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SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a)
OF THE SECURITIES EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [ ]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to 240.14a-11(c) or 240.14a-12
NIKE, INC.
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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NIKE LOGO
NIKE, INC.
ONE BOWERMAN DRIVE
BEAVERTON, OREGON 97005-6453
August 10, 2001
To Our Shareholders:
You are cordially invited to attend the annual meeting of shareholders of
NIKE, Inc. to be held at the Center for Cultural Exchange, One Longfellow
Square, Portland, Maine 04101, on Monday, September 17, 2001, at 1:00 P.M.
Eastern Time. Registration will begin at 12:00 P.M.
NIKE's Cole Haan and Bauer NIKE Hockey subsidiaries are headquartered
nearby. I believe that the annual meeting provides an excellent opportunity for
shareholders to become better acquainted with NIKE and its directors and
officers. I hope that you will be able to attend. Highlights of the meeting will
be available on videotape by calling 1-800-640-8007 following the meeting.
Whether or not you plan to attend, the prompt execution and return of your
proxy card will both assure that your shares are represented at the meeting and
minimize the cost of proxy solicitation.
Sincerely,
[/s/ Philip H. Knight]
Philip H. Knight
Chairman of the Board,
President, and Chief Executive
Officer
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NIKE LOGO
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
SEPTEMBER 17, 2001
To the Shareholders of NIKE, Inc.
The annual meeting of shareholders of NIKE, Inc., an Oregon corporation,
will be held on Monday, September 17, 2001, at 1:00 P.M., at the Center for
Cultural Exchange, One Longfellow Square, Portland, Maine 04101, for the
following purposes:
1. To elect a Board of Directors for the ensuing year.
2. To approve the NIKE, Inc. Employee Stock Purchase Plan.
3. To consider a shareholder proposal.
4. To ratify the appointment of PricewaterhouseCoopers LLP as independent
accountants.
5. To transact such other business as may properly come before the
meeting.
All shareholders are invited to attend the meeting. Shareholders of record
at the close of business on July 25, 2001, the record date fixed by the Board of
Directors, are entitled to notice of and to vote at the meeting. You must
present an admission ticket enclosed in this Proxy Statement.
By Order of the Board of Directors
JOHN E. JAQUA
Secretary
Beaverton, Oregon
August 10, 2001
Whether or not you intend to be present at the meeting, please sign and date the
enclosed proxy and return it in the enclosed envelope, or vote by telephone or
over the internet following the instructions on the proxy.
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PROXY STATEMENT
The enclosed proxy is solicited by the Board of Directors of NIKE, Inc.
("NIKE" or the "Company") for use at the annual meeting of shareholders to be
held on September 17, 2001, and at any adjournment thereof (the "Annual
Meeting"). The Company expects to mail this proxy statement and the enclosed
proxy to shareholders on or about August 10, 2001.
The Company will bear the cost of solicitation of proxies. In addition to
the solicitation of proxies by mail, certain officers and employees of the
Company, without extra compensation, may also solicit proxies personally or by
telephone. The Company has retained ADP Investor Communications Services, 51
Mercedes Way, Edgewood, New York, to assist in the solicitation of proxies from
nominees and brokers at an estimated fee of $5,000 plus related out-of-pocket
expenses. Copies of proxy solicitation materials will be furnished to
fiduciaries, custodians and brokerage houses for forwarding to the beneficial
owners of shares held in their names.
All valid proxies properly executed and received by the Company prior to
the Annual Meeting will be voted in accordance with the instructions specified
in the proxy. Where no instructions are given, shares will be voted FOR the
election of each of the named nominees for director, FOR approval of the NIKE,
Inc. Employee Stock Purchase Plan, AGAINST the shareholder proposal regarding
business principles for China, and FOR ratification of the appointment of
PricewaterhouseCoopers LLP as independent accountants. A shareholder may choose
to strike the names of the proxy holders named in the enclosed proxy and insert
other names.
A shareholder giving the enclosed proxy has the power to revoke it at any
time before it is exercised by affirmatively electing to vote in person at the
meeting or by delivering to John F. Coburn III, Assistant Secretary of NIKE,
either an instrument of revocation or an executed proxy bearing a later date.
VOTING SECURITIES
Holders of record of NIKE's Class A Common Stock ("Class A Stock") and
holders of record of NIKE's Class B Common Stock ("Class B Stock"), at the close
of business on July 25, 2001, will be entitled to vote at the Annual Meeting. On
that date, 99,126,334 shares of Class A Stock and 170,114,060 shares of Class B
Stock were issued and outstanding. Neither class of Common Stock has cumulative
voting rights.
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Each share of Class A Stock and each share of Class B Stock is entitled to
one vote on every matter submitted to the shareholders at the Annual Meeting.
With regard to Proposal 1, the election of directors, the holders of Class A
Stock and the holders of Class B Stock will vote separately. Holders of Class B
Stock are currently entitled to elect 25 percent of the total Board, rounded up
to the next whole number. Holders of Class A Stock are currently entitled to
elect the remaining directors. Under this formula, holders of Class B Stock,
voting separately, will elect three directors, and holders of Class A Stock,
voting separately, will elect eight directors. Holders of Class A Stock and
holders of Class B Stock will vote together as one class on Proposals 2, 3 and
4.
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PROPOSAL 1
ELECTION OF DIRECTORS
A Board of 11 directors will be elected at the Annual Meeting. All of the
nominees were elected at the 2000 annual meeting of shareholders. Directors will
hold office until the next annual meeting of shareholders or until their
successors are elected and qualified.
Thomas E. Clarke, Jill K. Conway and Delbert J. Hayes are nominated by
management for election by the holders of Class B Stock. The other eight
nominees are nominated by management for election by the holders of Class A
Stock.
Under Oregon law, if a quorum of each class of shareholders is present at
the Annual Meeting, the eight director nominees who receive the greatest number
of votes cast by holders of Class A Stock and the three director nominees who
receive the greatest number of votes cast by holders of Class B Stock will be
elected directors. Abstentions and broker non-votes will have no effect on the
results of the vote. Unless otherwise instructed, proxy holders will vote the
proxies they receive for the nominees listed below. If any nominee becomes
unable to serve, the holders of the proxies may, in their discretion, vote the
shares for a substitute nominee or nominees designated by the Board of
Directors.
Background information on the nominees as of July 15, 2001, appears below:
NOMINEES FOR ELECTION BY CLASS A SHAREHOLDERS
Ralph D. DeNunzio -- Mr. DeNunzio, 69, a director of the Company since
1988, is President of Harbor Point Associates, Inc., New York, New York, a
private investment and consulting firm. Mr. DeNunzio was employed by the
investment banking firm of Kidder, Peabody & Co. Incorporated from 1953 to 1987,
where he served as President from 1977 to 1986, as Chief Executive Officer from
1980 to 1987 and as Chairman of the Board of Directors from 1986 to 1987. Mr.
DeNunzio served as Vice Chairman and Chairman of the Board of Governors of the
New York Stock Exchange from 1969 to 1972 and was President of the Securities
Industry Association in 1981. In 1970, Mr. DeNunzio headed the Securities
Industry Task Force, which led to enactment of the Securities Investor
Protection Act of 1970 and establishment of the Securities Investor Protection
Corporation. He is also a director of FDX Corporation and Harris Corporation.
Richard K. Donahue -- Mr. Donahue, 74, a director since 1977, is Vice
Chairman of the Board. He served as President and Chief Operating Officer of the
Company from 1990 until 1994. He has been a partner in the law firm of Donahue &
Donahue, Lowell, Massachusetts, since 1951. From 1961 to 1963, Mr. Donahue was
an assistant to President John F. Kennedy. Mr. Donahue is a former President of
the Massachusetts Bar Association and the New England Bar Association. He is a
member of the John F. Kennedy Library Foundation. Mr. Donahue is a trustee of
the Joyce Foundation and is a director of Courier Corp.
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Douglas G. Houser -- Mr. Houser, 66, a director since 1970, is an Assistant
Secretary of the Company and has been a partner in the Portland, Oregon law firm
of Bullivant, Houser, Bailey since 1965. Mr. Houser is a trustee of Willamette
University and a Fellow in the American College of Trial Lawyers, and has served
as a member of the Board of Governors and Treasurer of the Oregon State Bar
Association and as a Director of the Rand Corporation, Institute for Civil
Justice Board of Overseers.
John E. Jaqua -- Mr. Jaqua, 80, a director since 1968, is Secretary of NIKE
and has been a principal in the law firm of Jaqua & Wheatley, P.C., Eugene,
Oregon, since 1962. Mr. Jaqua has served as President of the Oregon State Bar
Association and as a State Delegate to the House of Delegates of the American
Bar Association.
Philip H. Knight -- Mr. Knight, 63, a director since 1968, is President,
Chief Executive Officer and Chairman of the Board of Directors of NIKE. Mr.
Knight is a co-founder of the Company and, except for the period from June 1983
through September 1984, served as its President from 1968 to 1990, and from June
2000 to present. Prior to 1968, Mr. Knight was a certified public accountant
with Price Waterhouse and Coopers & Lybrand and was an Assistant Professor of
Business Administration at Portland State University.
Charles W. Robinson -- Mr. Robinson, 81, a director since 1978, is Chairman
and President of Robinson & Associates, Inc., Santa Fe, New Mexico, a venture
capital firm. From January 1978 to January 1979, Mr. Robinson was Vice Chairman
of the Board of Blyth, Eastman, Dillon & Co., Inc. and from March 1977 to
December 1977, was Senior Managing Director of Kuhn Loeb & Co., Incorporated.
Mr. Robinson served as Under-secretary of State for Economic Affairs from 1974
to 1976, at which time he was appointed Deputy Secretary of State. From 1964 to
1974, Mr. Robinson was President of Marcona Corporation. Mr. Robinson is also a
director of Allen Telecom, Inc., and a trustee of The Brookings Institution.
A. Michael Spence -- Dr. Spence, 57, a director since 1995, is a partner of
Oak Hill Venture Partners. He was the Philip H. Knight Professor and Dean of the
Graduate School of Business at Stanford University from 1990 to 1999. From 1984
to 1990 he was Dean of the Faculty of Arts and Sciences at Harvard University.
He was professor of economics and business administration at Harvard University
from 1977 to 1986. He is the author of three books and numerous articles on
economics and business. He is a Fellow of the Econometric Society and was for
six years Chairman of the National Research Council Board on Science, Technology
and Economic Policy. Dr. Spence is also a director of Sun Microsystems, Inc.,
Siebel Systems, Inc., General Mills, Inc. eGain Communications Corp., Exult,
Inc., Torstar Corporation, and ITI Education Corporation.
John R. Thompson, Jr. -- Mr. Thompson, 59, a director since 1991, was head
coach of the Georgetown University men's basketball team from 1972 until 1998.
Mr. Thompson also serves as Assistant to the President of Georgetown for Urban
Affairs. Mr. Thompson was head coach of the 1988
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United States Olympic basketball team. He is a past President of the National
Association of Basketball Coaches and presently serves on its Board of
Governors.
