SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
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ChemFirst inc.
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<PAGE>
CHEMFIRST INC.
Jackson, Mississippi
-----------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
-----------------
May 23, 2000
To the Stockholders:
Notice is hereby given that the Annual Meeting of the Stockholders of
ChemFirst Inc. will be held at the Hilton Jackson, 1001 East County Line Road,
Jackson, Mississippi, on Tuesday, May 23, 2000, at 1:30 p.m. (CST), for the
following purposes:
1. To elect five (5) directors to serve for the terms specified in this
proxy statement and until their successors are elected and qualified;
2. To act upon a proposal to amend the ChemFirst Inc. 1998 Long-Term
Incentive Plan; and
3. To transact such other business as may be properly brought before the
meeting.
Stockholders of record on March 23, 2000, 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, 2000
* 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>
-----------------
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 2000 Annual Meeting of the
Stockholders of ChemFirst (the "Annual Meeting") to be held at the Hilton
Jackson, 1001 East County Line Road, Jackson, Mississippi at 1:30 p.m. (CST), on
Tuesday, May 23, 2000, 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 an approximate fee of $6,500 plus expenses. 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, 2000.
All proxies will be voted as specified. IN THE ABSENCE OF SPECIFIC
INSTRUCTIONS, PROXIES WILL BE VOTED: (1) FOR THE ELECTION OF FIVE (5) DIRECTORS
OF CHEMFIRST TO SERVE FOR THE TERMS SPECIFIED IN THIS PROXY STATEMENT AND UNTIL
THEIR SUCCESSORS ARE ELECTED AND QUALIFIED; (2) FOR THE APPROVAL OF THE
AMENDMENT TO THE CHEMFIRST INC. 1998 LONG-TERM INCENTIVE PLAN; AND (3) 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 23,
2000, are entitled to notice of and to vote at the Annual Meeting.
Shares Outstanding. As of March 16, 2000, a total of 16,392,205 shares of
Common Stock were outstanding. 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 2001 Annual Meeting must be received by
the Company on or before December 1, 2000 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, of which the Company did not
have notice by February 25, 2001 or if the Company received notice before
January 16, 2001.
<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 5% 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") 1,441,300(1) 7.9%
44 Brattle Street, 5th Floor 8.7%(4)
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 Mutual Advisers, LLC 1,463,300(2) 8.0%
("Franklin") 8.8%(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 6.9%(4)
(collectively, "Goldman Sachs")
85 Broad Street
New York, NY 10004
</TABLE>
- ----------
(1) According to a Schedule 13G filed with the Securities and Exchange
Commission by Baupost, SAK and Klarman, as of December 31, 1999, Baupost,
SAK and Klarman have sole power to vote or direct the vote, and sole power
to dispose or direct the disposition of 1,441,300 shares, 0 shares, and 0
shares, respectively. According to the Schedule 13G, Baupost is a
registered investment advisor. 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 Franklin Mutual Advisers LLC
(formerly Franklin Mutual Advisers, Inc.) with the Securities and Exchange
Commission, as of December 31, 1999, Franklin Mutual Advisers LLC has sole
power to vote or direct the vote, and sole power to dispose or direct the
disposition of 1,463,300 shares.
(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. On March 3, 2000,
Goldman disposed of 800,000 shares, which is not reflected in the number
shown above.
(4) Revised percentage owned as of March 8, 2000, due to recent purchases of
Common Stock by the Company under its stock repurchase program.
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 5% holder of Common Stock of the Company.
2
<PAGE>
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 1999. All directors of the
Company have attended at least 75% of the Company's Board meetings and meetings
of committees on which they serve which were held during 1999.
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 2001 Annual Meeting,
together with appropriate detailed biographical information, should be submitted
to the Corporate Secretary no earlier than January 16, 2001, and no later than
February 25, 2001. The Committee on Director Affairs met two (2) times during
1999. Members of this committee are Mr. Anderson, Mr. Crook, Mr. Speed and Dr.
Turner (Chairman).
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 reviewing
compliance with various governmental regulations and corporate policies and
procedures. The Audit Committee met four (4) times during 1999. Members of this
committee are Mr. Becker, Mr. Guyton (Chairman), Dr. Murrill and Mr. Smith.
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
1999. Members of this committee are Mr. Anderson (Chairman), Mr. Ferris, Mr.
Fligg and Mr. Percy.
3
<PAGE>
PROPOSAL I: ELECTION OF DIRECTORS
Section 3(a) of the Company's bylaws specifies in part that "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 consecutive years of service on
the board of First Mississippi Corporation on that date will offer a written
resignation upon the completion of nine consecutive years of service on either
the board of First Mississippi Corporation or the Company if under age 65 at
that time. In addition, all such directors who were under age 65 on August 22,
1995 will offer a written resignation upon reaching age 65. All other directors
will offer resignations upon completion of nine consecutive years of service on
either the Board of Directors of First Mississippi Corporation or the Company
prior to age 65 and again upon reaching age 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 70, unless asked by the Board to serve longer
pursuant to the bylaws. In accordance with these bylaw provisions, Mr. Anderson,
who would have retired upon reaching age 70 on April 10, 1999, was asked by the
Board to serve the remainder of his elected term. He has been asked by the Board
to stand for election for an additional year and has been nominated for a
one-year term to expire in 2001. Also in accordance with these bylaw provisions,
Mr. Crook will retire on his 70th birthday on April 19, 2000.
Set forth below is 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."
NOMINEES FOR ELECTION AS DIRECTORS
TO SERVE A THREE (3) YEAR TERM TO EXPIRE IN 2003
MICHAEL J. FERRIS Term Expires: 2000
Mr. Ferris, 55, 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, 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 director of ChemFirst Fine Chemicals, Inc.,
a subsidiary of the Company.
JOHN F. OSBORNE New Nominee
Mr. Osborne, 56, is an engineer with over 30 years
experience in the semiconductor industry, including 15
years in senior management positions. Since November
1997, he has been President of Competitive Customer
Support, Twin Bridges, Montana, which provides advisory
services to companies that make or use semiconductors.
From 1988 to November 1997, he was a corporate senior
manager of Lam Research, Fremont, California, a
manufacturer of microchip fabricating equipment,
including President of a business division and Vice
President of various other Lam units. Prior to Lam
Research, he worked for 11 years at N.V. Philips
Electronics, where he had multiple management
responsibilities, including Vice President/General
Manager for Philips' Application Specific and
4
<PAGE>
Microcontroller product lines. He also worked for
Motorola Semiconductor, Phoenix, Arizona, in process
development of lithography, metallization, and cleaning
technologies. He is a director of CFM Technologies,
Exton, Pennsylvania, a publicly-held manufacturer of
capital equipment for semiconductor processing. He has
been an advisor to the board of directors of EKC
Technology, Inc., a subsidiary of the Company, since
1998.
