation 1,717,600(3) 6.54%
P.O. Box 31363-SMB
Grand Cayman, Cayman Islands, B.W.I.
W.A. Dart Foundation
500 Hogsback Road
Mason, MI 48854
-------------------------
1 The percents shown in the table are based on 26,252,934 shares of
Common Stock outstanding on June 30, 2002.
2 On May 3, 2002, Taunus Corporation and Deutsche Investment Management
Americas Inc., subsidiaries of Deutsche Bank AG, filed a joint Schedule 13G with
the Securities and Exchange Commission reporting beneficial ownership of
2,703,806 shares as of April 30, 2002. According to the Schedule 13G, Taunus
Corporation, which is the parent company of Deutsche Investment Management
Americas Inc., had sole power to vote all 2,783,806 shares, sole power to
dispose of 315,998 shares and shared power to dispose of 2,418,806 shares.
Deutsche Investment Management Americas Inc. had sole power to vote 2,603,320
shares, sole power to dispose of 184,700 shares and shared power to dispose of
2,418,620 shares. The shares reported as beneficially owned by Taunus
Corporation and Deutsche Investment Management Americas Inc. included shares
that had been previously reported as beneficially owned by Zurich Scudder
Investments, Inc., which was acquired by Deutsche Bank AG in April 2002. On
August 14, 2002, Deutsche Bank Aktiengesellschaft filed a Schedule 13F with the
Securities and Exchange Commission reporting beneficial ownership of 3,524,526
shares as of June 30, 2002. In addition, on August 5, 2002, Dreman Value
Management, L.L.C. filed a Schedule 13F with the Securities and Exchange
Commission reporting beneficial ownership of 2,993,665 shares as of June 30,
2002. Dreman Value Management, L.L.C. is not an affiliated company of Deutsche
Bank AG, but manages accounts held by Zurich Scudder Investments, Inc. The
number of shares shown in the table is the total number
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of shares reported in all filings described above, less 2,610,320 shares that
the Company has determined are included in each of them.
3 The number of shares shown in the table is the total number of shares
reported in a Schedule 13G filed jointly by Ross Financial Corporation and W.A.
Dart Foundation with the Securities and Exchange Commission on July 9, 1999, as
adjusted for a sale of 8,200 shares by Ross Financial Corporation in May 2002.
According to information available to the Company, Ross Financial Corporation
has sole power to vote and to dispose of 1,360,300 of the shares and W.A. Dart
Foundation has sole power to vote and to dispose of 357,300 of the shares.
Directors and Executive Officers
The following table sets forth certain information with respect to the
beneficial ownership of shares of the Company's Common Stock by (i) each
director or nominee, (ii) each executive officer listed in the Summary
Compensation Table (the "Named Executive Officers") and (iii) all directors and
executive officers as a group.
Name of Beneficial Owner Number of Shares (1)(2)(3) Percent of Class
------------------------ -------------------------- ----------------
William W. Berry 12,079 *
Ronald E. Carrier 11,400 *
Joseph C. Farrell 21,430 *
Charles H. Foster, Jr. 10,500 *
Henry H. Harrell 160,911 *
Thomas H. Johnson 2,900 *
Allen B. King 103,698 *
Eddie N. Moore, Jr. 3,443 *
Hartwell H. Roper 64,418 *
Jeremiah J. Sheehan 7,251 *
Hubert R. Stallard 11,950 *
Walter A. Stosch 4,400 *
William L. Taylor 54,399 *
Eugene P. Trani 4,443 *
Jack M.M. van de Winkel 500 *
All directors and executive officers 480,345 1.83%
as a group (17 persons)
-------------------------
* Percentage of ownership is less than 1% of the outstanding shares of
Common Stock of the Company.
1 Except as otherwise noted, the number of shares of Common Stock of the
Company shown in the table is as of June 30, 2002.
2 The number of shares of Common Stock of the Company shown in the table
does not include shares that certain officers of the Company may acquire upon
the exercise of stock options that, except under extraordinary circumstances,
are automatically exercisable at not less than six-month intervals when at least
a minimum stock price appreciation has occurred.
5
3 The number of shares of Common Stock of the Company shown in the table
includes 90,706 shares held for executive officers in the Employees' Stock
Purchase Plan of Universal Leaf and 46,000 shares that certain directors and
executive officers of the Company have the right to acquire through the exercise
of stock options within 60 days following June 30, 2002. The number of shares
also includes 950 shares that are jointly or solely held by minor children or
other children living at home or held in fiduciary capacities. Such shares may
be deemed to be beneficially owned by the rules of the Securities and Exchange
Commission but inclusion of the shares in the table does not constitute
admission of beneficial ownership.
The Employees' Stock Purchase Plan of Universal Leaf held 914,513
shares or 3.48% of the shares of Common Stock outstanding on June 30, 2002. Each
participant in the plan has the right to instruct The Bank of New York, trustee
for the plan, with respect to the voting of shares allocated to his or her
account. The trustee, however, will vote any shares for which it receives no
instructions in the same proportion as those shares for which it has received
instructions.
Section 16(a) Beneficial Ownership Reporting Compliance
The Company's directors and executive officers are required under
Section 16(a) of the Securities Exchange Act of 1934, as amended, to file
reports of ownership and changes in ownership of Common Stock of the Company
with the Securities and Exchange Commission and the New York Stock Exchange.
Copies of those reports must also be furnished to the Company.
Based solely on a review of the copies of reports furnished to the
Company and the written representations of its directors and executive officers,
the Company believes that during the preceding fiscal year all filing
requirements applicable to directors and executive officers were satisfied.
COMMITTEES
The standing committees of the Board of Directors are the Executive
Committee, the Finance Committee, the Audit Committee, the Pension Investment
Committee and the Executive Compensation and Nominating Committee. The Executive
Committee has the authority to act for the Board of Directors on most matters
during the intervals between Board meetings. The Finance Committee has the
responsibility of establishing the Company's financial policies and controlling
the use of its financial resources. The responsibilities of the Audit Committee
include the review of the scope and the results of the work of the independent
public accountants and internal auditors, the review of the adequacy of internal
accounting controls and the recommendation to the Board of Directors as to the
selection of independent public accountants. Additional information with respect
to the Audit Committee is discussed below under "Audit Information." The Pension
Investment Committee establishes the investment policies, selects investment
advisors and monitors the performance of investments of the pension plans, the
retirement plans and other qualified employee benefit plans of Universal Leaf
and the Company's other U.S. subsidiaries. After receiving recommendations from
the Chief Executive Officer, the Executive Compensation and Nominating Committee
fixes the compensation of officers and makes awards under the Company's
incentive compensation plans. See "Report of Executive Compensation and
Nominating Committee." The Executive Compensation and Nominating Committee also
develops qualifications for director candidates, recommends to the Board of
Directors persons to serve as directors of the Company and monitors developments
in, and makes recommendations to the Board concerning corporate governance
practices. Shareholders entitled to vote for the election of directors may
nominate candidates for consideration by the Executive Compensation and
Nominating Committee. See "Proposals for 2003 Annual Meeting."
During the fiscal year ended June 30, 2002, there were five meetings of
the Board of Directors, nine meetings of the Executive Committee, three meetings
of the Finance Committee, five meetings of the Audit
6
Committee, four meetings of the Pension Investment Committee and three meetings
of the Executive Compensation and Nominating Committee. All directors attended
75% or more of the total number of meetings of the Board of Directors and all
committees of the Board on which they served.
DIRECTORS' COMPENSATION
Each director who is not an officer of the Company receives an annual
retainer of $25,000, a fee of $1,200 for each Board meeting attended and a fee
of $1,200 for each committee meeting attended. A non-employee director may elect
to receive his annual retainer in cash, shares of the Company's Common Stock or
an option to purchase such shares. If option payment is elected, the number of
shares of Common Stock covered by the option is determined by dividing the
Black-Scholes value per share on the date of grant into 125% of the cash value
of the annual retainer.
The Outside Directors' 1994 Deferred Income Plan permits a non-employee
director to defer all or a portion of his compensation. Deferred amounts are
deemed hypothetically invested as designated by the director in certain
investment options offered by the Company. In 1998, this plan was amended to add
a Deferred Stock Unit Fund to the investment options available under the plan.
Each Deferred Stock Unit represents a hypothetical share of the Company's Common
Stock and fluctuates in value with the market price of the stock. The portion of
a director's Deferral Account that is invested in the Deferred Stock Unit Fund
is increased by the number of Deferred Stock Units that could be purchased with
Common Stock dividends paid by the Company. With respect to investment options
other than the Deferred Stock Unit Fund, the Company may, but is not required
to, invest the deferred amounts in a Company-owned life insurance product with
parallel investment options. Subject to certain restrictions, the director may
elect at the time of deferral to take cash distributions, in whole or in part,
from his Deferral Account either prior to or following termination of service.
Pursuant to the Restricted Stock Plan for Non-Employee Directors and
the 1997 Executive Stock Plan, each non-employee director is awarded 700 shares
of restricted Common Stock of the Company each year following the Annual
Meeting. No director may receive in the aggregate more than 2,100 shares of
restricted Common Stock under these plans. Restrictions on awards under this
plan lapse in the event the director becomes disabled, dies, is not nominated
for reelection, or is not reelected. The number of shares issued to non-employee
directors will be adjusted for stock dividends, stock splits and certain other
corporate events that may occur in the future.
Under the 1994 Stock Option Plan for Non-Employee Directors and the
1997 Executive Stock Plan, each non-employee director receives an option to
purchase 2,000 shares of Common Stock of the Company on the first business day
following the Annual Meeting. The exercise price of all such options is the fair
market value of the Common Stock on the date of grant. All of the options become
exercisable six months after the date of grant and expire ten years from the
date of grant. Shorter expiration periods may apply in the event an optionee
dies, becomes disabled or resigns from or does not stand for reelection to the
Board. The options will be adjusted for stock dividends, stock splits and
certain other corporate events that may occur in the future.
As part of its overall program of charitable giving, the Company offers
the directors participation in a Directors' Charitable Contribution Program (the
"Charitable Program"). The Charitable Program is funded by life insurance
policies purchased by the Company on the directors. The directors derive no
financial or tax benefits from the Charitable Program, because all insurance
proceeds and charitable tax deductions accrue solely to the Company. However,
the Company will donate up to $1,000,000 to one or more qualifying charitable
organizations recommended by that director. The donation(s) will be made by the
Company in ten equal annual installments, with the first installment to be made
at the later of the director's retirement from the
7
Board or age 70; the remaining nine installments will be paid annually beginning
immediately after the director's death.