NOMINEES FOR ELECTION BY CLASS B SHAREHOLDERS
Thomas E. Clarke -- Dr. Clarke, 50, a director since 1994, joined the
Company in 1980, and serves as President of New Business Ventures of the
Company. He was appointed divisional vice president in charge of marketing in
1987, corporate Vice President in 1989, General Manager in 1990, and served as
President and Chief Operating Officer from 1994 to 1999. Dr. Clarke previously
held various positions with the Company, primarily in research, design,
development and marketing. Dr. Clarke holds a Doctorate degree in biomechanics.
Jill K. Conway -- Dr. Conway, 66, a director since 1987, is currently a
Visiting Scholar with the Massachusetts Institute of Technology's Program in
Science, Technology and Society, and Chairman of Lend Lease Inc., an
Australian-based property company. Dr. Conway was President of Smith College,
Northampton, Massachusetts, from 1975 to 1985. She was affiliated with the
University of Toronto from 1964 to 1975, and held the position of Vice
President, Internal Affairs from 1973 to 1975. Her field of academic specialty
is history. Dr. Conway is currently a director of Merrill Lynch & Co., Inc., and
Colgate-Palmolive Company. She is currently a trustee of Mount Holyoke College.
Delbert J. Hayes -- Mr. Hayes, 67, a director since 1975, served as
Executive Vice President of NIKE from 1980 to 1995. Mr. Hayes served as
Treasurer and in a number of other executive positions with the Company from
1975 to 1980. Mr. Hayes was a partner with Hayes, Nyman & Co., certified public
accountants, from 1970 to 1975. Prior to 1970, Mr. Hayes was a certified public
accountant with Price Waterhouse for eight years.
BOARD OF DIRECTORS AND COMMITTEES
The Board currently has an Executive Committee, an Audit Committee, a
Finance Committee, a Corporate Responsibility Committee, a Personnel Committee,
and a Compensation Plan Subcommittee of the Personnel Committee, and may also
appoint other committees from time to time. There is currently no Nominating
Committee. There were five meetings of the Board of Directors during the last
fiscal year. Each director attended at least 75 percent of the total number of
meetings of the Board of Directors and committees on which he or she served,
except for Dr. Spence who attended 50 percent.
The Executive Committee of the Board is currently composed of Messrs.
Knight (Chairman), Clarke, and Houser. The Executive Committee is authorized to
act on behalf of the Board on all corporate actions for which applicable law
does not require participation by the full Board. In practice, the Executive
Committee acts in place of the full Board only when emergency issues or
scheduling make it difficult or impracticable to assemble the full Board. All
actions taken by the Executive Committee must be reported at the next Board
meeting. The Executive Committee held no formal meetings during
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the fiscal year ended May 31, 2001, but took actions from time to time pursuant
to written consent resolutions.
The Audit Committee is currently composed of Mr. Hayes (Chairman), Mr.
Houser and Dr. Spence. The Audit Committee reviews and makes recommendations to
the Board regarding services provided by the independent accountants, reviews
with the independent accountants the scope and results of their annual
examination of the Company's consolidated financial statements and any
recommendations they may have, and makes recommendations to the Board with
respect to the engagement or discharge of the independent accountants. The Audit
Committee also reviews the Company's procedures with respect to maintaining
books and records, the adequacy and implementation of internal auditing,
accounting and financial controls, and the Company's policies concerning
financial reporting and business practices. The Audit Committee met four times
during the fiscal year ended May 31, 2001.
The Finance Committee is currently composed of Messrs. Robinson (Chairman),
DeNunzio, and Hayes. The Finance Committee considers long-term financing options
and needs of the Company, long-range tax and currency issues facing the Company,
and management recommendations concerning major capital expenditures and
material acquisitions or divestments. The Finance Committee met five times
during the fiscal year ended May 31, 2001.
The Corporate Responsibility Committee is currently composed of Dr. Conway
(Chair), and Messrs. Donahue and Spence. The Corporate Responsibility Committee
reviews significant activities and policies regarding labor and environmental
practices, community affairs, charitable and foundation activities, diversity
and equal opportunity, and environmental and sustainability initiatives, and
makes recommendations to the Board of Directors. The Board established the
committee in June 2001.
The Personnel Committee is currently composed of Mr. DeNunzio (Chairman),
Dr. Conway, Mr. Jaqua, Dr. Spence and Mr. Thompson. The Personnel Committee
makes recommendations to the Board regarding officers' compensation, management
incentive compensation arrangements and profit sharing plan contributions. The
Personnel Committee met five times during the fiscal year ended May 31, 2001.
The Compensation Plan Subcommittee of the Personnel Committee is currently
composed of Dr. Spence and Mr. Jaqua. The Subcommittee grants stock options and
restricted stock bonuses under the NIKE, Inc. 1990 Stock Incentive Plan, and
determines targets and awards under the NIKE, Inc. Executive Performance Sharing
Plan and the NIKE, Inc. Long-Term Incentive Plan.
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DIRECTOR COMPENSATION AND RETIREMENT PLAN
Messrs. Knight and Clarke do not receive additional compensation for their
services as directors. Directors are reimbursed for travel and other expenses
incurred in attending Board meetings. No fee is paid for attending Compensation
Plan Subcommittee meetings. In fiscal 2000, directors made a one-time election
to be compensated under either:
(a) the previously existing method, which consists of a fee of $18,000
per year, plus $2,000 for each Board meeting attended, $1,000 for each
committee meeting attended, medical insurance, and $500,000 of life
insurance coverage, or
(b) a revised compensation method, which consists of a fee of $36,000
per year, plus $2,000 for each Board meeting attended, $1,000 for each
committee meeting attended, an annual grant of an option to purchase 1,000
shares of stock at the market price at grant, but no medical or life
insurance benefits while serving or after retirement.
Messrs. DeNunzio, Houser, and Spence elected the latter revised compensation,
and any new non-employee directors elected after fiscal 2000 will be compensated
in the revised fashion.
The Company has since 1989 provided certain retirement benefits to
non-employee directors who retire after serving for five years or more. The plan
has provided that after ten years of service by a director, the Company will
provide such director for the remainder of his or her life with $500,000 of life
insurance and medical insurance at the levels provided by the Company to all of
its employees at the time the director retires. The plan has also provided that
a director who has served for at least five years will receive an annual
retirement cash payment for life, commencing on the later of age 65 or the date
the director retires or ceases to be a member of the Board. The annual
retirement cash payment ranges from $9,000 for five years of service up to a
maximum of $18,000 for 10 or more years of service.
In fiscal 2000, in an effort to reduce future retirement obligations, the
Board of Directors approved a new retirement plan that allowed directors to make
a one-time election to waive their future rights to annual retirement cash
payments in exchange for a credit to a stock account under the Company's
Deferred Compensation Plan equal to the lump sum present value of the payments
based on the actuarial life expectancy of each director. The number of shares of
Class B Common Stock credited to each stock account was based on the market
price of the stock on September 1, 1999. The three directors that chose the
revised compensation method (b) above were required to opt for the new
retirement plan. All other directors, except for Messrs. Donahue and Robinson
elected the new plan. The number of shares of Class B Common Stock credited to
the stock accounts of each director was: Dr. Conway, 4,165; Mr. DeNunzio, 3,852;
Mr. Hayes, 4,217; Mr. Houser, 4,243; Mr. Jaqua, 2,610; Dr. Spence, 1,220; and
Mr. Thompson, 3,271. Any new non-employee directors elected after fiscal 2000
will not receive retirement benefits.
New directors elected after the 1993 fiscal year must retire at age 72.
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STOCK HOLDINGS OF CERTAIN OWNERS AND MANAGEMENT
The following table sets forth the number of shares of each class of NIKE
securities beneficially owned, as of July 15, 2001, by (i) each person known to
the Company to be the beneficial owner of more than 5 percent of any class of
the Company's securities, (ii) each of the nominees for director, (iii) each
executive officer listed in the Summary Compensation Table ("Named Officers"),
and (iv) all nominees, Named Officers, and other executive officers as a group.
Because Class A Stock is convertible into Class B Stock on a share-for-share
basis, each beneficial owner of Class A Stock is deemed by the Securities and
Exchange Commission to be a beneficial owner of the same number of shares of
Class B Stock. Therefore, in indicating a person's beneficial ownership of
shares of Class B Stock in the table, it has been assumed that such person has
converted into Class B Stock all shares of Class A Stock of which such person is
a beneficial owner. For these reasons the table contains substantial
duplications in the numbers of shares and percentages of Class A and Class B
Stock shown for Messrs. Hayes, Jaqua and Knight, and for all directors and
officers as a group.
SHARES
TITLE OF BENEFICIALLY PERCENT OF
CLASS OWNED(1) CLASS(2)
--------- ------------ ----------
Thomas E. Clarke(3).................. Class B 295,264(4)(5)(7)(8) 0.2%
Portland, Oregon
Jill K. Conway....................... Class B 71,962(9)
Boston, Massachusetts
Ralph D. DeNunzio.................... Class B 108,325(4)(9)
Riverside, Connecticut
Richard K. Donahue................... Class B 142,706 0.1%
Lowell, Massachusetts
Delbert J. Hayes..................... Class A 670,000 0.7%
Newberg, Oregon Class B 686,597(9) 0.4%
Douglas G. Houser.................... Class B 93,323(4)(9)
Portland, Oregon
John E. Jaqua........................ Class A 585,752
Eugene, Oregon Class B 588,411(9) 0.6%
Philip H. Knight(3).................. Class A 94,653,192(6) 95.5%
Beaverton, Oregon Class B 95,662,016(6)(7) 36.1%
Charles W. Robinson.................. Class B 350,000 0.2%
Santa Fe, New Mexico
A. Michael Spence.................... Class B 22,243(4)(9)
Palo Alto, CA
John R. Thompson, Jr. ............... Class B 49,833(4)(9)
Washington, D.C.
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SHARES
TITLE OF BENEFICIALLY PERCENT OF
CLASS OWNED(1) CLASS(2)
--------- ------------ ----------
Gary M. DeStefano(3)................. Class B 88,169(4)(5)(7)(8)
Beaverton, Oregon
Mark G. Parker(3).................... Class B 408,259(4)(5)(7)(8) 0.2%
Portland, Oregon
Ian T. Todd(3)....................... Class B 98,162(4)(7)
Beaverton, Oregon
Nissho Iwai American Corporation..... Preferred(10) 300,000 100.0%
Portland, Oregon
All directors and executive officers
as a group (21 persons)............ Class A 95,908,944 96.8%
Class B 99,094,924(4) 37.3%
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(1) A person is considered to beneficially own any shares: (a) over which the
person exercises sole or shared voting or investment power, or (b) of which
the person has the right to acquire beneficial ownership at any time within
60 days (such as through conversion of securities or exercise of stock
options). Unless otherwise indicated, voting and investment power relating
to the above shares is exercised solely by the beneficial owner or shared
by the owner and the owner's spouse or children.
(2) Omitted if less than 0.1 percent.
(3) Executive officer listed in the Summary Compensation Table.