WILLIAM A. PERCY, II Term Expires: 2000
Mr. Percy, 60, a director of the Company since November
1996, is a partner of Trail Lake Enterprises, a cotton
and soybean farming operation in Arcola, Mississippi,
and has been since 1986. He is also President and Chief
Executive Officer of Greenville Compress Co.,
Greenville, Mississippi, a commercial real estate
company. In addition, he has been the Chairman of the
Board of Staple Cotton Cooperative Association in
Greenwood, Mississippi, since 1992. He is a director of
Mississippi Chemical Corporation, which manufactures
and sells fertilizer, and Entergy Corporation, a public
utility. He was a director of First Mississippi from
1988 until the Distribution Date. He is Chairman of the
ChemFirst Foundation, Inc. Board of Trustees.
R. GERALD TURNER Term Expires: 2000
Dr. Turner, 54, a director of the Company since
November 1996, is President of Southern Methodist
University in Dallas, Texas, a position he assumed in
June 1995. He was Chancellor of the University of
Mississippi in Oxford, Mississippi, from 1984 to June
1995. He has been a director of JC Penney Co., Inc.
since 1995, and a director of AMFM, Inc. (formerly
Capstar Broadcasting), indirect owner and operator of
radio stations, since 1997. He was a director of SkyTel
Communications, Inc., a provider of nationwide paging
and voice messaging services, from 1996 to 1999. He was
a director of First Mississippi from 1987 until the
Distribution Date. He is a member of the ChemFirst
Foundation, Inc. Board of Trustees.
NOMINEE FOR ELECTION AS A DIRECTOR
TO SERVE A ONE (1) YEAR TERM TO EXPIRE IN 2001
RICHARD P. ANDERSON Term Expires: 2000
Mr. Anderson, 71, 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 through September
1996. 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 ChemFirst
Fine Chemicals, Inc., a subsidiary of the Company. As
stated under "Proposal I: Election of Directors", the
Board has asked Mr. Anderson to stand for election for
an additional term of one (1) year.
5
<PAGE>
CONTINUING DIRECTORS
PAUL A. BECKER Term Expires: 2001
Mr. Becker, 61, a director of the Company since 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 until the Distribution Date.
JAMES E. FLIGG Term Expires: 2002
Mr. Fligg, 63, a director of the Company since November
1996, is retired. He was Senior Executive Vice
President of BP Amoco, p.l.c., Chicago, Illinois from
1998 until his retirement in 1999. 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.
ROBERT P. GUYTON Term Expires: 2002
Mr. Guyton, 63, 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 director of Piccadilly
Cafeterias, Inc., a restaurant chain based in Baton
Rouge, Louisiana.
PAUL W. MURRILL Term Expires: 2002
Dr. Murrill, 65, a director of the Company since
November 1996, is a professional engineer. 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 is
a director of Piccadilly Cafeterias, Inc., a restaurant
chain based in Baton Rouge, Louisiana, and was Chairman
of Piccadilly from 1996 to 1999. 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.
6
<PAGE>
DAN F. SMITH Term Expires: 2001
Mr. Smith, 54, 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. 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.
LELAND R. SPEED Term Expires: 2001
Mr. Speed, 67, 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 April 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
President and director of LNH REIT, INC. from 1991
through May 1996. 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.
J. KELLEY WILLIAMS Term Expires: 2002
Mr. Williams, 66, 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 Chief Executive Officer and President from
1971 to 1988. He was a director of First Mississippi
from 1971 to the Distribution Date. From May 1998
through September 1999, Mr. Williams was a director of
First American Corporation, based in Nashville,
Tennessee, which acquired Deposit Guaranty National
Bank, Jackson, Mississippi, of which he was a director
from 1975 until such acquisition in May 1998. Mr.
Williams is a director of Placer Dome Corporation, and
has been since its May 1999 merger with Getchell Gold
Corporation, of which he was Chairman from October 1987
until such merger. He is Chairman of the Board of EKC
Technology, Inc. and First Chemical Corporation, and a
director of ChemFirst Fine Chemicals, Inc. and
TriQuest, L.P., subsidiaries of the Company.
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
7
<PAGE>
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 Company's 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.
SECURITY OWNERSHIP OF MANAGEMENT
The directors and executive 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 8, 2000, Common Stock of the Company as follows:
Common Stock Percent of
Director/Officer Beneficially Owned (1) Class
---------------- ---------------------- ----------
Richard P. Anderson
Common Stock 9,450 (2)
NQSOs 7,950
------
Total 17,400 *
Paul A. Becker
Common Stock 10,000
NQSOs 7,950
------
Total 17,950 *
James W. Crook
Common Stock 47,937 (3)
NQSOs 7,950
------
Total 55,887 *
Michael J. Ferris
Common Stock 500 (4)
NQSOs 6,075
------
Total 6,575 *
James E. Fligg
Common Stock 3,610
NQSOs 6,075
------
Total 9,685 *
Robert P. Guyton
Common Stock 23,000
NQSOs 7,950
------
Total 30,950 *
8
<PAGE>
Common Stock Percent of
Director/Officer Beneficially Owned (1) Class
---------------- ---------------------- ----------
Paul W. Murrill
Common Stock 7,926 (5)
NQSOs 7,950
Convertible Subordinated Debentures 6,039
------
Total 21,915 *
John F. Osborne
Common Stock 3,000
------
Total 3,000 *
William A. Percy, II
Common Stock 40,301 (6)
NQSOs 7,950
Convertible Subordinated Debentures 6,039
------
Total 54,290 *
Dan F. Smith
Common Stock 1,000 (7)
NQSOs 6,075
------
Total 7,075 *
Leland R. Speed
Common Stock 16,746
NQSOs 7,950
Convertible Subordinated Debentures 6,039
------
Total 30,735 *
R. Gerald Turner
Common Stock 7,900 (8)
NQSOs 7,950
------
Total 15,850 *
J. Kelley Williams
Common Stock 1,095,773 (9)
NQSOs 357,680
Convertible Subordinated Debentures 90,563
--------
Total 1,544,016 9.0%
R. Michael Summerford
Common Stock 71,655
NQSOs 185,363
-------
Total 257,018 *
George M. Simmons
Common Stock 6,022
NQSOs 71,940
------
Total 77,962 *
P. Jerry Coder
Common Stock 795
NQSOs 62,015
------
Total 62,810 *
J. Steve Chustz
Common Stock 2,224 (10)
NQSOs 93,777
------
Total 96,001 *
9
<PAGE>
Common Stock Percent of
Director/Officer Beneficially Owned (1) Class
---------------- ---------------------- ----------
All Directors and Officers
as a Group (24 persons)
Common Stock 1,379,467 (11)
NQSOs 1,066,704
Convertible Subordinated Debentures 108,680
---------
Total 2,554,851 14.4%
- ----------
* Represents less than 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 executive 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. Mr. Crook
will retire on April 19, 2000 in accordance with Company bylaws.
(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) Shared voting and investment power of 100 shares with Mrs. Chustz.
(11) Except for 446 shares for which Mr. Browning has shared voting and
investment power, 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
executive officers and directors of the Company and persons who own more than
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 executive 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 1999, its executive 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
10
<PAGE>
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 February 1999, each non-employee director received an option
to purchase 1,500 shares of Common Stock of the Company, at an exercise price of
$19.2813 and which vested 100% on August 23, 1999, 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 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.
