SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] Confidential, For Use of the
[X] Definitive Proxy Statement Commission Only (as permitted
[_] Definitive Additional Materials by Rule 14a-6(e)(2))
[_] Soliciting Material Pursuant to
Rule 14a-11(c) or Rule 14a-12
CHEMFIRST INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
________________________________________________________________________________
1) Title of each class of securities to which transaction applies:
________________________________________________________________________________
2) Aggregate number of securities to which transaction applies:
________________________________________________________________________________
3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is
calculated and state how it was determined):
________________________________________________________________________________
4) Proposed maximum aggregate value of transaction:
________________________________________________________________________________
5) Total fee paid:
[_] Fee paid previously with preliminary materials:
________________________________________________________________________________
[_] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the form or schedule and the date of its filing.
1) Amount previously paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
<PAGE>
CHEMFIRST INC.
Jackson, Mississippi
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
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May 25, 1999
To the Stockholders:
Notice is hereby given that the Annual Meeting of the Stockholders of
ChemFirst Inc. will be held in the Garden Room at Dennery's, 330 Greymont
Avenue, Jackson, Mississippi, on Tuesday, May 25, 1999, at 1:30 p.m. (CST), for
the following purposes:
1. To elect four (4) Directors to serve for the terms specified in this
proxy statement and until their successors are elected and qualified;
and
2. To transact such other business as may be properly brought before the
meeting.
Stockholders of record on March 18, 1999, are entitled to notice of and to
vote at the Annual Meeting or any adjournment thereof.
You are urged to consider the enclosed materials and to sign and return
your proxy promptly in the enclosed, postage prepaid envelope, even if you plan
to attend the meeting. Any stockholder giving a proxy has a right to revoke it
at any time before it is voted.
* PLEASE DATE AND SIGN YOUR NAME EXACTLY AS IT APPEARS ON THE PROXY.
By order of the Board of Directors.
JAMES L. McARTHUR, Secretary
ChemFirst Inc.
P. O. Box 1249
Jackson, Mississippi 39215-1249
March 31, 1999
* NOTICE: Stockholders receiving more than one (1) proxy because of shares
registered in different names or addresses must complete and return
each proxy in order to vote all shares to which such stockholder is
entitled.
<PAGE>
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CHEMFIRST INC.
PROXY STATEMENT
----------
SOLICITATION
The enclosed proxy is being SOLICITED BY THE BOARD OF DIRECTORS of
ChemFirst Inc., P. O. Box 1249, Jackson, Mississippi, a Mississippi corporation
("ChemFirst" or "the Company"), for use at the 1999 Annual Meeting of the
Stockholders of ChemFirst (the "Annual Meeting") to be held in the Garden Room
at Dennery's, 330 Greymont Avenue, Jackson, Mississippi at 1:30 p.m. (CST), on
Tuesday, May 25, 1999, and at any adjournments thereof. Stockholders may revoke
their proxies by written notice to ChemFirst at any time prior to the exercise
thereof, by the execution of a later proxy with respect to the same shares, or
by voting their shares in person. The solicitation will be primarily by mail but
may also include telephone, telegraph, or oral communications by officers or
employees of the Company. Officers and employees will receive no additional
compensation in connection with the solicitation of proxies. Corporate Investor
Communications, Inc., 111 Commerce Road, Carlstadt, New Jersey 07072-2586, has
been retained for advice and consultation and to solicit proxies for the Annual
Meeting at a minimum fee of $4,500. All costs of soliciting proxies will be
borne by ChemFirst. The approximate mailing date of the proxy statements and
proxies to stockholders is March 31, 1999.
All proxies will be voted as specified. IN THE ABSENCE OF
SPECIFIC INSTRUCTIONS, PROXIES WILL BE VOTED: (1) FOR THE
ELECTION OF FOUR (4) DIRECTORS OF CHEMFIRST TO SERVE FOR THE
TERMS SPECIFIED IN THIS PROXY STATEMENT AND UNTIL THEIR
SUCCESSORS ARE ELECTED AND QUALIFIED; AND (2) ON ALL OTHER
MATTERS BY THE PERSONS NAMED IN THE PROXIES IN ACCORDANCE WITH
THEIR JUDGMENT.
VOTING SECURITIES
Record Date. Stockholders of record at the close of business on March 18,
1999, are entitled to notice of and to vote at the Annual Meeting.
Shares Outstanding. As of March 18, 1999, a total of 18,360,735 shares of
Common Stock were outstanding and entitled to vote. Each share is entitled to
one (1) vote per share on each matter submitted to a vote at the Annual Meeting.
Stockholder Proposals. Proposals from stockholders intended to be included
in the Company's proxy statement for the 2000 Annual Meeting must be received by
the Company on or before December 3, 1999 and may be omitted unless the
submitting stockholder meets certain requirements. Further, a proxy may confer
discretionary authority to vote on any matter submitted outside of Rule 14a-8 of
the Securities Exchange Act of 1934, as amended, and included in these proxy
materials of which the Company did not have notice of by January 27, 1999 or if
the Company received notice before December 18, 1998.
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following persons or entities beneficially own as specified in Rule
13d-3 of the Securities Exchange Act of 1934, as amended, more than five (5%)
percent of the Common Stock of the Company as of the dates indicated.
<TABLE>
<CAPTION>
Amount and nature of Percent of
Title of class Name and address of beneficial owner beneficial ownership class
- -------------- ------------------------------------ -------------------- ----------
<S> <C> <C> <C>
Common Stock The Baupost Group, L.L.C. ("Baupost") 1,417,200(1) 7.54%
44 Brattle Street, 5th Floor
Cambridge, MA 02138
SAK Corporation ("SAK") 0
44 Brattle Street, 5th Floor
Cambridge, MA 02138
Seth A. Klarman ("Klarman") 0
44 Brattle Street, 5th Floor
Cambridge, MA 02138
Common Stock Franklin Resources, Inc. 855,900(2) 4.6%
Charles B. Johnson
Rupert H. Johnson
(collectively, "FRI")
777 Mariners Island Boulevard
San Mateo, CA 94404
Franklin Mutual Advisers, Inc. ("FMAI") 1,962,600(2) 10.4%
51 John F. Kennedy Parkway
Short Hills, NJ 07078
Common Stock Goldman Sachs Group, L.P. 1,950,000(3) 10.3%
Goldman, Sachs & Company
(collectively, "Goldman Sachs")
85 Broad Street
New York, New York 10004
Common Stock Donald A. Parker 1,007,699(4) 5.7%
Meryl A. Buchanan
234 Park Avenue, Suite 801
New York, New York 10017
</TABLE>
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(1) According to a Schedule 13G filed with the Securities and Exchange
Commission by Baupost, SAK and Klarman, as of December 31, 1998, Baupost,
SAK and Klarman have sole power to vote or direct the vote, and sole power
to dispose or direct the disposition of 1,417,200 shares, 0 shares, and 0
shares, respectively. According to the Schedule, Baupost is a registered
investment adviser. SAK is the manager of Baupost. Klarman, as sole
director of SAK and a controlling person of Baupost, may be deemed to have
beneficial ownership under Section 13(d) of the securities beneficially
owned by Baupost. Securities reported on this Schedule as being
beneficially owned by Baupost include securities purchased on behalf of a
registered investment company and various limited partnerships.
(2) According to a Schedule 13G filed by FRI and FMAI with the Securities and
Exchange Commission, as of December 31, 1998, FRI and Franklin Advisers,
Inc. have sole power to vote or direct the vote, and sole power to dispose
or direct the disposition of 0 shares and 855,900 shares, respectively. The
Schedule indicates that FMAI, Franklin Advisers, Inc. and Franklin
Management, Inc. are advisory subsidiaries of FRI and, as such, possess
investment and/or voting power over certain securities owned by FRI.
(3) According to a Schedule 13G filed by Goldman Sachs as of August 31, 1998,
Goldman Sachs has shared voting power as to 1,950,000 shares and sole
voting power as to 0 shares, and shared dispositive power as to 1,950,000
shares and sole dispositive power as to 0 shares.
(4) According to a Schedule 13D filed by the Reporting Persons, as of July 27,
1998, Mr. Parker and Ms. Buchanan are deemed to beneficially own 5.7% of
the Company's Common Stock. They share power to vote or direct the vote of
all of the shares they are deemed to beneficially own, and share the power
to dispose or direct the disposition of all of the shares they are deemed
to beneficially own. Mr. Parker and Ms. Buchanan are the general partners
of Buchanan Parker Asset Management, a registered investment adviser and a
general
2
<PAGE>
partner of an investment partnership, and Parker Buchanan Asset Management,
an investment manager (together with Buchanan Parker Asset Management, the
"Investment Managers"). Mr. Parker and Ms. Buchanan are also general
partners of Buchanan Parker Asset Management. All shares are held by
Buchanan Parker Asset Management or in managed accounts over which the
Investment Managers or the Reporting Persons have investment discretion.