(4) These amounts include the right to acquire, pursuant to the exercise of
stock options, within 60 days after July 15, 2001, the following numbers of
shares: 221,250 shares for Dr. Clarke, 1,000 shares for Mr. DeNunzio, 1,000
shares for Mr. Houser, 21,000 shares for Dr. Spence, 42,500 shares for Mr.
Thompson, 354,002 shares for Mr. Parker, 93,750 shares for Mr. Todd, 45,000
shares for Mr. DeStefano, and 1,070,377 shares for the executive officer
and director group.
(5) Includes shares held in account under the NIKE, Inc. Retirement Savings
Plan for Dr. Clarke and Messrs. DeStefano and Parker in the amounts of
2,213, 2,640, and 2,613 shares, respectively.
(6) Includes (a) 3,368,416 shares held by a limited partnership in which a
corporation owned by Mr. Knight's spouse is a co-general partner, (b)
65,224 shares owned by such corporation, (c) 1,000,000 shares held by the
Knight Foundation, a charitable trust in which Mr. Knight and his spouse
are directors, and (d) 1,950,000 shares held by Oak Hill Strategic
Partners, L.P. (formerly F.W. Strategic Partners, L.P.), a limited
partnership in which a company owned by Mr. Knight is a limited partner.
Mr. Knight has disclaimed ownership of all such shares.
(7) These amounts include 3,105, 3,105, 1,553, 1,553, and 1,553 restricted
shares granted to Dr. Clarke and Messrs. Knight, Parker, Todd, and
DeStefano, respectively, under NIKE, Inc. Long-Term Incentive Plan, as to
which the restrictions expire August 15, 2002, unless employment terminates
before that date, in which case the shares are forfeited. These amounts
also
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include 5,719, 5,719, 2,859, 2,859, and 2,859 restricted shares granted to
Dr. Clarke and Messrs. Knight, Parker, Todd, and DeStefano respectively,
under NIKE, Inc. Long-Term Incentive Plan, as to which the restrictions
expire August 15, 2003, unless employment terminates before that date, in
which case the shares are forfeited.
(8) These amounts include 48,157, 36,117, and 24,078 restricted shares granted
in March 2000 to Dr. Clarke and Messrs. Parker and DeStefano, respectively,
under NIKE, Inc. 1990 Stock Incentive Plan. The restrictions lapse with
respect to one-third of the shares on each of the first three anniversaries
of the grant date, unless employment terminates before that date, in which
case any remaining restricted shares are forfeited.
(9) Includes shares credited to accounts under the NIKE, Inc. Deferred
Compensation Plan in the following amounts: Dr. Conway, 4,244; Mr.
DeNunzio, 3,925; Mr. Hayes, 4,297; Mr. Houser, 4,323; Mr. Jaqua, 2,659; Dr.
Spence, 1,243; and Mr. Thompson, 3,333.
(10) Preferred Stock does not have general voting rights except as provided by
law, and under certain circumstances as provided in the Company's Restated
Articles of Incorporation, as amended.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors and executive officers, and persons who own more than 10 percent of a
registered class of the Company's equity securities, to file with the Securities
and Exchange Commission, the New York Stock Exchange and the Pacific Stock
Exchange initial reports of ownership and reports of changes in ownership of
Common Stock and other equity securities of the Company. Officers, directors and
greater than 10 percent shareholders are required by the regulations of the
Securities and Exchange Commission to furnish the Company with copies of all
Section 16(a) forms they file. To the Company's knowledge, based solely on
review of the copies of such reports furnished to the Company and written
representations that no other reports were required, during the fiscal year
ended May 31, 2001 all Section 16(a) filing requirements applicable to its
officers, directors and greater than 10 percent beneficial owners were complied
with, except as follows. The Company filed one report late for each of Dr.
Conway, Mr. DeNunzio, Mr. Hayes, Mr. Houser, Mr. Jaqua, Dr. Spence, and Mr.
Thompson, covering the initial crediting of shares of Class B Stock to their
accounts under the Deferred Compensation Plan in September 1999 and the
crediting of additional shares to their accounts for dividend reinvestments on
three dividend payment dates in fiscal year 2000. One report, covering the sale
of 352 shares in a retirement account was filed late for Mr. Hayes due to broker
error. Finally, one report, covering the sale of 20,000 shares was filed late
for Mr. Robinson as a result of the broker's administrative error.
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EXECUTIVE COMPENSATION
The following table discloses compensation awarded to, earned by, or paid
to the Company's Chief Executive Officer and its next four most highly
compensated executive officers for all services rendered by them in all
capacities to the Company and its subsidiaries during the fiscal year ended May
31, 2001 and the two preceding fiscal years.
SUMMARY COMPENSATION TABLE
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION RESTRICTED ------------
--------------------------------------- STOCK STOCK ALL OTHER
OTHER ANNUAL AWARDS OPTIONS LTIP COMPENSATION
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) COMPENSATION($) ($)(2) (#) PAYOUTS($) ($)(1)
--------------------------- ---- --------- --------- --------------- ---------- ------------ ---------- ------------
Philip H. Knight.......... 2001 1,300,000 663,000 -- -- 0 92,000 586,427(3)
Chairman, Chief 2000 1,205,300 1,330,651 -- -- 0 300,000 666,665
Executive Officer and 1999 1,115,000 892,000 -- -- 0 156,000 936,901
President
Thomas E. Clarke.......... 2001 1,100,000 448,800 103,509(5) -- 0 92,000 75,410(4)
President of New 2000 910,833 942,712 110,338 2,000,000 150,000 300,000 126,899
Business Ventures 1999 825,000 618,750 -- -- 60,000 156,000 357,306
Ian T. Todd............... 2001 1,091,667 334,050 -- -- 0 46,000 64,202
Vice President 2000 1,041,667 862,500 -- -- 50,000 150,000 129,826
Sports Marketing 1999 1,000,000 2,600,000 -- -- 100,000 78,000 137,789
Mark G. Parker............ 2001 772,756 256,169 -- -- 0 46,000 55,686(4)
President 2000 658,333 545,100 -- 1,500,000 105,000 150,000 84,994
NIKE Brand 1999 600,000 360,000 -- -- 52,500 78,000 32,854
Gary M. DeStefano......... 2001 501,042 153,319 -- - 0 46,000 32,924
President 2000 387,500 294,113 -- 1,000,000 60,000 150,000 47,520
USA Operations 1999 349,999 192,500 -- -- 30,000 78,000 16,969
---------------
(1) Includes contributions by the Company to the NIKE, Inc. Retirement Savings
Plan for the fiscal year ended May 31, 2001 in the amount of $12,385 each
for Dr. Clarke and Messrs. Parker and DeStefano, and $5,585 each for Messrs.
Knight and Todd. Also includes contributions by the Company to the Deferred
Compensation Plan for Messrs. Knight, Clarke, Todd, Parker and DeStefano of
$80,842, $61,526, $58,617, $41,688, and $20,539, respectively.
(2) Represents the value of restricted shares granted based on the closing
market price of the Class B Stock on the grant date. In fiscal 2000,
restricted stock grants were made to Dr. Clarke for 72,235 shares, Mr.
Parker for 54,176 shares, and Mr. DeStefano for 36,177 shares. The
restrictions lapse with respect to one third of the shares on each of the
first three anniversaries of the grant date, unless employment terminates
before that date, in which case any remaining restricted shares are
forfeited. Dividends on restricted shares are paid currently to the holders.
On May 31, 2001, the number of remaining restricted shares and the dollar
value of those shares based on the fair market value of $41.10 per share on
that date was 48,157 shares with a value of $1,979,253 for Dr. Clarke,
36,117 shares with a value of $1,434,409 for Mr. Parker, and 24,078 shares
with a value of $989,606 for Mr. DeStefano.
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(3) The Company paid $500,000 towards a portion of the annual premium for term
life insurance on the life of Mr. Knight pursuant to a "split dollar" plan.
The Company would be reimbursed for its payments from the proceeds of the
life insurance policies in the event Mr. Knight dies.
(4) Includes above-market interest on deferred compensation for Dr. Clarke and
Mr. Parker in the amount of $1,499 and $1,613, respectively, for the 2001
fiscal year.
(5) Includes forgiveness of $100,000 of a $500,000 loan in 1994 for a second
home, pursuant to an agreement that conditions such forgiveness on continued
employment with the Company.
OPTION GRANTS IN THE FISCAL YEAR ENDED MAY 31, 2001
There were no grants of stock options to the named executive officers
during Fiscal Year 2001.
AGGREGATED OPTION EXERCISES IN THE FISCAL YEAR
ENDED MAY 31, 2001 AND FISCAL YEAR-END OPTION VALUES
NUMBER OF UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT IN-THE-MONEY OPTIONS
SHARES FISCAL YEAR-END(#) AT FISCAL YEAR-END($)(1)
ACQUIRED ON VALUE --------------------------- ---------------------------
NAME EXERCISE(#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ----------- ----------- ------------- ----------- -------------
Philip H. Knight.......... 0 0 0 0 0 0
Thomas E. Clarke.......... 387,288 $12,783,995 177,500 152,500 $ 251,484 $754,453
Ian T. Todd............... 0 0 62,500 87,500 $ 83,828 $251,484
Mark G. Parker............ 61,056 $ 2,085,003 319,002 193,377 $4,164,382 $528,117
Gary M. DeStefano......... 49,000 $ 654,906 26,250 63,750 $ 100,594 $301,781
---------------
(1) Based on a fair market value as of May 31, 2001 of $41.10 per share. Values
are stated on a pre-tax basis.
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LONG-TERM INCENTIVE PLANS AWARDS IN FISCAL YEAR ENDED MAY 31, 2001
PERFORMANCE
OR OTHER PERIOD
UNTIL MATURATION
NAME OR PAYOUT(1) THRESHOLD($) TARGET($) MAXIMUM($)
---- ---------------- ------------ --------- ----------
Philip H. Knight....................... Fiscal Year 2003 40,000 400,000 600,000
Fiscal Year 2004 40,000 400,000 600,000
Thomas E. Clarke....................... Fiscal Year 2003 -- -- --
Fiscal Year 2004 -- -- --
Ian T. Todd............................ Fiscal Year 2003 20,000 200,000 300,000
Fiscal Year 2004 20,000 200,000 300,000
Mark G. Parker......................... Fiscal Year 2003 20,000 200,000 300,000
Fiscal Year 2004 20,000 200,000 300,000
Gary M. DeStefano...................... Fiscal Year 2003 20,000 200,000 300,000
Fiscal Year 2004 20,000 200,000 300,000
---------------
(1) The Compensation Plan Subcommittee established a series of performance
targets based on fiscal 2003 and 2004 revenues and earnings per share
corresponding to award payouts ranging from 10% to 150% of the target
awards. Participants will receive a payout at the highest percentage level
at which both performance targets are met, subject to the Committee's
discretion to reduce or eliminate any award based on Company or individual
performance. Under the terms of the awards, on August 15, 2003 and 2004 the
Company would issue in the name of each participant a number of shares of
Class B Stock with a value equal to the award payout based on the closing
price of the Class B Stock on that date on the New York Stock Exchange. The
shares will be 100% vested at that time. The Company's performance in fiscal
year 2001 corresponded to an LTIP payout of 23% of the target awards for
2001.