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 (and Plan B, discussed below). Effective January 1, 1994, Plan A was
amended to change the interest rate prospectively to 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 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 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 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. During 1999, directors purchased Share Units
under Plan B in the following amounts: Mr. Anderson, 1,848; Mr. Crook, 1,537;
Mr. Ferris, 1,564; Mr. Fligg, 1,470; Mr. Smith, 1,593; Mr. Speed, 362; and Dr.
Turner, 1,002.
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 three-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.
11
<PAGE>
EXECUTIVE OFFICERS
The following sets forth certain information with respect to the executive
officers of the Company, including age as of the date of the Annual Meeting. All
executive 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 director's information for the definition
of Distribution Date.
Daniel P. Anderson. Mr. Anderson, 47, 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, a subsidiary of the Company.
Max P. Bowman. Mr. Bowman, 39, 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, 47, is Controller of the Company and has
been since 1996. He was Controller of First Mississippi from 1983 until the
Distribution Date.
J. Steve Chustz. Mr. Chustz, 51, is General Counsel of the Company and has
been since 1996. He was General Counsel of First Mississippi from 1993 until the
Distribution Date.
P. Jerry Coder. Mr. Coder, 57, is President of EKC Technology, Inc., a
subsidiary of the Company, and has been since December 1992.
William B. Kemp. Mr. Kemp, 51, is Vice President, Human Resources, and has
been since June 1997. From 1992 through June 1997, he was Vice President, Human
Resources of Rust Environmental and Infrastructure, an engineering consulting
firm.
Scott A. Martin. Mr. Martin, 41, is President of ChemFirst Fine Chemicals,
Inc. (formerly 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, 56, is Secretary and Manager, Investor
Relations of the Company and has been since 1996. He was Secretary and Manager,
Investor Relations of First Mississippi from 1993 until the Distribution Date.
George M. Simmons. Mr. Simmons, 57, is President of First Chemical
Corporation, a subsidiary of the Company, and has been since July 1995. From
1985 through June 1995, he was Vice President, Marketing of First Chemical
Corporation.
R. Michael Summerford. Mr. Summerford, 51, 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, 58, is President of TriQuest, L.P., a
limited partnership of which the Company 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, 66, 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 its Chairman, Chief Executive Officer and
President from 1988 until August 1995. He was Chief Executive Officer and
President from 1971 to 1988. He was a director of First Mississippi from 1971 to
the Distribution Date.
12
<PAGE>
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long-Term
Compensation
Annual Compensation Awards
-------------------------------------- ------------
Other Securities
Annual Underlying All Other
Salary Bonus Compensation(1) Options(2) Compensation(3)
Name and Principal Position Year ($) ($) ($) (#) ($)
- --------------------------- ---- ------ ----- --------------- ---------- ---------------
<S> <C> <C> <C> <C> <C> <C>
J. Kelley Williams 1999 501,923 299,600 560,993 100,000 64,236
Chairman & Chief Executive 1998 500,000 0 345,122 59,600 35,322
Officer 1997 500,000 600,000 379,551 60,000 405,342
R. Michael Summerford 1999 301,154 163,500 -- 100,000 23,636
President & Chief 1998 232,667 34,600 -- 30,700 17,289
Operating Officer 1997 199,000 144,500 -- 27,150 21,593
George M. Simmons, 1999 188,121 108,000 435,305 30,750 43,092
President, 1998 180,838 23,900 -- 14,550 29,081
First Chemical Corporation 1997 172,227 121,000 57,996 20,300 54,167
P. Jerry Coder, 1999 176,000 74,700 -- 29,025 22,271
President, 1998 164,281 58,000 -- 11,300 15,452
EKC Technology, Inc. 1997 150,713 98,000 -- 16,950 34,475
J. Steve Chustz, 1999 175,365 49,900 -- 28,650 10,414
General Counsel 1998 152,885 16,700 -- 14,500 7,872
1997 135,067 71,100 -- 14,150 20,356
</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 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 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 1999
to Mr. Williams and Mr. Simmons were $560,993 and $57,102, respectively.
Tax reimbursement payment in 1998 to Mr. Williams was $345,122. Tax
reimbursement payments in 1997 to Mr. Williams and Mr. Simmons were
$379,551 and $57,996, respectively. Performance Option payouts in 1999
were $378,203 to Mr. Simmons.
(2) NQSOs were granted to executive officers and certain key employees of the
Company in 1999, 1998, and 1997. The options in 1998 were granted under
the 1998 Long-Term Incentive Plan and 1995 Long-Term Incentive Plan. The
options in 1997 were awarded 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. 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 the following:
Above-market interest under the Deferred Income Plan A. The
above-market portion of interest earned under the Deferred Income Plan A
in 1998 was $6,944 and $13,063 for Mr. Summerford and Mr. Simmons,
respectively. See "Director Compensation" for a description of Plan A.
Company's contributions to the ChemFirst Inc. 401(k) and Employee
Stock Ownership Plan and Trust ("401(k)/ESOP"). Company contributions in
1999 to the 401(k) portion of this plan were $6,400, $6,400, $5,776,
$6,384, and $6,362 for Mr. Williams, Mr. Summerford, Mr. Simmons, Mr.
Coder, and Mr. Chustz, respectively. Company contributions in 1999 to the
ESOP portion of this plan were $800, $800, $722, $798, and $795 for Mr.
Williams, Mr. Summerford, Mr. Simmons, Mr. Coder, and Mr. Chustz,
respectively.
Company's Benefits Restoration Plan ("BRP") contributions. The
Company's BRP permits the Company to make contributions to the 401(k)
portion and the ESOP portion of the 401(k)/ESOP in amounts permitted by
that plan, but that would otherwise be in excess of those permitted by
certain Internal Revenue Code limitations. 401(k)-related accruals under
the BRP in 1999 were $12,477, $5,600, $549, $656 and $652 for Mr.
Williams, Mr. Summerford, Mr. Simmons, Mr. Coder, and Mr. Chustz,
respectively. ESOP-related accruals under the BRP in 1999 were $1,256,
$696, $0, $0 and $0 for Mr. Williams, Mr. Summerford, Mr. Simmons, Mr.
Coder, and Mr. Chustz, respectively.
Cash subsidies related to the executive life insurance program. Cash
subsidies in 1999 were $17,815, $2,777, $2,979, $2,804 and $1,620 for Mr.
Williams, Mr. Summerford, Mr. Simmons, Mr. Coder and Mr. Chustz,
respectively. The executive
13
<PAGE>
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.
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, 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 1999 was $19.2505 for salary deferral (85% of
the fair market value of the Company's Common Stock on January 4, 1999)
and $16.15 for bonus deferral (85% of the fair market value of the
Company's Common Stock on March 7, 2000). The dollar value of amounts
earned on deferred compensation during 1999 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. For
1999, the aggregate preferential amounts for each of the named Officers
was $25,489, $420, $16,731, $10,502 and $984, for Mr. Williams, Mr.
Summerford, Mr. Simmons, Mr. Coder and Mr. Chustz, respectively.