Each director is also eligible to participate in a Directors' Matching
Gifts Program in which the Company matches directors' contributions to
charities. The maximum amount that can be matched in any fiscal year is $5,000
per director.
REPORT OF EXECUTIVE COMPENSATION AND NOMINATING COMMITTEE
The Company's executive compensation and benefits program is
administered by the Executive Compensation and Nominating Committee (the
"Committee"), which is composed entirely of non-employee directors. The goal of
the program is to attract, motivate, reward and retain the management talent
required to achieve the Company's business objectives, at compensation levels
that are fair, equitable and competitive with those of comparable companies.
This goal is furthered by the Committee's policy of linking compensation to
individual and corporate performance and by encouraging significant stock
ownership by senior management in order to align the financial interests of
management with those of the shareholders.
The three main components of the Company's executive compensation
program are base salary, annual cash awards under incentive compensation plans
adopted by the Company and its principal subsidiaries and equity participation
usually in the form of stock option grants and eligibility to participate in the
Employees' Stock Purchase Plan of Universal Leaf. Each year the Committee
reviews the total compensation package of executive officers to ensure they meet
the goals of the program. As a part of this review, the Committee considers
corporate performance information, compensation survey data, the advice of
consultants and the recommendations of management.
Base Salary. Base salaries for executive officers are reviewed annually
to determine whether adjustments may be necessary. Factors considered by the
Committee in determining base salaries for executive officers include personal
performance of the executive in light of individual levels of responsibility,
the overall performance and profitability of the Company during the preceding
year, economic trends that may be affecting the Company, and the competitiveness
of the executive's salary with the salaries of executives in comparable
positions at companies of comparable size or operational characteristics. Each
factor is weighed by the Committee in a subjective analysis of the appropriate
level of compensation for that executive. For purposes of assessing the
competitiveness of salaries, the Committee reviews compensation data from
national surveys and selected groups of companies with similar size or
operational characteristics to determine ranges of total compensation and the
individual components of such compensation. Such compensation data indicates
that the Company's salary levels are below the median of such data when compared
to executive positions of similar scope and responsibility.
Mr. Harrell became the Chief Executive Officer of the Company in 1988
and Chairman of the Board of Directors in 1991 and has 36 years experience with
the Company. For the fiscal year beginning July 1, 2002, Mr. Harrell's base
salary was increased approximately 3.0% after a thorough review and evaluation
by the Committee of the competitiveness of Mr. Harrell's salary and total cash
compensation with those of other chief executive officers of comparable
companies.
8
Annual Cash Incentives. The Company and its principal subsidiaries have
incentive compensation plans under which key management employees may receive
annual cash incentive awards that vary from year to year based upon corporate,
business unit and individual performance. Pursuant to the Company's Executive
Officer Annual Incentive Plan approved by the shareholders at the 1999 Annual
Meeting, for the 2002 fiscal year, with respect to the Named Executive Officers
based in the United States, the bonus awards were based 50% on the generation of
economic profit, which is defined as consolidated earnings before interest and
taxes after certain adjustments minus a capital charge equal to the weighted
average cost of capital times average funds employed, and 50% on the generation
of earnings per share, adjusted to exclude extraordinary gains and losses and
bonus accruals under the plan. Mr. Harrell's cash incentive award for the 2002
fiscal year was approximately 12.8% less than the award he received in 2001. Mr.
Harrell's 2002 award was determined by the Committee based upon the Company's
economic profit and adjusted earnings per share performance during fiscal year
2002.
Equity Participation. The Committee administers the Company's 1989 and
1997 Executive Stock Plans, under which it has granted to key executive
employees options to purchase shares of the Company's Common Stock based upon a
determination of competitive aggregate compensation levels. The primary
objective of issuing stock options is to encourage significant investment in
stock ownership by management and to provide long-term financial rewards linked
directly to market performance of the Company's stock. The Committee believes
that significant ownership of stock by senior management is the best way to
align the interests of management and the shareholders, and the Company's stock
incentive program is effectively designed to further this objective.
The Career Equity Ownership Program (the "CEO Program") was instituted
by the Committee during the 1992 fiscal year to promote an increase in the
equity interest of key executives through systematic option exercises and the
retention of shares. The CEO Program requires each participant to make an
investment in the Company by contributing to the program currently owned shares
equal to at least 10% of the number of shares subject to the initial options
granted to the participant under the program. Option exercises occur
automatically at not less than six-month intervals when at least a minimum stock
price appreciation has occurred. The exercise price of options granted under the
program is the fair market value of a share of the Company's Common Stock on the
date of grant. The options cannot be exercised until six months after the date
of grant and expire ten years from such date. No new option grants (excluding
reload options described below) were made under the CEO Program during the 2002
fiscal year to the Named Executive Officers.
Except under extraordinary circumstances or as otherwise determined by
the Committee, participants have agreed that the options granted under the CEO
Program may be exercised only through stock-for-stock swaps, and both the
contributed shares and additional shares acquired through option exercises under
the program may not be sold by the participating executives during the ten-year
option term. Each option granted under the program included a reload
replenishment feature that entitles participants each time a stock-for-stock
exercise occurs to receive automatically a new option grant at the fair market
value of a share of the Company's Common Stock on the date of grant. The number
of reload options granted is equal to the number of shares contributed by a
participant to effect a stock-for-stock swap. In exchange for this replenishment
feature, each participant has agreed to retain in the program shares equaling at
least the after-tax gain realized upon each exercise.
9
Tax Considerations. Section 162(m) of the Internal Revenue Code of
1986, as amended (the "Internal Revenue Code"), provides certain criteria for
the tax deductibility of annual compensation in excess of $1 million paid to
certain executives of public companies. The Company has taken appropriate
actions to preserve the deductibility of stock option grants and annual cash
incentive awards, and to date all compensation payable to the Company's
executive officers has been deductible or voluntarily deferred under the
Company's Deferred Income Plan. While the Company's policy is generally to
preserve the federal income tax deductibility of compensation paid, the
Committee has the authority to authorize payments that may not be deductible if
it believes that it is in the best interests of the Company and its
shareholders.
Executive Compensation and Nominating Committee
William W. Berry, Chairman
Ronald E. Carrier
Joseph C. Farrell
Charles H. Foster, Jr.
Jeremiah J. Sheehan
Hubert R. Stallard
Richmond, Virginia
July 22, 2002
10
PERFORMANCE GRAPH
The following graph compares the cumulative total shareholder return on
the Company's Common Stock for the last five fiscal years with the cumulative
total return for the same period of the Standard & Poors Midcap 400 Stock Index
and the peer group index. The companies in the peer group are DIMON Incorporated
and Standard Commercial Corporation. The graph assumes that $100 was invested on
June 30, 1997, in the Company's Common Stock and in each of the comparative
indices, in each case with dividends reinvested.
[PERFORMANCE GRAPH]
CUMULATIVE TOTAL RETURN ON COMMON STOCK
--------------------------------------------------------------------------
At June 30,
--------------------------------------------------------------------------
1997 1998 1999 2000 2001 2002
---- ---- ---- ---- ---- ----
------------------------ ----------- ------------ ------------ ----------- ------------ -----------
Universal Corporation $ 100.00 $ 121.05 $ 95.51 $ 74.85 $ 146.63 $ 140.65
------------------------ ----------- ------------ ------------ ----------- ------------ -----------
S&P Midcap 400 Index $ 100.00 $ 127.15 $ 143.15 $ 167.45 $ 182.31 $ 161.65
------------------------ ----------- ------------ ------------ ----------- ------------ -----------
Peer Group Index $ 100.00 $ 47.04 $ 23.58 $ 12.66 $ 56.13 $ 49.87
======================== =========== ============ ============ =========== ============ ===========
11
EXECUTIVE COMPENSATION
The individuals named below include the Company's Chairman and Chief
Executive Officer and the other four executive officers of the Company who were
the most highly compensated executive officers of the Company for the 2002
fiscal year. Information is provided for the fiscal years ended on June 30 of
the years shown.
Summary Compensation Table
Long Term
Compensation
Annual Compensation Awards
----------------------------------------- --------------
Fiscal Year Other Securities
Name and Ended Annual Underlying All Other
Principal Position 6/30 Salary($) Bonus($) Compensation($)(1) Options(#) Compensation($)(2)
------------------ ---- --------- -------- ------------------ -------------- -------------------
Henry H. Harrell 2002 $584,429 $1,035,338 -- 181,284 $198,298
Chairman and Chief 2001 563,685 1,186,946 -- 71,970 150,127
Executive Officer 2000 548,271 910,597 -- 225,734 148,084
Allen B. King 2002 448,200 772,399 -- 144,983 99,386
President and Chief 2001 435,127 885,504 -- 59,237 81,799
Operating Officer 2000 407,852 679,337 -- 173,667 80,939
Jack M.M. van 2002 254,216 268,167 -- 0 0
de Winkel 2001 238,400 237,184 -- 0 0
Co-Chairman and 2000 260,417 279,792 -- 0 0
Co-President,
Deli Universal, Inc.
William L. Taylor 2002 341,281 369,781 -- 89,990 73,194
Vice President and 2001 329,038 423,929 -- 37,082 59,289
Chief Administrative 2000 321,811 325,444 -- 106,267 58,929
Officer
Hartwell H. Roper 2002 258,801 272,986 -- 79,995 39,340
Vice President and 2001 252,173 312,960 -- 31,980 33,401
Chief Financial 2000 244,028 240,011 -- 98,067 32,205
Officer
---------------------
1 None of the Named Executive Officers received perquisites or other
personal benefits in excess of the lesser of $50,000 or 10% of his total annual
salary and bonus for each reported year.
12
2 The amounts in the "All Other Compensation" column represent (i)
employer contributions to the Employees' Stock Purchase Plan and the
Supplemental Stock Purchase Plan of Universal Leaf (the "Stock Purchase Plans"),
(ii) life insurance premium payments made by the Company under the Executive
Insurance Program, and (iii) interest accrued to participants' accounts under
the Company's Deferred Income Plan (the "DIP") to the extent such interest
exceeded 120% of the applicable federal long-term rate under Internal Revenue
Code Section 1274(d). Employer contributions to the Stock Purchase Plans on
behalf of the Named Executive Officers for the 2002, 2001 and 2000 fiscal years
were in the following respective amounts: Mr. Harrell, $28,550, $27,550 and
$26,500; Mr. King, $21,550, $20,800 and $20,000; Mr. Taylor, $16,575, $16,000
and $15,400; and Mr. Roper, $10,140, $9,683 and $8,625. The life insurance
premiums paid by the Company on behalf of such executive officers for the 2002,
2001 and 2000 fiscal years were in the following respective amounts: Mr.