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Notwithstanding anything to the contrary set forth in any of the Company's
filings under the Securities Act of 1933 or the Securities Exchange Act of 1934,
the following Performance Graph and the Report of the Personnel Committee below
shall not be incorporated by reference into any such filings and shall not
otherwise be deemed filed under such acts.
PERFORMANCE GRAPH
The following graph demonstrates a five-year comparison of cumulative total
returns for NIKE's Class B Stock, the Standard & Poor's 500 Stock Index, and the
Standard & Poor's Footwear and Textiles-Apparel Indices. The graph assumes an
investment of $100 on May 31, 1996 in each of the Company's Common Stock, and
the stocks comprising the Standard & Poor's 500 Stock Index and the Standard &
Poor's Footwear and Textiles-Apparel Indices. Each of the indices assumes that
all dividends were reinvested.
COMPARISON OF 5-YEAR CUMULATIVE TOTAL RETURN AMONG NIKE, INC.,
S&P 500 INDEX, S&P FOOTWEAR INDEX AND S&P TEXTILES-APPAREL INDEX
(PERFORMANCE GRAPH)
S&P TEXTILES
NIKE, INC. S&P 500 S&P FOOTWEAR (APPAREL)
---------- ------- ------------ ------------
5/96 100 100 100 100
5/97 115.29 129.41 117.79 106.04
5/98 93.07 169.12 94.14 126.14
5/99 124.7 204.68 119.41 91.45
5/00 88.65 226.13 84.77 69.5
5/01 86 202.27 88.14 96.42
The Standard & Poor's Footwear Index consists of NIKE and Reebok
International. The Standard & Poor's Textiles-Apparel Index consists of Liz
Claiborne, Inc., Russell Corp., and VF Corp. The Standard & Poor's Footwear and
Textiles-Apparel Indices include companies in two major lines of business in
which the Company competes. The indices do not encompass all of the Company's
competitors, nor all product categories and lines of business in which the
Company is engaged. Because NIKE is part of the S&P Footwear Index, the price
and returns of NIKE stock affect this index.
The Stock Performance shown on the Graph above is not necessarily
indicative of future performance. The Company will not make nor endorse any
predictions as to future stock performance.
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REPORT OF THE PERSONNEL COMMITTEE OF THE BOARD
OF DIRECTORS ON EXECUTIVE COMPENSATION
The Personnel Committee of the Board of Directors (the "Committee"),
subject to the approval of the Board of Directors, determines the compensation
of the Company's five most highly compensated executive officers, including the
Chief Executive Officer, and oversees the administration of executive
compensation programs, except that stock option grants, and targets and awards
under the Executive Performance Sharing Plan and the Long-Term Incentive Plan,
are made by the Compensation Plan Subcommittee (the "Subcommittee"), which is
composed of outside directors.
Executive Compensation Policies and Programs. The Company's executive
compensation programs are designed to attract and retain highly qualified
executives and to motivate them to maximize shareholder returns by achieving
both short- and long-term strategic Company goals. The programs link each
executive's compensation directly to individual and Company performance. A
significant portion of each executive's total compensation is variable and
dependent upon the attainment of strategic and financial goals, individual
performance objectives, and the appreciation in value of the Common Stock.
There are three basic components to the Company's "pay for performance"
system: base pay; annual incentive bonus; and long-term, equity-based incentive
compensation. Each component is addressed in the context of individual and
Company performance, competitive conditions and equity among employees. In
determining competitive compensation levels, the Company analyzes information
from several independent surveys which include information regarding the general
industry as well as other consumer product companies. Since the Company's market
for executive talent extends beyond the sports industry, the survey data
includes global name-brand consumer product companies with sales in excess of $2
billion. A comparison of the Company's financial performance with that of the
companies and indices shown in the Performance Graph is only one of many factors
considered by the Committee to determine executive compensation.
Base Pay. Base pay is designed to be competitive, although conservative
(generally in the second or third quartile) as compared to salary levels for
equivalent executive positions at other global consumer product companies. An
executive's actual salary within this competitive framework will vary based on
responsibilities, experience, leadership, potential future contribution, and
demonstrated individual performance (measured against strategic management
objectives such as maintaining customer satisfaction, developing innovative
products, strengthening market share and profitability, and expanding the
markets for the Company's products). The types and relative importance of
specific financial and other business objectives vary among the Company's
executives depending on their positions and the particular operations or
functions for which they are responsible. The Company's philosophy and practice
is to place a relatively greater emphasis on the incentive components of
compensation.
Annual Incentive Bonus. Each executive is eligible to receive an annual
cash bonus under the Executive Performance Sharing Plan. The "target" level for
that bonus, like the base salary level, is set
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with reference to Company-wide bonus programs, as well as competitive
conditions. These target levels are intended to motivate the Company's
executives by providing substantial bonus payments for the achievement of
financial goals within the Company's business plan. An executive receives a
percentage of his or her target bonus depending on the extent to which the
Company achieves financial performance goals set by the Subcommittee, as
measured by the Company's net income before taxes. Bonuses may exceed the target
if the Company's performance exceeds the goal.
Long-Term, Equity-Based Incentive Compensation. The long-term equity-based
compensation program is tied directly to shareholder return. Under the current
program, long-term incentive compensation consists of stock options, 25% of
which vest in each of the four years after grant, and performance-based stock
under the Long-Term Incentive Plan ("LTIP").
Stock options are awarded with an exercise price equal to the fair market
value of the Class B Stock on the date of grant. Accordingly, the executive is
rewarded only if the market price of the Class B Stock appreciates. Since
options vest over time, the Company periodically grants new options to provide
continuing incentives for future performance. The size of previous grants and
the number of options held are considered by the Subcommittee, but are not
entirely determinative of future grants. Like base pay, the grant is set with
regard to competitive considerations, and each executive's actual grant is based
upon individual performance measured against the criteria described in the
preceding paragraphs and the executive's potential for future contributions.
Under the LTIP, the Subcommittee has established a series of performance
targets corresponding to awards of stock ranging from 10% to 150% of the target
awards. The performance targets are currently based on revenues and earnings per
share. The Company expects that future awards under the LTIP will be for
performance periods from between one to three years, in order to provide an
incentive to achieve the Company's longer-term performance goals. If performance
targets are achieved, the shares of stock issued to executives will be 100%
vested for payouts made after 2002.
Stock options and performance-based stock under the LTIP are designed to
align the interests of the Company's executives with those of shareholders by
encouraging executives to enhance the value of the Company and, hence, the price
of the Class B Stock and the shareholders' return. In addition, through deferred
vesting and three-year performance periods, this component of the compensation
system is designed to create an incentive for the individual executive to remain
with the Company.
Other Plans. The Company maintains combined profit sharing and 401(k)
retirement plans, a non-qualified Deferred Compensation Plan, and has proposed
an Employee Stock Purchase Plan. Under the profit sharing retirement plan, the
Company annually contributes to a trust on behalf of employees, including
executive officers, an amount that in the past five fiscal years has equaled an
annual contribution of between 3.29% to 6.94% of each employee's earnings. The
percentage is determined by the Board of Directors.
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For fiscal 2001, under the terms of the profit sharing plan, each employee,
including each executive officer, received a contribution to his or her plan
account of 3.29% of the employee's total salary and bonus up to $170,000, and an
additional 4.0% of the employee's total salary and bonus in excess of
approximately $80,400 and below $170,000. Under the terms of the Deferred
Compensation Plan, employees, including executive officers, whose total salary
and bonus exceeds $170,000 receive a supplemental profit sharing contribution
into a nonqualified deferred compensation account in an amount equal to the
additional contribution they would have received under the profit sharing plan
if not for the $170,000 cap on salary and bonus considered for purposes of that
plan as required under IRS regulations. Accordingly, those employees each
received supplemental contributions equal to 3.29% of their salary and bonus in
excess of $170,000. These profit sharing plans serve to retain employees and
executives, since funds do not fully vest until after five years of employment
with the Company.
Under the 401(k) retirement plan, the Company contributes up to 4% of each
employee's earnings as a matching contribution for pre-tax salary deferred into
the plan. This matching contribution is initially invested in Class B Stock,
which strengthens the linkage between employee and shareholder interests.
This year, the Company has proposed for shareholder approval an Employee
Stock Purchase Plan ("ESPP") that would qualify under Section 423 of the
Internal Revenue Code. See Proposal 2. The ESPP would allow employees to defer
up to 10% or $25,000 of their annual compensation for purchases of Class B
Stock. The stock would be purchased every six months at 85% of the lower of the
price of the stock at the beginning and end of the six-month period. The ESPP is
intended to encourage employee investment in the Company and to provide an
incentive for employees to increase shareholder returns.
Annual Reviews. Each year, the Committee reviews the executive compensation
policies with respect to the linkage between executive compensation and the
creation of shareholder value, as well as the competitiveness of the programs.
The Committee determines what changes, if any, are appropriate in the
compensation programs for the following year. In conducting the annual review,
the Committee considers information provided by Human Resources staff and uses
surveys and reports prepared by independent compensation consultants.
Each year, the Committee, with the Chairman and Human Resources staff,
reviews the individual performance of each of the other four most highly
compensated executive officers, and the Chairman's recommendations with respect
to the appropriate compensation levels and awards. The Subcommittee sets
performance and bonus targets, and certifies awards, under the Executive
Performance Sharing Plan and the LTIP, and makes stock option grants and
restricted stock awards. The Committee makes recommendations to the Board of
Directors for final approval of all other compensation matters. The Committee
also reviews with the Chairman and the Human Resources staff the financial and
other strategic objectives, such as those identified above, for each of the
named executive officers for the following year.
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For fiscal year 2001, the Company met targeted performance objectives set
for named executive officers sufficient for a payout under the Executive
Performance Sharing Plan and the LTIP. This resulted from increased
profitability due to aligning costs with revenues, and sales increases in key
product categories and markets, helping to offset reductions in others.
Furthermore, the Company's competitive position in the industry remained strong.
The Company's financial performance corresponded to bonuses of 51% of the
individual targeted bonuses under the Executive Performance Sharing Plan and 23%
of their individual targeted stock payouts under the LTIP.
Chief Executive Officer. In reviewing Mr. Knight's performance, the
Committee focused primarily on the Company's performance in fiscal year 2001,
which resulted in better earnings compared to the performance of the previous
year. The Committee noted continued progress toward the achievement of various
strategic objectives such as earnings growth, infrastructure expansion, and
growth in key product categories and regions outside the United States. The
Committee also considered the other factors and considerations described above.
Consistent with the plans, Mr. Knight received a bonus of $663,000 under the
Executive Performance Sharing Plan and an award of $92,000 worth of Class B
Stock under the LTIP. The Committee increased Mr. Knight's base salary for the
2002 fiscal year by 3.8 percent to $1,350,000. Mr. Knight received no stock
option awards.