OPTION GRANTS IN 1999(1)
Individual Grants
<TABLE>
<CAPTION>
Potential Realizable
% of Total Value at Assumed
Number of Options Annual Rates
Securities Granted to of Stock Price
Underlying all Exercise Appreciation for
Options Employees Price Expiration Ten-Year Option
Name Granted in Fiscal Year ($/share) Date Term ($)(2)
- ----- ---------- -------------- --------- ---------- -----------------------
5% 10%
---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
J. Kelley Williams 100,000 18.9% 19.2813 02/23/09 1,212,591 3,072,943
R. Michael Summerford 100,000 18.9% 19.2813 02/23/09 1,212,591 3,072,943
George M. Simmons 30,750 5.8% 19.2813 02/23/09 372,872 944,930
P. Jerry Coder 29,025 5.5% 19.2813 02/23/09 351,954 891,922
J. Steve Chustz 28,650 5.4% 19.2813 02/23/09 347,407 880,398
</TABLE>
- ----------
(1) Options shown in this table represent NQSOs granted to executive officers
named in the Summary Compensation Table under the 1998 Long-Term Incentive
Plan on February 23, 1999. No other awards were granted to these
individuals pursuant to the Long-Term Incentive Plans.
(2) The dollar amounts under these columns represent the potential realizable
value of each grant assuming that the market value of the Company's Common
Stock appreciates from the date of grant to the expiration of the option
at annualized rates of 5% and 10%. These assumed rates of appreciation
have been specified by the Securities and Exchange Commission for
illustrative purposes only and are not intended to forecast future
financial performance or possible future appreciation in the price of
Company Common Stock. Optionees will only realize value from this grant if
the price of Company Common Stock appreciates, which would benefit all
stockholders commensurately.
AGGREGATED 1999 OPTION EXERCISES AND YEAR END VALUES
<TABLE>
<CAPTION>
Number of Securities Aggregate Value of
Underlying Unexercised Unexercised, In-the-Money
Number of Options at 12/31/99 Options at 12/31/99($)(1)
Shares Acquired Value --------------------------------------------------------
Name on Exercise Realized ($) Exercisable Unexercisable Exercisable Unexercisable
- ---- --------------- ------------ ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
J. Kelley Williams 90,563 1,516,196 412,403 47,760 2,229,186 -0-
R. Michael Summerford -- -- 173,653 35,850 450,942 -0-
George M. Simmons 2,013 30,435 74,850 12,790 109,063 -0-
P. Jerry Coder -- -- 54,105 10,170 97,332 -0-
J. Steve Chustz -- -- 85,147 11,530 443,725 -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,
1999, 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.
14
<PAGE>
OTHER COMPENSATION
In 1970, First Mississippi stockholders authorized a noncontributory
retirement plan for the employees of First Mississippi. In connection with the
ChemFirst Distribution, the Company assumed the obligations of First Mississippi
under this retirement plan. Employees become 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.
The following table shows the estimated annual retirement benefit payable
to participating employees including executive officers 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> <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, 32.7 years; R. Michael Summerford,
21.4 years; George M. Simmons, 15.0 years; P. Jerry Coder, 7.6 years; and J.
Steve Chustz, 22.7 years.
Termination Agreements
During fiscal 1996, the Board of Directors of First Mississippi approved
Termination Agreements for the executive officers of First Mississippi,
including Mr. Williams, Mr. Summerford, Mr. Simmons, Mr. Coder and Mr. Chustz.
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 two three-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 times the sum of the five-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 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 additional tax ("Excise Tax") imposed by Section 4999 of the Code,
15
<PAGE>
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, was an executive
officer (Chairman of the Board of Directors) of Getchell Gold Corporation prior
to its merger with Placer Dome Corporation in May 1999, and Mr. Summerford, an
executive officer of the Company, was a director of Getchell Gold Corporation
until such merger, at which time he resigned as a director.
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 May 1999, Getchell merged with Placer Dome Inc., resulting in
the prepayment of all the principal and interest due to the Company.
During 1999, First Chemical Corporation, a subsidiary of the Company,
purchased a total of $404,581 in products from Pioneer Companies, Inc. or its
affiliates. Michael J. Ferris, a director of the Company, is President, CEO and
a director of Pioneer.
During 1999, ChemFirst Fine Chemicals, Inc. and First Chemical
Corporation, subsidiaries of the Company, purchased a total of $1,227,910 in
products from Lyondell Chemical Company and its affiliate Equistar Chemicals,
L.P. Dan F. Smith, a director of the Company, is President, CEO and a director
of Lyondell and CEO of Equistar.
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 Compensation Committee is to assure development,
implementation and maintenance of competitive compensation and benefits to
attract, motivate and retain qualified officers, management and employees.
16
<PAGE>
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 four (4) named Executive Officers, other than the CEO, which
averaged 5% in 1999.
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 March 2000, the Compensation Committee recommended and the Board
approved annual incentive awards, in the total amount of $392,900 for the four
(4) named Executive Officers other than the CEO based on a review of Company and
subsidiary results and performance for 1999.
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.
The Company also has three (3) Performance Unit Plans outside of the
Long-Term Incentive Plans for certain of its non-public subsidiaries in which
subsidiary executive officers participate, and in which awards are payable
17
<PAGE>
in cash only based on the subsidiary's profits and price earning multiples of a
group of publicly held peer companies. No grants are currently awarded under
these plans, but some units remain unexercised.
The Compensation Committee granted 188,425 nonqualified stock options to
the four (4) named Executive Officers excluding the CEO in 1999.
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. Mr. Williams received no
base salary increase during 1999. In March 2000, the Compensation Committee
recommended and the Board approved an annual incentive award of $299,600 for Mr.
Williams based on 1999 results. During 1999, Mr. Williams received 100,000
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.
18
<PAGE>
PERFORMANCE GRAPH
The following line graph compares the cumulative total stockholder return
on the Company's Common Stock during the five-year period ended December 31,
1999, 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 two-year period ending December 31, 1996 is deemed to
equate with the cumulative total stockholder return of 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, 1994 and the reinvestment of all dividends.
Comparison of Five-Year Return on
ChemFirst Inc. Common Stock to
S&P 500 Index & Peer Group Index
Dec-94 Dec-95 Dec-96 Dec-97 Dec-98 Dec-99
------ ------ ------ ------ ------ ------
ChemFirst 100.00 173.07 208.09 258.28 183.93 207.12
S&P 500 Index 100.00 137.54 169.09 225.49 289.93 350.92
Peer Group Index 100.00 127.90 162.28 236.01 188.45 219.63
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.
19
<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 through 1998 and Quaker Chemical. Arch Chemical succeeded Olin in
January 1999 after Olin spun out its specialty chemical assets as Arch 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.