See "Security Ownership of Management" for information as to J. Kelley
Williams, Chairman and Chief Executive Officer of the Company, who is also a
greater than five percent (5%) holder of Common Stock of the Company.
BOARD OF DIRECTORS
The Board of Directors (the "Board") represents the interests of all
stockholders and is responsible for setting policy and objectives for the
Company in accord with its Charter, Bylaws, Mississippi laws and other
applicable governmental regulations. The Board is currently composed of eleven
(11) non-employee Directors and one (1) employee, the Chief Executive Officer.
The Board is divided into three (3) groups, typically elected for three-year
terms. The Board held five (5) meetings during 1998. All of the Directors of the
Company have attended at least seventy-five percent (75%) of the Company's Board
meetings and meetings of committees on which they serve which were held during
1998.
The COMMITTEE ON DIRECTOR AFFAIRS is composed of four (4) non-employee
Directors and is responsible for recommendations for nominating new Board
members, recommending appointments of members to Board Committees, and assessing
Chief Executive Officer and Board performance, and recommending Board
compensation for action by the Board. The Chairman of this committee also chairs
executive sessions of the outside members of the Board. The Committee on
Director Affairs considers suggestions for Director nominations from all
sources. Stockholder suggestions for nominees for the 2000 Annual Meeting,
together with appropriate detailed biographical information, should be submitted
to the Corporate Secretary no earlier than January 16, 2000, and no later than
February 25, 2000. The Committee on Director Affairs met two (2) times during
the year.
The AUDIT COMMITTEE is composed of four (4) non-employee Directors with
broad latitude for inquiry into all operations of the Company. Its primary
responsibilities include making a recommendation to the Board on the selection
of independent auditors, reviewing audit reports prepared by independent
auditors, internal auditors, insurance auditors and other consultants engaged by
the Company to examine specific areas of corporate operations, and examining the
adequacy of compliance with various governmental regulations and corporate
policies and procedures. The Audit Committee met four (4) times during the year.
The COMPENSATION & HUMAN RESOURCES COMMITTEE is composed of four (4)
non-employee Directors and is charged with the responsibility of recommending to
the Board a program of overall compensation for the Company and its
subsidiaries, including Executive Officers and other key employees. These
responsibilities include administration of the Company's Long-Term Incentive
Plans. The Compensation & Human Resources Committee met four (4) times during
the year.
Committee assignments are indicated below.
ELECTION OF DIRECTORS
Section 3(a) of the Company's Bylaws specify in part "The directors of the
corporation shall be divided into three (3) groups which shall be as nearly
equal as may be possible." Article III, Section 3(c) of the Company's Bylaws and
Section 3.4 of the Company's Corporate Governance Guidelines provide that each
Director who was, on August 22, 1995, a Director of First Mississippi
Corporation and who had completed less than nine (9) consecutive years of
service on the board of First Mississippi Corporation on that date will offer a
written resignation upon the completion of nine (9) consecutive years of service
on either the board of First Mississippi Corporation or the Company if under age
sixty-five (65) at that time. In addition, all such Directors who were under age
sixty-five (65) on August 22, 1995 will offer a written resignation upon
reaching age sixty-five (65). All other Directors will offer resignations upon
completion of nine (9) consecutive years of service on either the Board of
Directors of First Mississippi Corporation or the Company prior to age
sixty-five (65) and again upon reaching age sixty-five (65). In each case, the
Committee on Director Affairs (or successor committee) will make a
recommendation with respect to such Director for his continued service to the
Board of Directors. Directors will retire at age seventy (70), unless asked by
the Board to serve longer pursuant to the Bylaws. In accordance with
3
<PAGE>
these Bylaw provisions, Mr. Anderson, who would have retired upon reaching age
70 on April 10, 1999, has been asked by the Board to serve the remainder of his
elected term.
Sections I and II below set forth certain information for each nominee for
election as a Director and for each continuing Director who is not a nominee.
See the note following the Directors' information regarding the 1996
distribution of ChemFirst shares for definition of "Distribution Date."
SECTION I
NOMINEES FOR ELECTION AS DIRECTORS
TO SERVE A THREE (3) YEAR TERM TO EXPIRE IN 2002
JAMES E. FLIGG ....... Term Expires: 1999
Mr. Fligg, 62, a Director of the Company since November
1996, is Executive Vice President of BP Amoco, p.l.c.,
Chicago, Illinois. He was Senior Executive Vice
President, Strategic Planning and International
Business Development, Amoco Corporation, from October
1995 until Amoco's acquisition by BP in 1998. From July
1993 until October 1995, he was Executive Vice
President, Chemicals Sector, Amoco Corporation. Mr.
Fligg was a director of First Mississippi from 1994
until the Distribution Date. He is a member of the
Compensation & Human Resources Committee.
ROBERT P. GUYTON ..... Term Expires: 1999
Mr. Guyton, 62, a Director of the Company since
November 1996, is self-employed as a financial
consultant, a position he has held since October 1996.
He was Chairman and Chief Executive Officer of Bank
South Corporation, based in Atlanta, Georgia, from 1990
to 1991. He was President and Chief Executive Officer
of Bank South Corporation from 1980 to 1990. He was
Chairman and Chief Executive Officer of Smart Choice
Holdings, Inc., an owner and operator of automobile
dealerships and finance companies, from July 1996 to
October 1996. He was Vice President and Financial
Consultant for Raymond James & Associates, Inc., an
asset management and investment banking company in
Atlanta, Georgia, from August 1993 to July 1996. He was
a director of First Mississippi from 1969 until the
Distribution Date. He is a member of the Board of
Directors of Piccadilly Cafeterias, Inc., a restaurant
chain based in Baton Rouge, Louisiana. Mr. Guyton is
Chairman of the Audit Committee.
PAUL W. MURRILL ...... Term Expires: 1999
Dr. Murrill, 64, a Director of the Company since
November 1996, is a professional engineer. He is
Chairman of the Board of Directors of Piccadilly
Cafeterias, Inc., a restaurant chain based in Baton
Rouge, Louisiana. He has been a director of Entergy
Corporation since 1994, when it purchased Gulf States
Utilities Company, an electric and gas utility company
in Beaumont, Texas, of which Dr. Murrill was a
director. Dr. Murrill served as Chairman of the Board
and Chief Executive Officer of Gulf States Utilities
Company from 1982 to 1986. He was a director of First
Mississippi from 1969 until the Distribution Date. He
is a Director of ZYGO, a high precision instrument
company, Middlefield, Connecticut; Howell Corporation,
a diversified energy company, Houston, Texas; and
Tidewater, Inc., an oil service company, New Orleans,
Louisiana. He is a member of the Audit Committee.
4
<PAGE>
J. KELLEY WILLIAMS ... Term Expires: 1999
Mr. Williams, 65, is Chairman of the Board and Chief
Executive Officer of the Company, and has been since
November 1996. He was Chairman and Chief Executive
Officer of First Mississippi from August 1995 through
the Distribution Date, and was Chairman, Chief
Executive Officer and President from 1988 until August
1995. He was a director of First Mississippi from 1971
to the Distribution Date. During 1998, he was elected a
director of First American Corporation, based in
Nashville, Tennessee. He is Chairman of the Board of
Getchell Gold Corporation (formerly FirstMiss Gold
Inc.), Englewood, Colorado. He is Chairman of the Board
of EKC Technology, Inc. and First Chemical Corporation,
and a Director of Callidus Technologies Inc., Quality
Chemicals, Inc. and TriQuest, L.P., all subsidiaries of
the Company.
SECTION II
DIRECTORS
RICHARD P. ANDERSON .. Term Expires: 2000
Mr. Anderson, 70, a Director of the Company since
November 1996, is Chairman of the Board of The
Andersons, Inc., an agribusiness company in Maumee,
Ohio. He was Chairman and Chief Executive Officer from
September 1996 through 1998, and was President and
Chief Executive Officer from 1981 to September 1996. He
was a director of First Mississippi from 1987 to the
Distribution Date. He was a director of Centerior
Energy Corporation, an electric utility company in
Cleveland, Ohio, from 1986 to 1996, and N-Viro
International Corporation, a waste recycling company in
Toledo, Ohio from 1993 to 1996. He is also a Director
of Quality Chemicals, Inc., a subsidiary of the
Company. He is a member of the Committee on Director
Affairs and Chairman of the Compensation & Human
Resources Committee.
PAUL A. BECKER ....... Term Expires: 2001
Mr. Becker, 60, a Director of the Company since
November 1996, is President of Summit Investment
Management, Vero Beach, Florida. He was Managing
Director of Mitchell Hutchins Asset Management, Inc.,
an investment management company in New York City and
wholly owned by Paine Webber Group, Inc. from 1978 to
February 1999. Mr. Becker was a director of First
Mississippi from 1985 to the Distribution Date. He is a
member of the Audit Committee.
JAMES W. CROOK ....... Term Expires: 2001
Mr. Crook, 69, a Director of the Company since November
1996, is retired. He was Chairman of the Board of
Melamine Chemicals, Inc. from 1987 to November 1997.