Section 162(m) of the Internal Revenue Code. In 2000 shareholders amended
and re-approved the Executive Performance Sharing Plan, and in 1997 shareholders
approved the stock option plan and the LTIP. The plans are each designed to
satisfy the performance-based exception to the Section 162(m) limitation on
deductibility with respect to incentive compensation for named executive
officers, except that restricted stock bonuses granted in March 2000 will not
qualify as performance based.
Members of the Personnel Committee:
Ralph D. DeNunzio, Chairman
Jill K. Conway
John E. Jaqua*
A. Michael Spence*
John R. Thompson, Jr.
---------------
* Also members of the Compensation Plan Subcommittee.
PERSONNEL COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The members of the Personnel Committee of the Board of Directors during the
fiscal year ended May 31, 2001 are listed above. The Committee is composed
solely of non-employee directors. Mr. Jaqua serves as Secretary of the Company,
but is not an employee. During the fiscal year ended May 31, 2001,
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the Company paid Harbor Point Associates, Inc., of which director Ralph D.
DeNunzio is President, $91,667 for financial consulting services, and paid Dr.
Jill K. Conway $74,487 ($37,226 in cash, and 884 shares of Class B Stock valued
at $37,261) for consulting services rendered for labor relations and corporate
responsibility matters. The Company expects to pay Mr. DeNunzio, or his firm,
and Dr. Conway for additional consulting services that may be performed by them
for the Company during fiscal year 2002.
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT AND CHANGE-IN-CONTROL
ARRANGEMENTS
An agreement between the Company and President of New Business Ventures,
Dr. Thomas E. Clarke, contains a covenant not to compete that extends for one
year following the termination of his employment with the Company. The agreement
provides that if he voluntarily resigns, the Company will make monthly payments
to him during the one-year noncompetition period in an amount equal to one-half
of his last monthly salary. The agreement provides further that if his
employment is terminated by the Company, the Company will make monthly payments
to him during the one-year noncompetition period in an amount equal to his last
monthly salary. The Company may unilaterally waive the covenant not to compete.
If the covenant is waived, the Company will not be required to make the payments
described above for the months as to which the waiver applies.
The Company has a similar agreement with Vice President Mark G. Parker that
extends for one year following the termination of Mr. Parker's employment with
the Company. The agreement provides that if Mr. Parker voluntarily resigns, the
Company will make monthly payments to him during the one-year noncompetition
period in an amount equal to the greater of (i) $20,833 or (ii)
one-twenty-fourth of the total salary and bonuses received by Mr. Parker during
the 12-month period immediately preceding his resignation. The agreement
provides further that if Mr. Parker's employment is terminated by the Company,
the Company will make monthly payments to him during the one-year noncompetition
period in an amount equal to the greater of (i) $41,667 or (ii) one-twelfth of
the total salary and bonuses received by Mr. Parker during the 12-month period
immediately preceding his termination. If Mr. Parker is terminated without
cause, the parties may mutually agree to waive the covenant not to compete, and
if Mr. Parker is terminated for cause, the Company may unilaterally waive the
covenant. If the covenant is waived, the Company will not be required to make
the payments described above for the months as to which the waiver applies.
The Company has an employment agreement and a covenant not to compete with
Vice President Ian T. Todd, pursuant to which Mr. Todd is to receive minimum
annual salary increases of five percent, and a target bonus of 60 percent of his
annual salary. Mr. Todd will also be granted an option to purchase 25,000 shares
of Class B Stock each year during the term of his contract, which expires July
31, 2004. Company has guaranteed a minimum level of appreciation in such options
during the employment contract period. In the event the appreciation of vested
options is less than an amount computed assuming a 10% per annum increase in
share value, the Company will pay a cash bonus on July 31, 2004
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equal to the shortfall. The options generally vest with respect to 25% of each
option on the first four anniversaries of the option. If Mr. Todd's employment
is terminated without cause before any of the options completely vest, the
remaining unvested portion of all options granted to Mr. Todd during the term of
his employment contract will vest and the options will terminate on July 31,
2004. In that event, the Company's guarantee of appreciation described above
would still apply. In addition, if Mr. Todd's employment with the Company is
terminated without cause, the Company will pay to Mr. Todd as severance, upon
the satisfaction of certain conditions, an amount equal to 24 months' of Mr.
Todd's base salary. His covenant not to compete extends for one year following
the termination of his employment with the Company.
CERTAIN TRANSACTIONS AND BUSINESS RELATIONSHIPS
During the fiscal year ended May 31, 2001, the Company paid Harbor Point
Associates, Inc., of which director Ralph D. DeNunzio is President, $91,667 for
financial consulting services, and paid Dr. Jill K. Conway $74,487 ($37,226 in
cash, and 884 shares of Class B Stock valued at $37,261) for consulting services
rendered for labor and corporate responsibility matters. The Company expects to
pay Mr. DeNunzio, or his firm, and Dr. Conway for additional consulting services
that may be performed by them for the Company during fiscal year 2002.
Mr. Knight makes his airplane available for business use by the Company for
no charge. NIKE operates and maintains the aircraft. During fiscal 2001, Mr.
Knight reimbursed the Company $63,439 for NIKE's operating costs related to his
personal use of this aircraft.
INDEBTEDNESS OF MANAGEMENT
In 1994 the Company loaned $500,000 at 5.65% per annum to President of New
Business Ventures Thomas E. Clarke for the purchase of a second home. The loan
is secured by the second home, and must be repaid within 180 days following
termination of employment. As an inducement to remain employed by the Company,
the Company has agreed to forgive $100,000 of the loan commencing January 1,
2000 and on each of the four anniversary dates thereafter, provided that Dr.
Clarke remains employed by the Company.
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PROPOSAL 2
APPROVAL OF THE NIKE, INC. EMPLOYEE STOCK PURCHASE PLAN
The Company's Employee Stock Purchase Plan (the "ESPP") is intended to
provide a convenient and practical means by which employees may participate in
stock ownership of the Company. The Board of Directors believes that the
opportunity to acquire a proprietary interest in the success of the Company
through the acquisition of shares of Class B Stock pursuant to the ESPP will be
an important aspect of the Company's ability to attract and retain highly
qualified and motivated employees. Accordingly, the Board has approved the ESPP,
subject to shareholder approval.
The complete text of the ESPP is attached to this proxy statement as
Exhibit A. The following description of the ESPP is a summary of certain
provisions and is qualified in its entirety by reference to Exhibit A.
DESCRIPTION OF THE ESPP
Shares Reserved for the ESPP. A total of 3,000,000 shares of Class B Stock
are reserved under the ESPP for issuance to participating employees. The number
of shares reserved under the ESPP is subject to adjustment in the event of stock
dividends, reverse or forward stock splits, combinations of shares,
recapitalizations or other changes in the outstanding Class B Stock.
Eligibility. All active employees of the Company and its participating
subsidiaries are eligible to participate in the ESPP, except for the following:
(a) any employee who has been employed less than one month when an offering
commences, (b) any employee whose customary employment is less than 20 hours per
week, and (c) any employee who would, immediately after an offering, and after
including the number of shares that could be purchased in that offering, own or
be deemed to own five percent or more of the voting power or value of all
classes of stock of the Company or any subsidiary of the Company.
ESPP Offerings. The ESPP shall be implemented by a series of six-month
offerings, with a new offering commencing on April 1 and October 1 of each year
beginning with October 1, 2001. The first day of each offering is the "offering
date" for that offering and the last day of each offering is the "purchase date"
for that offering. An employee may purchase shares only through payroll
deductions permitted under the ESPP. Payroll deductions must be not less than 1%
or more than 10% of the participant's compensation.
The maximum number of shares that any participant may purchase in any
single offering is 1,000 shares. In addition, the terms of an offering may not
allow an employee's right to purchase shares under all stock purchase plans of
the Company and its subsidiaries to which Section 423 of the Internal Revenue
Code of 1986, as amended (the "Code"), applies to accrue at a rate that exceeds
$25,000 of
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fair market value of shares, as determined on the offering date, for each
calendar year in which the offering is outstanding.
Purchase Price. The price at which shares may be purchased in an offering
will be the lower of (a) 85 percent of the fair market value of a share of Class
B Stock on the offering date of the offering or (b) 85 percent of the fair
market value of a share of Class B Stock on the purchase date of the offering.
The fair market value of a share of Class B Stock on any date will be the
closing price on the immediately preceding trading day of the Class B Stock on
the New York Stock Exchange or, if the Class B Stock is not traded on the New
York Stock Exchange, such other reported value of the Class B Stock as may be
specified by the Board of Directors.
Termination and Amendment. The ESPP will terminate when all of the shares
reserved for purposes of the ESPP have been purchased, provided that the Board
of Directors in its sole discretion may terminate the ESPP at any time. The
Board may at any time amend the ESPP in any and all respects, provided that
without shareholder approval, the Board may not increase the number of shares
reserved for the ESPP or decrease the purchase price of shares offered pursuant
to the ESPP.
TAX CONSEQUENCES
The ESPP is intended to qualify as an "employee stock purchase plan" within
the meaning of Section 423 of the Code. Under the Code, employees will not
recognize taxable income or gain with respect to shares purchased under the ESPP
either at the offering date or the purchase date of an offering. If an employee
disposes of shares purchased under the ESPP more than two years after the
offering date, or in the event of the employee's death at any time, the employee
or the employee's estate generally will be required to report as ordinary
compensation income for the taxable year of disposition or death an amount equal
to the lesser of (a) the excess of the fair market value of the shares at the
time of disposition or death over the applicable purchase price, or (b) 15
percent of the fair market value of the shares on the offering date. In the case
of such a disposition or death, the Company will not be entitled to any
deduction from income. Any gain on the disposition in excess of the amount
treated as ordinary compensation income generally will be capital gain.
If an employee disposes of shares purchased under the ESPP within two years
after the offering date, the employee generally will be required to report the
excess of the fair market value of the shares on the purchase date over the
applicable purchase price as ordinary compensation income for the year of
disposition. If the disposition is by sale, any difference between the fair
market value of the shares on the purchase date and the disposition price
generally will be capital gain or loss. In the event of a disposition within two
years after the offering date, subject to certain limitations such as the
$1,000,000 cap on deductibility under Section 162(m) of the Code, the Company
generally will be entitled to a deduction from income in the year of such
disposition equal to the amount the employee is required to report as ordinary
compensation income.
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RECOMMENDATION OF THE BOARD
The Board of Directors recommends that shareholders vote FOR approval of
the ESPP. Holders of Class A Stock and Class B Stock will vote together as a
single class on Proposal 2. If holders of a majority of the shares of Common
Stock vote on the proposal, Proposal 2 will be adopted if the votes cast in
favor of the proposal exceed the votes cast against the proposal. Accordingly,
abstentions and broker non-votes will have no effect on the results of the vote.
PROPOSAL 3
SHAREHOLDER PROPOSAL
John C. Harrington, P.O. Box 6108, Napa, California 94581-1108, a holder of
100 shares of Class B Stock, submitted the following resolution (the
"Proposal"), for the reasons stated. The Board of Directors recommends a vote
AGAINST the Proposal and asks shareholders to read through NIKE's response,
which follows the shareholder proposal.