Harrell, $152,777, $108,435 and $109,799; Mr. King, $74,827, $58,471, $58,814;
Mr. Taylor, $56,619, $43,289 and $43,529; and Mr. Roper, $26,779, $21,684 and
$21,870. The accruals of interest on income deferred by such executive officers
under the DIP in excess of 120% of the applicable federal long-term rate under
Internal Revenue Code Section 1274(d) for the 2002, 2001 and 2000 fiscal years
were in the following respective amounts: Mr. Harrell, $16,971, $14,142 and
$11,785; Mr. King, $3,009, $2,528 and $2,125; and Mr. Roper, $2,421, $2,034 and
$1,710.
Retirement Benefits
Employees of Universal Leaf and certain of the Company's other U.S.
subsidiaries are covered by a defined benefit retirement plan, which is
qualified under the Internal Revenue Code, and a defined benefit supplemental
retirement plan, which is a non-qualified plan intended to provide benefits in
excess of limits allowed by the Internal Revenue Code. The table below shows
estimated annualized benefits payable under both plans at normal retirement (age
65) based on the average salary and bonus (as reported in the Summary
Compensation Table) for the highest consecutive three years. The actuarial
equivalent of benefits under the supplemental retirement plan is payable in a
lump sum upon retirement.
Years of Service
-------------------- ------------ ------------ ------------ ------------ ----------- ------------ ------------
Remuneration 15 20 25 30 35 40 45
-------------------- ------------ ------------ ------------ ------------ ----------- ------------ ------------
$ 300,000 $66,610 $88,814 $111,017 $133,220 $155,424 $168,860 $182,296
400,000 90,124 120,165 150,206 180,247 210,288 228,203 246,118
500,000 113,637 151,516 189,395 227,274 265,153 287,547 309,940
600,000 137,150 182,867 228,584 274,301 320,018 346,890 373,762
700,000 160,664 214,218 267,773 321,328 374,882 406,233 437,585
800,000 184,177 245,570 306,962 368,354 429,747 465,577 501,407
900,000 207,691 276,921 346,151 415,381 484,611 524,920 565,229
1,000,000 231,204 308,272 385,340 462,408 539,476 584,263 629,051
1,100,000 254,717 339,623 424,529 509,435 594,341 643,607 692,873
1,200,000 278,231 370,974 463,718 556,462 649,205 702,950 756,695
1,300,000 301,744 402,326 502,907 603,488 704,070 762,294 820,517
1,400,000 325,258 433,677 542,096 650,515 758,935 821,637 884,339
1,500,000 348,771 465,028 581,285 697,542 813,799 880,980 948,162
The credited years of service for Messrs. Harrell, King, Taylor and
Roper are thirty-six, thirty-three, twelve and twenty-eight, respectively.
13
The benefits shown in the table are calculated on the basis of a 50%
joint and survivor benefit, assuming that at retirement the age of the
employee's spouse is 62. The amounts in the table do not include any social
security benefits that an employee may receive.
Mr. van de Winkel is covered by a pension plan established under the
laws of the Netherlands. The plan, which covers employees of N.V. Deli Universal
and certain other Dutch subsidiaries, is partially funded by employer and
participant contributions. During the fiscal year ended June 30, 2002, N.V. Deli
Universal contributed $37,168 to the plan on behalf of Mr. van de Winkel. His
estimated annual pension benefit under the plan assuming retirement at age 60,
continuance of current salary level and twenty years of service would be
$118,009.
Stock Options
The following tables contain information concerning grants of stock
options to the Named Executive Officers during the fiscal year ended June 30,
2002, exercises of stock options by such executive officers in such fiscal year
and the fiscal year end value of all unexercised stock options held by such
executive officers.
Option Grants in Last Fiscal Year
Individual Grants1
-----------------------------------------------------------
Number of % of Total
Securities Options Exercise
Underlying Granted Or Base
Options to Employees Price Expiration Grant Date
Name Granted (#) in Fiscal Year ($/Sh)(2) Date Present Value ($)(2)
---- ----------- -------------- ---------- ---------- --------------------
Henry H. Harrell 77,075 23.8% $36.92 12/02/09 $231,996
7,033 23.8 36.92 12/01/04 21,169
74,260 22.0 38.70 12/02/09 491,601
22,916 22.0 38.70 12/01/04 151,704
Allen B. King 63,955 19.1 36.92 12/02/09 192,505
3,604 19.1 36.92 12/01/04 10,848
51,991 17.5 38.70 12/02/09 344,180
25,433 17.5 38.70 12/01/04 168,366
William L. Taylor 38,509 11.9 36.92 12/02/09 115,912
3,572 11.9 36.92 12/01/04 10,752
30,920 10.8 38.70 12/02/09 204,690
16,989 10.8 38.70 12/01/04 112,467
Hartwell H. Roper 36,719 10.5 36.92 12/02/09 110,524
363 10.5 36.92 12/01/04 1,093
27,601 9.7 38.70 12/02/09 182,719
15,312 9.7 38.70 12/01/04 101,365
---------------------
1 All options granted in the last fiscal year were reload options that
replaced shares of the Company's Common Stock used for stock swap option
exercises under the CEO Program described above in "Report of Executive
Compensation and Nominating Committee." In general, such reload options become
exercisable six
14
months after the date of grant with exercise occurring automatically if certain
minimum price thresholds are met. The exercise price of the listed options was
the fair market value on the date of grant.
2 The Black-Scholes option pricing model was used to determine the "Grant
Date Present Value" of the options listed in the table. The model assumed a
risk-free interest rate of 2.46%, a dividend yield of 3.59% and a stock price
volatility of 0.31 based on the average weekly stock market closing price over
the past ten years. Because the magnitude of any nontransferability discount is
extremely difficult to determine, none was applied in determining the value of
the reported options. The grant date present values set forth in the table are
only theoretical values and may not accurately determine present value. The
actual value, if any, an optionee realizes will depend on the excess of market
value of a share of the Company's Common Stock over the exercise price on the
date the option is exercised.
Aggregated Option Exercises in Last Fiscal Year
and Option Values at Fiscal Year End
Number of Securities
Underlying Value of Unexercised
Unexercised In-the-Money Options
Shares Options at FY-End (#) At FY-End ($)(2)
Acquired Value -------------------------- --------------------------
Name on Exercise(#) Realized($)(1) Exercisable Unexercisable Exercisable Unexercisable
---- -------------- -------------- ----------- ------------- ----------- -------------
Henry H. Harrell 211,168 $1,113,374 151,748 97,176 $0 $0
Allen B. King 168,112 862,583 133,335 77,424 0 0
William L. Taylor 103,797 515,194 82,441 47,909 0 0
Hartwell H. Roper 93,612 507,854 75,433 42,913 0 0
1 The value realized represents the difference between the exercise price
of the option and the fair market value of the Company's Common Stock on the
date of exercise.
2 The value of the unexercised options at fiscal year end represents the
difference between the exercise price of any outstanding options and $36.70, the
closing sales price of a share of the Company's Common Stock on June 30, 2002,
as reported on the New York Stock Exchange.
Except under extraordinary circumstances, all of the options shown as
of fiscal year end are exercisable automatically only at not less than six-month
intervals when at least a minimum stock price appreciation has occurred.
15
Equity Compensation Plan Information
The following table sets forth information as of June 30, 2002, with
respect to compensation plans under which shares of the Company's Common Stock
are authorized for issuance. The table does not include securities that may be
issuable under the Company's 2002 Executive Stock Plan, which is being submitted
to shareholders for approval at the Annual Meeting and has not been implemented.
Number of Securities
Number of Securities to Be Weighted Average Remaining Available
Issued upon Exercise of Exercise Price of for Future Issuance
Outstanding Options, Outstanding Options, Under Equity
Plan Category Warrants and Rights Warrants and Rights Compensation Plans(1)
------------- ------------------- ------------------- ---------------------
Equity Compensation Plans
Approved by Shareholders
1989 Executive Stock Plan 522,336 $38.82 0
1997 Executive Stock Plan 1,053,341 36.42 222,438 (2)
1994 Amended and
Restated Stock Option
Plan for Non-Employee
Directors 62,000 29.27 34,000
Equity Compensation Plans Not
Approved by Shareholders(3)
-- -- --
Total 1,637,677 $36.91 256,438
---------------------
1 Amounts exclude any securities to be issued upon exercise of
outstanding options, warrants and rights.
2 The 1997 Executive Stock Plan permits grants of stock options and
awards of Common Stock and/or restricted stock. Of the 222,438 shares of Common
Stock remaining available for future issuance under the 1997 Executive Stock
Plan, 192,700 shares are available for awards of Common Stock or restricted
stock.
3 The Company does not have any equity compensation plans that have not
been approved by shareholders.
Contractual Obligations
To ensure that the Company will have the continued dedicated service of
certain executives notwithstanding the possibility, threat or occurrence of a
change of control, the Company has entered into change of control employment
agreements (the "Employment Agreements") with certain executives, including
Henry H. Harrell, Allen B. King, William L. Taylor and Hartwell H. Roper. The
Employment Agreements generally provide that if the executive is terminated
other than for cause within three years after a change of control of the
Company, or if the executive terminates his employment for good reason within
such three-year period or voluntarily during the 30-day period following the
first anniversary of the change of control, the executive is entitled to receive
"severance benefits." Severance benefits include a lump sum severance payment
equal to three times the sum of his base salary and highest annual bonus,
together with certain other payments
16
and benefits, including continuation of employee welfare benefits and an
additional payment to compensate the executive for certain excise taxes imposed
on certain change of control payments.
The Board of Directors believes that the Employment Agreements benefit
the Company and its shareholders by securing the continued service of key
management personnel and by enabling management to perform its duties and
responsibilities without the distracting uncertainty associated with a change of
control.
CERTAIN TRANSACTIONS
On August 29, 2002, the then remaining balances of stock purchase loans
in the amounts of $325,989, $244,492, $150,456 and $135,828 to Messrs. H. H.
Harrell, A. B. King, W. L. Taylor and H. H. Roper, respectively, were paid in
full. These loans, payable on demand and bearing interest at the applicable
federal rate, financed open market purchases of a total of 43,050 shares of
Common Stock, all of which shares were contributed to the Career Equity
Ownership Program described above in "Report of the Executive Compensation and
Nominating Committee."