20
<PAGE>
PROPOSAL II: APPROVAL OF THE AMENDMENT
TO THE 1998 LONG-TERM INCENTIVE PLAN
An amendment to the Company's 1998 Long-Term Incentive Plan was adopted by
the Board on March 7, 2000, subject to approval by the Company's stockholders at
the Annual Meeting. The purpose of the Plan Amendment is to increase the number
of shares of the Company's Common Stock authorized to be awarded under the Plan
by 750,000, so that 1,700,000 total shares are authorized pursuant to the Plan,
as amended (the "Plan Amendment"). (The Company's 1998 Long-Term Incentive Plan,
as amended by the Plan Amendment, shall be referred to as the "Plan".) The
purpose of the Plan is to further the growth in earnings and market appreciation
of the Company by providing long-term incentives to directors and employees of
the Company and its subsidiaries, partnerships and joint ventures. The Company
exhausted all the shares originally authorized under the Plan by stock options
granted on March 7, 2000, and also made certain conditional grants of stock
options at the same time subject to stockholder approval of the Plan Amendment.
(See "Grants Under the Plan" in the discussion following.) The Plan Amendment
will allow the Company to make the awards in 2000 and in the future, which will
further the Company's ability to attract, retain and motivate officers,
directors and key employees of high caliber and good potential and promote the
alignment of the participant's interests with that of the Company's
stockholders. The Plan provides for the granting from time to time of incentive
compensation in the form of stock options, stock appreciation rights,
performance shares and performance units, restricted stock, supplemental
payments and conversion awards ("Awards").
Set forth below is a brief description of the major features of the Plan,
which description does not purport to be complete and is qualified in all
respects by the terms of the Plan, a copy of which is attached as Appendix A.
Administration
The Plan shall be administered by the Board or a committee of at least two
(2) members appointed by the Board (the "Committee"), as the Board shall
determine in its sole discretion from time to time. Each member of the Committee
shall be a member of the Board and shall be considered a "non-employee" director
within the meaning of Rule 16b-3 ("Rule 16b-3") as promulgated under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"). The Board or
the Committee, as the case may be, has full and final authority to interpret the
provisions of the Plan and to grant Awards pursuant to the Plan, provided,
however, that the Company's Chief Executive Officer (or some other officer
designated by the Board or the Committee) has the authority to grant Awards to
newly hired employees who are not subject to Section 16 of the Exchange Act at
the time such Award is granted, subject to such limitations as may be
established by the Board or the Committee, as the case may be. In exercising its
discretion with respect to the administration of the Plan, the Board has the
option of administrating only certain aspects of the Plan, such as the
determination and approval of Awards to be granted under the Plan and delegating
the administration of the remaining aspects of the Plan to the Committee.
Hereinafter in this description of the major features of the Plan, any
references to the Committee shall be deemed to refer to the Board whenever the
Board is administrating, pursuant to the discretion granted to it under the
Plan, the aspect of the Plan to which said references relate.
Eligibility for Participation
All Employees, Directors and Advisors of the Company or any subsidiary are
eligible to participate in the Plan. The Committee has the sole discretion to
determine and designate those Employees, Directors and Advisors that are to
receive Awards. Since designation of participants is subject to the discretion
of the Committee, the approximate number of eligible participants in the Plan is
impossible to estimate at this time.
Shares Subject to the Plan
If the proposal to amend the Plan to add 750,000 shares authorized
pursuant to the Plan is approved by the Company's stockholders, then a maximum
of 1,700,000 shares of the Company's $1.00 par value common stock (the "Common
Stock") may be issued pursuant to the Plan, provided, however, that no more than
50,000 shares may be granted in the form of restricted stock Awards. Shares
issued pursuant to the Plan shall be either shares of authorized but unissued
Common Stock or shares of Common Stock held as treasury shares. Any shares
forfeited
21
<PAGE>
pursuant to the terms of the Plan shall again be available for grant under the
Plan. The maximum number of shares with respect to which any employee may be
awarded stock options, restricted stock or stock appreciation rights in any
calendar year is limited to an aggregate amount of 100,000 shares.
Awards
Participants. The Committee has the discretion to grant any of the Awards
described below to Employees, Directors or Advisors. These Awards are not
transferable, except by will or the laws of descent or distribution, provided
that the Committee may, in its sole discretion, when and if permitted by Rule
16b-3, establish guidelines providing for the irrevocable transfer, without
payment of consideration, of any Stock Option, other than Incentive Stock
Options, by the Participant to a member of the Participant's immediate family or
to a trust, partnership or other pass-through entity whose beneficiaries are
members of the Participant's immediate family.
Stock Options. Options granted pursuant to the Plan may be either in the
form of incentive stock options (which are options that meet the requirements of
Section 422 of the Internal Revenue Code (the "Code")) or in the form of
nonqualified stock options. A stock option gives the holder the right to
purchase, during the term of the option, a number of shares of Common Stock at a
price determined on the date the option is granted. The option exercise price
and the time or times at which the option may be exercised are determined by the
Committee at the time of grant, except that the option price may not be less
than one hundred percent of the fair market value of the Common Stock on the
date of grant. The value of the Company's Common Stock as of March 7, 2000 was
$19.00. The option price may be paid in cash, or in the form of Common Stock
owned by the option holder at least six months prior to exercise, based on the
fair market value of such Common Stock on the date of exercise, or a combination
of cash and Common Stock. In addition, an option holder may exercise an option
by providing assurance from a broker registered under the Exchange Act of
delivery of the proceeds of an imminent sale of the stock to be issued pursuant
to the exercise. Stock options may be exercised at such time or times as may be
specified at the time of grant, but in no event more than ten years after the
date of grant.
Stock Appreciation Rights ("SARs"). SARs may be granted in connection with
all or any part of a previously or contemporaneously granted stock option or
unrelated to any option. SARs entitle the holder, upon exercise of the SAR, to
receive an amount equal to the difference between the fair market value of
shares of Common Stock with respect to which the SAR is being exercised and the
price specified by the Committee. Payment may be made in cash, in shares of
Common Stock, or a combination of the two, as the Committee determines. A SAR
may be exercised at such times as may be specified by the Committee provided
that no SAR shall be exercisable earlier than six months after grant and no
later than ten years after grant.
Performance Shares and Performance Units. Performance Shares or Units give
the holder the right to receive shares of Common Stock or a cash payment
specified by the Committee at the end of a specified performance period if
specified performance goals are met. Performance goals are related to the
performance of the Company or one or more subsidiaries or a combination thereof.
When circumstances occur that cause predetermined performance objectives to
become an inappropriate measure of performance, the Committee, in its
discretion, may adjust the performance goals, except for an Award intended to
qualify under Section 162(m) of the Code.
Restricted Stock. In a restricted stock Award, shares of Common Stock are
granted to an employee for no consideration, but are subject to such conditions,
terms and restrictions for such period or periods as shall be determined by the
Committee or as expressly stated in the Plan. During the restricted period, the
participants shall be entitled to vote the shares but shall not assign,
transfer, pledge or otherwise encumber such shares. The Committee has the power
to accelerate the termination of the applicable restricted period with respect
to part or all of any restricted stock Award.
Supplemental Payments. The Committee has the discretion to determine that
any Award may provide for a supplemental payment to a participant after the
exercise, lapse of restrictions or payment for such Award. The Committee shall
set the terms and conditions of such supplemental payments, provided however,
that the amount of the payment may not exceed, in the case of a stock option,
the excess of fair market value on the date of exercise over the option exercise
price multiplied by the number of shares for which such option is exercised, and
in the case of a SAR, performance unit, performance share or restricted stock
Award, the value of the shares and other consideration issued in payment of such
Award.
