SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
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Quaker Chemical Corporation
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QUAKER CHEMICAL CORPORATION
Elm and Lee Streets
Conshohocken, Pennsylvania 19428
----------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
----------
To the Shareholders of Quaker Chemical Corporation:
Notice is hereby given that the Annual Meeting of Shareholders of
Quaker Chemical Corporation (the "Company") will be held in Salon A and B,
Philadelphia Marriott West, Matson Ford at Front Street, 111 Crawford
Avenue, West Conshohocken, Pennsylvania 19428, on Thursday,Wednesday, May 9, 1996,7, 1997,
at 10:30 A.M., local time, for the following purposes:
1. To elect three (3)four (4) Class III Directors, each to serve for three
years and until his respective successor is elected and
qualified;
2. To consider and act upon ratifying the appointment of Price
Waterhouse LLP as the Company's independent accountants for the
year 1996;1997; and
3. To transact such other business as may properly come before the
Meeting or any adjournments thereof.
Only shareholders of record at the close of business on March 15, 199614, 1997
are entitled to notice of and to vote at the Meeting.
IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THE MEETING. YOU ARE
CORDIALLY INVITED TO ATTEND THE MEETING IN PERSON. WHETHER OR NOT YOU
EXPECT TO ATTEND IN PERSON, YOU ARE URGED TO COMPLETE, SIGN, DATE, AND
RETURN THE ENCLOSED PROXY IN THE SELF-ADDRESSED ENVELOPE ENCLOSED FOR YOUR
CONVENIENCE; NO POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES.
By Order of the Board of Directors,
KARL/s/Karl H. SPAETHSpaeth
-------------------------
Karl H. Spaeth
Secretary
Dated: March 29, 199627, 1997
QUAKER CHEMICAL CORPORATION
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PROXY STATEMENT
----------
The solicitation of the accompanying proxy is made by and on behalf of
the Board of Directors of Quaker Chemical Corporation, a Pennsylvania
corporation (the "Company"), whose principal executive offices are located
at Elm and Lee Streets, Conshohocken, Pennsylvania 19428, for use at the
Annual Meeting of Shareholders to be held on Thursday,Wednesday, May 9, 1996,7, 1997 and at
any adjournments thereof. The Meeting will be held in Salon A and B,
Philadelphia Marriott West, Matson Ford at Front Street, 111 Crawford
Avenue, West Conshohocken, Pennsylvania 19428 at 10:30 A.M., local time.
The approximate date on which this Proxy Statement and the accompanying
form of proxy will first be sent or given to shareholders is March 29, 1996.27,
1997. Any shareholder executing and delivering the accompanying proxy has
the power to revoke it at any time prior to its use by giving notice of its
revocation to the Secretary of the Company.
The Company will bear the cost of the solicitation of proxies. Proxies
will be solicited by mail, telephone, facsimile, and personal contact by
certain officers and regular employees of the Company. The Company will,
upon the request of record holders, pay reasonable expenses incurred by
record holders who are brokers, dealers, banks or voting trustees, or their
nominees, for mailing proxy material and the Company's Annual Report to
Shareholders to any beneficial holder of the Common Stock they hold of
record.
Proxies in the accompanying form which are properly executed, returned
to the Company, and not revoked will be voted in accordance with the
instructions thereon, or, in the absence of specific instruction, will be
voted for the election of all three (3)four (4) of the nominees named therein and
for ratification of the appointment of Price Waterhouse LLP as the
Company's independent accountants for the year 1996.1997.
As of March 15, 1996,14, 1997, the outstanding voting securities of the Company
consisted of 8,669,3208,624,581 shares of Common Stock, $1.00 par value ("Common
Stock"). As more specifically provided in Article 5 of the Company's
Articles of Incorporation, shareholders who, as of March 15, 1996,14, 1997, held
shares of the Company's Common Stock beneficially owned since March 1, 19931994
are entitled to cast 10 votes for each such share. Holders of shares the
beneficial ownership of which was acquired after March 1, 19931994 are entitled
to cast 1 vote per share, subject to certain exceptions described in
Exhibit A hereto. Based on the information available to the Company on
March 15, 1996,14, 1997, the holders of 3,135,7333,115,579 shares of Common Stock will be
entitled to cast 10 votes with respect to each such share, and the holders
of 5,533,5875,509,002 shares of Common Stock, including but not limited to those
shares held in "street" or "nominee" name or by a broker, clearing agency,
voting trustee, bank, trust company, or other nominee which have been
presumed to have been acquired by the beneficial owner subsequent to March
1, 19931994 in accordance with the terms and conditions of Article 5 of the
Company's Articles of Incorporation, will be entitled to cast one vote with
respect to each such share, representing an aggregate of 36,890,91736,664,792 votes.
The aforementioned presumption that a share is entitled to 1 vote rather
than 10 is rebuttable upon presentation to the Company of written evidence
to the contrary in accordance with the procedures established by the
Company and described in Exhibit A hereto. The effect of rebutting the
foregoing presumption will be to increase the number of votes that may be
cast at the Meeting. Depending on the number of shares with respect to
which the aforementioned presumption is rebutted, the total number of votes
that may be cast at the Meeting could be increased to as many as
86,693,200.86,245,810. The presence, in person or by proxy, of shareholders entitled
to cast at least a majority of the votes that all shareholders are entitled
to cast on a particular matter will constitute a quorum for the purpose of
considering such matter. Abstentions, and any shares as to which a broker
or nominee has indicated that it does not have discretionary authority to
vote, will be counted only for purposes of determining whether a quorum is
present at the Meeting and, thus, will have the effect of a vote to
"Withhold Authority" in the election of directors or as an "Against" vote
on all other matters included in the proxy.
Only shareholders of record at the close of business on March 15, 199614, 1997
are entitled to notice of and to vote at the Meeting or any adjournments
thereof.
1
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT
Certain Beneficial Owners
The following table sets forth information, as of March 15, 1996,14, 1997, with
respect to persons known to the Company to be the beneficial owners of more
than five percent of its Common Stock (its only class of outstanding equity
securities). Peter A. Benoliel, Quest Advisory Corp.,The State Teachers Retirement Fund of Ohio,
and Quest Management
CompanyThe TCW Group, Inc. have sole voting and dispositive power over the
outstanding Common Stock listed opposite their names.
Invista Capital Management, Inc. has shared power
to vote and sole dispositive power over the Common Stock listed opposite its
name.
Number
of Shares Percent Number
Name and Address Owned(1) of Class(2) of Votes
- -----------------------------------------------------------------------------------------------------------------------------------------------------------
Peter A. Benoliel 624,172(3) 7.2 5,644,713605,275(3) 7.0 5,290,480
130 Cornwall Lane
St. Davids, PA 19087
Invista Capital Management,The State Teachers Retirement 432,500(4) 5.0 432,500(4)
System of Ohio
275 East Broad Street
Columbus, OH 43215-3771
The TCW Group, Inc. 534,600(4) 6.2 534,600(4)
1500 Hub Tower
699 Walnut
Des Moines, IA 50309
Quest Advisory Corp. and 533,414(4) 6.2 533,414(4)
Quest Management Company
1414 Avenue of the Americas
New York, NY 10019520,200(4) 6.0 520,200(4)
865 South Figueroa Street
Los Angeles, CA 90017
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(1) Based upon information contained in filings made by the named person
with the Securities and Exchange Commission.
(2) Based upon 8,669,3208,624,581 shares outstanding.
(3) Includes 54,63160,000 shares subject to options that are currently
exercisable or will become exercisable within sixty (60) days of the
record date.
(4) These shares, which are held in street name, are presumed under Article
5 of the Company's Articles of Incorporation to be entitled to one (1)
vote per share.
Each such share for which the aforementioned presumption is
rebutted in accordance with applicable procedures shall be entitled to ten
(10) votes per share or up to an aggregate of 5,346,000 votes in the case
of Invista Capital Management, Inc. and up to an aggregate of 5,334,140 in
the case of Quest Advisory Corp. and Quest Management Company.
2
Directors and Officers
The following table sets forth information, as of March 15, 1996,14, 1997, with
respect to beneficial ownership of the Company's Common Stock by each
director, each nominee for director, each executive officer named in the
Summary Compensation Table, and all directors and executive officers of the
Company as a group. Each director, nominee, and executive officer has sole
voting and dispositive power over the Common Stock listed opposite his/her
name unless otherwise noted.