APPROVAL OF THE UNIVERSAL CORPORATION
2002 EXECUTIVE STOCK PLAN
The Board of Directors has adopted unanimously and recommends that the
shareholders approve the Universal Corporation 2002 Executive Stock Plan (the
"2002 Plan"). The 2002 Plan will succeed the Universal Corporation 1997
Executive Stock Plan (the "1997 Plan"), under which all but 222,438 shares
authorized for issuance have been reserved by the Company for outstanding grants
and awards. The 1997 Plan replaced the Universal Corporation 1989 Executive
Stock Plan (the "1989 Plan"), which expired on June 30, 1998.
The Company's experience with stock options has convinced the Board of
Directors of the important role of stock options and other stock-based
incentives in recruiting and retaining officers, directors and key employees
with ability and initiative and in encouraging such persons to have a greater
financial investment in the Company.
The complete text of the 2002 Plan is set forth in Exhibit A to this
Proxy Statement. The following general description of the principal features of
the 2002 Plan is qualified in its entirety by reference to Exhibit A.
General Information
The 2002 Plan would authorize the Executive Compensation and Nominating
Committee of the Board of Directors (the "Committee") to award shares of Common
Stock, restricted stock and stock options (collectively, "Stock Incentives") to
officers, directors and key employees of the Company and its subsidiaries who
are designated by the Committee. No determination has been made as to which of
the persons eligible to participate in the 2002 Plan (currently, approximately
20) will receive awards under the 2002 Plan, and, therefore, the benefits to be
allocated to any individual or to various groups of participants are not
presently determinable.
If the shareholders approve the 2002 Plan, the Company will be
authorized to issue up to 2,000,000 shares of Common Stock under the 2002 Plan.
Shares will be considered to be issued under the 2002 Plan only when the shares
are actually issued to a participant. Additionally, any shares tendered or
withheld in payment of all or part of a stock option granted under the 2002 Plan
or in satisfaction of withholding tax obligations and any shares forfeited or
canceled in accordance with the terms of a grant or award under the 2002 Plan,
the 1997 Plan
17
or the 1989 Plan will become available for issuance under the 2002 Plan. The
2002 Plan provides that not more than 500,000 shares of Common Stock shall be
available for awards of Common Stock and/or restricted stock.
The 2002 Plan provides that if there is a stock split, stock dividend
or other event that affects the Company's capitalization, appropriate
adjustments will be made in the number of shares that may be issued and the
number of shares and price of all outstanding grants and awards made before such
event.
On September 4, 2002, the closing price for a share of the Company's
Common Stock on the New York Stock Exchange was $38.44. Through that date, an
aggregate of 17,500 shares of restricted Common Stock and 1,051,809 exercisable
non-qualified stock options (including reload options) were covered by
outstanding grants and awards under both the 1989 Plan and the 1997 Plan. In
addition, there are currently 222,438 shares of Common Stock available for Stock
Incentives that may be issued under the 1997 Plan.
Grants and Awards under the 2002 Plan
Stock Options. The 2002 Plan will permit the granting of incentive
stock options ("ISOs"), which qualify for special tax treatment, non-qualified
stock options, and reload options. The exercise price for options will not be
less than the fair market value of a share of Common Stock on the date of grant.
The period in which an option may be exercised will be determined by the
Committee on the date of grant, but will not exceed 10 years in the case of an
ISO. Payment of the option exercise price may be in cash or, if the award
agreement provides, by surrendering previously owned shares of Common Stock or
by the Company's withholding of shares of Common Stock upon exercise. The 2002
Plan also permits the Company to "cash out" any outstanding option by paying the
optionee the fair market value of the shares of Common Stock underlying the
option less the applicable option exercise price.
Common Stock and Restricted Stock. Shares of Common Stock and
restricted Common Stock may also be awarded. The restricted stock would vest and
become transferable upon the satisfaction of conditions set forth in the
applicable award agreement. Restricted stock awards may be subject to forfeiture
if, for example, the recipient's employment terminates before the award vests.
During the period of restriction, holders of restricted stock will have voting
rights and the right to receive dividends on their shares.
Change of Control Provisions
The 2002 Plan provides that in the event of a "Change of Control" (as
defined in the plan), unless otherwise provided by the Committee in a grant or
award agreement, all stock options will become fully exercisable and the
restrictions applicable to outstanding restricted stock will lapse. The
Committee may also provide that under such circumstances holders of restricted
stock may elect to receive, in exchange for shares that were restricted stock, a
cash payment equal to the fair market value of the shares surrendered.
Federal Income Tax Consequences
Non-Qualified Stock Options. Non-qualified stock options granted under
the 2002 Plan are not taxable to an optionee at grant but result in taxation at
exercise, at which time the individual will recognize ordinary income in an
amount equal to the difference between the option exercise price and the fair
market value of the Common Stock on the exercise date. The Company will be
entitled to deduct a corresponding amount as a business expense in the year the
optionee recognizes this income.
Incentive Stock Options. An employee will generally not recognize
income on receipt or exercise of an ISO so long as he or she has been an
employee of the Company or its subsidiaries from the date the option was granted
until three months before the date of exercise; however, the amount by which the
fair market value of
18
the Common Stock at the time of exercise exceeds the option price is a required
adjustment for purposes of the alternative minimum tax applicable to the
employee. If the employee holds the Common Stock received upon exercise of the
option for one year after exercise (and for two years from the date of grant of
the option), any difference between the amount realized upon the disposition of
the stock and the amount paid for the stock will be treated as long-term capital
gain (or loss, if applicable) to the employee. If the employee exercises an ISO
and satisfies these holding period requirements, the Company may not deduct any
amount in connection with the ISO.
In contrast, if an employee exercises an ISO but does not satisfy the
holding period requirements with respect to the Common Stock acquired on
exercise, the employee generally will recognize ordinary income in the year of
the disposition equal to the excess, if any, of the fair market value of the
Common Stock on the date of exercise over the option price; and any excess of
the amount realized on the disposition over the fair market value on the date of
exercise will be taxed as long- or short-term capital gain (as applicable). If,
however, the fair market value of the Common Stock on the date of disposition is
less than on the date of exercise, the employee will recognize ordinary income
equal only to the difference between the amount realized on disposition and the
option price. In either event, the Company will be entitled to deduct an amount
equal to the amount constituting ordinary income to the employee in the year of
the premature disposition.
Restricted Stock. The federal income tax consequences of restricted
stock awards depend on the restrictions imposed on the stock. Generally, the
fair market value of the stock received will be includable in the participant's
gross income at receipt unless the property is subject to a substantial risk of
forfeiture (and is either nontransferable or after transfer remains subject to
such risk of forfeiture). In this case, taxation will be deferred until the
first taxable year the stock is no longer subject to substantial risk of
forfeiture. The employee may, however, make a tax election to include the value
of the stock in gross income in the year of receipt despite such restrictions.
Generally, the Company will be entitled to deduct the fair market value of the
stock transferred to the employee as a business expense in the year the employee
includes the compensation in income.
Common Stock/Cash Payments. The fair market value of any Common Stock
awarded to a participant and any cash payments a participant receives in
connection with other Stock Incentives or as dividends on restricted stock are
taxable as ordinary income in the year received or made available to the
participant without substantial limitations or restrictions. Generally, the
Company will be entitled to deduct the amount (other than dividends) that the
participant includes as income as a business expense in the year the participant
recognizes such income.
Section 162(m) of the Internal Revenue Code places a $1 million annual
limit on the deductible compensation of certain executives of publicly traded
corporations. The limit, however, does not apply to "qualified performance-based
compensation." The Company believes that grants of options under the 2002 Plan
will qualify for the performance-based compensation exception to the
deductibility limit, assuming that the 2002 Plan is approved by the
shareholders.
State tax consequences may in some cases differ from those described
above. Grants and awards under the 2002 Plan may in some instances be made to
employees who are subject to tax in jurisdictions other than the United States
and may result in tax consequences differing from those described above.
Other Information
Upon approval by the Company's shareholders, the 2002 Plan will be
effective as of July 1, 2002, and will expire on June 30, 2012, unless
terminated earlier or extended by the Board of Directors. Grants and awards
issued before the 2002 Plan expires or is terminated may extend beyond the
expiration or termination date. The Board of Directors may amend the 2002 Plan
at any time, provided that no such amendment will be
19
made without shareholder approval if such approval is required under any
applicable law, rule or regulation. Except for adjustments that result from
events that affect the Company's capitalization, the 2002 Plan prohibits any
repricing of options without shareholder approval. In any calendar year, no
individual may receive Stock Incentives under the 2002 Plan that cover more than
200,000 shares of the Company's Common Stock.
The 2002 Plan provides that options granted under the plan generally
are nontransferable except by will or by the laws of descent and distribution.
The Committee may grant non-qualified stock options that are transferable,
without payment of consideration, to immediate family members of the optionee,
to a trust for the benefit of such family members or to a partnership whose only
partners are such family members.
Vote Required
In order for it to be adopted, the proposed 2002 Plan must be approved
by the holders of a majority of the shares of Common Stock present or
represented by properly executed and delivered proxies at the Annual Meeting.
Abstentions and Broker Shares voted as to any matter at the Annual Meeting will
be included in determining the number of shares present or represented at the
Annual Meeting. Broker Shares that are not voted on any matter at the Annual
meeting will not be included in determining the number of shares present or
represented at the Annual Meeting.
The Board of Directors recommends that the shareholders vote in favor
of Proposal Two.
AUDIT INFORMATION
The five members of the Audit Committee are independent as that term is
defined in the listing standards of the New York Stock Exchange.
Fees of Independent Auditors
Audit Fees
Fees for professional services rendered by Ernst & Young LLP in
connection with the audit of the Company's annual financial statements for the
fiscal year ended June 30, 2002, were $1,181,631.
Financial Information System Design and Implementation Fees
There were no professional services rendered to the Company by Ernst &
Young LLP for the design and implementation of financial information systems
during the fiscal year ended June 30, 2002.
All Other Fees
The aggregate amount of fees for all other services rendered to the
Company by Ernst & Young LLP for the fiscal year ended June 30, 2002, was
$904,361, including audit-related services of $422,453 and non-audit services of
$481,908.
Audit Committee Report
Management is responsible for the Company's internal controls,
financial reporting process and compliance with laws and regulations and ethical
business standards. The independent auditor is responsible for performing an
independent audit of the Company's consolidated financial statements in
accordance with
20
generally accepted auditing standards and issuing a report thereon. The Audit
Committee's responsibility is to monitor and oversee these processes on behalf
of the Board of Directors.