22
<PAGE>
Conversion Awards
Employees designated by the Committee may make an irrevocable election to
receive share units in exchange for some portion of their cash compensation
(base salary or annual incentives). The maximum amount of cash compensation
which may be exchanged for share units is the lesser of 30% or $30,000 of a
year's base salary and the lesser of 50% or $50,000 of an annual incentive
award. The share unit may be acquired at a per share exchange price of
eighty-five percent of the fair market value of the Company's Common Stock
determined as of the first business day in January in the year of election if
base salary is deferred or the day the annual incentive award is approved by the
Board if an annual incentive is deferred (the "Exchange Date"). All share units
are subject to certain conditions, terms and restrictions set by the Committee
and vest three years from the Exchange Date or, in the event of a Rollover
Election (as defined below), two years from the effective date of the most
recent Rollover Election. An Employee has the option to elect ("Rollover
Election") to defer the vesting of any share unit for an additional period of
two years by making an irrevocable Rollover Election at least six months prior
to the vesting date of such share unit. There is no limit to the number of
Rollover Elections an Employee may make with respect to a particular share unit.
An Employee is also entitled to receive additional share units equal in value to
the amount of cash dividends such Employee would have received had the Employee
owned one share of the Company's Common Stock for each share unit owned by the
Employee on each record dividend date.
At such time as a share unit vests, such share unit will be returned to
the Company and in exchange thereof the Employee is entitled to receive an
amount equal to the average of the highest and lowest price for the Company's
Common Stock on such date. Such payment in exchange for a share unit will be
made in the form of cash or Company Common Stock as the Committee shall
determine in its sole discretion. In the event an Employee owns unvested share
units at the time such Employee's employment with the Company is terminated,
each unvested share unit will be forfeited and in substitution thereof the
Employee is entitled to receive a cash payment, the amount of which is
determined by the circumstances under which the Employee's employment with the
Company is terminated.
Adjustments
In the event of any change in the capitalization of the Company by reason
of a dividend, stock split or combination or any similar change or a merger,
consolidation, recapitalization, reclassification of shares or similar
reorganization, the Plan provides that the Committee may make certain
adjustments, if any, to (a) the number of shares of stock which may be issued
under the Plan, (b) the number of shares issuable and the exercise price per
share pursuant to an outstanding Award theretofore granted under this Plan and,
(c) the number and kind of shares which may underlie an Award granted.
Duration of Plan; Amendment or Termination
The Plan shall remain in effect until all Awards have been satisfied, but
no Award shall be granted more then ten years after the date of approval of the
Plan by the stockholders. The Committee may at any time suspend, terminate,
modify or amend the Plan, but any amendment that requires shareholder approval
in order for the Plan to continue to comply with Rule 16b-3, Section 162(m) of
the Code or any other applicable law, rule or regulation shall not be effective
unless approved by the requisite shareholder vote. In addition, no such action
by the Committee may adversely affect any previously granted Award without the
consent of the Award recipient.
Change in Control
In the event of a "change in control" (as defined in the Plan), all
outstanding stock options, SARs and other awards shall automatically become
fully vested and exercisable in full.
Federal Income Tax Consequences
The following is a brief and general discussion of the principal federal
income tax rules applicable to Plan Awards:
23
<PAGE>
Stock Options. There is no tax incurred by the participant (or expense
deduction for the Company) upon the grant. At the time of exercise of a
nonqualified stock option, the difference between the exercise price and the
fair market value of Common Stock on the date of exercise will constitute
ordinary income to the participant. The Company will be allowed a deduction
equal to the amount of ordinary income realized by the participant. In the case
of incentive stock options, although no income is realized upon exercise and the
Company is not entitled to a deduction, the excess of the fair market value on
the date of exercise over the exercise price is treated by the participant as an
adjustment for alternative minimum tax purposes. If the participant does not
dispose of the shares acquired on the exercise of an incentive stock option
within one year after their receipt or within two years after the grant of the
stock option, gain or loss realized on the subsequent disposition of the shares
will be treated as long-term capital gain or loss. Under current law, such
long-term capital gain on incentive stock option shares is taxed at a maximum
rate of 28% unless the shares are sold at least eighteen months after exercise
and two years after grant, in which case the gain will be subject to a maximum
tax rate of 20%. In the event of a disposition of shares within one year after
exercise or within two years after the grant of the stock option, the
participant may realize ordinary income and the Company will be entitled to a
deduction, equal to the amount of such income, at the time such income is
realized by the participant.
SARs. The participant will not realize any income at the time of grant of
a SAR. Upon the exercise of a SAR, any cash received and the fair market value
on the exercise date of any shares of Common Stock received will constitute
ordinary income to the participant. The Company will be entitled to a deduction
in the amount of such income at the time of exercise.
Restricted Stock. A participant normally will not realize taxable income
upon an award of restricted stock, and the Company will not be entitled to a
deduction, until the termination of the restrictions, except with respect to the
dividends, or dividend equivalents, received by the participant. Upon
termination of restrictions, the participant will realize ordinary income in an
amount equal to the fair market value of the Common Stock at that time and the
Company will be entitled to a deduction in the same amount. However, a
participant may elect to realize ordinary income in the year the restricted
stock is awarded in an amount equal to the fair market value of the Common Stock
at the time of the Award, determined without regard to the restrictions. In this
event, the Company will be entitled to a deduction in such year in the same
amount, and any gain or loss realized by the participant upon subsequent
disposition of the stock will be capital gain or loss. If, after making this
election, any restricted stock is forfeited, or if the market value at vesting
is lower than the amount on which the participant was taxed, the participant
cannot then claim an ordinary deduction, but may claim a capital loss.
Performance Shares and Performance Units. A participant normally will not
realize taxable income upon the award of performance units or performance
shares. Subsequently, when conditions and requirements established with respect
to grants made in shares of Common Stock have been satisfied so that the shares
are no longer subject to a substantial risk of forfeiture, then an amount equal
to the fair market value of any shares of Common Stock received will constitute
ordinary income to the participant in the year in which such event occurs, and
the Company will be entitled to a deduction in the same amount. Recipients of
Performance Awards made in shares of Common Stock may make an election to
realize ordinary income in the year of receipt in the same manner as described
above for recipients of restricted stock Awards. A Participant normally will not
realize taxable income on Performance Units, which represent a contingent
unfunded promise to pay cash or property in the future, until all conditions or
requirements applicable to such Performance Units have been satisfied and the
promised amount has become immediately payable. At the time, the cash amount or
fair market value of property payable will constitute ordinary income and the
Company will be entitled to a deduction in the same amount.
Conversion Awards. A Participant normally will not realize taxable income
upon the award of share units, and the Company will not be entitled to a
deduction until the conditions and requirements placed on the award have lapsed.