Number
of Shares Percent Number of
Name Owned of Class(1) Votes
---- ----- ----------- ------ ---------------------------------------------------------------------------
Joseph B. Anderson, Jr 900(2)Jr. 5,600(2) -- 1,8005,600
Patricia C. Barron 4,160(3)7,510(3) -- 5,6008,950
William L. Batchelor 201,602 2.3 2,016,020193,762 2.2 1,937,260
Peter A. Benoliel 624,172(4)605,275(4)(5) 7.2 5,644,7137.0 5,290,480
Lennox K. Black 7,750 -- 14,500
Donald R. Caldwell -- -- --
Robert E. Chappell -- -- --
Edwin J. Delattre 448610(2) -- 1,573
Francis J. Dunleavy 3,000 -- 30,0001,735
Robert P. Hauptfuhrer 7,200 -- 72,000
Frederick Heldring 7,800(2)9,000(2) -- 78,00079,200
Ronald J. Naples 51,000(6) -- 52,350262,136(5)(6) 3.0 53,786
Robert H. Rock 01,000 -- 01,000
Alex Satinsky 2,000 -- 15,500
Jose Luiz Bregolato 34,631(5)Thomas F. Kirk 14,858(5) -- 0
John E. Burrows, Jr 651(7) -- 6,474
Sigismundus W. W. Lubsen 42,326(8) -- 59,5882,000
Daniel S. Ma 15,036(5)20,628(5) -- 405628
Marcus C. J. Meijer 70,631(5)77,450(5) -- 1,550
Clifford E. Montgomery 35,765(5) -- 13416,950
All directors and executive 1,257,079(5)(6) 13.9 7,499,889(7)
officers as a group
(19(18 persons)
1,154,695(2)(5)(6) 12.9 8,151,247(9)
- ----------------------
(1) Based upon 8,669,3208,624,581 shares outstanding. The percentage is less than
1%, except as otherwise indicated.
(2) Includes 100 shares in the case of Mr. Anderson, 100 shares in the case
of Dr. Delattre, and 6,600 shares in the case of Mr. Heldring held
jointly with a spouse.
(3) Includes 10 shares held in an indirect trust account for child.
(4) Does not include 3,0004,500 shares held of record by Mr. Benoliel's wife.
(5) Includes 54,63160,000 shares in the case of Mr. Benoliel; 34,63112,858 shares in
the case of Mr. Bregolato; 14,631Kirk; 20,000 shares in the case of Mr. Ma; 69,08174,450
shares in the case of Mr. Meijer; 35,631210,000 shares in the case of Mr.
Montgomery;Naples; and 238,503419,308 shares in the case of all directors and officers as
a group subject to options that are currently exercisable or will
become exercisable within sixty (60) days of the record date.
Also includes 5,881 shares held in
trust accounts for children of directors and officers.
(6) Includes 45,00030,000 shares of restricted Common Stock awarded to Mr. Naples
which are registered in his name and for which he has sole voting power
but for which he has no dispositive power since the shares are held by
the Company and are subject to forfeiture. For additional information,
see "Employment Agreements with Executive Officers" below.
(7) Includes 53 shares held in a trust account for a child.
(8) Includes 5,818 shares held in a trust account for children.
(9) Represents 22.1%20.5% of all votes entitled to be cast at the Meeting, based
on information available on March 15, 1996.14, 1997.
Section 16(a) Beneficial Ownership Reporting Compliance
Based solely (i) on the Company's review of certain reports filed with
the Securities and Exchange Commission ("SEC") pursuant to Section 16(a) of
the Securities Exchange Act of 1934 (the "Act"), as amended, and (ii)
written representations of the Company's officersdirectors and directors,officers, the
Company believes that all reports required to be filed pursuant to the 1934
Act with respect to transactions in the Company's Common Stock through
December 31, 19951996 were filed on a timely basis, except for one filing on
Form 4 covering one transaction each for Patricia C. Barron Lennox K. Black, and EdwinRonald J.
Delattre.Naples.
3
ELECTION OF DIRECTORS
The Articles of Incorporation, as amended, provide that the Company
shall have a Board of Directors that is divided into three classes, each
class to consist, as nearly as may be possible, of one-third of the total
number of directors. One class shall be elected each year to serve as
directors for a term of three (3) years. Directors elected to fill
vacancies and newly created directorships will be elected to serve for the
balance of the term of the class to which they are elected. At the present
time, there are eleven (11) directors including three (3) Class I
Directors, four (4) Class II Directors, and four (4) Class III Directors.
Mr. Sigismundus W. W. Lubsen, formerly aFrederick Heldring and Mr. Alex Satinsky, both Class I Director,
resigned as President and Chief Executive Officer and as a director of the
Company effective July 31, 1995, and the Board ofII Directors, on June 28, 1995,
voted to decrease the number of directors of the Company from twelve (12) to
eleven (11), effective July 31, 1995. Mr. Francis J. Dunleavy, a Class I
Director, isare
not eligible to stand for reelection having reached retirement age. To fill
the vacancy created by the retirement of Messrs. Heldring and Satinsky, Mr.
Dunleavy's retirement,Donald R. Caldwell and Mr. Robert H. Rock hasE. Chappell have been nominated as a Class
I Director.II Directors. Therefore, three (3)four (4) Class III Directors are to be elected at
the Meeting with each member to serve a three (3) year term expiring in
19992000 or until his successor is duly elected and qualified. The threefour
nominees receiving the greatest number of votes cast by the holders of the
Company's Common Stock present, in person, or by proxy, at the Meeting will
be elected Class III Directors of the Company.
The proxies will be voted in accordance with the instructions set
forth therein, and proxies for which no contrary instructions are given
will be voted for the Class III nominees, William L. Batchelor, Peter A. Benoliel,Lennox K. Black, Donald R.
Caldwell, Robert E. Chappell, and Robert H.
Rock.P. Hauptfuhrer. Mr. BenolielBlack and Mr.
BatchelorHauptfuhrer are each presently serving as a director of the Company, having
been so elected by the shareholders at the Annual Meeting held on May 5, 1993.4,
1994. If any nominee withdraws or otherwise becomes unable to serve, which
is not anticipated, the proxies will be voted for a substitute nominee who
will be designated by the Board of Directors. The following table sets
forth information concerning the nominees and the Company's directors who
will continue to serve in that capacity following the Meeting:
First Became Principal Occupation for
Name and (Age) a Director the Past Five Years
-------------- ---------- -------------------
Class I--Directors nominated for electionFirst Became Principal Occupation for
Name and (Age) a Director the Past Five Years
- ------------------------------------------------------------------------------
Class I--Directors elected in 1996 to serve until the Annual Meeting in 1999:
William L. Batchelor (79) 1952 Retired Senior Vice President of the
Company.
Peter A. Benoliel (65) 1961 Chairman of the Board and former Chief
Executive Officer of the Company.
Robert H. Rock (46) 1996 to serve until the Annual Meeting in 1999:
William L. Batchelor (78) 1952 Retired Senior Vice President of the Company.
Peter A. Benoliel (64) 1961 Chairman of the Board and former Chief Executive Officer of the Company.
Robert H. Rock (45) President, MLR Holdings, LLC, an
investment company with holdings in
the publishing and information
businesses. Formerly Chairman and
majority owner of IDD Enterprises, a
publisher of magazines, newsletters,
and a provider of on-line data for
financial executives. Member of the
Board of Directors of Alberto-Culver
Company, Hunt Manufacturing Company,
and R. D. Scherer Corporation.
Class II --Directors nominated for election in 1997 to serve until the
Annual Meeting in 2000:
Lennox K. Black (67) 1985 Chairman of the Board and former Chief
Executive Officer, Teleflex
Incorporated, a diversified Fortune
1000 manufacturer of products and
services for the automotive, marine,
industrial, aerospace, and medical
markets worldwide; and Chairman of the
Board of Directors of Alberto-Culver Company, Hunt Manufacturing Company,
and R.D. Scherer Corporation.
Class II--Directors elected in 1994 to serve until the Annual Meeting in 1997:
Lennox K. Black (66) 1985 Chairman of the Board and former Chief Executive Officer, Teleflex
Incorporated, a diversified Fortune 1000 manufacturer of products and
services for the automotive, marine, industrial, aerospace, and medical
markets worldwide; and Chairman of the Board and Chief Executive
Officer, Penn Virginia Corporation, an
energy company engaged primarily in
leasing of mineral rights, collection
of royalties, and development and
production of oil and natural gas.
Member of the Board of Directors of Westmoreland Coal Company and
Pep Boys.
4
First Became Principal Occupation for
Name and (Age) a Director the Past Five Years
-------------- ---------- -------------------
Robert P. Hauptfuhrer (64) 1977 Former Chairman of the Board and Chief Executive Officer, Oryx Energy
Company, an energy company. Trustee, 1838 Investment Advisors Funds.
Frederick Heldring (71) 1970 Chairman, Global Interdependence Center. Formerly Vice Chairman of the
Board of CoreStates Financial Corporation, a bank holding company; and
Chairman and President of The Philadelphia National Bank, a commercial
bank.
Alex Satinsky (83) 1952 Partner, Fox, Rothschild, O'Brien & Frankel, General Counsel to the
Company.
Class III--Directors elected in 1995 to serve until the Annual Meeting in 1998:
Joseph B. Anderson, Jr. (53) First Became Principal Occupation for
Name and (Age) a Director the Past Five Years
- ------------------------------------------------------------------------------
Donald R. Caldwell (50) President and Chief Operating Officer,
Safeguard Scientifics, Inc., a company
engaged in a broad spectrum of
activities directed to information
technology and its Executive Vice
President from November 1993 until
February 1996. From 1991 to 1993,
President of Valley Forge Capital
Group, Ltd., a business mergers and
acquisition advisory firm. Member of
the Board of Directors of Safeguard
Scientifics, Inc., Integrated Systems
Consulting Group, Inc., and Diamond
Technology Partners, Inc.