Mr. Crook was a director of First Mississippi from 1971
until the Distribution Date, and is a retired Vice
President of First Mississippi, a position he held from
1965 to June 1985. He is a member of the Committee on
Director Affairs and the ChemFirst Foundation, Inc.
Board of Trustees.
MICHAEL J. FERRIS .... Term Expires: 2000
Mr. Ferris, 54, a Director of the Company since
November 1996, is President and Chief Executive
Officer, as well as a director of Pioneer Companies,
Inc. of Houston, Texas, a position he has held since
January 1997. Pioneer manufactures chlorine, caustic
soda, muriatic acid and related products. He was
formerly the Executive Vice President, Chemicals Group,
of Vulcan Materials Company, a chemical manufacturer
located in Birmingham,
5
<PAGE>
Alabama. Prior to becoming Executive Vice President of
Vulcan in 1996, Mr. Ferris served in various positions
at Vulcan Chemicals, a division of Vulcan Materials
Company, since 1974, including President and Executive
Vice President. Mr. Ferris is a member of the
Compensation & Human Resources Committee and a director
of Quality Chemicals, Inc., a subsidiary of the
Company.
WILLIAM A. PERCY, II . Term Expires: 2000
Mr. Percy, 59, a Director of the Company since November
1996, has been a partner of Trail Lake Enterprises, a
cotton and soybean farming operation in Arcola,
Mississippi, since 1986. In addition, he has been the
Chairman of the Board of Staple Cotton Cooperative
Association in Greenwood, Mississippi, since September
1992. He is a Director of Mississippi Chemical
Corporation, which manufactures and sells fertilizer.
Mr. Percy is also President and Chief Executive Officer
of Greenville Compress Co., Greenville, Mississippi. He
was a director of First Mississippi from 1988 until the
Distribution Date. He is also a Director of Callidus
Technologies Inc., a subsidiary of the Company. He is a
member of the Compensation & Human Resources Committee
and Chairman of the ChemFirst Foundation, Inc. Board of
Trustees.
DAN F. SMITH ......... Term Expires: 2001
Mr. Smith, 53, a Director of the Company since November
1996, is President and Chief Executive Officer of
Lyondell Chemical Company (formerly Lyondell
Petrochemical Company) of Houston, Texas, a position he
has held since December 1996. He has been a director of
Lyondell since November 1988. Lyondell manufactures and
sells petrochemicals and refinery products. He has been
CEO of Equistar Chemicals, L.P., Houston, Texas, since
its formation in December 1997. Equistar is a joint
venture of Lyondell, Occidental Petroleum Corporation,
and Millennium Chemicals Inc. and manufactures polymers
and polymer feedstocks. From August 1994 until December
1996, he was President and Chief Operating Officer of
Lyondell. From May 1993 until August 1994, he was
Executive Vice President and Chief Operating Officer of
Lyondell. He has been a director of Cooper Industries,
Inc. since August 1998. He is a Director of First
Chemical Corporation, a subsidiary of the Company, and
a member of the Audit Committee.
LELAND R. SPEED ...... Term Expires: 2001
Mr. Speed, 66, a Director of the Company since November
1996, is Chairman of the Board of Parkway Properties,
Inc., and Chairman and Trustee of EastGroup Properties,
Inc., real estate investment companies, both of
Jackson, Mississippi. From May 1993 through September
1997, he was also CEO of Parkway Properties and
EastGroup Properties. He is Chairman and Director of
Delta Industries, Inc., a construction materials
manufacturer, and a Director of Farm Fish, Inc.,
Mississippi Valley Gas Company, and KLLM Transport
Services, Inc., all of Jackson, Mississippi. He was
Trustee and President of Eastover Corporation from 1977
through December 1994; President and Director of
Congress Street Properties from 1984 through November
1994; and President and Director of LNH REIT, INC. from
1991 through May 1996. He was also President, Chief
Executive Officer and Director of Rockwood National
Corporation, a real estate developer, from 1983 through
June 1994. He was a director of First Mississippi from
1965 until the Distribution Date. He is a Director of
EKC Technology, Inc., a subsidiary of the Company. He
is a member of the Committee on Director Affairs.
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<PAGE>
R. GERALD TURNER ..... Term Expires: 2000
Dr. Turner, 53, a Director of the Company since
November 1996, is the President of Southern Methodist
University in Dallas, Texas, a position he assumed in
June 1995. He was the Chancellor of the University of
Mississippi in Oxford, Mississippi, from 1984 through
June 1995. He has been a Director of JC Penney Co.,
Inc. since 1995; a Director of Skytel (formerly, Mobile
Telecommunications Technologies Corp.), a provider of
nationwide paging and voice messaging services, since
July 1996; and a Director of Capstar Broadcasting,
indirect owner and operator of radio stations, since
1997. He was a Director of First Mississippi from 1987
until the Distribution Date. Dr. Turner is also a
Director of Callidus Technologies Inc., a subsidiary of
the Company. He is Chairman of the Committee on
Director Affairs and a member of the ChemFirst
Foundation, Inc. Board of Trustees.
Definition of "Distribution Date": On December 23, 1996 (the "Distribution
Date"), First Mississippi Corporation contributed all of its assets and
subsidiaries, other than those relating to its fertilizer business, to the
Company, which at that time was a wholly owned subsidiary of First Mississippi.
First Mississippi then spun off the Company in a tax-free distribution of the
Company's common stock to First Mississippi shareholders (the "ChemFirst
Distribution") on the Distribution Date. The ChemFirst Distribution occurred
immediately prior to and in connection with the merger of First Mississippi with
a wholly owned subsidiary of Mississippi Chemical Corporation on December 24,
1996, pursuant to an Agreement and Plan of Merger and Reorganization dated as of
August 27, 1996.
THE BOARD RECOMMENDS A VOTE FOR THE NOMINEES.
Voting Procedures on Election of Directors. Stockholders have the right to
vote "For" or "Withhold Authority" to vote for some or all of the nominees for
Directors. Pursuant to the Bylaws and Mississippi law, the presence, in person
or by proxy, of a majority of the outstanding shares of Common Stock entitled to
vote shall constitute a quorum to convene the Annual Meeting. Therefore, any
proxy authorized to be voted at the Annual Meeting on any matter, whether or not
marked to "Withhold Authority" or to effect a broker non-vote, will be counted
in establishing a quorum. The election of Directors will require the affirmative
vote of a plurality of the shares voted at the Annual Meeting in person or by
proxy. Votes withheld and broker non-votes will not be included in vote totals
for Director nominees and will have no effect on the outcome of the vote. In the
absence of specific instructions, proxies will be voted for the nominees.
7
<PAGE>
SECURITY OWNERSHIP OF MANAGEMENT
The Directors and Officers of the Company beneficially own (as specified in
Rule 13d-3(d)(1)(i) of the Securities Exchange Act of 1934, as amended) as of
March 1, 1999, Common Stock of the Company as follows:
<TABLE>
<CAPTION>
Common Stock Percent of
Director/Officer Beneficially Owned (1) Class
---------------- ---------------------- ----------
<S> <C> <C>
Richard P. Anderson
Common Stock .................................................. 9,450(2)
NQSOs ......................................................... 5,550
-------
Total ......................................................... 15,000 *
Paul A. Becker
Common Stock .................................................. 10,000
NQSOs ......................................................... 5,550
-------
Total ......................................................... 15,550 *
James W. Crook
Common Stock .................................................. 70,187(3)
NQSOs ......................................................... 5,550
-------
Total ......................................................... 75,737 *
Michael J. Ferris
Common Stock .................................................. 500(4)
NQSOs ......................................................... 3,675
-------
Total ......................................................... 4,175 *
James E. Fligg
Common Stock .................................................. 3,610
NQSOs ......................................................... 3,675
-------
Total ......................................................... 7,285 *
Robert P. Guyton
Common Stock .................................................. 23,000
NQSOs ......................................................... 5,550
-------
Total ......................................................... 28,550 *
Paul W. Murrill
Common Stock .................................................. 5,913(5)
NQSOs ......................................................... 5,550
Convertible Subordinated Debentures ........................... 8,052
-------
Total ......................................................... 19,515 *
William A. Percy, II
Common Stock .................................................. 38,288(6)
NQSOs ......................................................... 5,550
Convertible Subordinated Debentures ........................... 8,052
-------
Total ......................................................... 51,890 *
Dan F. Smith
Common Stock .................................................. 1,000(7)
NQSOs ......................................................... 3,675
-------
Total ......................................................... 4,675 *
Leland R. Speed
Common Stock .................................................. 14,733
NQSOs ......................................................... 5,550
Convertible Subordinated Debentures ........................... 8,052
-------
Total ......................................................... 28,335 *
R. Gerald Turner
Common Stock .................................................. 7,900(8)
NQSOs ......................................................... 5,550
-------
Total ......................................................... 13,450 *
</TABLE>
8
<PAGE>
<TABLE>
<CAPTION>
Common Stock Percent of
Director/Officer Beneficially Owned (1) Class
---------------- ---------------------- ----------
<S> <C> <C>
J. Kelley Williams
Common Stock .................................................. 1,004,080(9)
NQSOs ......................................................... 221,840
Convertible Subordinated Debentures ........................... 181,126
-------
Total ......................................................... 1,407,046 7.4%
R. M. Summerford
Common Stock .................................................. 71,579
NQSOs ......................................................... 69,653
-------
Total ......................................................... 141,232 *
George M. Simmons
Common Stock .................................................. 5,854
NQSOs ......................................................... 31,310
Convertible Subordinated Debenture ............................ 2,013
-------
Total ......................................................... 39,177 *
P. Jerry Coder
Common Stock .................................................. 631
NQSOs ......................................................... 25,080
-------
Total ......................................................... 25,711 *
Scott A. Martin
Common Stock .................................................. 10,349
NQSOs ......................................................... 21,048
-------
Total ......................................................... 31,397 *
All Directors and Officers as a Group (25 persons)
Common Stock .................................................. 1,308,047(10)
NQSOs ......................................................... 602,482
Convertible Subordinated Debentures ........................... 208,302
-------
Total ......................................................... 2,118,831 11%
</TABLE>
- ----------
* Represents less than one percent (1%) of class.