In this context, the Audit Committee has reviewed and discussed the
audited financial statements with management and the independent auditors. The
Audit Committee has discussed with the independent auditors the matters required
to be discussed by Statement on Auditing Standards No. 61 (Communication with
Audit Committees). In addition, the Audit Committee has received from the
independent auditors the written disclosures required by Independence Standards
Board Standard No. 1 (Independence Discussions with Audit Committees) and
discussed with them their independence from the Company and its management.
Moreover, the Audit Committee has considered whether the independent auditor's
provision of non-audit services to the Company is compatible with maintaining
the auditor's independence.
In reliance on the reviews and discussions referred to above, the Audit
Committee recommended to the Board of Directors that the audited financial
statements be included in the Company's Annual Report on Form 10-K for the
fiscal year ended June 30, 2002, for filing with the Securities and Exchange
Commission. By recommending to the Board of Directors that the audited financial
statements be so included, the Audit Committee is not opining on the accuracy,
completeness or presentation of the information contained in the audited
financial statements.
Audit Committee
Ronald E. Carrier, Chairman
Thomas H. Johnson
Eddie N. Moore, Jr.
Jeremiah J. Sheehan
Walter A. Stosch
Richmond, Virginia
September 3, 2002
Appointment of Independent Public Accountants
Upon the recommendation of the Audit Committee, the Board of Directors has
appointed the firm of Ernst & Young LLP as independent public accountants to
audit the consolidated financial statements of the Company for the fiscal year
ending June 30, 2003. Representatives of Ernst & Young LLP will be present at
the Annual Meeting, will be available to respond to appropriate questions and
may make a statement if they so desire.
PROPOSALS FOR 2003 ANNUAL MEETING
Under the regulations of the Securities and Exchange Commission, any
shareholder desiring to make a proposal to be acted upon at the 2003 Annual
Meeting must cause such proposal to be delivered, in proper form, to the
Secretary of the Company, whose address is 1501 North Hamilton Street, P.O. Box
25099, Richmond, Virginia 23260, no later than May 23, 2003, in order for the
proposal to be considered for inclusion in the Company's Proxy Statement. The
Company anticipates holding the 2003 Annual Meeting on October 28, 2003.
The Company's Bylaws also prescribe the procedure a shareholder must
follow to nominate directors or to bring other business before shareholders'
meetings. For a shareholder to nominate a candidate for director or to bring
other business before a meeting, notice must be received by the Secretary of the
Company not less than 60 days and not more than 90 days prior to the date of the
meeting. Based upon an anticipated date of October 28, 2003, for the 2003 Annual
Meeting, the Company must receive such notice no later than August 29, 2003, and
no earlier than July 30, 2003. Notice of a nomination for director must describe
various matters
21
regarding the nominee and the shareholder giving the notice. Notice of other
business to be brought before the meeting must include a description of the
proposed business, the reasons therefor, and other specified matters. Any
shareholder may obtain a copy of the Company's Bylaws, without charge, upon
written request to the Secretary of the Company.
OTHER MATTERS
THE COMPANY'S 2002 ANNUAL REPORT TO SHAREHOLDERS, WHICH INCLUDES A COPY
OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED JUNE 30,
2002 (EXCLUDING EXHIBITS) AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION
("THE FORM 10-K"), IS BEING MAILED TO SHAREHOLDERS WITH THIS PROXY STATEMENT.
ADDITIONAL COPIES OF THE FORM 10-K CAN BE OBTAINED WITHOUT CHARGE BY WRITING TO
KAREN M. L. WHELAN, VICE PRESIDENT AND TREASURER, UNIVERSAL CORPORATION, 1501
NORTH HAMILTON STREET, P.O. BOX 25099, RICHMOND, VIRGINIA 23260 OR BY VISITING
THE COMPANY'S WEBSITE AT WWW.UNIVERSALCORP.COM.
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EXHIBIT A
UNIVERSAL CORPORATION
2002 EXECUTIVE STOCK PLAN
Article I
DEFINITIONS
1.1 Affiliate means any "subsidiary" or "parent corporation"
(within the meaning of Section 424 of the Code) of the Company.
1.2 Agreement means a written agreement (including any amendment
or supplement thereto) between the Company and a Participant specifying the
terms and conditions of a Grant or an Award issued to such Participant.
1.3 Award means an award of Common Stock and/or Restricted Stock.
1.4 Board means the Board of Directors of the Company.
1.5 Change of Control means and shall be deemed to have taken
place if: (i) any individual, entity or "group" (within the meaning of Sections
13(d)(3) or 14(d)(2) of the Exchange Act) becomes the beneficial owner of shares
of the Company having 20 percent or more of the total number of votes that may
be cast for the election of directors of the Company, other than (a) as a result
of any acquisition directly from the Company, or (b) as a result of any
acquisition by any employee benefit plans (or related trusts) sponsored or
maintained by the Company or its Subsidiaries; or (ii) there is a change in the
composition of the Board such that the individuals who, as of the date hereof,
constitute the Board (the Board as of the date hereof shall be hereinafter
referred to as the "Incumbent Board") cease for any reason to constitute at
least a majority of the Board; provided, however, for purposes of this Section,
that any individual who becomes a member of the Board subsequent to the date
hereof whose election, or nomination for election by the Company's shareholders,
was approved by a vote of at least a majority of those individuals who are
members of the Board and who were also members of the Incumbent Board (or deemed
to be such pursuant to this proviso) shall be considered as though such
individual were a member of the Incumbent Board; but, provided further, that any
such individual whose initial assumption of office occurs as a result of either
an actual or threatened election contest (as such terms are used in Rule 14a-11
of Regulation 14A promulgated under the Exchange Act) or other actual or
threatened solicitation of proxies or consents by or on behalf of a person other
than the Board shall not be so considered as a member of the Incumbent Board; or
(iii) if at any time, (w) the Company shall consolidate with, or merge with, any
other Person and the Company shall not be the continuing or surviving
corporation, (x) any Person shall consolidate with, or merge with, the Company,
and the Company shall be the continuing or surviving corporation and in
connection therewith, all or part of the outstanding Common Stock shall be
changed into or exchanged for stock or other securities of any other person or
cash or any other property, (y) the Company shall be a party to a statutory
share exchange with any other Person after which the Company is a Subsidiary of
any other Person, or (z) the Company shall sell or otherwise transfer 50% or
more of the assets or earning power of the Company and its Subsidiaries (taken
as a whole) to any Person or Persons.
1.6 Change of Control Date is the date on which an event described
in (i), (ii) or (iii) of Section 1.5 occurs.
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1.7 Code means the Internal Revenue Code of 1986, as amended from
time to time. References to the Code shall include the valid and binding
governmental regulations, court decisions and other regulatory and judicial
authority issued or rendered thereunder.
1.8 Commission means the Securities and Exchange Commission or any
successor agency.
1.9 Committee means the Executive Compensation and Nominating
Committee of the Board.
1.10 Common Stock means the Common Stock of the Company.
1.11 Company means Universal Corporation.
1.12 Disability, with respect to a Participant, means "disability"
as defined from time to time under any long-term disability plan of the Company
or Subsidiary with which the Participant is employed.
1.13 Exchange Act means the Securities Exchange Act of 1934, as
amended from time to time, and any successor thereto.
1.14 Fair Market Value means, on any given date, the closing price
of a share of Common Stock as reported on the New York Stock Exchange composite
tape on such day or, if the Common Stock was not traded on the New York Stock
Exchange on such day, then on the next preceding day that the Common Stock was
traded on such exchange, all as reported by such source as the Committee may
select.
1.15 Grant means the grant of an Option.
1.16 Incentive Stock Option means an Option that is intended to
qualify as an "incentive stock option" under Section 422 of the Code.
1.17 Non-Qualified Stock Option means an Option other than an
Incentive Stock Option.
1.18 Option means a stock option that entitles the holder to
purchase from the Company a stated number of shares of Common Stock at the price
set forth in an Agreement.
1.19 Option Price means the price per share for Common Stock
purchased on the exercise of an Option as provided in Article VI.
1.20 Participant means an officer, director or employee of the
Company or of a Subsidiary who satisfies the requirements of Article IV and is
selected by the Committee to receive a Grant or an Award.
1.21 Plan means the Universal Corporation 2002 Executive Stock
Plan.
1.22 Prior Plans mean, collectively, the Universal Corporation 1997
Executive Stock Plan and the Universal Corporation 1989 Executive Stock Plan.
1.23 Restricted Stock means shares of Common Stock awarded to a
Participant under Article IX. Shares of Common Stock shall cease to be
Restricted Stock when, in accordance with the terms of the applicable Agreement,
they become transferable and free of substantial risks of forfeiture.
1.24 Rule 16b-3 means Rule 16b-3, as promulgated by the Commission
under Section 16(b) of the Exchange Act, as amended from time to time.
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1.25 Securities Broker means the registered securities broker
acceptable to the Company who agrees to effect the cashless exercise of an
Option pursuant to Section 8.4 hereof.
1.26 Subsidiary means any corporation, partnership, joint venture
or other entity during any period in which at least a 50% voting or profits
interest is owned, directly or indirectly, by the Company (or by any entity that
is a successor to the Company), and any other business venture designated by the
Committee in which the Company (or an entity that is a successor to the Company)
has a significant interest, as determined in the discretion of the Committee.
Article II
PURPOSES
The Plan is intended to assist the Company in recruiting and retaining
officers, directors and key employees with ability and initiative by enabling
such persons who contribute significantly to the Company or an Affiliate to
participate in its future success and to associate their interests with those of
the Company and its shareholders. The Plan is intended to permit the award of
Common Stock and Restricted Stock, and the issuance of Options qualifying as
Incentive Stock Options or Non-Qualified Stock Options as designated by the
Committee at time of grant. No Option that is intended to be an Incentive Stock
Option, however, shall be invalid for failure to qualify as an Incentive Stock
Option under Section 422 of the Code but shall be treated as a Non-Qualified
Stock Option.
Article III
ADMINISTRATION
The Plan shall be administered by the Committee. No Person shall be
appointed to or serve as a member of the Committee unless at the time of such
appointment and service he shall be a "non-employee director" as defined in Rule
16b-3, an "outside director" within the meaning of Section 162(m) of the Code,
and an "independent director" within the meaning of any applicable listing
requirement of the New York Stock Exchange applicable to the Committee. The
Committee shall have authority to issue Grants and Awards upon such terms (not
inconsistent with the provisions of this Plan) as the Committee may consider
appropriate. The terms of such Grants and Awards may include conditions (in
addition to those contained in this Plan) on (i) the exercisability of all or
any part of an Option and (ii) the transferability or forfeitability of
Restricted Stock. In addition, the Committee shall have complete authority to
interpret all provisions of this Plan; to prescribe the form of Agreements; to
adopt, amend, and rescind rules and regulations pertaining to the administration
of the Plan; and to make all other determinations necessary or advisable for the
administration of this Plan. To fulfill the purposes of the Plan without
amending the Plan, the Committee may also modify any Grants or Awards issued to
Participants who are nonresident aliens or employed outside of the United States
to recognize differences in local law, tax policy or custom.