Robert E. Chappell (52) Chairman and Chief Executive Officer,
The Penn Mutual Life Insurance
Company, being Chairman since January
1, 1997, Chief Executive Officer since
April 1995, President from 1994 until
1996, and Chief Operating Officer from
1994 until 1995. Formerly Executive
Vice President of PNC Bank from 1992
until 1993, and from 1988 until 1992
was Chairman and Chief Executive
Officer of Provident National Bank.
Member of the Board of Directors of P.
H. Glatfelter Company.
Robert P. Hauptfuhrer (65) 1977 Former Chairman of the Board and Chief
Executive Officer, Oryx Energy
Company, an energy company. Trustee,
1838 Investment Advisors Funds.
Class III--Directors elected in 1995 to serve until the Annual Meeting
in 1998:
Joseph B. Anderson, Jr. (54)1992 Chairman and Chief Executive Officer,
Chivas Products Limited, an interior
trim automotive supplier and
manufacturer. Formerly President and
Chief Executive Officer, Composite
Energy Management Systems Inc., a
manufacturer of bumpers for the
automotive industry. Previously served
as Director, Body Hardware Business
Unit, Inland Fisher Guide Division,
General Motors Corporation.
Patricia C. Barron (54) 1989 President, Xerox Engineering Systems
Division, Xerox Corporation. Previous
positions with Xerox Corporation
include President, Office Document
Products, and Vice President,
Corporate Information Management.
Member of the Board of Directors of
Frontier Corporation and Reynolds
Metals Company.
Edwin J. Delattre (55) 1984 Dean and Professor of Education and
Philosophy, Boston University.
Ronald J. Naples (51) 1988 President and Chief Executive Officer of
the Company since October 1995.
Formerly Chairman of the Board and
Chief Executive Officer, Hunt
Manufacturing Company, a producer and
distributor of office products, office
furniture, and art/craft products.
Member of the Board of Directors of
Advanta Corporation.
Patricia C. Barron (53) 1989 President, Xerox Engineering Systems Division, Xerox Corporation. Previous
positions with Xerox Corporation include President, Office Document
Products, and Vice President, Corporate Information Management. Member
of the Board of Directors of Frontier Corporation and Reynolds Metals
Company.
Edwin J. Delattre (54) 1984 Dean and Professor of Education and Philosophy, Boston University.
Ronald J. Naples (50) 1988 President and Chief Executive Officer of the Company since October 2,
1995. Formerly Chairman of the Board and Chief Executive Officer, Hunt
Manufacturing Company, a producer and distributor of office products,
office furniture, and art/craft products. Member of the Board of
Directors of Advanta Corp.
There are no family relationships between any directors, executive
officers, or nominees for election as directors of the Company.
5
Committees of the Board of Directors
The Company has an Executive Committee whose principal functions are
to act for the Board of Directors in situations requiring prompt action
when a meeting of the full Board is not feasible and to implement specific
action for the Board when directed to do so. The current members of the
Committee, which met oncedid not meet in 1995,1996, are P. A. Benoliel (Chairman), L. K.
Black, R. P. Hauptfuhrer, and R. J. Naples.
The Company has an Audit Committee whose principal functions are to
recommend the selection of independent accountants; approve the scope of
audit and specification of non-audit services provided by such accountants
and the fees for such services; and review audit results, internal
accounting procedures, and programs to comply with applicable laws and
regulations relating to financial accountability. The current members of
the Committee, which met three times in 1995,1996, are F. J. DunleavyR. P. Hauptfuhrer
(Chairman), J. B. Anderson, Jr., P. C. Barron, and R. P. Hauptfuhrer.F. Heldring.
The Company has a Compensation/Management Development Committee whose
principal functions are to review and recommend officers' compensation;
review the performance of officers and management development and
succession; review compensation levels throughout the Company; and
administer the Company's Long-Term Performance Incentive Plan. The current
members of the Committee, which met three times and took action by
unanimous written consent once in 1995,1996, are F. Heldring (Chairman), P. C. Barron, L. K.
Black, and E. J. Delattre.Delattre, and R. H. Rock.
The Company has a Finance Committee whose principal functions are to
establish guidelines for the investment of Company funds and advise on
matters relating to the Company's financial condition, dividend policy, and
shareholder financial interests. The current members of the Committee,
which did not meetmet two times in 1995 as a Committee but did act by written consent,1996, are L. K. Black (Chairman), J. B. Anderson,
Jr., P. C. Barron, F. Heldring, and A. Satinsky.
The Company has a Nominating Committee whose principal role is to
ensure that the Board of Directors has the depth and range of relevant
experience to provide optimal governance of the Company and growth in
shareholder value. To accomplish this, the Committee has responsibility to
review Board membership, provide leadership in the nomination of directors,
and review shareholder proposals. The current members of the Committee,
which met oncetwo times during 1995,1996, are E. J. Delattre (Chairman), R. P.
Hauptfuhrer, (Chairman), E.R. J. Delattre, F. J. Dunleavy,Naples, and R. J. Naples.H. Rock. The Committee will consider
candidates recommended by shareholders when submitted in writing not later
than November 29, 199628, 1997 with a statement of the candidate's business
experience, business affiliations, and confirmation of the candidate's
willingness to serve as a nominee. Nominations should be submitted to the
Secretary of the Company.
During the year ended December 31, 1995,1996, six regular meetings and one
special meeting of the
Board of Directors were held. During 1995,1996, each of the directors was in
attendance in person or by teleconference at no less than 75% of the
aggregate number of meetings of the Board of Directors and Committees of
the Board on which he or she then served.
EXECUTIVE COMPENSATION
Summary of Cash and Certain Other Compensation
The following table sets forth certain summary information concerning
compensation paid or accrued by the Company and its subsidiaries for the
years ended December 31, 1993, 1994, 1995, and 19951996 as to Mr. Lubsen, Mr. Benoliel,Naples and Mr.
Naples, who each served as the Company's Chief Executive Officer in 1995, each of
the Company's other four most highly compensated officers who served as
executive officers at December 31, 1995, and one additional executive officer
who would have been included as one of the four most highly compensated officers
had he still been employed by the Company on December 31, 19951996 (hereinafter referred to as the
named executive officers).
6
SUMMARY COMPENSATION TABLE
Long-Term Compensation
---------------------------------------------------------------------------------------
Annual Compensation Awards Payouts
-------------------------------------- ------------------------ --------------------------------------- ------------
(a) (b) (c) (d) (e) (f) (g) (h) (i)
Restricted Securities
Name and Other Annual Stock Underlying All Other
Principal Compensation Award(s) Options/ LTPILTIP Compensation
Position Year Salary($) Bonus($) ($)(1) ($) SARs(#)(2) Payouts($) ($)(3)
-------- ---- --------- -------- ------ --- ---------- ---------- ------- ----------------------------------------------------------------------------------------------------------------------------------
Peter A. 1996 200,000 0 0 0 0 0 5,400
Benoliel, 1995 200,000 0 0 0 30,000 0 0
Chairman of the 1994 200,000 0 0 0 0 0 5,000
the Board
and from 1993 215,000Ronald J. 1996 578,750(4) 126,892(4) 0 0 0 30,000 51,000 0
July 31, 1995 to
October 2, 1995
Acting Chief
Executive Officer
Sigismundus 1995 151,666111,000 0 0
0 50,000(5)Naples, 1995 170,620(4) 0 0 W. W. Lubsen, 1994 400,000(4) 0 0 0 0 0 5,000
President and 1993 359,000(4) 0 0 0 40,000 45,540 0
Chief Executive
Officer,
January 1, 1995
to July 31, 1995
Ronald J. Naples, 1995 170,620(6) 0 0 1,282,500(7)1,282,500(5) 200,000 0 0
President and
Chief Executive
Officer
October 2, 1995Thomas F. Kirk, 1996 168,750 64,892 0 0 40,000 0 0
Vice President
and Chief
Financial Officer,
April 1, 1996 to
December 31, 1996
Daniel S. Ma 1996 145,959(6) 67,778 89,890(7) 0 14,000 0 0
Vice President- 1995 Jose Luiz 1995 115,707(8) 10,841 0131,000(6) 86,174 88,182(7) 0 20,000 0 0
Bregolato,Asia/Pacific 1994 107,600(8) 10,300 0 0 0 0 0
Vice President- 1993 52,500(8) 20,000 0 0 20,000 0 0
South America
John E 1995 164,885(9) 0 0 0 30,000(10) 0 0
Burrows, Jr., 1994 157,000 24,000 0 0 0 0 5,000
Vice President- 1993 149,000 17,000 0 0 25,000 0 0
North America
Daniel S. Ma, 1995 131,000(8) 86,174 88,182(11) 0 20,000 0 0
Vice President- 1994 125,500(8)125,500(6) 7,900 84,843(11) 0 0 0 0
Asia/Pacific 1993 60,500(8) 15,000 37,878(11)84,843(7) 0 0 0 0
Marcus C. JJ. 1996 217,207(6) 76,721 0 0 20,000 0 0
Meijer, Vice 1995 224,200(8)224,200(6) 51,700 0 0 30,000 0 0
Meijer, VicePresident- 1994 194,000(8)194,000(6) 49,000 0 0 0 0 0
President- 1993 170,000(8) 38,000 0 0 30,000 26,000 0
Europe
Clifford E 1995 122,500 10,453 0 0 15,000 0 0
Montgomery, 1994 118,000 10,000 0 0 0 0 4,000
Vice President- 1993 115,000 17,000 0 0 12,000 10,000 0
Human Resources
- ----------------------------
(1) During the year ended December 31, 1995,1996, certain of the individuals
named in column (a) received personal benefits not reflected in the
amounts set forth for such individual in columns (c), (d), and (e), the
dollar value of which did not exceed the lesser of $50,000 or 10% of
the total of annual salary and bonus reported for such individual in
columns (c) and (d).