(1) Certain numbers represent shares of Common Stock of the Company underlying
the Convertible Subordinated Debentures and Nonqualified Stock Options
("NQSOs") beneficially owned by the Directors and Officers. The Debentures
are immediately convertible into the specified number of shares of
Convertible Preferred Stock of the same series and then immediately
convertible into the specified number of shares of Common Stock of the
Company. NQSOs are exercisable no earlier than six (6) months from date of
grant into shares of Common Stock of the Company.
(2) Shared voting and investment power of 3,700 shares with Mrs. Anderson.
(3) Included are 700 shares owned by Mrs. Crook of which Mr. Crook has no
voting and investment power and disclaims beneficial ownership.
(4) Shared voting and investment power with Mrs. Ferris.
(5) Included are 775 shares owned by Mrs. Murrill of which Dr. Murrill has no
voting and investment power and disclaims beneficial ownership.
(6) Included are 31,500 shares of which Mr. Percy has sole voting and
investment power as President and CEO of Greenville Compress Company and of
which he disclaims beneficial ownership.
(7) Shared voting and investment power with Mrs. Smith.
(8) Shared voting and investment power of 7,800 shares with Mrs. Turner.
(9) Excluded are 61,750 shares held in the Jean P. Williams Revocable Trust, of
which Mr. Williams has no voting and investment power and disclaims
beneficial ownership.
(10) Except for 2,000 shares, 446 shares and 100 shares for which Mr. Daniel
Anderson, Mr. Troy Browning and Mr. Steve Chustz, respectively, have shared
voting and investment power, and except for 864 shares of which
9
<PAGE>
Mr. William Bartlett has no voting and investment power and disclaims
beneficial ownership, and except as otherwise indicated in these notes, the
shares beneficially owned by the persons indicated in the table above
represent sole voting and investment power.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
Officers and Directors of the Company and persons who own more than ten percent
(10%) of a registered class of the Company's equity securities to file reports
of ownership and changes in their ownership with the Securities and Exchange
Commission and the New York Stock Exchange. The Company monitors compliance and
acts as the Compliance Officer for such filings of its Officers and Directors
and prepares and files reports for such persons based on information supplied by
them. Based solely on its review of such information, the Company believes that
for 1998, its Officers and Directors were in compliance with all applicable
filing requirements.
DIRECTOR COMPENSATION
Directors who are not employees are compensated for their services with a
retainer of $16,000 per year. In addition, non-employee directors receive fees
for attendance at duly called Board and committee meetings. The fees paid are
$1,000 per day for attendance at duly called Board and committee meetings or a
fee of $500 for half-day committee meetings except for committee chairmen, who
receive a fee of $1,250 per day for meetings and $625 for half-day meetings.
These fees are recommended by the Committee on Director Affairs to align board
compensation with peer companies. Travel expenses to and from meetings are
reimbursed to all Directors. No fees are paid for informal meetings. Attendance
at meetings held by telephone conference call are paid at the half-day rate.
Directors performing special services at the request of the Chief Executive
Officer are paid a per diem of $1,000 per day, except for committee chairmen,
who are paid a per diem of $1,250 per day.
Under the Company's 1995 Long-Term Incentive Plan, as amended, and the 1998
Long-Term Incentive Plan (collectively, the "Long-Term Incentive Plans"), each
non-employee Director is entitled to receive Awards which may be in the form of
stock options, restricted stock, stock appreciation rights, performance shares
or units, supplemental cash, or other such forms as appropriate. The
Compensation Committee annually reviews and the Company's Board of Directors
annually approves potential award ranges for the Directors based on, among other
criteria, condition and performance of the Company versus long-term goals. In
March 1998, each non-employee Director received an option to purchase 1,500
shares of Common Stock of the Company, at an exercise price of $26.75 and which
vests 40%, 40% and 20% on February 24, 1999, February 24, 2000, and February 24,
2001, respectively, pursuant to the 1998 Long-Term Incentive Plan.
In addition, under the Long-Term Incentive Plans, Directors are permitted
to make an irrevocable election to receive share units ("Share Units") in
exchange for deferring all or some portion of their annual retainer at a per
Share Unit exchange price that is equal to eighty-five percent (85%) of the fair
market value of Company Common Stock determined as of the first day of the year
during which all or a portion of the deferred retainer was to be paid. Dividends
earned pursuant to the Share Units are reinvested in the form of additional
Share Units. During 1998, Directors purchased Share Units in the following
amounts: Mr. Anderson, 1,613; Mr. Crook, 1,231; Mr. Ferris, 1,120; Mr. Fligg,
1,083; Mr. Percy, 138; Mr. Smith, 1,120; Mr. Speed, 407; and Dr. Turner, 846.
In fiscal 1986, First Mississippi established a Deferred Income Plan for
Directors, Officers and Key Employees ("Plan A") pursuant to which deferral
opportunities in any given year, up to a maximum of three (3) years, were
offered at the discretion of the Board. In connection with the ChemFirst
Distribution, the Company assumed the obligations of First Mississippi under
Plan A. Effective January 1, 1994, Plan A was amended to change the interest
rate prospectively to one hundred and twenty percent (120%) of the applicable
annual federal long-term rate as specified in the Internal Revenue Code. At the
same time, the Board closed Plan A for any new participants or deferral
opportunities, subject to the existing rights and obligations thereunder. Plan A
was further amended effective September 15, 1997, to allow participating
Directors to invest existing account balances in Share Units in lieu of the
interest-bearing investment alternative set forth in the original plan. Share
Units purchased under Plan A were acquired at a price equal to the fair market
value of a share of Company Common Stock on the date of valuation and were
subject to other terms and conditions similar to those which are applicable to
Share Units purchased under Plan B, as discussed below. In February 1998, the
Board further amended Plan A to remove the Share Unit investment alternative
referenced above and replace it with a new crediting option which
10
<PAGE>
allows participating Directors to invest existing account balances at an annual
crediting rate which is based on total stockholder return on the Company's
Common Stock.
In fiscal 1989, First Mississippi established a successor Deferred
Compensation Plan for Outside Directors ("Plan B") to insure continuation of
deferral opportunities for Directors. Plan B was amended effective January 1,
1994, to change the interest rate prospectively to one hundred twenty percent
(120%) of the applicable annual federal long-term rate as specified in the
Internal Revenue Code. Plan B was further amended effective July 1, 1997, to
allow participating Directors to invest existing account balances and future
compensation deferrals in Share Units in lieu of the interest-bearing investment
alternative of the original plan. Except for certain conversions of existing
balances within two (2) years of termination of Board service that are converted
at fair market value of the Company's Common Stock, Share Units purchased in
Plan B are acquired at a price equal to eighty-five percent (85%) of the fair
market value of a share of Company Common Stock on the date of valuation. Except
for the initial election to convert existing account balances, which had a
valuation date of July 1, 1997, the valuation date for all elections to purchase
or convert to Share Units under Plan B is the first trading date in the calendar
year immediately following the year of election. In distributing a participating
Director's account balance at termination of Board service, each Share Unit in
such account is valued at the fair market value of a share of the Company's
Common Stock on the date of valuation. The deferrals under both Plan A and Plan
B are held by the Company until retirement, resignation or other termination of
services. Director J. Kelley Williams participates as an employee in Plan A but
does not participate in Plan B. Directors Anderson, Becker, Crook, Ferris,
Fligg, Smith, Speed and Turner currently participate in Plan B.
The Company furnishes Directors with $100,000 accidental death and
dismemberment and $250,000 of business travel accident protection. The Company
also has a Retirement Plan for its non-employee Directors under which all
Directors who have served at least one (1) three (3)-year term will, under
certain conditions, receive an annual retirement benefit equal to their annual
retainer at retirement for each year of service, not to exceed fifteen (15)
years. The amount of the retainer to be received after retirement shall be fixed
at the time of retirement. The plan also provides for a lump sum payment to a
Director under certain conditions in the event of a change of control and to his
beneficiary upon his death.