The express grant in the Plan of any specific power to the Committee
shall not be construed as limiting any power or authority of the Committee. Any
decision made, or action taken, by the Committee or in connection with the
administration of this Plan shall be final and conclusive. All expenses of
administering this Plan shall be borne by the Company.
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Article IV
ELIGIBILITY
4.1 General. Any officer, director or employee of the Company or
of any Subsidiary (including any corporation that becomes a Subsidiary after the
adoption of this Plan) who, in the judgment of the Committee, has contributed
significantly or can be expected to contribute significantly to the profits or
growth of the Company or a Subsidiary may receive one or more Awards or Grants,
or any combination or type thereof. Employee and non-employee directors of the
Company are eligible to participate in this Plan.
4.2 Grants and Awards. The Committee will designate individuals to
whom Grants and/or Awards are to be issued and will specify the number of shares
of Common Stock subject to each such Grant or Award. An Option may be granted
alone or in addition to other Grants and/or Awards under the Plan. The Committee
shall have the authority to grant any Participant Incentive Stock Options,
Non-Qualified Stock Options or both types of Options; provided, however, that
Incentive Stock Options may be granted only to employees of the Company and its
subsidiaries (within the meaning of Section 424(f) of the Code). All Grants or
Awards issued under this Plan shall be evidenced by Agreements which shall be
subject to applicable provisions of this Plan and to such other provisions as
the Committee may determine. No Participant may be granted Options that are
Incentive Stock Options (under all Incentive Stock Option plans of the Company
and Affiliates) which are first exercisable in any calendar year for stock
having an aggregate Fair Market Value (determined as of the date an Option is
granted) exceeding $100,000. A Participant may not receive Grants and Awards
under this Plan with respect to more than 200,000 shares of Common Stock during
any calendar year.
4.3 Reload Options. The Committee shall have the authority to
specify at the time of Grant that an optionee shall be granted the right to a
further Non-Qualified Stock Option (a "Reload Option") in the event such
optionee exercises all or a part of an Option, including a Reload Option (an
"Original Option"), by surrendering in accordance with Section 8.2 hereof
already owned shares of Common Stock in full or partial payment of the Option
Price under such Original Option. Each Reload Option shall be granted on the
date of exercise of the Original Option, shall cover a number of shares of
Common Stock not exceeding the whole number of shares of Common Stock
surrendered in payment of the Option Price under such Original Option, shall
have an Option Price equal to the Fair Market Value on the date of Grant of such
Reload Option, shall expire on the stated expiration date of the Original Option
and shall be subject to such other terms and conditions as the Committee may
determine.
4.4 Designation of Option as an Incentive Stock Option or a
Non-Qualified Stock Option. The Committee will designate at the time an Option
is granted whether the Option is to be treated as an Incentive Stock Option or a
Non-Qualified Stock Option. In the absence, however, of any such designation,
such Option shall be treated as a Non-Qualified Stock Option.
4.5 Qualification of Incentive Stock Option under Section 422 of
the Code. Anything in the Plan to the contrary notwithstanding, no term of the
Plan relating to Incentive Stock Options shall be interpreted, amended or
altered nor shall any discretion or authority granted under the Plan be
exercised so as to disqualify the Plan under Section 422 of the Code or, without
the consent of the optionee affected, to disqualify any Incentive Stock Option
under such Section 422. No Option that is intended to be an Incentive Stock
Option, however, shall be invalid for failure to qualify as an Incentive Stock
Option under Section 422 of the Code but shall be treated as a Non-Qualified
Stock Option.
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Article V
STOCK SUBJECT TO PLAN
Subject to the adjustment provisions of Article X and the provisions of
(a) through (c) of this Article V, up to 2,000,000 shares of Common Stock may be
issued under the Plan. In addition to such authorization, the following shares
of Common Stock may be issued under the Plan:
(a) Shares of Common Stock that are forfeited under the Prior
Plans and shares of Common Stock that are not issued under the Prior Plans
because of a payment of cash in lieu of shares of Common Stock, the
cancellation, termination or expiration of Grants and Awards, and/or other
similar events under the Prior Plans shall be available for issuance under this
Plan.
(b) If a Participant tenders, or has withheld, shares of Common
Stock in payment of all or part of the Option Price under an Option granted
under the Plan, or in satisfaction of withholding tax obligations thereunder,
the shares of Common Stock so tendered by the Participant or so withheld shall
become available for issuance under the Plan.
(c) If shares of Common Stock that are issued under the Plan are
subsequently forfeited in accordance with the terms of the Grant or Award, the
forfeited shares of Common Stock shall become available for issuance under the
Plan.
Notwithstanding (a) above, any shares of Common Stock that are
authorized to be issued under the Prior Plans prior to the expiration of its
term, but that are not issued or covered by Grants or Awards under the Prior
Plans, shall not be available for issuance under this Plan.
Subject to the adjustment provisions of Article X, not more than
500,000 shares of Common Stock shall be issued under this Plan pursuant to
Awards of Common Stock and/or Restricted Stock.
Subject to the foregoing provisions of this Article V, if a Grant or an
Award may be paid only in shares of Common Stock, or in either cash or shares of
Common Stock, the shares of Common Stock shall be deemed to be issued hereunder
only when and to the extent that payment is actually made in shares of Common
Stock. However, the Committee may authorize a cash payment under a Grant or an
Award in lieu of shares of Common Stock if there are insufficient shares of
Common Stock available for issuance under the Plan.
Article VI
OPTION PRICE
The price per share for Common Stock purchased on the exercise of an
Option shall be fixed by the Committee, but shall not be less than the Fair
Market Value on the date of grant.
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Article VII
EXERCISE OF OPTIONS
7.1 Maximum Option Period. The period in which an Option may be
exercised shall be determined by the Committee on the date of grant; provided,
however that an Incentive Stock Option shall not be exercisable after the
expiration of 10 years from the date the Incentive Stock Option was granted.
7.2 Non-Transferability. Non-Qualified Stock Options may be
transferable by a Participant and exercisable by a person other than a
Participant, but only to the extent specifically provided in an Option
Agreement. Incentive Stock Options, by their terms, shall not be transferable
except by will or by the laws of descent and distribution and shall be
exercisable, during the Participant's lifetime, only by the Participant. No
right or interest of a Participant in any Option shall be liable for, or subject
to, any lien, obligation or liability of such Participant.
7.3 Employee Status. For purposes of determining the applicability
of Section 422 of the Code (relating to Incentive Stock Options), or in the
event that the terms of any Grant provide that it may be exercised only during
employment or within a specified period of time after termination of employment,
the Committee may decide to what extent leaves of absence for governmental or
military service, illness, temporary Disability, or other reasons shall not be
deemed interruptions of continuous employment.
Article VIII
METHOD OF EXERCISE
8.1 Exercise. Subject to the provisions of Articles VII and XI, an
Option may be exercised in whole at any time or in part from time to time at
such times and in compliance with such requirements as the Committee shall
determine. An Option granted under this Plan may be exercised with respect to
any number of whole shares less than the full number for which the Option could
be exercised. Such partial exercise of an Option shall not affect the right to
exercise the Option from time to time in accordance with this Plan with respect
to remaining shares subject to the Option.
8.2 Payment. Unless otherwise provided by the Agreement, payment
of the Option Price shall be made in cash. If the Agreement provides, payment of
all or part of the Option Price may be made by surrendering (by either actual
delivery or attestation) already owned shares of Common Stock to the Company and
the payment of applicable withholding taxes may be made by the Company
withholding shares of Common Stock from the Participant upon exercise, provided
the shares surrendered or withheld have a Fair Market Value (determined as of
the day preceding the date of exercise) that is not less than such price or part
thereof and any such withholding taxes. In addition, the Committee may establish
such payment or other terms as it may deem to be appropriate and consistent with
these purposes.
8.3 Shareholder Rights. No participant shall have any rights as a
shareholder with respect to shares subject to his Option until the date he
exercises such Option.
8.4 Cashless Exercise. To the extent permitted under the
applicable laws and regulations, at the request of the Participant and with the
consent of the Committee, the Company agrees to cooperate in a "cashless
exercise" of the Option. The cashless exercise shall be effected by the
Participant delivering to the Securities Broker instructions to exercise all or
part of the Option, including instructions to sell a sufficient number of shares
of Common Stock to cover the costs and expenses associated therewith. The
Committee may permit a
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Participant to elect to pay any applicable withholding taxes by requesting that
the Company withhold the number of shares of Common Stock equivalent at current
Fair Market Value to the withholding taxes due.
8.5 Cashing Out of Option. The Committee may elect to cash out all
or part of the portion of any Option to be exercised by paying the optionee an
amount, in cash or Common Stock, equal to the excess of the Fair Market Value of
the Common Stock that is the subject of the portion of the Option to be
exercised over the Option Price times the number of shares of Common Stock
subject to the portion of the Option to be exercised on the effective date of
such cash out.
Article IX
COMMON STOCK AND RESTRICTED STOCK
9.1 Award. In accordance with the provisions of Article IV, the
Committee will designate persons to whom an Award of Common Stock and/or
Restricted Stock is to be made and will specify the number of shares of Common
Stock covered by such Award or Awards.
9.2 Vesting. In the case of Restricted Stock, on the date of the
Award, the Committee may prescribe that the Participant's rights in the
Restricted Stock shall be forfeitable or otherwise restricted. Subject to the
provisions of Article XI hereof, the Committee may award Common Stock to a
Participant which is not forfeitable and is free of any restrictions on
transferability.
9.3 Shareholder Rights. Prior to their forfeiture in accordance
with the terms of the Agreement and while the shares are Restricted Stock, a
Participant will have all rights of a shareholder with respect to Restricted
Stock, including the right to receive dividends and vote the shares; provided,
however, that (i) a Participant may not sell, transfer, pledge, exchange,
hypothecate, or otherwise dispose of Restricted Stock, (ii) the Company shall
retain custody of the certificates evidencing shares of Restricted Stock, and
(iii) the Participant will deliver to the Company a stock power, endorsed in
blank, with respect to each award of Restricted Stock.