(2) Options to purchase shares of the Company's Common Stock.
(3) The amounts listed as "All Other Compensation" represent compensation
earned by each of the named executive officers pursuant to the terms of
the Company's Profit Sharing Plan.
(4) Includes compensation earned by Mr. Naples pursuant to the 1995 Naples
Restricted Stock Plan and Agreement (i) for each of the yearsyear ended December 31,
1993 and 19941996 the fair market value of 6,00015,000 shares of Common Stock which were issued during such
year and an additional cash payment made during such year pursuant to a
Restricted Stock and Cash Bonus Plan Agreement between the Company and Mr.
Lubsen (the "Lubsen Agreement"). The aggregate values of the shares issueddelivered
to Mr. Lubsen pursuant to the Lubsen Agreement during 1993 and 1994Naples on October 2, 1996, which shares have a fair market value
of $228,750 (based
with respect to each issuance, on the last reported sale price for the Common Stock
on the Nasdaq National Market System on the last trading day
of each such year) were $95,250 and $112,500, respectively.
7
(5) Pursuant to the terms of the Company's Long-Term Performance Incentive
Plan, these options expiredNew York Stock Exchange on October 2, 1996, of $15.25 per share)
and (ii) for the year ended December 31, 1995 without being exercised,
which date is three months following Mr. Lubsen's last date of employment.
(6) Includes the fair market value of
5,000 shares of Common Stock awarded to Mr. Naples on October 2, 1995,
pursuant to the 1995 Naples Restricted Stock
Plan and Agreement, which shares have a fair market value of $82,500 based(based on the last
reported sale price for the Common Stock on the Nasdaq National Market
System on the date of issuance, of $16.50 per share.
(7)share).
(5) Includes for the year ended December 31, 1995 the fair market value
based(based on the last reported sale price for the Common Stock on the
Nasdaq National Market System on December 29, 1995 of $13.50 per share)
of restricted stock holdings under the 1995 Naples Restricted Stock
Plan and Agreement of (i) 45,000 shares of restricted Common Stock
awarded to Mr. Naples on October 2, 1995, which shares are registered
in his name and on which he is entitled to dividends but which are held
by the Company and will be delivered to Mr. Naples in installments of
15,000 shares each on October 2, 1996, 1997, and 1998 if Mr. Naples is
still employed by the Company on such dates;dates and (ii) 50,000 shares of
restricted Common Stock which maywill be earned bydelivered to Mr. Naples at the rate of
1,000 shares for each $.01 increase in the Company's net income per
share of Common Stock as reported to shareholders in excess of $1.10
per share, all pursuantshare. At December 31, 1996, the fair market value of 80,000 shares
of restricted Common Stock representing the balance to be delivered
under the 1995 Naples Restricted Stock Plan and Agreement.
(8) Mr. Bregolato's,Agreement was
$1,310,000 (based on the last reported sale price for the Common Stock
on the New York Stock Exchange on December 31, 1996 of $16.375 per
share).
7
(6) Mr. Ma's and Mr. Meijer's compensation was paid in
Brazilian reals, Hong Kong dollars
and Dutch guilders, respectively. For purposes of this presentation, Mr. Bregolato's,
Mr. Ma's and Mr. Meijer's salary and bonus for each year have been
translated into U.S. dollars using the applicable exchange rates for
the conversion of currencies into U.S. dollars on December 31 of such
year.
(9) Mr. Burrows resigned from the Company effective November 6, 1995.
(10) Pursuant to the terms of the Company's Long-Term Performance Incentive
Plan, these options expired on February 6, 1996 without being exercised,
which date is three months following Mr. Burrows' last date of employment.
(11)(7) Represents housing benefits paid to Mr. Ma in connection with his
assignment for the Company in Hong Kong.
Options/SAR Grants in the Last Fiscal Year
During 1995,1996, the Company granted stock options (without any stock
apprecia-
tionappreciation rights) to the named executive officers as follows:
STOCK OPTION GRANTS LAST YEAR
Potential
Realizable Value
at Assumed
Annual Rates of
Stock Price
Appreciation for
Individual Grants Option Term
-------------------------------------------------------- ---------------------------------------------------------------------------------------- -------------------------
(a) (b) (c) (d) (e) (f) (g)
Number of
Securities
Underlying % of Total Exercise
Options Options Granted or Base
Granted to Employees Price Expiration
Name (#)(1) in 19951996 ($/sh)(2) Date 5%($) 10%($)
---- ------ ------- --------- ---- ----- ------- -----------------------------------------------------------------------------------------------------------------------------
Peter A. Benoliel 30,000 6.5 20.490 1/3/00 98,000 341,000
Sigismundus W. W. Lubsen(3) 50,000 10.9 18.625 10/31/95 -- --
Ronald J. Naples 100,000 21.8 17.500 75,000 25.9 13.50 5/10/1/05 1,101,000 2,789,000
50,000 10.9 19.25006 637,000 1,614,000
36,000 12.4 15.00 10/1/05 605,000 1,534,000
50,000 10.9 22.500 10/1/05 707,500 1,793,000
Jose Luiz Bregolato31/06 340,000 861,000
Thomas F. Kirk 20,000 4.4 18.625 1/3/05 234,000 594,000
John E. Burrows, Jr. (4) 30,000 6.5 18.625 6.9 14.00 4/2/6/96 -- --
Daniel S. Ma06 176,000 446,000
20,000 4.4 18.625 1/3/05 234,000 594,0006.9 15.00 10/31/06 189,000 478,000
Marcus C. J. Meijer 30,000 6.5 18.625 1/3/05 351,000 891,000
Clifford E. Montgomery 15,000 3.3 18.625 1/3/05 176,000 445,00020,000 6.9 15.00 10/31/06 189,000 478,000
Daniel S. Ma 14,000 4.8 15.00 10/31/06 132,000 335,000
(1) Of the options listed, 17,142certain of Mr. Naples'the options are non-qualified stock
options, and 10,738certain options of
each of the other named executives are incentive stock options which qualify
for favorable tax treatment under Section 422 of the Internal Revenue
Code. In the case of Mr.Specifically:
Recipient Non-Qualified Options Incentive Stock Options
----------------- --------------------- -----------------------
Ronald J. Naples his incentive111,000 --
Thomas F. Kirk 25,716 14,284
Daniel S. Ma 7,334 6,666
Marcus C. J. Meijer 13,334 6,666
The 75,000 non-qualified stock options first
become exercisable in three equal installments of 5,714 options on each of
October 2, 1996, 1997 and 1998, and in the case of the other named
executives, half were first exercisable on January 4, 1996 and the other
half will be exercisable on January 4, 1997. Further, with respect to Mr.
Naples' options (which option amounts include the incentive stock
8
options), 135,000 options (100,000 at an exercise price of $17.50 and
35,000$13.50
granted to Mr. Naples become exercisable on May 9, 1997. Of the 20,000
options granted to Mr. Kirk at an exercise price of $19.25)$14.00 per share,
14,284 are incentive stock options (50% of which are first exercisable
on October 2,
1996; 35,000April 1, 1997 and the remaining 50% are first exercisable on April
1, 1998), and 5,716 are non-qualified options (15,000 atwhich are first
exercisable on April 1, 1997. As to the options issued to each of the
named executive officers having an exercise price of $19.25$15.00, 36,000
non-qualified options granted to Mr. Naples, 20,000 non-qualified
options granted to Mr. Kirk, 13,334 non-qualified options and 20,000 at
an exercise price of $22.50) are6,666
incentive stock options granted to Mr. Meijer, and 7,334 non-qualified
options and 6,666 incentive stock options granted to Mr. Ma all will be
first exercisable on October 2, 1997; and
30,000 options (at an exercise price of $22.50) are first exercisable on
October 2,31, 1998. Except as otherwise discussed above, all other options
granted are exercisable on the first anniversary of the option grant.
(2) The purchase price of a share of Common Stock is the fair market value
of a share of Common Stock on the date of grant and, in the case of Mr.
Benoliel, is 110% of the fair market value of a share of Common Stock on
the date of grant.
(3) Pursuant to the terms of the Company's Long-Term Performance Incentive
Plan, these options expired on October 31, 1995 without being exercised,
which date is three months following Mr. Lubsen's last date of employment.