EXECUTIVE OFFICERS
The following sets forth certain information with respect to the Officers
of the Company, including age as of the date of the Annual Meeting. All Officers
of the Company were elected to the current term effective January 1, 1999, to
serve at the pleasure of the Company's Board of Directors for a term of one (1)
year and thereafter until their successors are elected and qualified. See the
note following the Directors' information for the definition of Distribution
Date.
Daniel P. Anderson. Mr. Anderson, 46, is Vice President, Health, Safety and
Environmental Affairs, of the Company. He was Vice President, Health, Safety and
Environmental Affairs of First Mississippi from July 1995 to the Distribution
Date. From 1990 to 1995, he was Vice President, Environmental Affairs, of First
Chemical Corporation.
William P. Bartlett. Mr. Bartlett, 60, is President of Callidus
Technologies Inc., a subsidiary of the Company, and has been since 1989.
Max P. Bowman. Mr. Bowman, 37, has been Vice President, Finance, and
Treasurer of the Company since November 1998. He was formerly Treasurer and
Corporate Risk Manager of the Company from 1996 to November 1998. From 1993
until the Distribution Date, he was Internal Audit/Corporate Risk Manager of
First Mississippi.
Troy B. Browning. Mr. Browning, 46, is Controller of the Company and has
held that position since 1996. He was Controller of First Mississippi from 1983
until the Distribution Date.
J. Steve Chustz. Mr. Chustz, 50, is General Counsel of the Company and has
held that position since 1996. He was General Counsel of First Mississippi from
1993 until the Distribution Date.
Paul Jerry Coder. Mr. Coder, 56, is President of EKC Technology, Inc., a
subsidiary of the Company, and has been since December 1992.
11
<PAGE>
William B. Kemp. Mr. Kemp, 50, is Vice President, Human Resources, and has
been since June 1997. From 1992 through June 1997, he was Vice President, Human
Resources, of Rust Environment and Infrastructure, an engineering consulting
firm.
Scott A. Martin. Mr. Martin, 40, is President of Quality Chemicals, Inc., a
subsidiary of the Company, and has been since October 1996. From 1993 to October
1996, he was Vice President and General Manager, Custom Manufacturing of Quality
Chemicals, Inc.
James L. McArthur. Mr. McArthur, 55, is Secretary and Manager, Investor
Relations, of the Company and has held that position since 1996. He was
Secretary and Manager, Investor Relations, of First Mississippi from 1993 until
the Distribution Date.
George M. Simmons. Mr. Simmons, 56, is President of First Chemical
Corporation, a subsidiary of the Company, and has been since July 1995. From
1985 to June 30, 1995, he was Vice President, Marketing, of First Chemical
Corporation.
R. Michael Summerford. Mr. Summerford, 50, has been President and Chief
Operating Officer of the Company since September 1998. He was Vice President and
Chief Financial Officer of the Company from the Distribution Date until
September 1998. From 1988 until the Distribution Date, he was Vice President and
Chief Financial Officer of First Mississippi.
Roger L. Van Duyne. Mr. Van Duyne, 57, is President of TriQuest, L.P., a
limited partnership of which the Company indirectly owns an 87.5% interest, a
position he has held since January 1998. From July 1997 through December 1997,
he was Business Director, Acylation Derivatives, of Clariant Fine Chemicals
Group. He was Business Director, Acylation Derivatives, of Hoechst Celanese Fine
Chemicals Division from July 1995 until July 1997, and was Business Director,
Polymer Enhancement Chemicals, of Hoechst Celanese Bulk Pharmaceuticals and
Intermediates Division from January 1993 until July 1995.
J. Kelley Williams. Mr. Williams, 65, is Chairman of the Board and Chief
Executive Officer of the Company, and has been since November 1996. He was
Chairman and Chief Executive Officer of First Mississippi from August 1995
through the Distribution Date, and was Chairman, Chief Executive Officer and
President from 1988 until August 1995. He was a director of First Mississippi
from 1971 to the Distribution Date. During 1998, he was elected a Director of
First American Corporation based in Nashville, Tennessee. He is Chairman of the
Board of Getchell Gold Corporation (formerly FirstMiss Gold Inc.), Englewood,
Colorado. He is Chairman of the Board of EKC Technology, Inc. and First Chemical
Corporation, and a director of Callidus Technologies Inc., Quality Chemicals,
Inc. and TriQuest, L.P., all subsidiaries of the Company. The Board of Directors
has asked Mr. Williams to continue to serve as CEO beyond his announced
retirement pending selection of a successor.
Frank D. Winter. Mr. Winter, 58, is President and Chief Executive Officer
of FirstMiss Steel, Inc., a subsidiary of the Company, and has been since 1992.
12
<PAGE>
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long-Term
Compensation
Annual Compensation Awards
------------------------------------- ----------
Other Securities
Annual Underlying All Other
Name and Principal Salary Bonus Compensation(1) Options(2) Compensation(3)
Position Year ($) ($) ($) (#) ($)
--------- ---- ------- ------- --------------- ---------- ---------------
<S> <C> <C> <C> <C> <C> <C>
J. Kelley Williams 1998 500,000 0 345,122 59,600 35,322
Chairman & Chief Executive 1997 500,000 600,000 379,551 60,000 405,342
Officer 1996(4) 500,000 324,400 -- 75,000 35,883
R. Michael Summerford 1998 232,667 34,600 -- 30,700 17,289
President & Chief 1997 199,000 144,500 -- 27,150 21,593
Operating Officer 1996(4) 199,000 95,500 -- 20,528 13,932
George M. Simmons 1998 180,838 23,900 -- 14,550 29,081
President, 1997 172,227 121,000 57,996 20,300 54,167
First Chemical Corporation 1996(4) 163,227 81,600 60,368 2,875 15,559
P. Jerry Coder, 1998 164,281 58,000 -- 11,300 15,452
President, 1997 150,713 98,000 -- 16,950 34,475
EKC Technology, Inc. 1996(4) 144,233 70,000 -- 1,750 8,305
Scott A. Martin, 1998 142,400 46,400 21,261 8,950 11,276
President, Quality 1997 132,000 67,840 -- 15,350 25,672
Chemicals, Inc. 1996(4) 115,250 36,300 -- 1,500 5,631
Thomas G. Tepas 1998(5) 204,452 0 -- 58,850 118,146
former President & Chief 1997 250,000 222,000 -- 35,150 39,376
Operating Officer 1996(4) 250,000 135,000 -- 20,544 56,067
</TABLE>
- ----------
(1) Other Annual Compensation includes payouts under Performance Option
arrangements and direct cash payments related to long-term incentive tax
reimbursements. Aggregate perquisites and other personal benefits were less
than either $50,000 or ten percent (10%) of the total annual salary and
bonus reported for the named Executive Officers and are excluded from the
table. Tax reimbursement payments are made to eligible employees equal to
thirty-seven percent (37%) of the Company's federal income tax deduction
resulting from the exercise of Convertible Subordinated Debenture Options,
NQSOs, Incentive Stock Options and Performance Options. Tax reimbursement
payments are not applicable for options granted after August 21, 1995. Tax
reimbursement payments in 1998 to Mr. Williams and Mr. Martin were $345,122
and $5,742, respectively. Tax reimbursement payments in 1997 to Mr.
Williams and Mr. Simmons were $379,551 and $57,996, respectively. Tax
reimbursement payments in 1996 to Mr. Simmons were $16,304. Payments
received by Mr. Martin on exercise of Performance Options in 1998 were
$15,519. Payments received by Mr. Simmons on exercise of Performance
Options in 1996 were $44,064.
(2) NQSOs were granted to Officers and certain key employees of the Company in
1998, 1997 and 1996. The options for 1998 were granted under the 1998
Long-Term Incentive Plan and 1995 Long-Term Incentive Plan. The options for
1997 and 1996 were awarded under the 1995 Long-Term Incentive Plan. No
further grants will be made under the 1995 Long-Term Incentive Plan. No
shares of Common Stock of the Company are available for the grant of awards
under the 1988 Long-Term Incentive Plan or 1980 Long-Term Incentive Plan.
The share amounts for a particular fiscal year under this column reflect
only the shares underlying options which were granted during the respective
fiscal year.
(3) All Other Compensation is comprised of Company contributions related to the
Company's 401(k) and ESOP Plans, including amounts provided by the
Company's Benefits Restoration Plan ("BRP"), executive life insurance,
relocation expenses, the above market portion of interest earned under the
Deferred Income Plan (Plan A) and the dollar value difference between the
purchase price and fair market value of Share Units purchased under the BRP
and the Long-Term Incentive Plans. The BRP permits participants in the
401(k) Plan to make contributions, and the Company to match the same, in
amounts permitted by the 401(k) Plan but that would otherwise be in excess
of those permitted by certain Internal Revenue Code limitations.