The Company will also not be entitled to a deduction for any additional share
units awarded to the participant on account of dividends paid on the Company's
Common Stock until the conditions and requirements placed on such additional
share units have lapsed. Subsequently, when all conditions and requirements
established with respect to the share unit have lapsed, any cash or Common Stock
received in exchange thereof will constitute ordinary income to the participant
in the year in which paid in the case of cash payments and when no longer
subject to a substantial risk of forfeiture in the case of payments in the form
of Common Stock, and the Company will be entitled to a deduction in the same
amount.
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<PAGE>
Withholding. The Company shall have the right to reduce the number of
shares of Common Stock deliverable pursuant to the Plan by an amount which would
have a fair market value equal to the amount of all federal, state, or local
taxes required to be withheld, or to deduct the amount of such taxes from any
cash payment to be made to the participant, pursuant to the Plan or otherwise.
Grants Under the Plan
Because a Participant's eligibility for Awards under the Plan and the
amount of any such Awards are determined by the Committee or the Board, as the
case may be, the nature and amounts of future benefits under the Plan are not
currently determinable. All Awards thereunder will be made at the discretion of
the Committee or the Board, as the case may be, in accordance with policies and
guidelines in effect from time to time. On March 7, 2000, the Board granted,
subject to stockholder approval at the Annual Meeting of the Plan Amendment, a
total of 378,050 nonqualified stock options under the Plan. Of these options,
177,288 remaining Plan shares were granted prorata, and the remaining 203,910
shares were granted from the additional shares subject to stockholder approval
of the Plan Amendment. These options will vest and become exercisable on
September 7, 2000, and will expire on March 7, 2010. Each option has a per share
exercise price of $19.00, which was the fair market value of the Company's
Common Stock on the date of the grant. If the Company's stockholders do not
approve the Plan Amendment at the Annual Meeting, the amendment will not become
effective and that portion of the March 2000 grants subject to stockholder
approval will be voided. The following table sets forth for the following
persons the number of shares and corresponding values relating to the
outstanding options granted under the Plan in March 2000 which are subject to
such stockholder approval: the executive officers included in the Summary
Compensation Table on page 13, all current executive officers as a group, all
non-executive officer directors as a group, each nominee for election as a
director and all other employees as a group.
<TABLE>
<CAPTION>
Dollar Number of
Value(1) Shares(2)
-------- ---------
<S> <C> <C>
Executive Officers Listed in Summary Compensation Table:
J.Kelley Williams, Chairman & Chief Executive Officer....... 846,659 44,561
R.Michael Summerford, President & Chief Operating Officer... 529,017 27,843
George M. Simmons, President of First Chemical Corporation.. 212,420 11,180
P. Jerry Coder, President of EKC Technology, Inc............ 194,636 10,244
J. Steve Chustz, General Counsel............................ 198,189 10,431
Executive Officers as a Group (12 persons)........................ 2,625,800 138,200
Non-Executive Officer Directors as a Group (12 persons)........... 182,856 9,624
Nominees for Election as a Director:
Richard P. Anderson......................................... 15,238 802
Michael J. Ferris........................................... 15,238 802
John F. Osborne............................................. 15,238 802
William A. Percy, II........................................ 15,238 802
R. Gerald Turner............................................ 15,238 802
Non-Executive Officer Employees as a Group (41 persons)........... 1,110,398 58,442
</TABLE>
- ----------
(1) Based on the per share value of the Company's Common Stock on March 7,
2000 of $19.00.
(2) The shares reflected in this column represent shares underlying options
granted under the Plan on March 7, 2000.
THE BOARD RECOMMENDS A VOTE FOR THE AMENDMENT TO THE
1998 LONG-TERM INCENTIVE PLAN
Voting Procedures for Approval of the Plan Amendment. Stockholders have
the right to vote "For", "Against" or "Abstain" when voting on the adoption of
the Plan Amendment. Pursuant to the Company's 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 "Abstain" or to effect a broker non-vote,
will be counted in establishing a quorum. Approval of the Plan Amendment will
require the affirmative vote of the holders of a majority of the shares
represented at the Annual Meeting and entitled to vote for approval of the Plan
25
<PAGE>
Amendment, in person or by proxy. Consequently, abstentions will have the
effect of a vote against the Plan Amendment, but broker non-votes will not
affect the outcome of the vote. In the absence of specific instructions, proxies
will be voted for the approval of the Plan Amendment.
AUDITORS
The accounting firm of KPMG LLP ("KPMG") was approved by the Board to
serve as independent auditor of the Company for 2000.
KPMG has served as independent auditor of the Company for the past four
(4) 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, 1999 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
26
<PAGE>
Appendix A
(Marked to show amendment to Section 5)
ChemFirst Inc.
1998 Long Term Incentive Plan
1. Purpose
The purpose of this Plan is to further the growth in earnings and market
appreciation of ChemFirst Inc. by providing long-term incentives to directors,
officers, advisors and employees of the Company and its subsidiaries,
partnerships and joint ventures. The Company intends that the Plan will help
attract, retain and motivate officers, directors, advisors and key employees of
high caliber and good potential and promote the alignment of the participants'
interests with that of the Company's shareholders.
2. Definitions
For purposes of this Plan, the following terms shall have the meanings set
forth below:
"Advisor" means a non-employee consultant to the Board of Directors of the
Company or a Subsidiary.
"Annual Incentive" means an amount payable pursuant to any short term
incentive compensation plan or sales incentive plan of the Company.
"Award" means an award granted under this Plan.
"Base Salary" means the regular salary paid to an employee. Base Salary
shall not include bonuses or other forms of compensation which are not
considered regular earnings by the Company.
"Board" means the Board of Directors of the Company.
"Change of Control" shall have the meaning set forth in Paragraph 18.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time.
"Committee" means the committee appointed by the Board to administer the
Plan as a whole or certain aspects of the Plan. The Committee shall consist of
two or more members of the Board who are "nonemployee directors" within the
meaning of Rule 16b-3.
"Company" means ChemFirst Inc.
"Conversion Award" means an Award issued in place of cash compensation,
pursuant to Paragraph 7 of the Plan.
"Director" means a member of the Board of Directors of the Company or a
Subsidiary.
"Employee" means any officer or other employee of the Company or a
Subsidiary.
"Exchange Act" means the Securities Exchange Act of 1934, as amended from
time to time.
"Exchange Date" means the date upon which the replacement of cash
compensation with a Conversion Award is to take effect. For purposes of:
(a) Base salary, that date shall be the first business day of
January in the calendar year for which an election has been made to
replace cash compensation with a Conversion Award.
(b) Annual incentives, that date shall be the date on which the
incentive award is approved by the Board of Directors.
"Fair Market Value" means, as of any date, the average of the highest and
lowest prices at which the Stock is traded on such date on the principal market
on which the Stock is traded, or if the Stock is not traded on such date, on the
immediately preceding date on which the Stock is traded.
A-1
<PAGE>
"Incentive Stock Option" means an option meeting the requirements of
Section 422 of the Code.
"Nonqualified Stock Option" means an option that is not an Incentive Stock
Option.
"Participant" means an Employee, Director or Advisor who has been selected
by the Committee to receive an Award under the Plan.
"Performance Period" means the period of time designated by the Committee
in which an Award may be earned.