(4) Pursuant to the terms of the Company's Long-Term Performance Incentive
Plan, these options expired on February 6, 1996 without being exercised,
which date is three months following Mr. Burrows' last date of employment.8
Aggregate Option/SAR Exercises in Last Fiscal Year and
FY-End Option/SAR Values
The following table provides information related to options to
purchase the Company's Common Stock exercisedheld by the named executive officers
during the year ended December 31, 19951996 and the number and value of such
options held as of the end of such year. The Company does not have any
outstanding stock appreciation rights.
AGGREGATE OPTION/SAR EXERCISES IN LAST YEAR
AND YEAR-END OPTION/SAR VALUES
(a) (b) (c) (d) (e)
Number of Securities Value of Unexercised
Value Underlying Unexercised In-the-Money Options
Shares Acquired Realized Options at Year End(#) at Year End($)
Name on Exercise(#) ($) Exercisable Unexercisable Exercisable/Unexercisable(1)
---- -------------- --- ----------- ------------- ----------------------------- --------------------------------------------------------------------------------------------------------------
Peter A. Benoliel 0 0 80,998 5,369 0/0
Sigismundus W. W. Lubsen 35,440 445,645 0(2)60,000 0 0/0
Ronald J. Naples 0 0 0 200,000135,000 176,000 0/0
Jose Luiz Bregolato265,125
Thomas F. Kirk 0 0 34,631 5,3690 40,000 0/0
John E. Burrows, Jr. 0 0 0(3) 0 0/075,000
Daniel S. Ma 0 0 14,631 5,36920,000 14,000 0/019,250
Marcus C. J. Meijer 0 0 69,081 5,36974,450 20,000 0/0
Clifford E. Montgomery 0 0 35,631 5,369 0/027,500
- ------------------------
(1) Based on the last sale price on December 29, 199531, 1996 on the Nasdaq National
Market SystemNew York Stock
Exchange of $13.50$16.375 per share.
(2) Pursuant to the terms of the Company's Long-Term Performance Incentive
Plan, all of Mr. Lubsen's options not exercised by October 31, 1995 (three
months following Mr. Lubsen's last date of employment) expired.
(3) Pursuant to the terms of the Company's Long-Term Performance Incentive
Plan, all of Mr. Burrows' options not exercised by February 6, 1996 (three
months following Mr. Burrows' last date of employment) expired.
9
Long-Term Performance Incentive Plan Awards in Last Fiscal Year
During 1995,1996, the Company granted performance incentive units pursuant
to the Company's Long-Term Performance Incentive Plan to the named
executive officersofficer as follows:
LONG-TERM PERFORMANCE INCENTIVE PLAN--AWARDS
LONG-TERM INCENTIVE PLAN -- AWARDS LAST YEAR
Estimated Future Payouts
Under Non-Stock Price-Based Plan
------------------------------------------------------------------------------
(a) (b) (c) (d) (e) (f)
Performance
Number of or Other
Shares, Units Period Until
or Other Maturation or Threshold Target Maximum
Name Rights (#)(1) Payout ($ or #)(2) ($ or #)(2) ($ or #)(2)
---- ------------- ------------- ----------- ----------- ------------ ------------------------------------------------------------------------------------------
Peter A. Benoliel 15,000 1995 through 1998 0.00 279,750 559,500
Sigismundus W. W. Lubsen 25,000(3) 1995 through 1998 0.00 0 0
Ronald J. Naples 25,000 1995 through 1998 0.00 466,250 932,500
Jose Luiz BregolatoThomas F. Kirk 10,000 1995 through 1998 0.00 186,500 373,000
John E. Burrows, Jr. 15,000(3) 1995 through 1998 0.00 0 0
Daniel S. Ma 10,000 1995 through 1998 0.00 186,500 373,000
Marcus C. J. Meijer 15,000 1995 through 1998 0.00 279,750 559,500
Clifford E. Montgomery 7,500 1995 through 1998 0.00 139,875 279,750140,000 280,000
(1) Performance Incentive Units.
(2) The value on maturation of a performance incentive unit is determined
by performance over a time period as plotted on a grid defined by two
axes; one axis sets forth average return on assets, and one axis sets
forth average earnings per share for the period 1995-1998.1995-98. Each
performance unit is issued at the value of the stockexercise price of incentive stock
options issued in connection with the performance incentive unit
($18.65)14.00), and the 1995 performance unit grid results in a zero payout
for performance of less than 5% return on assets based onor less than an
average earnings per share of $1.22 forover the years 1996, 1997, and 1998.performance period. A
payout of $18.65$14.00 per unit will be made if performance reaches the
target, and a payout of $37.30$28.00 per unit will be made if performance
reaches the maximum of the measurement scale.
(3) Pursuant to the terms of the Company's Long-Term Performance Incentive
Plan, all performance incentive units awarded to Mr. Lubsen and Mr. Burrows
became null and void on their respective dates of resignation.9
Employment Agreements with Executive Officers
Ronald J. Naples assumed the position of President and Chief Executive
Officer of the Company on October 2, 1995. Effective that date, Mr. Naples
entered into an Employment Agreement with the Company for a term ending
December 31, 1998 and continuing thereafter for successive terms of one
year unless timely notice to terminate is given by either the Company or
Mr. Naples. Mr. Naples' base salary is at an annual rate of $350,000 which
is to be reviewed annually after January 1, 1999 if the Employment
Agreement is then in effect. Mr. Naples is eligible to participate in the
Company's incentive compensation
planIncentive Compensation Plan pursuant to which bonuses may be paid
to participants.
Pursuant to the Employment Agreement, Mr. Naples was granted a stock
bonus of 100,000 shares of the Company's Common Stock. Of this amount,
5,000 shares were paid to him immediately; 45,000 shares were registered in
Mr. Naples' name and are beingto be held by the Company for delivery to Mr. Naples in
installments of 15,000 shares each on October 2, 1996, 1997, and 1998 if
Mr. Naples is employed by the Company on those dates;dates of which 15,000 shares
have been delivered to Mr. Naples; and 50,000 shares are to be delivered to
him beginning in 19961997 at the rate of 1,000 shares for each $.01 increase in
the Company's net income per share of Common Stock as reported to
shareholders in excess of $1.10 per share. As the $1.10 per share target
was not achieved in 1996, no shares were delivered to him in 1997. The
Company may make loans to Mr. Naples to cover withholding and additional
taxes on the stock bonuses.
10
bonuses, and a loan in the principal amount of $186,244
has been extended. The loan has a ten-year term ending November 2005 and
bears interest at a rate of 6.4% per annum.
The Employment Agreement also provides for and Mr. Naples was granted
options to purchase 200,000 shares of the Company's Common Stock, which
options become exercisable in installments and at varying prices as follows--135,000follows
- -- 135,000 shares, 35,000 shares, and 30,000 shares, respectively, after
October 2, 1996, 1997, and 1998, prices of $17.50 for the first 100,000
shares, $19.25 for the next 50,000 shares, and $22.50 for the remaining
shares. Mr. Naples was also granted 25,000 performance incentive units
under the Company's Long-Term Performance Incentive Plan for the 1995
through 1998 performance award period and will be granted not less than
25,000 performance incentive units and options to purchase not less than
50,000 shares of the Company's Common Stock for the performance award
period covering 1997 through 2000. Mr. Naples participates in the Company's
Supplemental Retirement Income Plan with full service being based on 15
years instead of 30 years, as in the case of other participants.
The Employment Agreement further provides that upon the termination of
Mr. Naples' employment for reasons other than Mr. Naples' death or
disability or by the Company for "cause" or by Mr. Naples for other than
"good reason" (each as defined in the Employment Agreement), the Company
will pay Mr. Naples termination benefits ranging from 250% to 300% of his
base salary depending upon when such termination occurs. In addition,
subject to certain conditions, if Mr. Naples' employment is terminated, his
right to exercise the stock options and to receive his stock bonuses may be
accelerated.
All other executive officers of the Company are employed pursuant to
employment agreements, which agreements provide for each officer's salary
and the basis upon which his bonus (if any) is to be calculated. Salary and
the bonuses, if any, are adjusted annually by the Compensation/Management
Development Committee. EachExcept in the case of Mr. Meijer, each employment
agreement is for an initial term of one (1) year and thereafter is
automatically renewed for successive one (1) year terms unless either party
gives written notice of termination at least ninety (90) days prior to the
expiration of the then current term. TheMr. Meijer's employment agreement
provides for continued employment until either party gives the other party
six (6) months' notice of termination. Also, in the case of Mr. Benoliel
and Mr. Kirk, their agreements also provide for the payment by the Company of an
amount substantially equal to 150% of the officer'stheir then current annual rate of
salary (except in the case of Mr.
Lubsen whose agreement, which has expired due to his resignation, provided for
the payment of the greater of 200% of his then current annual salary or
$400,000) if theeither officer's employment by the Company is terminated other
than for cause or by reason of death, disability, or normal retirement
within three (3) years after the occurrence of certain specified events
that constitute a change or potential change in control of the Company,
and, in the case of Mr. Meijer, his agreement provides for a payment equal
to two (2) years salary, bonus, and vacation if he elects to resign from
his position within twelve (12) months of a change in control. In addition,
under the terms of Mr. Kirk's employment agreement, if the Company
terminates Mr. Kirk's employment for reasons other than for "Termination
for Cause" (as defined in Mr. Kirk's employment agreement), the Company
shall pay, if termination occurs within three (3) years of his initial date
of employment, not less than eighteen (18) months' base salary calculated
at his then current rate, or, if it occurs after the initial three (3) year
period of employment, the Company shall pay three (3) months' salary plus
one month for each year employed by the Company. Under the terms of Mr.