13
<PAGE>
Above market interest earned under the Deferred Income Plan A in 1998 was
$5,319 and $9,653 for Mr. Summerford and Mr. Simmons, respectively. See
"Director Compensation."
Company contributions to the 401(k) Plan in 1998 were $6,400, $6,400,
$6,400, $6,400, $5,411 and $6,400 for Mr. Williams, Mr. Summerford, Mr.
Simmons, Mr. Coder, Mr. Martin and Mr. Tepas, respectively. Accruals to the
401(k) related BRP in 1998 were $12,400, $2,907, $834, $171, $285 and
$2,259 for Mr. Williams, Mr. Summerford, Mr. Simmons, Mr. Coder, Mr. Martin
and Mr. Tepas, respectively.
The executive life insurance program was changed effective November 1, 1995
to provide cash subsidies to participants based on age-based premium cost
replacing a program under which the Company provided the insurance and paid
the premiums directly. Cash subsidies in 1998 were $13,680, $1,510, $3,255,
$2,912, $553 and $2,237 for Mr. Williams, Mr. Summerford, Mr. Simmons, Mr.
Coder, Mr. Martin and Mr. Tepas, respectively.
The BRP, 1995 Long-Term Incentive Plan and 1998 Long-Term Incentive Plan
permit Officers to defer certain salary and bonus amounts in the form of
Share Units. The price paid by the Officers for each Share Unit pursuant to
these plans in 1998 was $23.95 for salary deferral (85% of the fair market
value of the Company's Common Stock on January 2, 1998) and $22.75 for
bonus deferral (85% of the fair market value of the Company's Common Stock
on February 24, 1998). The dollar value of amounts earned on deferred
compensation during 1998 is calculated by comparing the difference between
the applicable Share Unit purchase price and the fair market value of the
Company's Common Stock on the date the deferred compensation is earned by
the Officer. Because these amounts are calculated at the time the
compensation is earned, the actual value of such compensation received by
the Officers will vary in accordance with fluctuations in the per share
price of the Company's Common Stock. In 1998, the aggregate preferential
amounts for each of the named Officers was $0, $0, $2,109, $5,118, $4,094
and $0 for Mr. Williams, Mr. Summerford, Mr. Simmons, Mr. Coder, Mr. Martin
and Mr. Tepas, respectively.
Company contributions to the Employee Stock Ownership Plan in 1998 were
$2,350, $1,153, $754, $851, $684 and $0 for Mr. Williams, Mr. Summerford,
Mr. Simmons, Mr. Coder, Mr. Martin and Mr. Tepas, respectively.
(4) Due to a change in the Company's fiscal year end from June 30 to December
31, compensation for 1996 was previously reported in 2 separate periods: a
transition period from July 1, 1996 through December 31, 1996, and the
fiscal period July 1, 1995 through June 30, 1996. Compensation data for
1996 has now been restated to reflect the period January 1, 1996 through
December 31, 1996.
(5) Mr. Tepas resigned in September 1998 as President and Chief Operating
Officer of the Company. Compensation shown for Mr. Tepas is total
compensation for 1998. A total of $106,539 was paid to him in connection
with his resignation and is included in All Other Compensation.
OPTION GRANTS IN 1998(1)
<TABLE>
<CAPTION>
Individual Grants
----------------------------------------------------
Potential Realizable
% of Total Value at Assumed
Number of Options Annual Rates
Securities Granted to of Stock Price
Underlying all Exercise Appreciation for
Options Employees Price Expiration Ten-Year Option
Name Granted in Fiscal Year ($/share) Date Term ($)(2)
---------------- ---------- -------------- --------- ---------- ---------------------
5% 10%
--------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
J. Kelley Williams 59,600 20.8% 26.75 02/24/08 1,002,647 2,540,904
R. Michael Summerford 30,700 10.7% 26.75 02/24/08 516,464 1,308,821
10,000 3.5% 18.81 11/24/08 118,311 299,823
George M. Simmons 14,550 5.1% 26.75 02/24/08 244,774 620,304
P. Jerry Coder 11,300 3.9% 26.75 02/24/08 190,099 481,749
Scott A. Martin 8,950 3.1% 26.75 02/24/08 150,565 381,562
Thomas G. Tepas (3) 58,850 20.5% 26.75 02/24/08 -0- -0-
</TABLE>
- ----------
(1) Options shown in this table represent NQSOs granted to employees under the
Long-Term Incentive Plans on February 24, 1998 and a separate grant to Mr.
Summerford under the 1998 Long-Term Incentive Plan on November 24, 1998. No
other awards were granted pursuant to the Long-Term Incentive Plans.
14
<PAGE>
(2) The dollar amounts under these columns represent the potential realizable
value of each grant assuming that the market value of the Company's Common
Stock appreciates from the date of grant to the expiration of the option at
annualized rates of 5% and 10%. These assumed rates of appreciation have
been specified by the SEC for illustrative purposes only and are not
intended to forecast future financial performance or possible future
appreciation in the price of Company Common Stock. Optionees will only
realize value from this grant if the price of Company Common Stock
appreciates, which would benefit all stockholders commensurately.
(3) All options granted to Mr. Tepas in 1998 were unvested on his resignation
date, and were forfeited pursuant to the Long-Term Incentive Plans.
AGGREGATED 1998 OPTION EXERCISES AND YEAR END VALUES
<TABLE>
<CAPTION>
Number of Securities Aggregate Value of
Underlying Unexercised Unexercised, In-the-Money
Number of Options at 12/31/98 Options at 12/31/98($)(1)
Shares Acquired Value --------------------------- ----------------------------
Name on Exercise Realized ($) Exercisable Unexercisable Exercisable Unexercisable
---- ----------- ------------ ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
J. Kelley Williams 90,563 932,762 355,126 95,600 2,459,734 -0-
R. Michael Summerford -- -- 52,513 56,990 90,809 -0-
George M. Simmons -- -- 19,383 26,730 31,907 -0-
P. Jerry Coder -- -- 13,780 21,470 7,175 -0-
Scott A. Martin -- -- 11,328 18,160 4,488 -0-
Thomas G. Tepas (2) 29,750 210,900 -0- -0- -0- -0-
</TABLE>
- ----------
(1) Value was computed as the difference between the individual option price
and the per share closing price of Company Common Stock on December 31,
1998, as reported on the consolidated transaction system for New York Stock
Exchange issues. Only options with fair market values in excess of the
exercise price are reflected in this column.
(2) When Mr. Tepas resigned, under the terms of the Long-Term Incentive Plans
he forfeited 79,940 non-vested NQSOs on the effective date of resignation,
September 2, 1998. The Long-Term Incentive Plans also required that he
exercise or forfeit vested options within three (3) months after
resignation, December 2, 1998. On that date, Mr. Tepas exercised 2,250
NQSOs, which exercise is included in the above table, and forfeited 40,685
NQSOs.
15
<PAGE>
OTHER COMPENSATION
In 1970, First Mississippi stockholders authorized a noncontributory
retirement plan for the employees of First Mississippi. Employees become one
hundred percent (100%) vested after five (5) years of employment. The retirement
plan provides for normal retirement at age sixty-five (65) with actuarially
adjusted provisions for early and postponed retirement dates. Retirement
benefits are based on years of service and average compensation (wages and
salary) of the five (5) highest consecutive years during employment. The
benefits listed in the table below are not subject to any reduction for social
security or other offset amounts. In connection with the ChemFirst Distribution,
the Company assumed the obligations of First Mississippi under this retirement
plan.
The following table shows the estimated annual retirement benefit payable
to participating employees including Executive Officers based on earnings and
years of service classifications as indicated.
<TABLE>
<CAPTION>
Average Annual Estimated Annual Benefits for Years of Credited Service
Compensation (5 Highest --------------------------------------------------------------------
Consecutive Years) 10 Years 20 Years 30 Years 40 Years
------------------ -------- -------- -------- --------
<S> <C> <C> <C> <C>
$100,000 $17,712 $ 35,424 $ 53,136 $ 70,848
150,000 26,712 53,424 80,136 106,848
200,000 35,712 71,424 107,136 142,848
300,000 53,712 107,424 161,136 214,848
400,000 71,712 143,424 215,136 286,848
450,000 80,712 161,424 242,136 322,848
500,000 89,712 179,424 269,136 358,848
</TABLE>
The table includes amounts that exceed limitations allowed under Section
415 of the Internal Revenue Code. The Company's BRP provides that if an
individual's retirement benefits calculated under the retirement plan exceed the
maximum allowed under the Code, the Company may supplement such employee's
benefits under certain conditions to the extent such benefit is in excess of the
limitation.
Years of service for the Executive Officers listed in the Summary
Compensation Table are: J. Kelley Williams, 31.7 years; R. Michael Summerford,
20.4 years; George M. Simmons, 14.0 years; P. Jerry Coder, 6.6 years; Scott A.
Martin, 21.0 years; and Thomas G. Tepas, 3.5 years.