Article X
ADJUSTMENT UPON CHANGE IN COMMON STOCK
Should the Company effect one or more (x) stock dividends, stock
split-ups, subdivisions or consolidations of shares or other similar changes in
capitalization; (y) spin-offs, spin-outs, split-ups, split-offs, or other such
distribution of assets to shareholders; or (z) direct or indirect assumptions
and/or conversions of outstanding Options due to an acquisition of the Company,
then the maximum number of shares as to which Grants and Awards may be issued
under this Plan shall be proportionately adjusted and their terms shall be
adjusted as the Committee shall determine to be equitably required, provided
that the number of shares subject to any Grant or Award shall always be a whole
number. Any determination made under this Article X by the Committee shall be
final and conclusive.
The issuance by the Company of shares of stock of any class, or
securities convertible into shares of stock of any class, for cash or property
or for labor or services, either upon direct sale or upon the exercise of rights
or warrants to subscribe therefor, or upon conversion of shares or obligations
of the Company convertible into such shares or other securities, shall not
affect, and no adjustment by reason thereof shall be made with respect to any
Grant or Award.
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Article XI
COMPLIANCE WITH LAW AND APPROVAL OF REGULATORY BODIES
No Grant shall be exercisable, no Common Stock shall be issued, no
certificates for shares of Common Stock shall be delivered, and no payment shall
be made under this Plan except in compliance with all applicable federal and
state laws and regulations (including, without limitation, withholding tax
requirements) and the rules of all domestic stock exchanges on which the
Company's shares may be listed. The Company may rely on an opinion of its
counsel as to such compliance. Any share certificate issued to evidence Common
Stock for which a Grant is exercised or an Award is issued may bear such legends
and statements as the Committee may deem advisable to assure compliance with
federal and state laws and regulations. No Grant shall be exercisable, no Common
Stock shall be issued, no certificate for shares shall be delivered, and no
payment shall be made under this Plan until the Company has obtained such
consent or approval as the Committee may deem advisable from regulatory bodies
having jurisdiction over such matters.
Article XII
GENERAL PROVISIONS
12.1 Effect on Employment. Neither the adoption of this Plan, its
operation, nor any documents describing or referring to this Plan (or any part
thereof) shall confer upon any employee any right to continue in the employ of
the Company or a Subsidiary or in any way affect any right and power of the
Company or a Subsidiary to terminate the employment of any employee at any time
with or without assigning a reason therefor.
12.2 Unfunded Plan. The Plan, insofar as it provides for a Grant,
is not required to be funded, and the Company shall not be required to segregate
any assets that may at any time be represented by a Grant under this Plan.
12.3 Change of Control. Notwithstanding any other provision of the
Plan to the contrary, in the event of a Change of Control:
(a) Unless otherwise provided by the Committee in an
Agreement, any outstanding Option which is not presently exercisable and vested
as of a Change of Control Date shall become fully exercisable and vested to the
full extent of the original Grant upon such Change of Control Date.
(b) Unless otherwise provided by the Committee in an
Agreement, the restrictions applicable to any outstanding Restricted Stock shall
lapse, and such Restricted Stock shall become free of all restrictions and
become fully vested, nonforfeitable and transferable to the full extent of the
original Award. The Committee may also provide in an Agreement that a
Participant may elect, by written notice to the Company within 60 days after a
Change of Control Date, to receive, in exchange for shares that were Restricted
Stock immediately before the Change of Control Date, a cash payment equal to the
Fair Market Value of the shares surrendered on the last business day the Common
Stock is traded on the New York Stock Exchange prior to receipt by the Company
of such written notice.
(c) The Committee may, in its complete discretion, cause
the acceleration or release of any and all restrictions or conditions related to
a Grant or Award, in such manner, in the case of officers and directors of the
Company who are subject to Section 16(b) of the Exchange Act, as to conform to
the provisions of Rule 16b-3.
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12.4 Rules of Construction. Headings are given to the articles and
sections of this Plan solely for ease of reference and are not to be considered
in construing the terms and conditions of the Plan. The reference to any
statute, regulation, or other provision of law shall be construed to refer to
any amendment to or successor of such provision of law.
12.5 Rule 16b-3 Requirements. Notwithstanding any other provisions
of the Plan, the Committee may impose such conditions on any Grant or Award, and
the Board may amend the Plan in any such respects, as they may determine, on the
advice of counsel, are necessary or desirable to satisfy the provisions of Rule
16b-3. Any provision of the Plan to the contrary notwithstanding, and except to
the extent that the Committee determines otherwise: (a) transactions by and with
respect to officers and directors of the Company who are subject to Section
16(b) of the Exchange Act shall comply with any applicable conditions of Rule
16b-3; and (b) every provision of the Plan shall be administered, interpreted,
and construed to carry out the foregoing provisions of this sentence.
12.6 Amendment, Modification, and Termination. At any time and from
time to time, the Board may terminate, amend, or modify the Plan. Such amendment
or modification may be without shareholder approval except to the extent that
such approval is required by the Code, pursuant to the rules under Section 16 of
the Exchange Act, by any national securities exchange or system on which the
Common Stock is then listed or reported, by any regulatory body having
jurisdiction with respect thereto, or under any other applicable laws, rules, or
regulations. No termination, amendment, or modification of the Plan, other than
pursuant to Section 12.5 herein, shall in any manner adversely affect any Grant
or Award theretofore issued under the Plan, without the written consent of the
Participant. The Committee may amend the terms of any Grant or Award theretofore
issued under this Plan, prospectively or retrospectively, but no such amendment
shall impair the rights of any Participant without the Participant's written
consent except an amendment provided for or contemplated in the terms of the
Grant or Award, an amendment made to cause the Plan, or Grant or Award, to
qualify for the exemption provided by Rule 16b-3, or an amendment to make an
adjustment under Article X. Except as provided in Article X, the Option Price of
any outstanding Option may not be adjusted or amended, whether through
amendment, cancellation or replacement, unless such adjustment or amendment is
approved by the shareholders of the Company.
12.7 Governing Law. The validity, construction and effect of the
Plan and any actions taken or related to the Plan shall be determined in
accordance with the laws of the Commonwealth of Virginia and applicable federal
law.
12.8 Successors and Assigns. All obligations of the Company under
the Plan, with respect to Grants and Awards issued hereunder shall be binding on
any successor to the Company, whether the existence of such successor is the
result of a direct or indirect purchase, merger, consolidation, or otherwise, of
all or substantially all of the business and/or assets of the Company. The Plan
shall be binding on all successors and permitted assigns of a Participant,
including, but not limited to, the estate of such Participant and the executor,
administrator or trustee of such estate, and the guardians or legal
representative of the Participant.
12.9 Effect on Prior Plans and Other Compensation Arrangements. The
adoption of this Plan shall have no effect on Grants and Awards made or to be
made pursuant to the Prior Plans and the Company's other compensation
arrangements. Nothing contained in this Plan shall prevent the Company from
adopting other or additional compensation plans or arrangements for its
officers, directors or employees.
12.10 Limitation of Implied Rights. Neither a Participant nor any
other person shall, by reason of participation in the Plan, acquire any right in
or title to any assets, funds or property of the Company or any Subsidiary
whatsoever, including, without limitation, any specific funds, assets, or other
property which the Company or any Subsidiary, in its sole discretion, may set
aside in anticipation of a liability under the Plan.
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Except for those rights in Restricted Stock specifically set forth in subsection
9.3 hereof, a Participant shall have only a contractual right to the Stock or
amounts if any, payable under the Plan, unsecured by any assets of the Company
or any Subsidiary, and nothing contained in the Plan shall constitute a
guarantee that the assets of the Company or any Subsidiary shall be sufficient
to pay any benefits to any person. The Plan does not constitute a contract of
employment, and selection as a Participant will not give any participating
employee the right to be retained in the employ of the Company or any
Subsidiary, nor any right or claim to any benefit under the Plan, unless such
right or claim has specifically accrued under the terms of the Plan. Except as
otherwise provided in the Plan, no Award or Grant under the Plan shall confer
upon the holder thereof any rights as a shareholder of the Company prior to the
date on which the individual fulfills all conditions for receipt of such rights.
12.11 Duration of Plan. No Grant or Award may be issued under this
Plan before July 1, 2002, or after June 30, 2012; provided, however, a Grant of
a Reload Option may be issued after June 30, 2012, upon the exercise of an
Original Option as provided in Section 4.3 hereof. Grants and Awards issued on
or after July 1, 2002, but on or before June 30, 2012, and Grants of Reload
Options issued after June 30, 2012 upon the exercise of an Original Option as
provided in Section 4.3 hereof, shall remain valid in accordance with their
terms.
12.12 Effective Date. This Plan has been approved by the Board,
effective as of July 1, 2002, subject, however, to approval by the shareholders
of the Company entitled to vote at the 2002 Annual Meeting of the Shareholders.
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[FORM OF PROXY AND VOTING INSTRUCTIONS]
UNIVERSAL CORPORATION
ANNUAL MEETING OF SHAREHOLDERS
Tuesday, October 22, 2002
2:00 p.m.
1501 North Hamilton Street
Richmond, VA 23230
UNIVERSAL CORPORATION Proxy
--------------------------------------------------------------------------------
This Proxy is Solicited on Behalf of the Board of Directors.
The undersigned hereby appoints Henry H. Harrell, Allen B. King and William L.
Taylor, and each or any of them, proxies for the undersigned, with power of
substitution, to vote all the shares of Common Stock of Universal Corporation
held of record by the undersigned on September 4, 2002, at the Annual Meeting of
Shareholders to be held at 2:00 p.m. on October 22, 2002, and at any
adjournments thereof, upon the matters listed on the reverse side, as more fully
set forth in the Proxy Statement, and for the transaction of such other business
as may properly come before the Meeting.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED ON THE
REVERSE SIDE BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY
WILL BE VOTED FOR ALL NOMINEES AND THE EXECUTIVE STOCK PLAN.
PLEASE VOTE, DATE AND SIGN ON REVERSE AND RETURN PROMPTLY IN THE ENCLOSED
ENVELOPE.
(continued, and to be DATED and SIGNED on reverse side)
-----------------------
| 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 by mail.
VOTE BY PHONE - TOLL FREE - 1-800-240-6326 - QUICK *** EASY *** IMMEDIATE
* Use any touch-tone telephone to vote your Proxy 24 hours a day, 7 days a
week, until 11:00 a.m. (CT) on October 21, 2002.
* You will be prompted to enter your 3-digit Company Number and your 7-digit
Control Number which are located above.
* Follow the simple instructions the Voice provides you.
VOTE BY INTERNET - http://www.eproxy.com/uvv/ - QUICK *** EASY *** IMMEDIATE
* Use the Internet to vote your Proxy 24 hours a day, 7 days a week, until
12:00 p.m. (CT) on October 21, 2002.