Meijer's employment agreement, if the Company terminates Mr. Meijer's
employment for other than cause, it shall pay to Mr. Meijer an amount equal
to two (2) months' income (as defined in Mr. Meijer's employment agreement)
for each year of service up to a maximum of twenty-four (24) months.
10
Pension and Death Benefits
Substantially all of the Company's U.S. employees are covered by a
noncontributory qualified defined benefit retirement plan (the "Pension
Plan"). The method of funding the Pension Plan does not readily permit the
calculation of the required contribution, payment, or accrual applicable to
any covered individual. The formula for determining the annual pension
benefit is based upon two formulas, a past service formula for service
through November 30, 1989 and a future service formula for service
beginning December 1, 1989, as follows: (a) 1.1% of the employee's Highest
Average Earnings (HAE) (which means the average of the employee's three
highest consecutive years of pay including overtime, shift differential,
bonuses, and commissions) before December 1, 1989 plus .5% of HAE over the
employee's Covered Compensation as defined in the Pension Plan (which
depends on the employee's birth date and is determined from an Internal
Revenue Service table which is updated each year) times the employee's
service up to December 1, 1989; and (b)(i) for the employee's service after
December 1, 1989 until past and future service total 35 years, 1.15% of
annual pay plus .6% of annual pay over the employee's Covered Compensation
and (ii) for the employee's service after December 1, 1989 beyond 35 years,
1.3% of annual pay.
Listed below for each of the persons named is the estimated annual
pension benefit payable to them and their credited service under the
Pension Plan. The estimate of the annual pension benefit was made by adding
to the accrued benefits as of November 30, 19951996 an estimate of benefits
that will be accrued from December 1, 19951996 to age 65 based upon W-2 or
other information.
11
Years
Credited
Estimated Annual Service as of
Name Pension Benefit(1) 12/31/95
---- ------------------ ---------------96
----------------------------------------------------------------------
Peter A. Benoliel $98,544 39
Sigismundus W. W. Lubsen 25,054(1) 7$104,636 40
Ronald J. Naples 32,53732,110 1
Thomas F. Kirk 31,319 0
Jose Luiz Bregolato 41,000(2) 2
John E. Burrows, Jr. 12,183(1) 5
Daniel S. Ma 22,805 227,184 3
Marcus C. J. Meijer 84,768(3) 4
Clifford E. Montgomery 41,559 482,110(1) 5
- -------------------------
(1) Mr. Lubsen's and Mr. Burrows' employment terminated on July 31, 1995 and on
November 6, 1995, respectively. The amount stated is the actual amount
payable at age 65.
(2) The pension benefit for Mr. Bregolato is provided by the Brazilian pension
program which is a government-defined and funded program supplemented by
the Company.
(3) The pension benefit for Mr. Meijer is provided by a policy funded
through premiums paid to an insurance company. The premiums are
currently equal to 16.75% of Mr. Meijer's annual pensionable salary.
The Company also provides supplemental retirement income in accordance
with the provisions of a Supplemental Retirement Income Program (the
"Program") which became effective on November 6, 1984. The Program, which
is a "non-qualified plan" for federal income tax purposes, is intended to
provide to officers of the Company elected to office by the Board of
Directors additional retirement income in certain cases. Generally
speaking, an officer who, as of age 65, has completed at least 30 years of
employment with the Company and/or its affiliated companies will qualify
for the maximum benefit under the Program which will entitle him to receive
annually from the date of retirement until death such payments, if any, as
are required to maintain his "net post-retirement income," as defined, at a
level equal to 80% of his "net pre-retirement income," as defined. For an
officer who otherwise qualifies to participate in the Program but, as of
age 65, has completed less than 30 years of employment (15 years in the
case of Mr. Naples), the maximum benefit is reduced by 2% (2.667% in the
case of Mr. Naples) for each such full year of employment less than 30.
Because the benefits payable under the Program depend on various post-retirementpost-
retirement factors (e.g., defined benefit pension calculation, number of
years employed less than 30, social security benefit at age 65, state,
local, and federal income taxes on pension and social security benefits),
it is impossible to determine in advance which officers might be eligible
to receive payments under the Program or the amount payable to any
participant. Payments were made pursuant to the Program during the year
ended December 31, 19951996 in the aggregate amount of $165,803.$198,000.
11
Listed below for each named executive officer is the estimated annual
payment to be made under the Program assuming that (a) the named executive
officer retires at age 65; (b) the officer's compensation (salary plus
incentive) remains at its current level; (c) the estimated pension benefit
is as set forth above; (d) social security benefits remain unchanged and at
the current level; and (e) there is no change to the current federal,
state, and local income tax rates applicable to pension and social security
benefits.
12
Estimated Payment
Name Under the Program
---- --------------------------------------------------------------------
Peter A. Benoliel $71,668
Sigismundus W. W. Lubsen -0-(1)$ 66,669
Ronald J. Naples 87,031
Jose Luiz Bregolato -0-(2)
John E. Burrows, Jr. -0-(1)124,793
Thomas F. Kirk 47,339
Daniel S. Ma 18,09141,157
Marcus C. J. Meijer -0-(2)
Clifford E. Montgomery 16,1410(1)
- -----------------------
(1) Neither Mr. Lubsen nor Mr. Burrows met the qualification requirements by
their last date of employment by the Company.
(2) Messrs. Bregolato and Meijer dodoes not participate in the Pension Plan and, therefore, areis
not eligible for payments under the Program.
Certain of the Company's executive officers are entitled to a death
benefit if employed by the Company at the time of death. The benefit, equal
to 1 1/3 times the deceased officer's then current annual salary plus
$30,000, is payable in installments at various times over a 40 month period
after death. The Company's policy is not to provide currently for this
contingent future liability.
Compensation of Directors
Employees of the Company and persons affiliated with the Company's
General Counsel are not paid any fees for services as a director of the
Company. During 1995,1996, directors of the Company, who were not employees or
affiliated with the Company's General Counsel, were paid a standard fee of
$15,000 each for the year plus $850 for each meeting attended except that
directors who are former employees received only the standard fee. In
addition, they received $850 for attending each meeting of a Committee on
which they serve. Each Committee Chairman received an additional $150 for
each Committee meeting chaired.
Alex Satinsky, a director of the Company, is a member of the law firm
Fox, Rothschild, O'Brien & Frankel, which was retained by the Company as
General Counsel during the year 19951996 and which is being retained by the
Company in such capacity during the current year.
COMPENSATION/MANAGEMENT DEVELOPMENT COMMITTEE REPORT
ON EXECUTIVE COMPENSATION
Introduction
The philosophy of the Company's executive officers' remuneration program is to
compensate on the basis of performance. Therefore,Accordingly, a considerable portion
of an executive officer's total compensation is incentive basedincentive-based and tied
directly to the achievement of pre-established business goals. The Company's compensation program
has three components: a base salary; an annual incentive cash payment; and
compensation realized from options and/or performance incentive units
issued under the Company's Long-Term Performance Incentive Plan (the
"Plan").
Both the
annual incentive payment and compensation earned pursuant to the Plan are based
on achievement of previously set financial criteria targeted for the development
of shareholder value. All components combined are intendedCompetitive Reward Systems
In order to attract, motivate, and retain executives.
Compensation Structured to Reward Excellence
Theexecutives, the Company
positions its executive officer base pay levels at the median of a broad
cross section of both chemical and chemical specialty companies in the
United States, derived from theusing a database of the compensation consulting
company HayGroup (some companies of which(which may be included in theinclude companies that are part
of the S&P Chemicals (Specialty) Index) and asavailable through HayGroup, a
compensation consulting company. With respect to foreign-based executive officers in
other countries, the base pay is determined based upon the regions where such executive officersin which
they are located. Total pay,
which includes incentive-based compensation, is sufficiently variable that
outstanding performance may result in total compensation in the top quarter of
the industry comparison group. The most recent survey data places the Company'sWhile average base compensationpay is in the lower half of the
companies surveyed.
13surveyed according to recent data, attainment of the maximum
incentive portion would place total pay in the top quarter of the survey
group.
12
The target compensation forCompensation Components
Base salary is reviewed annually, and increases are based primarily on
performance against pre-established goals with major emphasis on the
positionattainment of financial objectives and the relation to the individual's
penetration into his/her salary range. Individual increases are recommended
by the Chief Executive Officer ("CEO") is currently at the median of the chemical industry group.