Termination Agreements
During fiscal 1996, the Board of Directors of First Mississippi approved
and First Mississippi entered into Termination Agreements for the Executive
Officers of First Mississippi, including Mr. Williams, Mr. Summerford, Mr.
Simmons, Mr. Coder, Mr. Martin and Mr. Tepas. Pursuant to that certain Agreement
and Plan of Distribution between First Mississippi and the Company dated as of
December 18, 1996, the Company assumed the obligations of First Mississippi
under the Termination Agreements. The Termination Agreements are contingent upon
a Change of Control, as defined in the Agreements, and provide for three
(3)-year terms which are automatically extended unless the Company determines
not to renew or there is a Change of Control of the Company during any
three-year term. Each officer, other than the Chief Executive Officer, would be
paid upon termination of employment for reasons other than cause, death or
disability or upon resignation for good reason, subsequent to a Change of
Control during the term of the Termination Agreement, three (3) times the sum of
the five (5)-year average of his annual base salary and bonus. The Company's
Chief Executive Officer is entitled to the same termination benefit as described
above for all other Executive Officers, except that the Chief Executive Officer
may resign for any reason, as opposed to "good reason," within thirty-six (36)
months of a Change of Control and still be entitled to the termination benefit.
Upon termination, the individual would have the option, unless he notifies the
Company otherwise, to receive a cash payment equal to the cash value of all his
NQSOs, Debenture Options and Convertible Debentures, whether then exercisable or
not. Following termination, the Company may pay amounts due to individuals for
stock disposition of grants issued in 1994 and earlier under the Company's tax
sharing plan. No individual would receive payments in the event of death,
disability or termination for cause. In addition, the Termination Agreements
provide for an additional payment to be made by the Company to the Chief
Executive Officer if any of the severance payments provided for by the
Termination Agreements or any other payments made pursuant to a Change of
Control of the Company (the "Total Payments") become subject to an
16
<PAGE>
additional tax ("Excise Tax") imposed by Section 4999 of the Code, such that the
net of all of the payments received by the Officer after the imposition of the
Excise Tax on the Total Payments and any federal income tax on the additional
payment shall be equal to the Total Payments.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Chief Executive Officer serves as a member ex-officio of the
Compensation & Human Resources Committee, but may not serve as Chairman or vote
or participate in or be present for Committee decisions regarding his own
compensation. He does not make recommendations about or participate in decisions
regarding any aspect of his compensation. In addition, Mr. Williams, a director
of the Company, is an executive officer (Chairman of the Board of Directors) of
Getchell Gold Corporation, and Mr. Summerford, an executive officer of the
Company, is a Director of Getchell Gold Corporation.
RELATED TRANSACTIONS
In October 1995, First Mississippi Corporation distributed to its
stockholders the shares of Getchell Gold Corporation, formerly FirstMiss Gold
Inc., held by First Mississippi. As part of this distribution, the Company
received a promissory note in settlement of all prior cash advances. The
aggregate unpaid principal amount of this note as of December 31, 1998 was
$28,918,000. In November 1998, Getchell and Placer Dome Inc. announced plans to
merge. Closing is anticipated for second quarter of 1999 and if consummated will
result in the prepayment of principal and interest due to the Company.
During 1998, Quality Chemicals, Inc. and First Chemical Corporation
purchased a total of approximately $625,527 in products from BP Amoco or one of
its affiliates, and Callidus Technologies Inc. sold (directly and indirectly) a
total of $2,382,902 in products to BP Amoco or one of its affiliates.
During 1998, Quality Chemicals, Inc. purchased a total of $417,844 in
products from Pioneer Companies, Inc. or its affiliates through a distributor,
and First Chemical Corporation entered into an agreement with Pioneer or its
affiliates to purchase product through the year 2000 with estimated annual
purchases of $700,000.
During 1998, Quality Chemicals, Inc. purchased a total of $161,695 in
products from Equistar Chemicals, L.P.
The Company has contracted with Parkway Properties, Inc. to locate a tenant
to sublease from the Company office space in a building in Jackson, Mississippi.
If successful, the commission to be paid to Parkway by the Company for these
services would be approximately $200,000.
COMPENSATION & HUMAN RESOURCES COMMITTEE REPORT
ON EXECUTIVE COMPENSATION
Philosophy. The Company's compensation philosophy is designed to maximize
stockholder value and serve the best interest of stockholders and employees. The
philosophy incorporates the following principles:
(a) Compensation should attract and retain qualified employees and
stimulate their useful and profitable efforts on behalf of the
Company;
(b) Compensation should be internally equitable and externally
competitive; and
(c) Compensation should be defined broadly and comprehensively.
Committee Members. The Compensation & Human Resources Committee (the
"Compensation Committee") is a Committee of the Board composed of not less than
three (3) Directors who are not officers or regular employees of the Company or
of any subsidiary of the Company. The Chief Executive Officer ("CEO") of the
Company is also a member ex-officio but may not serve as chairman or vote or
participate in or be present for Compensation Committee decisions regarding his
own compensation. The Compensation Committee selects and is advised by
independent outside consultants as considered appropriate.
Charter. The Compensation Committee operates under a charter approved by
the Board, which formally defines responsibilities, authorities, and procedures.
The charter provides for members to be elected annually by the Board. The
chairman is elected annually by the Compensation Committee. The primary
responsibility of the
17
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Compensation Committee is to assure development, implementation and maintenance
of competitive compensation and benefits to attract, motivate and retain
qualified officers, management and employees.
Overall compensation and benefits are targeted at the median or mid-market
of peer companies. Compensation includes base pay and annual and long-term
performance incentives. Incentives are tied to the Company's financial results
versus peer companies and/or to specific performance objectives linked to
stockholder value. Peer companies are public companies with products and markets
and other characteristics comparable to the Company and/or its subsidiaries.
Duties. The Compensation Committee's duties include the following:
(a) To recommend to the Board compensation policies for the Company and
its subsidiaries;
(b) To recommend to the Board the base salary and annual incentive awards
for Executive Officers;
(c) To review and report to the Board base salaries and annual incentive
awards for other highly compensated officers and employees; and
(d) To designate participants and grant awards under the Long-Term
Incentive Plan.
Components of Executive Compensation
Base Salary. The Compensation Committee annually reviews and compares base
salaries and salary ranges for similar positions in other companies in relevant
markets defined by company size, industry and location. Executive, technical and
other highly compensated positions are valued in the national market using data
developed by nationally recognized compensation consulting firms. The published
compensation data used by the Compensation Committee to establish base salary
ranges is not necessarily comprised of the same peer group of companies included
in the Five-Year Cumulative Total Return Graph. Salary ranges and actual
salaries are adjusted annually, taking into consideration position value, market
pricing, operating results, individual performance and other relevant factors.
The Compensation Committee recommended and the Board approved merit
increases to the three (3) named Executive Officers, other than the CEO and the
President and Chief Operating Officer, which averaged 7.5% in 1998. The
President and Chief Operating Officer received a 50.8% increase effective
September 4, 1998 due to his change in position from Vice President and Chief
Financial Officer to President and Chief Operating Officer.
Annual Incentive Awards. Annual incentive awards, in the form of cash
payments, are designed to achieve specific short-term results and to further
long-term objectives. Financial and other objectives for the Company, its
subsidiaries, and program participants are set at the beginning of each fiscal
year. This process involves the Board, the Compensation Committee, the CEO and
program participants. The Compensation Committee annually reviews and recommends
to the Board participation and award opportunity. Award opportunity is based on
guidelines developed by nationally recognized compensation consultants. At
fiscal year end, incentives are awarded following review of Company and
subsidiary results and performance versus objectives, and peer results and
personal performance of participants versus objectives. As a general rule, no
awards are made unless the Company is profitable. However, awards have been made
for superior individual performance in profitable subsidiaries when the Company
has had a loss.
In February 1999, the Compensation Committee recommended and the Board
approved annual incentive awards, in the total amount of $162,900 for the four
(4) named Executive Officers other than the CEO based on a review of Company and
subsidiary results and performance for 1998.
Long-Term Incentive Awards. Participation in the Long-Term Incentive Plan
is limited to officers and key managers based on responsibility, authority,
potential impact on the Company and competitive practice for similar positions
in peer companies. The Compensation Committee annually reviews and approves
participation and potential award ranges. Award ranges are based on guidelines
developed by nationally recognized compensation consultants. At fiscal year end,
the Compensation Committee reviews Company condition and performance versus
long-term goals and recommends awards under the Long-Term Incentive Plan. Awards
may be in the form of stock options, debenture options, restricted stock, stock
appreciation rights, performance shares or units, supplemental cash or other
such forms as appropriate.
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<PAGE>
The Company also has four (4) Performance Unit Plans outside of the
Long-Term Incentive Plans for certain of its non-public subsidiaries in which
subsidiary executive officers participate. No grants are currently awarded under
these plans, but some units remain unexercised. In three (3) plans, awards are
payable in cash only based on the subsidiary's profits and price earning
multiples of a group of publicly held peer companies. In the other plan, awards
are payable in cash only at the end of a five (5)-year period based on actual
results versus targets.