US BUSINESS PRINCIPLES FOR HUMAN RIGHTS OF WORKERS IN CHINA
WHEREAS: our company's business practices in China respect human and labor
rights of workers. The eleven principles below were designed to commit a company
to a widely accepted and thorough set of human and labor rights standards for
China. They were defined by the International Labor Organization and the United
Nations Covenants on Economic, Social and Cultural Rights, and Civil, and
Political Rights. They have been signed by the Chinese government and China's
national laws.
(1) No goods or products produced within our company's facilities or
those of suppliers shall be manufactured by bonded labor, forced labor,
within prison camps or as part of reform-through-labor or
reeducation-through-labor programs.
(2) Our facilities and suppliers shall adhere to wages that meet
workers' basic needs, fair and decent working hours, and at a minimum, to
the wage and hour guidelines provided by China's national labor laws.
(3) Our facilities and suppliers shall prohibit the use of corporal
punishment, any physical, sexual or verbal abuse or harassment of workers.
(4) Our facilities and suppliers shall use production methods that do
not negatively affect the worker's occupational safety and health.
(5) Our facilities and suppliers shall not call on police or military
to enter their premises to prevent workers from exercising their rights.
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(6) We shall undertake to promote the following freedoms among our
employees and the employees of our suppliers: freedom of association and
assembly, including the rights to form unions and bargain collectively;
freedom of expression, and freedom from arbitrary arrest or detention.
(7) Company employees and those of our suppliers shall not face
discrimination in hiring, remuneration or promotion based on age, gender,
marital status, pregnancy, ethnicity or region of origin.
(8) Company employees and those of our suppliers shall not face
discrimination in hiring, remuneration or promotion based on labor,
political or religious activity, or on involvement in demonstrations, past
records of arrests or internal exile for peaceful protest, or membership in
organizations committed to non-violent social or political change.
(9) Our facilities and suppliers shall use environmentally responsible
methods of production that have minimum adverse impact on land, air and
water quality.
(10) Our facilities and suppliers shall prohibit child labor, at a
minimum comply with guidelines on minimum age for employment within China's
national labor laws.
(11) We will issue annual statements to the Human Rights for Workers
in China Working Group detailing our efforts to uphold these principles and
to promote these basic freedoms.
RESOLVED: Stockholders request the Board of Directors to make all possible
lawful efforts to implement and/or increase activity on each of the principles
named above in the People's Republic of China.
SUPPORTING STATEMENT: As U.S. companies import more goods, consumer and
shareholder concern is growing about working conditions in China that fall below
basic standards of fair and humane treatment. We hope that our company can prove
to be a leader in its industry and embrace these principles.
RECOMMENDATION OF THE BOARD
The Board of Directors recommends a vote AGAINST adoption of the Proposal
for the following reasons:
NIKE supports the general intent of the Proposal, but believes that it
already has a Code of Conduct that addresses most of the principles contained in
the Proposal that the Company can legally comply with in China. Also, there are
elements of the proposal that are vague and so sweeping in nature that
compliance would be difficult or impossible to measure.
NIKE is committed to operating in full compliance with applicable laws in
every country in which it does business, including China, and requires the same
compliance of its contract manufacturers.
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NIKE was among the first in the industry to establish standards for labor
practices and environmental responsibility in the numerous countries in which
its products are manufactured. These standards and principles are embodied in
the NIKE Code of Conduct, first established in 1992. NIKE has regularly revised,
improved and expanded the Code of Conduct as it has been able to raise levels of
compliance in its contract factories. The Code's requirements frequently exceed
the requirements of local laws in many countries, and in many instances impose
standards that are higher than those stated in the Proposal.
The Board believes the Proposal is redundant because NIKE's Code of Conduct
already prohibits the use of forced labor or child labor, and requires employers
to respect the dignity of workers. Moreover, NIKE works with its contractors on
safety standards, and has adopted specific exposure limit standards for indoor
factory air quality (or their equivalent) established by U.S. OSHA.
Since 1992, the Company has invested significant resources to develop its
own internal system to monitor compliance with the Code of Conduct, and to work
with external auditing partners, and, more recently, international
non-governmental organizations to collect data directly from workers to help
enforce the Code.
In addition, some parts of the Proposal are vague and overbroad, and lack
clear standards, such as requiring wages that meet workers' "basic needs,"
requiring production methods that do not "negatively affect" worker health and
have "minimum adverse impact" on land, air and water quality, and "promoting"
enumerated freedoms.
The Proposal also calls for contradictory actions. It requires an employer
to comply with the law of the country in which it operates, but also requires
that the employer promote the right to form unions and establish collective
bargaining -- actions which are illegal in China. Further, since NIKE does not
control the state in China, nor its police, the Company is not in a position to
guarantee workers freedom from arrest or detention. Where rights of free
association and collective bargaining are illegal, NIKE has successfully used
worker opinion surveys conducted by independent non-governmental organizations
to provide necessary information to NIKE and factory management about workers'
needs and desires.
But, in the spirit of the proponent of the Proposal, NIKE has, in the past
three years,
- raised the minimum age for workers to 18 years for its contract footwear
factories and 16 for its apparel factories.
- sponsored, with its factory partners, loan programs for workers to
provide capital for small businesses in factory communities, and free
education for workers seeking to improve their quality of life.
- improved the air quality in factories by developing and introducing safe
water-based glues to replace petroleum-based glues in shoe production.
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- worked with the Global Alliance for Workers and Communities to assess
worker sentiments and needs in factories in Thailand, Vietnam and
Indonesia, and developed remediation plans to meet worker concerns about
conditions and benefits such as education or health care. The Global
Alliance will undertake similar survey research in China. See
www.theglobalalliance.org.
- made significant investments in community youth sports development
programs in China, including building or making available high quality
youth sports facilities and organizing and funding youth sports programs.
The Board encourages shareholders to obtain more information about these
programs and the NIKE Code of Conduct, and also to take a look inside a factory
at www.nikebiz.com/social.
Although the Board agrees with the concerns for worker welfare expressed,
the Board believes that adoption of the Proposal as currently worded would be
counterproductive because of its redundancy with the Code of Conduct, vague and
conflicting requirements, and the potential to divert valuable resources from
Code of Conduct compliance monitoring. Accordingly, the Board recommends a vote
AGAINST the Proposal.
Holders of Class A Stock and Class B Stock will vote together as a single
class on Proposal 3. If holders of a majority of the shares of Common Stock vote
on the proposal, Proposal 3 will be adopted if the votes cast in favor of the
proposal exceed the votes cast against the proposal. Accordingly, abstentions
and broker non-votes will have no effect on the results of the vote.
PROPOSAL 4
RATIFICATION OF INDEPENDENT ACCOUNTANTS
The Board of Directors of the Company, upon recommendation of its Audit
Committee, has appointed PricewaterhouseCoopers LLP as independent accountants
to examine the Company's consolidated financial statements for the fiscal year
ending May 31, 2002 and to render other professional services as required.
The Board of Directors is submitting the appointment of
PricewaterhouseCoopers LLP to shareholders for ratification.
PricewaterhouseCoopers has served as independent accountants to the Company
since 1971. Representatives of PricewaterhouseCoopers will be present at the
Annual Meeting and are expected to be available to respond to questions.
Notwithstanding anything to the contrary set forth in any of the Company's
filings under the Securities Act of 1933 or the Securities Exchange Act of 1934,
the following Report of the Audit Committee shall not be incorporated by
reference into any such filings and shall not otherwise be deemed filed under
such acts.
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REPORT OF THE AUDIT COMMITTEE
The Audit Committee has:
- Reviewed and discussed the audited financial statements with management.
- Discussed with the independent auditors the matters required to be
discussed by SAS 61.
- Received the written disclosures and the letter from the independent
auditors required by Independence Standards Board Standard No. 1, and has
discussed with the independent auditors the auditors' independence.
- Based on the review and discussions above, 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 last fiscal year for filing
with the Securities and Exchange Commission.
- Considered whether the provision by the principal accountant of
professional services other than for the audit of the Company's financial
statements is compatible with maintaining the principal accountant's
independence, and determined that it is compatible.
The Board of Directors has determined that the members of the Audit
Committee are independent. The Audit Committee has adopted a written charter.
Members of the Audit Committee:
Delbert J. Hayes, Chairman
Douglas G. Houser
A. Michael Spence
Aggregate fees billed for professional services rendered by the Company's
principal accountants, PricewaterhouseCoopers LLP, for the most recent fiscal
year:
Audit Fees........................................ $ 1.7 million
Financial Information Systems
Design and Implementation....................... $ 4.7 million
All Other Fees.................................... $15.2 million
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Total................................... $21.6 million
OTHER MATTERS
As of the time this proxy statement was printed, management was unaware of
any proposals to be presented for consideration at the Annual Meeting other than
those set forth herein, but if other matters do properly come before the Annual
Meeting, the persons named in the proxy will vote the shares represented by such
proxy according to their best judgment.
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SHAREHOLDER PROPOSALS
A proposal by a shareholder for inclusion in the Company's proxy statement
and form of proxy for the 2002 annual meeting of shareholders must be received
by John F. Coburn III, Assistant Secretary of NIKE, at One Bowerman Drive,
Beaverton, Oregon 97005-6453, on or before April 12, 2002 in order to be
eligible for inclusion. Rules under the Securities Exchange Act of 1934 describe
standards as to the submission of shareholder proposals. In addition, the
Company's bylaws require that any shareholder wishing to make a nomination for
Director, or wishing to introduce a proposal or other business at a shareholder
meeting must give the Company at least 60 days' advance written notice, and that
notice must meet certain requirements described in the bylaws.
A COPY OF NIKE'S 2001 ANNUAL REPORT ON FORM 10-K WILL BE AVAILABLE TO
SHAREHOLDERS WITHOUT CHARGE UPON REQUEST TO: INVESTOR RELATIONS, NIKE, INC., ONE
BOWERMAN DRIVE, BEAVERTON, OREGON 97005-6453.
For the Board of Directors
JOHN E. JAQUA
SECRETARY
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EXHIBIT A
NIKE, INC. EMPLOYEE STOCK PURCHASE PLAN
1. Purpose of the Plan. NIKE, Inc. (the "Company") believes that ownership
of shares of its common stock by employees of the Company and its Participating
Subsidiaries (as defined below) is desirable as an incentive to better
performance and improvement of profits, and as a means by which employees may
share in the rewards of growth and success. The purpose of the Company's
Employee Stock Purchase Plan (the "Plan") is to provide a convenient means by
which employees of the Company and Participating Subsidiaries may purchase the
Company's shares through payroll deductions and a method by which the Company
may assist and encourage such employees to become share owners.
2. Shares Reserved for the Plan. There are 3,000,000 shares of the
Company's authorized but unissued or reacquired Class B Common Stock reserved
for purposes of the Plan. The number of shares reserved for the Plan is subject
to adjustment in the event of any stock dividend, stock split, combination of
shares, recapitalization or other change in the outstanding Class B Common Stock
of the Company. The determination of whether an adjustment shall be made and the
manner of any such adjustment shall be made by the Board of Directors of the
Company, which determination shall be conclusive.