Compensation Components
The base salary component is primarily used as a foundation upon which to
overlay the Company's annual and long-term incentive programs. Base salary
increases are approved by the
Compensation/Management Development Committee based on a recommendation by the CEO
following extensive review of each executive officer's performance during the
past year.(the "Committee"). The Committee's decision is based on achievement, as measured against
previously established goals, which include primary emphasis on attainment of
financial goals and non-financial objectives in such areas as leadership,
vision, and the management of cultural change. On average, base salary range
structural increases are made based on median increases in both the national
chemical industry as well as local general industry. Individual salary increases
are made based on performance in comparison to the individual executive's
penetration into his/her salary range. This salary range is part of Quaker's
overall salary structure which is adjusted, as needed, based on HayGroup data
reflecting the median increases inof both the national chemical industry as well asand the local
general industry more closely reflectingfor those cases where the competitiveness of positions
that areposition is not "national" in
nature. In the case of some foreign-based executive officers, residing
outside of the United States who fall within the jurisdiction of laws other than
United States law, salary
increases that aremay be mandated by suchthe laws will be
grantedin the particular country or region
even ifwhen similar increases are not being granted to executive officers locatedresiding in the
United States.
The incentive component is paid on an annual basis in the form of a
cash bonus. It is primarily used to motivate executive officers to meet or exceed
previously established targetsIn 1996, the major portion of the incentive award was based on a consistent basis. The measure used in 1995
is
the attainment of a previously established Profit Before Taxconsolidated corporate Profit-
Before-Tax ("PBT") targets as
well as the accomplishment of non-financial (personal) goals linked directly to
the achievement of the Company's strategic plan. Paymentstarget. In addition, there is also a management
discretionary award which is paid if certain regional, product line,
business development, or business support objectives are made based onattained. The
actual performance compared with target. Performance above budget targetincentive award payout is based on a formula which provides that for each additional 5% achievementthe attainment of budgeted PBT there will be an additional 20% increaseeither or both
financial and discretionary goals, except in the percentagecase of the CEO whose
incentive payout is based on the attainment of financial incentive award.goals only.
At the beginning of the year, the CEO recommends bonus gates at three
levels of consolidated corporate PBT performance as follows: (1) Threshold
- -- the PBT level at which bonus begins to be earned; (2) Target -- the PBT
level at which a mid-level bonus is earned; and (3) Maximum -- the PBT
level at which the maximum bonus is earned. The total incentive awardmaximum financial bonus
amount is determined by multiplying the base salary compensation labor grade midpoint
of the position based on data provided by the HayGroup, by a previously established incentive award percentage which varies between 20-65%.percentage. The
greater the weightingweight of the position and resultant impact on profitability of
the Company, the greater the percentage. PBT targets have historically been established at levels whichIn the Committee believes have been aggressive. In 1995, since Company PBT targets were
not achieved, nonecase of the individuals who served as CEO, nor the
othermaximum financial award that might be paid is 80% of his labor grade
midpoint. The applicable maximum percentage for executive officers received incentive payments resultingis lower
and can range from achievement40% to 60% of previouslylabor grade midpoint. Depending upon the
performance level achieved, the bonus amount can be as high as the maximum,
or if performance is at the threshold level, up to 20% of the maximum
amount will be paid.
The discretionary bonus award may be paid on the attainment of pre-
established financial objectives. Incentive payments were made in certain cases
(other thangoals and within pre-established parameters. This amount is
awarded at the discretion of the manager and targeted to recognize
individual performance. No discretionary bonus is paid to the CEO)CEO.
The PBT target for achievement of non-financial objectives referred to
as personal goals.1996 was aggressive, and the Target level was
achieved.
The final component is compensation realized from the biannual grants
of incentive stock options, non-qualified options, and performance
incentive units issued under the Plan. Awards under the Plan provide
incentives to those employees largely responsible for the long-term success
of the Company. The Plan
is primarily used to retain and motivate executive officers to improve total
return to shareholders. With stock options, executive officers receive gains only
if the stock price improves over the fair market value at the date of the
grant. With performance incentive units, for the 1995-98 Plan, the cash
value of the award is based on average earnings per share growth rate and
average return on assets. The purpose of issuing both stock options and
performance incentive units is to motivate executive officers to make the
types of long-term changes in the Company's business that will affect long-termlong-
term total return to shareholders. Past practice has been to grant stock
options combined with performance incentive units to executive officers in
alternate years and,as was the case in 1995, both incentive1995. In 1996, however, stock options and performance incentive units
were issued to each of the executive officers.officers, and the Committee is
currently evaluating whether the program needs to be modified to provide
for annual grants under the Plan. The amounts of the awards were based on
the relative position of each executive officer within the organizational
structure of the Company and past practice and performance factors
independent of the terms and amounts of awards previously granted. No
performance incentive units were granted in 1996 except to Mr. Kirk who
joined the Company on April 1, 1996 and received performance units
comparable to those provided to the executive officers in 1995.
13
Compensation of Chief Executive Officer
The compensation of the CEO, Ronald J. Naples, who assumedfor the position of President
and Chief Executive Officer on October 2,1996 year was
established in 1995 was fixed by the Compensation/Management Development Committee without reference to any specific
criteria butand was incorporated in an Employment
Agreement between the Company and Mr. Naples at the time of his employment
by the Company, as reported in detail elsewhere in this Proxy Statement.
The total compensation package for Mr. Naples was established by the
Committee at levels whichconsidered by the Committee believed to have beenbe reasonable after
having taken into account Mr. Naples' prior experience as athe chief
executive officer of a successful corporation and his general familiarity
with the Company after having served as a director for over seven years.
14
Policy RegardingMr. Naples also earned an incentive bonus in 1996 calculated as discussed
above based on the achievement of the Target level for the 1996
consolidated corporate PBT. In addition, in May of 1996, the Committee
issued 75,000 additional non-qualified options to Mr. Naples in recognition
of his performance during the year and the increase in the Company's Common
Stock price.
Deductibility of Compensation for Tax Purposes
Section 162(m) of the Internal Revenue Code (the "Code"), enacted in
1993, generally imposes a $1,000,000 limit on the amount of compensation
deductible by the Company in regard to compensation paid to the Company's
CEO and the other four most highly compensated executive officers. Since
the amount of compensation paid in the last year to any of the Company's CEOsCEO and
each of the
other four most highly compensated officers was considerably less
than $1,000,000, and it is unlikely that compensation levels will
dramatically increase in the foreseeable future, the Company has not
adopted any policy with respect to qualifying compensation paid to
executive officers for deductibility under Section 162(m) of the Code.
Compensation/Management Development Committee
Frederick Heldring, Chairman
Patricia C. Barron
Lennox K. Black
Edwin J. Delattre
Robert H. Rock
14
Performance Graph
Set forth below is a line graph comparing the yearly percentage change
in the cumulative total shareholder return on the Company's Common Stock
against the cumulative total return of the S&P Composite 500 Stock Index, the S&P
SmallCap 600 Stock Index,
and the S&P Chemicals (Specialty) Index for the period of five (5) fiscal
years commencing December 31, 19901991 and ending December 31, 1995.1996.
COMPARISON OF FIVE-YEARFIVE YEAR CUMULATIVE TOTAL RETURN*
AMONG QUAKER CHEMICAL CORPORATION, THE S&P 500 INDEX,
THE S&P & P SMALLCAP 600 INDEX
AND THE S&P & P CHEMICALS (SPECIALTY) INDEX
[The following table was represented by a line graph in the
printed document.]
Quaker S&P SmallCap S&P Chemicals
Date Quaker Chemical Corp. S&P 500 S&P Small Cap S&P Chemicals(spclty)600 Index (Specialty) Index
- ---- --------------------- ------- ------------- --------------------------------------------------------------------------------
12/9091 100 100 100
100
12/91 114 130 141 148
12/92 120 140 150 180105 121 106
12/93 94 155 171 21383 144 121
12/94 114 157 149 203100 137 105
12/95 86 215 196 264
*$10075 178 139
12/96 96 216 142
* $100 invested on 12/31/9091 in stock or index--index
including reinvestment of dividends.
Fiscal year ending December 31.
15
APPOINTMENT OF INDEPENDENT ACCOUNTANTS
The Board of Directors of the Company has appointed Price Waterhouse
LLP, independent accountants, to examine the accounts of the Company for
the year ending December 31, 19961997 and to report on the Company's financial
statements for that period. The firm of Price Waterhouse LLP has acted as
independent accountants for the Company since 1968. Representatives of
Price Waterhouse LLP will be present at the Meeting to make a statement if
they desire to do so and to respond to appropriate questions.
There is no requirement that the appointment of Price Waterhouse LLP
as the Company's independent accountants be submitted to the shareholders
for their approval. However, the Board of Directors believes that
shareholders should be provided an opportunity to express their views on
the subject. The Board of Directors will not be bound by a negative vote
but will take any negative vote into consideration in future years.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE IN FAVOR OF THE
RATIFICATION OF THE APPOINTMENT OF PRICE WATERHOUSE LLP.
DEADLINE FOR RECEIPT OF SHAREHOLDER PROPOSALS
TO BE INCLUDED IN MANAGEMENT'S PROXY AND
PROXY STATEMENT FOR THE NEXT ANNUAL MEETING
OF SHAREHOLDERS
In order for a shareholder's proposal(s) to be set forth in the
Company's Proxy Statement and Proxyproxy for the 19971998 Annual Meeting of
Shareholders, the shareholder must present his or her proposal(s) to the
Company not later than November 29, 1996.28, 1997.