The Compensation Committee granted 75,500 nonqualified stock options to the
four (4) named Executive Officers excluding the CEO in 1998.
CEO Compensation. At fiscal year end, the Committee on Director Affairs
(which is composed of independent Directors) evaluates the CEO's performance
versus objectives established at the beginning of the year. The Compensation
Committee considers this evaluation and compensation at peer companies in its
review and makes a recommendation to the Board regarding CEO compensation. This
performance evaluation includes an assessment of total return to shareholders
versus peers, return on equity, operating earnings compared to budget and prior
year, financial performance versus peers, restructuring and dispositions,
balance sheet improvements and market capitalization. In February 1999, the
Compensation Committee recommended and the Board approved no change in base
salary and no annual incentive award for Mr. Williams based on 1998 results.
During 1998, Mr. Williams received 59,600 non-qualified stock options priced at
fair market value on date of grant.
COMPENSATION & HUMAN RESOURCES
COMMITTEE
Richard P. Anderson, Chairman
Michael J. Ferris
James E. Fligg
William A. Percy, II
The report of the Compensation Committee shall not be deemed incorporated
by reference by any general statement incorporating by reference this Proxy
Statement into any filing under the Securities Act of 1933 or the Securities
Exchange Act of 1934 (collectively the "Acts"), except to the extent the Company
specifically incorporates this information by reference and shall not otherwise
be deemed filed under such Acts.
19
<PAGE>
PERFORMANCE GRAPH
The following line graph compares the cumulative total stockholder return
on the Company's Common Stock during the five (5)-year period ended December 31,
1998, to the Standard and Poor's 500 Stock Index and cumulative total
stockholder return of peer issuers selected by the Company over the same period.
For financial reporting purposes, First Mississippi Corporation's historical
financial statements, restated to present the fertilizer business as a
discontinued operation, serve as the Company's financial statements for periods
prior to the ChemFirst Distribution. Accordingly, for purposes of this
Performance Graph, the cumulative total stockholder return on the Company's
Common Stock during the three (3)-year period ending December 31, 1996 is deemed
to equate with the cumulative total stockholder return on First Mississippi
Common Stock during the same period. In addition, for purposes of the peer group
discussion below, the historical business operations and business developments
of First Mississippi for periods prior to December 31, 1996 are deemed to be
those of the Company. The graph assumes a one-hundred-dollar ($100) investment
on December 31, 1993 and the reinvestment of all dividends.
Comparison of Five-Year Return on
ChemFirst Inc. Common Stock to
S&P 500 Index & Peer Group Index
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE CHART IN THE PRINTED MATERIAL.]
<TABLE>
<CAPTION>
12/31/93 12/31/94 12/31/95 12/31/96 12/31/97 12/31/98
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
ChemFirst $100.00 193.79 335.40 403.27 500.53 356.43
S&P 500 Index $100.00 101.32 139.35 171.32 228.46 293.74
Peer Group Index $100.00 102.94 135.64 162.60 236.26 189.32
</TABLE>
The Company constructs a peer group index consisting of companies operating
in the same industries as the Company. Peer companies were grouped by industry
and weighted by market capitalization. Industry indices were then weighted by
the Company's asset mix, including chemicals, fertilizer, gold and steel.
Appropriate peer industry groups were removed as the Company disposed of gold in
1995 and fertilizer in 1996. Steel was removed in 1997 as discussed below.
20
<PAGE>
Companies in the gold index were Agnico-Eagle Mines, Atlas Corporation,
Battle Mountain Gold, Echo Bay Mines, Ltd. and FMC Gold. The fertilizer index
consisted of FreeportMcMoRan Resource Partners, L.P., IMC Fertilizer Group/IMC
Global and Terra Industries. The steel index consisted of New Jersey Steel and
NS Group, but was omitted for 1997 in light of the Company's efforts to dispose
of this business and to provide for a more meaningful peer group comparison. The
current applicable index consists of Dexter Corporation, MacDermid, Inc., Olin
Corporation and Quaker Chemical. Quantum Chemical was included in the chemicals
index for years prior to 1994 but was removed from this group in 1994 after it
was acquired by Hanson plc.
AUDITORS
The accounting firm of KPMG Peat Marwick LLP ("KPMG") was approved by the
Board to serve as independent auditor of the Company for 1999.
KPMG has served as independent auditor of the Company for the past three
(3) years, and served as First Mississippi's independent auditor for 33 years
prior to the ChemFirst Distribution. The Company has been advised that neither
KPMG nor any of its associates has a material interest in the Company or any
affiliate thereof. Representatives of KPMG are expected to be present at the
Annual Meeting of Stockholders, will be afforded an opportunity to make a
statement, if they desire, and will be available to respond to appropriate
questions from stockholders.
FORM 10-K
Stockholders may obtain without charge a copy of the Company's Form 10-K
for the fiscal year ended December 31, 1998 filed with the Securities and
Exchange Commission by calling or writing the Company's Investor Relations
Department, 700 North Street, Jackson, Mississippi 39202, telephone (601)
948-7550.
OTHER MATTERS
The management of the Company knows of no other matter which may come
before the Annual Meeting. However, if any matter other than those referred to
herein should properly come before the meeting, the proxies will be voted with
respect thereto in accordance with the judgment of the proxy holder.
Please sign the enclosed proxy and return it in the return envelope
promptly.
JAMES L. McARTHUR
Secretary
<PAGE>
[LOGO] ChemFirst Inc.
1999 ANNUAL MEETING
You are cordially invited to attend the annual meeting of stockholders of
ChemFirst Inc. The meeting will be held Tuesday, May 25, 1999, at 1:30 p.m.
(CST) in the Garden Room at Dennery's, 330 Greymont Avenue, Jackson,
Mississippi.
Please mark the boxes on the proxy card to indicate how your shares should
be voted. Sign and return your proxy as soon as possible in the enclosed
postpaid envelope. To vote in accordance with the Board of Directors'
recommendations, just sign and date the proxy card where indicated - no boxes
need be checked.
Votes are tabulated by The Bank of New York, the Company's transfer agent.
Any comments noted on the proxy card or an attachment will be forwarded to the
Corporate Secretary by Bank of New York. Please indicate if you have comments by
marking the appropriate box.
/s/ JAMES L. MCARTHUR
James L. McArthur
Secretary
Detach Proxy Card Here
- --------------------------------------------------------------------------------
|__|
1. Election of Directors
For all nominees |X| WITHHOLD AUTHORITY to vote |X| *EXCEPTIONS |X|
listed below for all nominees listed below
Nominees: Three year term to expire in 2002 - James E. Rigg, Robert P. Guyton,
Paul W. Murrill and J. Kelley Williams
[INSTRUCTIONS: To withhold authority to vote for any individual nominee mark the
"Exceptions" box and write that nominee's name in the space provided below).
*Exceptions ____________________________________________________________________
2. In their discretion upon such other matters as may properly come before the
meeting. (Crossout if vote is withheld)
I will |X| Change of Address and |X|
attend meeting or Comments Mark Here
NOTE: Please sign exactly as name
appears hereon. Joint Owners, each sign.
When signing as attorney, executor,
administrator, trustee, or guardian,
please give full name as such.
DATE____________________________________
________________________________________
SIGNATURE(S)
________________________________________
SIGNATURE(S)
Votes MUST be indicated
(X) in Black or Blue ink.
Please Sign, Date and Return the Proxy Promptly Using the Enclosed Envelope.
- --------------------------------------------------------------------------------
Please Detach Here
You Must Detach This Portion of the Proxy Card
Before Returning It in the Enclosed Envelope
<PAGE>
CHEMFIRST INC.
This Proxy is Solicited on Behalf of the Board of Directors
for the Annual Meeting on May 25, 1999
The undersigned hereby appoints RICHARD P. ANDERSON, MICHAEL J. FERRIS,
WILLAM A. PERCY, II and R. GERALD TURNER, and each of them, with the power of
substitution and revocation, as attorneys and proxies to appear and vote all
shares of COmmon Stock held by the undersigned, at the Annual Meeting of
ChemFirst Inc. to be held on May 25, 1999 and at any and all adjournments
thereof, and the undersigned hereby instructs said proxies to vote as indicated
on all matters referred to on the reverse side and described in the proxy
statement for the meeting, and in accordance with their judgment on all other
matters that may properly come before the meeting.
All proxies will vote as specified on the reverse side. IN THE ABSENCE OF
SPECIFIC INSTRUCTIONS, PROXIES WILL VOTE (1) FOR the election of the director
nominees, and (2) on all other matters that may properly come before the meeting
in accordance with their judgment. To vote FOR the Board of Directors'
recommendations, just sign and date the reverse side - no boxes need be checked.
See Reverse Side
CHEMFIRST INC.
P.O. BOX 11270
NEW YORK, N.Y. 10209-0270