3. Administration of the Plan. The Plan shall be administered by or under
the direction of the Personnel Committee of the Board of Directors, which may
delegate some or all of its duties and authority to one or more Company
employees. The Personnel Committee may promulgate rules and regulations for the
operation of the Plan, adopt forms for use in connection with the Plan, and
decide any question of interpretation of the Plan or rights arising thereunder.
The Personnel Committee may consult with counsel for the Company on any matter
arising under the Plan. All determinations and decisions of the Personnel
Committee shall be conclusive.
4. Eligible Employees. All Eligible Employees (as defined below) of the
Company and all Eligible Employees of each corporate subsidiary of the Company
that is designated by the Board of Directors of the Company as a participant in
the Plan (such participating subsidiary being hereinafter called a
"Participating Subsidiary") are eligible to participate in the Plan. An
"Eligible Employee" is an employee who has been employed by the Company or a
Participating Subsidiary for at least one full month prior to the Offering Date
(as defined below) excluding, however, (a) any employee whose customary
employment is less than 20 hours per week, and (b) any employee who would, after
a purchase of shares under the Plan, own or be deemed (under Section 424(d) of
the Internal Revenue Code of 1986, as amended (the "Code")) to own stock
(including stock subject to any outstanding options held by the employee)
possessing 5 percent or more of the total combined voting power or value of all
classes of stock of the Company or any parent or subsidiary of the Company.
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5. Offerings.
(a) Offering and Purchase Dates. The Plan shall be implemented by a series
of six-month offerings (the "Offerings"), with a new Offering commencing on
April 1 and October 1 of each year beginning with October 1, 2001. Each Offering
commencing on April 1 of any year shall end on September 30 of that year, and
each Offering commencing on October 1 of any year shall end on March 31 of the
following year. The first day of each Offering is the "Offering Date" for that
Offering and the last day of each Offering is the "Purchase Date" for that
Offering.
(b) Grants; Limitations. On each Offering Date, each Eligible Employee
shall be granted an option under the Plan to purchase shares of Class B Common
Stock on the Purchase Date for the Offering for the price determined under
paragraph 7 of the Plan exclusively through payroll deductions authorized under
paragraph 6 of the Plan; provided, however, that (i) no option shall permit the
purchase of more than 1,000 shares, and (ii) no option may be granted under the
Plan that would allow an employee's right to purchase shares under all stock
purchase plans of the Company and its parents and subsidiaries to which Section
423 of the Code applies to accrue at a rate that exceeds $25,000 of fair market
value of shares (determined at the date of grant) for each calendar year in
which such option is outstanding.
6. Participation in the Plan.
(a) Initiating Participation. An Eligible Employee may participate in an
Offering under the Plan by filing with the Company a subscription and payroll
deduction authorization on a form furnished by the Company. The subscription and
payroll deduction authorization must be filed no later than the "Subscription
Deadline," which shall be a number of days prior to the Offering Date with the
exact number of days being established from time to time by the Personnel
Committee by written notice to Eligible Employees. Once filed, a subscription
and payroll deduction authorization shall remain in effect unless amended or
terminated, and upon the expiration of an Offering the participants in that
Offering will be automatically enrolled in the new Offering starting the
following day. The payroll deduction authorization will authorize the employing
corporation to make payroll deductions in an amount designated by the
participant from each of the participant's paychecks during the Offering. The
designated amount to be deducted from each paycheck must be a whole percentage
of not less than one percent or more than 10 percent of the participant's
Compensation (as defined below) for the period covered by the paycheck. If
payroll deductions are made by a Participating Subsidiary, that corporation will
promptly remit the amount of the deductions to the Company.
(b) Definition of Compensation. "Compensation" means the participant's pay
reportable on IRS Form W-2 (under Section 3401(a) of the Code), adjusted as
follows:
(i) Before-tax contributions to a non-qualified deferred compensation
arrangement, contributions to a plan qualified under Section 401(k) of the
Code, and any amounts set aside by the
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participant from otherwise taxable pay under a welfare benefit plan
qualified under Section 125 of the Code shall be included.
(ii) Expense reimbursements, disability benefits, payments from a
nonqualified deferred compensation arrangement, stock option income, and
adjustments for overseas employment (other than any transfer premium) shall
be excluded.
(iii) Any payment representing excess vacation or paid time-off
accruals (where such excess represents vacation or time-off not taken)
shall be excluded.
(c) Amending Participation. After a participant has begun participating in
the Plan by initiating payroll deductions, the participant may amend the payroll
deduction authorization (i) once during any Offering to decrease the amount of
payroll deductions, and (ii) effective for the first paycheck of a new Offering
to either increase or decrease the amount of payroll deductions. In addition, if
the amount of payroll deductions from any participant during an Offering exceeds
the maximum amount that can be applied to purchase shares in that Offering under
the limitations set forth in paragraph 5(b) above, then (x) as soon as
practicable following a written request from the participant, payroll deductions
from the participant shall cease and all such excess amounts shall be refunded
to the participant, and (y) payroll deductions from the participant shall
restart as of the commencement of the next Offering at the rate set forth in the
participant's then effective payroll deduction authorization. A permitted change
in payroll deductions shall be effective for any paycheck only if written notice
is received by the Company at least 10 business days prior to the payday for
that paycheck.
(d) Terminating Participation. After a participant has begun participating
in the Plan by initiating payroll deductions, the participant may terminate
participation in the Plan by written notice received by the Company at least
some number of days prior to a Purchase Date, with the exact number of days
being established from time to time by the Personnel Committee by written notice
to participants. Participation in the Plan shall also terminate when a
participant ceases to be an Eligible Employee for any reason, including death or
retirement. A participant may not reinstate participation in the Plan with
respect to a particular Offering after once terminating participation in the
Plan with respect to that Offering. Upon termination of a participant's
participation in the Plan, all amounts deducted from the participant's
Compensation and not previously used to purchase shares under the Plan shall be
returned to the participant.
7. Option Price. The price at which shares shall be purchased in an
Offering shall be the lower of (a) 85% of the fair market value of a share of
Class B Common Stock on the Offering Date of the Offering or (b) 85% of the fair
market value of a share of Class B Common Stock on the Purchase Date of the
Offering. The fair market value of a share of Class B Common Stock on any date
shall be the closing price on the immediately preceding trading day of the Class
B Common Stock on the New York Stock Exchange or, if the Class B Common Stock is
not traded on the New York Stock Exchange, such other reported value of the
Class B Common Stock as shall be specified by the Board of Directors.
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8. Purchase of Shares. All amounts withheld from the Compensation of a
participant shall be credited to his or her account under the Plan. No interest
will be paid on such accounts, unless otherwise determined by the Board of
Directors. On each Purchase Date, the amount of the account of each participant
will be applied to the purchase of shares (including fractional shares) by such
participant from the Company at the price determined under paragraph 7 above.
Any cash balance remaining in a participant's account after a Purchase Date as a
result of the limitations set forth in paragraph 5(b) above shall be repaid to
the participant.
9. Delivery and Custody of Shares. Shares purchased by participants
pursuant to the Plan will be delivered to and held in the custody of such
investment or financial firm (the "Custodian") as shall be appointed by the
Personnel Committee. The Custodian may hold in nominee or street name
certificates for shares purchased pursuant to the Plan, and may commingle shares
in its custody pursuant to the Plan in a single account without identification
as to individual participants. By appropriate instructions to the Custodian, a
participant may from time to time sell all or part of the shares held by the
Custodian for the participant's account at the market price at the time the
order is executed. If a participant desires to sell all of the shares in his or
her account, the Custodian or the Company will purchase any fraction of a share
in the account at the same price per share that the whole shares are sold on the
market. By appropriate instructions to the Custodian, a participant may obtain
(a) transfer into the participant's own name of all or part of the whole shares
held by the Custodian for the participant's account and delivery of such whole
shares to the participant, or (b) transfer of all or part of the whole shares
held for the participant's account by the Custodian to a regular individual
brokerage account in the participant's own name, either with the firm then
acting as Custodian or with another firm; provided, however, that no shares may
be transferred under (a) or (b) until two years after the Offering Date of the
Offering in which the shares were purchased.
10. Records and Statements. The Custodian will maintain the records of the
Plan. As soon as practicable after each Purchase Date each participant will
receive a statement showing the activity of his or her account since the
preceding Purchase Date and the balance on the Purchase Date as to both cash and
shares. Participants will be furnished such other reports and statements, and at
such intervals, as the Personnel Committee shall determine from time to time.
11. Expense of the Plan. The Company will pay all expenses incident to
operation of the Plan, including costs of record keeping, accounting fees, legal
fees, commissions and issue or transfer taxes on purchases pursuant to the Plan,
on dividend reinvestments and on delivery of shares to a participant or into his
or her brokerage account. The Company will not pay expenses, commissions or
taxes incurred in connection with sales of shares by the Custodian at the
request of a participant. Expenses to be paid by a participant will be deducted
from the proceeds of sale prior to remittance.
12. Rights Not Transferable. The right to purchase shares under this Plan
is not transferable by a participant, and such right is exercisable during the
participant's lifetime only by the participant. Upon the death of a participant,
any cash withheld and not previously applied to purchase shares, together with
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any shares held by the Custodian for the participant's account shall be
transferred to the persons entitled thereto under the laws of the state of
domicile of the participant upon a proper showing of authority.
13. Dividends and Other Distributions; Reinvestment. Stock dividends and
other distributions in shares of Class B Common Stock of the Company on shares
held by the Custodian shall be issued to the Custodian and held by it for the
account of the respective participants entitled thereto. Cash distributions
other than dividends, if any, on shares held by the Custodian will be paid
currently to the participants entitled thereto. Cash dividends, if any, on
shares held by the Custodian will be reinvested in Class B Common Stock on
behalf of the participants entitled thereto. The Custodian shall establish a
separate account for each participant for the purpose of holding shares acquired
through reinvestment of the participant's dividends. On each dividend payment
date, the Custodian shall receive from the Company the aggregate amount of
dividends payable with respect to all shares held by the Custodian for
participants' accounts under the Plan. As soon as practicable thereafter, the
Custodian shall use all of the funds so received to purchase shares of Class B
Common Stock in the public market, and shall then allocate such shares
(including fractional shares) among the dividend reinvestment accounts of the
participants pro rata based on the amount of dividends reinvested for each
participant. A participant may sell or transfer shares in the participant's
dividend reinvestment account in accordance with paragraph 9 above, except that
there shall be no holding period required for a transfer from a dividend
reinvestment account.
14. Voting and Shareholder Communications. In connection with voting on any
matter submitted to the shareholders of the Company, the Custodian will cause
the shares held by the Custodian for each participant's accounts to be voted in
accordance with instructions from the participant or, if requested by a
participant, furnish to the participant a proxy authorizing the participant to
vote the shares held by the Custodian for his or her accounts. Copies of all
general communications to shareholders of the Company will be sent to
participants in the Plan.