OTHER MATTERS
The Board of Directors does not know of any matters other than the
matters described herein and procedural matters to be presented at the
Meeting. If any other matters properly come before the Meeting, the persons
named in the accompanying proxy will vote on such matters in accordance
with their best judgment.
By Order of the Board of Directors,
KARL/s/Karl H. SPAETHSpeth
-----------------------------------
Karl H. Spaeth
Secretary
Dated: March 29, 199627, 1997
16
EXHIBIT A
---------
SHAREHOLDER VOTING ADMINISTRATIVE PROCEDURES
Voting Rights
At the Annual Meeting of Shareholders held May 6, 1987, shareholders
approved an amendment to the Articles of Incorporation, pursuant to which
the holders of the Company's $1.00 par value Common Stock on May 7, 1987
(the "Effective Date") became entitled to 10 votes per share of Common
Stock with respect to such shares, and any shares of Common Stock acquired
after the Effective Date, subject to certain exceptions, shall only be
entitled to 1 vote per share until such shares have been owned beneficially
for a period of at least 36 consecutive calendar months, dating from the
first day of the first full calendar month on or after the date the holder
acquires beneficial ownership of such shares (the "Holding Period"). Each
change in beneficial ownership with respect to a particular share will
begin a new "1 vote" Holding Period for such share. A change in beneficial
ownership will occur whenever any change occurs in the person or group of
persons having or sharing the voting and/or investment power with respect
to such shares within the meaning of Rule 13d-3 of the General Rules and
Regulations under the Securities Exchange Act of 1934. Under the amendment,
a share of Common Stock held of record on a record date shall be presumed
to be owned beneficially by the record holder and for the period shown by
the shareholder records of the Company. A share of Common Stock held of
record in "street" or "nominee" name by a broker, clearing agency, voting
trustee, bank, trust company, or other nominee shall be presumed to have
been held for a period of less than the required 36 month Holding Period.
The foregoing presumptions are rebuttable upon presentation to the Company
of satisfactory evidence to the contrary. The amendment also provides that
no change in beneficial ownership will be deemed to have occurred solely as
a result of any of the following:
(1) a transfer by any gift, devise, bequest, or otherwise through the
laws of inheritance or descent;
(2) a transfer by a trustee to a trust beneficiary under the terms of
the trust;
(3) the appointment of a successor trustee, guardian, or custodian
with respect to a share; or
(4) a transfer of record or a transfer of a beneficial interest in a
share where the circumstances surrounding such transfer clearly
demonstrate that no material change in beneficial ownership has
occurred.
Maintaining Records
The Company's registrar and transfer agent, American Stock Transfer &
Trust Company, maintains the Company's register of shareholders. A single
register is maintained, but individual holdings are coded to indicate
automatically the number of votes that each shareholder is entitled to
cast. Internal mechanisms automatically convert the voting rights by a 10-to-110-
to-1 ratio for those shareholders who have held their shares for the
required Holding Period. Additionally, the register can be adjusted
manually, in order to respond to shareholders whose shares were held in
"street" or "nominee" name if shares acquired were held by the same party
for the required Holding Period.
Proxy Administration
As indicated above, record ownership proxy administration is
relatively simple. The transfer agent will mail proxy cards to all
shareholders, and each proxy card will reflect the number of votes that the
shareholder is entitled to cast, not the number of shares held. If
shareholders have deposited shares with brokers, clearing agencies, voting
trusts, banks, and other nominees, such shareholders will normally be
entitled to one vote per share. If they can provide evidence that they have
held their shares for the Holding Period, they can increase the number of
votes that may be cast to 10 votes per share by proper notification to the
Company. Equally, if a shareholder believes that he or she is entitled to
10 votes per share by virtue of falling within one of the exceptions set
forth above, that can be accomplished through proper notifica-
tionnotification to the
Company. Acceptable substantiation will in most cases be a letter from the
shareholder explaining the circumstances and stating why he or she feels
that the common shares held by such shareholder are entitled to 10 votes
per share, either because the shares have been held for the required
Holding Period or because the shareholder falls within one of the
exceptions set forth above. The Company reserves the right to change what
it deems to be acceptable substantiation at any time if it 17
appears from
experience that the present definition is inadequate or is being abused,
and further reserves the right at any time to require that a particular
shareholder provide additional evidence that one of the exceptions is
applicable.
17
Where evidence is presented that is satisfactory, the shareholder
records will be manually adjusted as appropriate. The shareholder
submitting the evidence will be advised as to any action taken or not
taken, which will be posted by ordinary mail to the shareholder's
registered address.
Special proxy cards are not used, and no special or unusual procedures
are required in order properly to execute and deliver the proxy card for
tabulation by the transfer agent.
Summary
The procedures set forth above have been reviewed with representatives
of various brokers and banks, as well as counsel to the Company. Those
representatives have made helpful and valuable suggestions, which have been
incorporated in the procedures.
The Company is confident that these procedures are efficient in
addressing the complications of multi-vote casting and tabulating, but the
Company is prepared to revise them if experience dictates the need for
revision.
18
PROXY
QUAKER CHEMICAL CORPORATION
Elm and Lee Streets,
Conshohocken, PA 19428
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints William L. Batchelor, Peter A. Benoliel,
and Alex Satinsky,Ronald J. Naples, and each of them (or if more than one is present,
then a majority of those present) proxies of the undersigned, to attend the
Annual Meeting of Shareholders of Quaker Chemical Corporation, a
Pennsylvania corporation (the "Company"), to be held at the Philadelphia
Marriott West, West Conshohocken, Pennsylvania, on May 9, 1996,7, 1997, or any
adjournment thereof, and with all powers the undersigned would possess if
present, to vote:
1. ELECTION OF DIRECTORS FOR all nominees listed below |_|[ ] WITHHOLD AUTHORITY |_|[ ]
(except as marked to the contrary below) to vote for all nominees listed below
William L. Batchelor, Peter A. Benoliel,Lennox K. Black, Donald R. Caldwell, Robert E. Chappell,
and Robert H. RockP. Hauptfuhrer
(Instruction: to withhold authority to vote for any individual nominee
write that nominee's name on the space provided below.)
- --------------------------------------------------------------------------------_______________________________________________________________________
2. PROPOSAL TO RATIFY THE APPOINTMENT OF PRICE WATERHOUSE LLP AS THE
COMPANY'S INDEPENDENT ACCOUNTANTS FOR 1996.1997.
FOR |_|[ ] AGAINST |_|[ ] ABSTAIN |_|[ ]
(CONTINUED ON REVERSE SIDE)
(CONTINUED FROM REVERSE SIDE)
3. IN THEIR DISCRETION UPON SUCH OTHER MATTERS AS MAY COME BEFORE THE
MEETING OR ANY ADJOURNMENT THEREOF.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY
WILL BE VOTED FOR PROPOSALS 1 AND 2.
The undersigned hereby also acknowledges receipt of the Notice of
Annual Meeting of Shareholders, the Proxy Statement with respect to said
Meeting, and the Company's Annual Report for the year ended
December 31, 1995.1996.
DATED:__________________________, 1996________________________ , 1997
______________________________________
(Signature)
(Signature should be exactly as name or
names appear on this Proxy)
PLEASE DATE, SIGN, AND RETURN PROMPTLY
Quaker Chemical
Corporation ELM AND LEE STREETS
CONSHOHOCKEN o PENNSYLVANIA 19428-0809 o USA
TELEPHONE: 610-832-4000 o FACSIMILE: 610-832-4495
March 29, 1996
Dear Quaker Shareholder:
Your enclosed proxy card shows the number of votes you are entitled to cast not
the number of shares that you own.
This reflects the action taken at the Annual Meeting of Shareholders on May 6,
1987 when shareholders approved an amendment to the Articles of Incorporation by
which holders of Common Stock became entitled to 10 votes per share of Common
Stock for shares which were held on that date. The amended Articles also provide
that with respect to shares acquired after May 6, 1987, all shares are entitled
to one vote per share until such shares are held for 36 consecutive months.
After 36 months, each share is entitled to 10 votes.
There are some exceptions to the above and those exceptions are listed in
Exhibit A "Shareholder Voting Administrative Procedures" to the enclosed Proxy
Statement.
Because we have no means of tracking ownership of shares held in "street" or
"nominee" name, such shares are presumed to have been held for a period of less
than 36 consecutive months.
Please review the number of votes which are listed on the proxy card. For all
shares purchased by you before March 1, 1993 (36 months before the record date),
you are entitled to 10 votes per share. For all shares purchased by you after
March 1, 1993, you are entitled to one vote per share.
If you feel that the votes listed do not accurately reflect the number of votes
you are entitled to cast, Exhibit A to the enclosed Proxy Statement outlines
procedures by which you may seek change. If you have any questions, please call
Irene M. Kisleiko, Assistant Corporate Secretary, at 610-832-4119.
To allow sufficient time to research your questions or act on your requests,
please call Ms. Kisleiko at Quaker Chemical as soon as possible.
Thank you.