* You will be prompted to enter your 3-digit Company Number and your 7-digit
Control Number which are located above to obtain your records and create an
electronic ballot.
VOTE BY MAIL
Mark, sign and date your Proxy and return it in the postage-paid envelope we've
provided or return it to Universal Corporation, c/o Shareowner ServicesSM, P.O.
Box 64873, St. Paul, MN 55164--0873.
If you vote by Phone or Internet, please do not mail your Proxy.
/ Please detach here /
-------- --------
| |
| |
COMMON STOCK
_ _
1. Election of Directors: 01 Allen B. King 03 Hubert R. Stallard |_| Vote FOR |_| Vote WITHHELD
02 Eddie N. Moore, Jr. all nominees from all nominees
(except as
indicated below)
--------------------------------------
(Instructions: To withhold authority to vote for any indicated nominee, | |
write the number(s) of the nominee(s) in the box provided to the right.) | |
--------------------------------------
_ _ _
2. Approval of the Universal Corporation 2002 Executive Stock Plan. |_| For |_| Against |_| Abstain
_
Address Change? Mark Box |_|
Indicate changes below:
Date______________________
--------------------------------------
| |
| |
--------------------------------------
Signature(s) in Box
Please sign exactly as your name(s) appear(s) on
this Proxy. Attorneys-in-fact, executors, trustees,
guardians, corporate officers, etc. should give full
title.
| |
| |
-------- --------
UNIVERSAL CORPORATION
ANNUAL MEETING OF SHAREHOLDERS
Tuesday, October 22, 2002
2:00 p.m.
1501 North Hamilton Street
Richmond, VA 23230
UNIVERSAL CORPORATION Voting Instruction
--------------------------------------------------------------------------------
TO TRUSTEE, LANDAMERICA FINANCIAL GROUP, INC. SAVINGS AND STOCK OWNERSHIP PLAN.
This Voting Instruction is Solicited on Behalf of the Board of Directors of
Universal Corporation.
Pursuant to Section 10.5 of the LandAmerica Financial Group, Inc. Savings and
Stock Ownership Plan, you are directed to vote, in person or by proxy, the whole
shares of Common Stock of Universal Corporation credited to the undersigned
Participant's Account as of June 30, 2002, at the Annual Meeting of Shareholders
of Universal Corporation, to be held at 2:00 p.m. on October 22, 2002, and at
any adjournments thereof, upon the matters listed on the reverse side, as more
fully set forth in the Proxy Statement, and for the transaction of such other
business as may properly come before the Meeting.
THIS VOTING INSTRUCTION, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER
DIRECTED ON THE REVERSE SIDE BY THE UNDERSIGNED PARTICIPANT. IF NO DIRECTION IS
MADE, OR IF A VOTING INSTRUCTION IS NOT PROPERLY EXECUTED AND RECEIVED BY THE
TRUSTEE, THE SHARES OF UNIVERSAL CORPORATION COMMON STOCK CREDITED TO YOUR
PARTICIPANT'S ACCOUNT SHALL BE VOTED IN THE SAME PROPORTION AS THOSE SHARES OF
UNIVERSAL CORPORATION COMMON STOCK FOR WHICH THE TRUSTEE HAS RECEIVED PROPER
VOTING INSTRUCTIONS.
PLEASE VOTE, DATE AND SIGN ON REVERSE AND RETURN PROMPTLY IN THE ENCLOSED
ENVELOPE.
(continued, and to be DATED and SIGNED on reverse side)
-----------------------
| COMPANY # |
| CONTROL # |
-----------------------
There are three ways to vote your Voting Instruction
Your telephone or Internet vote directs the Trustee to vote your shares in the
same manner as if you marked, signed and returned your Voting Instruction by
mail.
VOTE BY PHONE - TOLL FREE - 1-800-240-6326 - QUICK *** EASY *** IMMEDIATE
* Use any touch-tone telephone to vote your Voting Instruction 24 hours a day,
7 days a week, until 11:00 a.m. (CT) on October 21, 2002.
* You will be prompted to enter your 3-digit Company Number and your 7-digit
Control Number which are located above.
* Follow the simple instructions the Voice provides you.
VOTE BY INTERNET - http://www.eproxy.com/uvv/ - QUICK *** EASY *** IMMEDIATE
* Use the Internet to vote your Voting Instruction 24 hours a day, 7 days a
week, until 12:00 p.m. (CT) on October 21, 2002.
* You will be prompted to enter your 3-digit Company Number and your 7-digit
Control Number which are located above to obtain your records and create an
electronic ballot.
VOTE BY MAIL
Mark, sign and date your Voting Instruction and return it in the postage-paid
envelope we've provided or return it to Universal Corporation, c/o Shareowner
ServicesSM, P.O. Box 64873, St. Paul, MN 55164--0873.
If you vote by Phone or Internet, please do not mail your Voting Instruction.
/ Please detach here /
-------- --------
| |
| |
LANDAMERICA FINANCIAL GROUP, INC.
SAVINGS AND STOCK OWNERSHIP PLAN
_ _
1. Election of Directors: 01 Allen B. King 03 Hubert R. Stallard |_| Vote FOR |_| Vote WITHHELD
02 Eddie N. Moore, Jr. all nominees from all nominees
(except as
indicated below)
--------------------------------------
(Instructions: To withhold authority to vote for any indicated nominee, | |
write the number(s) of the nominee(s) in the box provided to the right.) | |
--------------------------------------
_ _ _
2. Approval of the Universal Corporation 2002 Executive Stock Plan. |_| For |_| Against |_| Abstain
_
Address Change? Mark Box |_|
Indicate changes below:
Date______________________
--------------------------------------
| |
| |
--------------------------------------
Signature(s) in Box
Please sign exactly as your name(s) appear(s) on
this Voting Instruction. Attorneys-in-fact,
executors, trustees,guardians, corporate officers,
etc. should give full title.
| |
| |
-------- --------
UNIVERSAL CORPORATION
ANNUAL MEETING OF SHAREHOLDERS
Tuesday, October 22, 2002
2:00 p.m.
1501 North Hamilton Street
Richmond, VA 23230
UNIVERSAL CORPORATION Voting Instruction
--------------------------------------------------------------------------------
TO TRUSTEE, EMPLOYEES' STOCK PURCHASE PLAN OF UNIVERSAL LEAF TOBACCO COMPANY,
INCORPORATED AND DESIGNATED AFFILIATED COMPANIES.
This Voting Instruction is Solicited on Behalf of the Board of Directors of
Universal Corporation.
Pursuant to Section 13.01 of the Employees' Stock Purchase Plan of Universal
Leaf Tobacco Company, Incorporated and Designated Affiliated Companies, you are
directed to vote, in person or by proxy, the whole shares of Common Stock of
Universal Corporation credited to the undersigned Participant's Account as of
July 31, 2002, at the Annual Meeting of Shareholders of Universal Corporation,
to be held at 2:00 p.m. on October 22, 2002, and at any adjournments thereof,
upon the matters listed on the reverse side, as more fully set forth in the
Proxy Statement, and for the transaction of such other business as may properly
come before the Meeting.
THIS VOTING INSTRUCTION, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER
DIRECTED ON THE REVERSE SIDE BY THE UNDERSIGNED PARTICIPANT. IF NO DIRECTION IS
MADE, OR IF A VOTING INSTRUCTION IS NOT PROPERLY EXECUTED AND RECEIVED BY THE
TRUSTEE, THE SHARES OF UNIVERSAL CORPORATION COMMON STOCK CREDITED TO YOUR
PARTICIPANT'S ACCOUNT SHALL BE VOTED IN THE SAME PROPORTION AS THOSE SHARES OF
UNIVERSAL CORPORATION COMMON STOCK FOR WHICH THE TRUSTEE HAS RECEIVED PROPER
VOTING INSTRUCTIONS.
PLEASE VOTE, DATE AND SIGN ON REVERSE AND RETURN PROMPTLY IN THE ENCLOSED
ENVELOPE.
(continued, and to be DATED and SIGNED on reverse side)
-----------------------
| COMPANY # |
| CONTROL # |
-----------------------
There are three ways to vote your Voting Instruction
Your telephone or Internet vote directs the Trustee to vote your shares in the
same manner as if you marked, signed and returned your Voting Instruction by
mail.
VOTE BY PHONE - TOLL FREE - 1-800-240-6326 - QUICK *** EASY *** IMMEDIATE
* Use any touch-tone telephone to vote your Voting Instruction 24 hours a day,
7 days a week, until 11:00 a.m. (CT) on October 21, 2002.
* You will be prompted to enter your 3-digit Company Number and your 7-digit
Control Number which are located above.
* Follow the simple instructions the Voice provides you.
VOTE BY INTERNET - http://www.eproxy.com/uvv/ - QUICK *** EASY *** IMMEDIATE
* Use the Internet to vote your Voting Instruction 24 hours a day, 7 days a
week, until 12:00 p.m. (CT) on October 21, 2002.
* You will be prompted to enter your 3-digit Company Number and your 7-digit
Control Number which are located above to obtain your records and create an
electronic ballot.
VOTE BY MAIL
Mark, sign and date your Voting Instruction and return it in the postage-paid
envelope we've provided or return it to Universal Corporation, c/o Shareowner
ServicesSM, P.O. Box 64873, St. Paul, MN 55164--0873.
If you vote by Phone or Internet, please do not mail your Voting Instruction.
/ Please detach here /
-------- --------
| |
| |
EMPLOYEES' STOCK PURCHASE PLAN OF
UNIVERSAL LEAF TOBACCO COMPANY, INCORPORATED
AND DESIGNATED AFFILIATED COMPANIES
_ _
1. Election of Directors: 01 Allen B. King 03 Hubert R. Stallard |_| Vote FOR |_| Vote WITHHELD
02 Eddie N. Moore, Jr. all nominees from all nominees
(except as
indicated below)
--------------------------------------
(Instructions: To withhold authority to vote for any indicated nominee, | |
write the number(s) of the nominee(s) in the box provided to the right.) | |
--------------------------------------
_ _ _
2. Approval of the Universal Corporation 2002 Executive Stock Plan. |_| For |_| Against |_| Abstain
_
Address Change? Mark Box |_|
Indicate changes below:
Date______________________
--------------------------------------
| |
| |
--------------------------------------
Signature(s) in Box
Please sign exactly as your name(s) appear(s) on
this Voting Instruction. Attorneys-in-fact,
executors, trustees, guardians, corporate officers,
etc. should give full title.
| |
| |
-------- --------