15. Tax Withholding. Each participant who has purchased shares under the
Plan shall immediately upon notification of the amount due, if any, pay to the
Company in cash amounts necessary to satisfy any applicable federal, state and
local tax withholding determined by the Company to be required. If the Company
determines that additional withholding is required beyond any amount deposited
at the time of purchase, the participant shall pay such amount to the Company on
demand. If the participant fails to pay the amount demanded, the Company may
withhold that amount from other amounts payable by the Company to the
participant, including salary, subject to applicable law.
16. Responsibility and Indemnity. Neither the Company, its Board of
Directors, the Personnel Committee, the Custodian, any Participating Subsidiary,
nor any member, officer, agent, or employee of any of them, shall be liable to
any participant under the Plan for any mistake of judgment or for any omission
or wrongful act unless resulting from gross negligence, willful misconduct or
intentional misfeasance. The Company will indemnify and save harmless its Board
of Directors, the Personnel Committee, the Custodian and any such member,
officer, agent or employee against any claim, loss,
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liability or expense arising out of the Plan, except such as may result from the
gross negligence, willful misconduct or intentional misfeasance of such entity
or person.
17. Conditions and Approvals. The obligations of the Company under the Plan
shall be subject to compliance with all applicable state and federal laws and
regulations, compliance with the rules of any stock exchange on which the
Company's securities may be listed, and approval of such federal and state
authorities or agencies as may have jurisdiction over the Plan or the Company.
The Company will use its best effort to comply with such laws, regulations and
rules and to obtain such approvals.
18. Amendment of the Plan. The Board of Directors of the Company may from
time to time amend the Plan in any and all respects, except that without the
approval of the shareholders of the Company, the Board of Directors may not
increase the number of shares reserved for the Plan (except for adjustments
authorized in paragraph 2 above) or decrease the purchase price of shares
offered pursuant to the Plan.
19. Termination of the Plan. The Plan shall terminate when all of the
shares reserved for purposes of the Plan have been purchased, provided that the
Board of Directors in its sole discretion may at any time terminate the Plan
without any obligation on account of such termination, except as hereinafter in
this paragraph provided. Upon termination of the Plan, the cash and shares, if
any, held in the accounts of each participant shall forthwith be distributed to
the participant or to the participant's order, provided that if prior to the
termination of the Plan, the Board of Directors and shareholders of the Company
shall have adopted and approved a substantially similar plan, the Board of
Directors may in its discretion determine that the accounts of each participant
under this Plan shall be carried forward and continued as the accounts of such
participant under such other plan, subject to the right of any participant to
request distribution of the cash and shares, if any, held for his accounts.
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ANNUAL
MEETING
AND
PROXY STATEMENT
SEPTEMBER 17, 2001
PORTLAND, MAINE
NIKE LOGO
This proxy statement is printed on recycled paper
39
[NIKE SWOOSH LOGO]
NIKE, INC.
P.O. BOX 8094
JERSEY CITY, NJ 08818-8094
VOTE BY INTERNET - www.proxyvote.com
Use the Internet to transmit your voting instructions and for electronic
delivery of information up until 11:59 P.M. Eastern Time the day before the
meeting date. Have your proxy card in hand when you access the web site. You
will be prompted to enter your 12-digit Control Number which is located below
to obtain your records and to create an electronic voting instruction form.
VOTE BY PHONE - 1-800-690-6903
Use any touch-tone telephone to transmit your voting instructions up until
11:59 P.M. Eastern Time the day before the meeting date. Have your proxy card
in hand when you call. You will be prompted to enter your 12-digit Control
Number which is located below and then follow the simple instructions the Vote
Voice provides you.
VOTE BY MAIL
Mark, sign, and date your proxy card and return it in the postage-paid envelope
we have provided or return it to Nike, Inc., c/o ADP, 51 Mercedes Way,
Edgewood, NY 11717.
TO VOTE MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: [ ] NIKE01 KEEP THIS PORTION FOR YOUR RECORDS
-----------------------------------------------------------------------------------------------------------------------
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. DETACH AND RETURN THIS PORTION ONLY
NIKE, INC.
THE BOARD OF DIRECTORS RECOMMENDS A
VOTE FOR PROPOSALS 2 AND 4, AND AGAINST
PROPOSAL 3 For Withhold For All To withhold authority to vote, mark
All All Except "For All Except" and write the nominee's number
on the line below.
1. Election of Directors; [ ] [ ] [ ] ___________________________________
Nominees: 01) Ralph D. DeNunzio,
02) Richard K. Donahue, (03) Douglas
G. Houser 04) John E. Jaqua, 05) Philip
K. Knight, 06) Charles W. Robinson,
07) Michael Spence, 08) John R.
Thompson, Jr. For Against Abstain
2. Proposal to approve the NIKE, Inc.
Employee Stock Purchase Plan. [ ] [ ] [ ]
3. Shareholder proposal regarding China
business principles. [ ] [ ] [ ]
4. Proposal to ratify the appointment of
PricewaterhouseCoopers LLP as independent
accountants. [ ] [ ] [ ]
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS SPECIFIED, BUT IF NO
SPECIFICATION IS MADE, THIS PROXY WILL BE VOTED FOR THE ELECTION OF THE NOMINEES
FOR DIRECTOR, FOR PROPOSALS 2 AND 4, AND AGAINST PROPOSAL 3. THE PROXIES MAY
VOTE IN THEIR DISCRETION AS TO OTHER MATTERS WHICH MAY COME BEFORE THE MEETING.
YOU ARE ENCOURAGED TO SPECIFY YOUR CHOICES BY MARKING THE APPROPRIATE
BOXES, BUT YOU NEED NOT MARK ANY BOXES IF YOU WISH TO VOTE IN ACCORDANCE
WITH THE BOARD OF DIRECTORS' RECOMMENDATIONS. THE PROXIES CANNOT VOTE
YOUR SHARES UNLESS YOU SIGN AND RETURN THIS CARD.
For address changes and/or comments, please check [ ]
this box and write them on the back where indicated.
(Please date and sign below exactly as your name or names appear
hereon. Joint owners should each sign personally. Corporate proxies
should be signed in full corporate name by an authorized officer
and attested. Persons signing in a fiduciary capacity should indicate
their full titles in such capacity.)
____________________________________________ ___________________________________
Signature (PLEASE SIGN WITHIN BOX) Date Signature (Joint Owners) Date
40
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NIKE, INC.
CLASS A COMMON STOCK PROXY
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE 2001 MEETING OF SHAREHOLDERS
SEPTEMBER 17, 2001
The undersigned hereby appoints Philip H. Knight, Delbert J. Hayes and Douglas
G. Houser, and each of them, proxies with full power of substitution, to vote,
as designated on the reverse side, on behalf of the undersigned all shares of
Class A Common Stock which the undersigned may be entitled to vote at the Annual
Meeting of Shareholders of NIKE, Inc. on September 17, 2001, and any
adjournments thereof, with all powers that the undersigned would possess if
personally present. A majority of the proxies or substitutes present at the
meeting may exercise all powers granted hereby.
ADDRESS CHANGE/COMMENTS:
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If you noted address changes or comments above,
please mark the corresponding box on the reverse side.
41
[Nike logo]
NIKE, INC.
P.O. BOX 8094
JERSEY CITY, NJ 08818-8094
VOTE BY INTERNET - www.proxyvote.com
Use the internet to transmit your voting instructions and for electronic
delivery of information up until 11:59 P.M. Eastern Time the day before the
meeting date. Have your proxy card in hand when you access the web site. You
will be prompted to enter your 12-digit Control Number which is located below to
obtain your records and to create an electronic voting instruction form.
VOTE BY PHONE - 1-800-690-6903
Use any touch-tone telephone to transmit your voting instructions up until 11:59
P.M. Eastern Time the day before the meeting date. Have your proxy card in hand
when you call. You will be prompted to enter your 12-digit Control Number which
is located below and then follow the simple instructions the Vote Voice provides
you.
VOTE BY MAIL
Mark, sign, and date your proxy card and return it in the postage-paid envelope
we have provided or return it to Nike, Inc. c/o ADP, 51 Mercedes Way, Edgewood,
NY 11717.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: NIKE03 KEEP THIS PORTION FOR YOUR RECORDS.
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DETACH AND RETURN THIS PORTION ONLY.
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
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NIKE, INC.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSALS 2 AND 4, AND AGAINST PROPOSALS 3.
1. Election of Directors:
Nominees: 01) Thomas E. Clarke, 02) Jill K. Conway, and
03) Delbert J. Hayes.
FOR WITHHOLD FOR ALL To withhold authority to vote, mark "For All Except"
ALL ALL EXCEPT and write the nominee's number on the line below.
[ ] [ ] [ ]
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2. Proposal to approve the NIKE, Inc. Employee Stock Purchase Plan
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
3. Shareholder proposal regarding China business principles.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
4. Proposal to ratify the appointment of PricewaterhouseCoopers LLP as independent accountants.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
THESE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS SPECIFIED, BUT IF NO
SPECIFICATION IS MADE, THIS PROXY WILL BE VOTED FOR THE ELECTION OF THE NOMINEES
FOR DIRECTOR, FOR PROPOSALS 2 AND 4, AND AGAINST PROPOSAL 3. THE PROXIES MAY
VOTE IN THEIR DISCRETION AS TO OTHER MATTERS WHICH MAY COME BEFORE THE MEETING.
YOU ARE ENCOURAGED TO SPECIFY YOUR CHOICES BY MARKING THE APPROPRIATE BOXES, BUT
YOU NEED NOT MARK ANY BOXES IF YOU WISH TO VOTE IN ACCORDANCE WITH THE BOARD OF
DIRECTORS' RECOMMENDATIONS. THE PROXIES CANNOT VOTE YOUR SHARES UNLESS YOU SIGN
AND RETURN THIS CARD.
For address changes and/or comments, please check [ ]
this box and write them on the back where indicated.
(Please date and sign below exactly as your name or names appear hereon. Joint
owners should each sign personally. Corporate proxies should be signed in full
corporate name by an authorized officer and attested. Persons signing in a
fiduciary capacity should indicate their full titles in such capacity.)
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Signature (PLEASE SIGN WITHIN BOX) Date Signature (Joint Owners) Date
42
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NIKE, INC.
CLASS B COMMON STOCK PROXY
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE 2001 MEETING OF SHAREHOLDERS
SEPTEMBER 17, 2001
The undersigned hereby appoints Philip H. Knight, Delbert J. Hayes and Douglas
G. Houser, and each of them, proxies with full power of substitution, to vote,
as designated on the reverse side, on behalf of the undersigned all shares of
Class B Common Stock which the undersigned may be entitled to vote at the Annual
Meeting of Shareholders of NIKE, Inc. on September 17, 2001, and any
adjournments thereof, with all powers that the undersigned would possess if
personally present. A majority of the proxies or substitutes present at the
meeting may exercise all powers granted hereby.
ADDRESS CHANGE/COMMENTS:
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If you noted address changes or comments above,
please mark the corresponding box on the reverse side.