"Performance Shares" means shares of Stock that may be earned under the
Plan, subject to the satisfaction of certain performance criteria over a
Performance Period.
"Performance Units" means a dollar denominated unit that may be earned
under the Plan, subject to the satisfaction of performance criteria over a
Performance Period.
"Plan" means this ChemFirst Inc. 1998 Long Term Incentive Plan, as amended
from time to time.
"Restricted Stock" means shares of stock that may be earned under the
Plan, subject to continued employment or other vesting criteria.
"Rollover Election" means election to defer vesting of share units for an
additional Restricted Period beyond the existing Vesting Date of Record. The
effective date of a Rollover Election shall be the day on which the applicable
share unit would have vested absent such election.
"Rule 16b-3" means Rule 16b-3 promulgated by the Securities and Exchange
Commission pursuant to the Exchange Act, as amended from time to time.
"Share Unit" is the right to receive an amount of cash or Stock equal to
the value of a share of Stock at a future date in exchange for a vested Share
Unit.
"Stock" means the common stock of the Company.
"Stock Option" means an option granted pursuant to the Plan, whether an
Incentive Stock Option or a Nonqualified Stock Option.
"Subsidiary" means any corporation, partnership, joint venture or other
entity in which the Company has at least a fifty percent beneficial ownership
interest.
"Vesting Date of Record" means the date on which a Share Unit fully vests.
3. Administration
The Plan shall be administered by the Board and/or the Committee, as the
Board shall determine in its sole discretion from time to time. In exercising
its discretion with respect to the administration of the Plan, the Board shall
have the option of administrating only certain aspects of the Plan, such as the
determination and approval of Awards to be granted under the Plan, and
delegating the administration of the remaining aspects of the Plan to the
Committee. The Board and/or the Committee, as the case may be, shall have full
and final authority in its discretion to conclusively interpret the provisions
of the Plan and to decide all questions of fact arising in its application; to
determine the Participants to whom Awards shall be made under the Plan; to
determine the type of Award to be made and the amount, size and terms of each
such Award; to determine the time when Awards will be granted to Participants;
and to make all other determinations necessary or advisable for the
administration of this Plan. Notwithstanding the above, the Company's Chief
Executive Officer or some other officer designated by the Board or the
Committee, as the case may be, shall have the authority to grant Awards to newly
hired employees who are not subject to Section 16 of the Exchange Act at the
time such Award is granted, subject to such limitations as may be established by
the Board or the Committee, as the case may be. All provisions elsewhere in this
Plan dealing with administration of and decisions under this Plan which refer to
the Committee shall be deemed to refer to the Board whenever the Board is
administrating, pursuant to this Section 3, the aspect of the Plan to which said
provision relates.
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4. Participation
The Committee, in its discretion, may grant Awards to any Participant,
subject to the provisions of the Plan. No Participant shall be entitled as a
matter of right to receive an Award, nor shall the grant of an Award entitle a
Participant to receive any future Award.
5. Shares Subject to the Plan
(a) A maximum of 1,700,000 shares of Stock (including 950,000 shares
originally authorized by the Plan and 750,000 shares added by Amendment No. 1 to
the Plan), may be issued in satisfaction of any type of Award pursuant to the
Plan provided, however, that no more than 50,000 shares may be granted in the
form of Restricted Stock Awards. The total number of shares authorized and the
number of shares which may be granted in the form of Restricted Stock Awards are
subject to adjustment pursuant to Paragraph 15. Shares issued pursuant to the
Plan shall be either authorized but unissued shares of Stock or shares of Stock
held as treasury stock.
(b) To the extent that any Award is canceled or forfeited, or terminates,
expires, or lapses for any reason, any unissued shares of Stock subject to such
Award shall again be available for grant under the Plan.
(c) Any Awards granted in substitution for awards or rights issued by a
company that is acquired by the Company or a Subsidiary shall not reduce the
number of Shares available for grant under the Plan.
(d) Subject to adjustment pursuant to Paragraph 15, the maximum number of
shares of Stock with respect to which any Employee may be awarded Stock Options,
Restricted Stock or Stock Appreciation Rights in any calendar year under
Paragraph 6 shall total no more than 100,000 shares.
6. Awards to Participants
As the Committee may determine, the following types of Awards may be
granted under the Plan to Participants, either alone, in combination or an
alternative basis:
(a) Stock Options: Stock Options shall be Incentive Stock Options or
Nonqualified Stock Options, as determined by the Committee. Stock Options shall
be granted with an exercise price which shall not be less than one hundred
percent of Fair Market Value on the date of grant, or, if in substitution for a
stock option previously granted an employee of an entity acquired by the Company
or by a Subsidiary, with an exercise price that reflects the relative values of
Company Stock and stock of the acquired entity and the employee's exercise price
under such previously granted option.
Incentive Stock Options shall comply with the provisions of Section 422 of
the Code and to the extent the aggregate fair market value (determined as of the
time the Incentive Stock Option is granted) of the stock with respect to which
Incentive Stock Options are exercisable for the first time by any individual
during any calendar year under all plans of the Company and its Subsidiaries
exceeds $100,000, such options shall be treated as Nonqualified Stock Options.
A Stock Option may be exercised at such times as may be specified by the
Committee at the time of grant, provided that no Stock Option granted under this
Paragraph 6 shall be exercisable later than ten years after grant, or, in the
case of Participants subject to Section 16 of the Exchange Act, earlier than six
months after grant and provided further that the Committee may at any time
before complete termination of a stock option, accelerate the time or times at
which such option may be exercised, in whole or in part.
(b) Stock Appreciation Rights: Stock Appreciation Rights shall entitle a
Participant to receive upon exercise, for each stock appreciation right
exercised, (i) the excess of the Fair Market Value of a share of Stock at the
time of exercise, over a price specified by the Committee, multiplied by (ii)
the number of Stock Appreciation Rights exercised. The price specified by the
Committee shall not be less than one hundred percent of Fair Market Value at the
time the Stock Appreciation Right was granted, or, if connected with a
previously issued stock option, the Fair Market Value at the time such
previously issued stock option was granted, or, if in substitution for a stock
appreciation right previously granted an employee of an entity acquired by the
Company or by a Subsidiary, a price that reflects the relative values of Company
Stock and stock of the acquired entity and the employee's price under
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such previously granted stock appreciation right. A Stock Appreciation Right may
be granted in tandem with all or any portion of a previously or
contemporaneously granted stock option (including, in addition to Stock Options
granted under the Plan, options granted under other plans of the Company), or
not in connection with a stock option.
Payment pursuant to a Stock Appreciation Right may be made in the form of
Stock, cash or a combination thereof, as the Committee may determine. A Stock
Appreciation Right may be exercised at such times as may be specified by the
Committee, either at the time of grant or thereafter, provided that no Stock
Appreciation Right shall be exercisable earlier than six months after grant
(except that earlier exercise may be permitted in the case of a Stock
Appreciation Right substituted for a stock appreciation right previously issued
by an acquired entity) nor later than ten years after grant.
(c) Performance Shares and Performance Units: An Award of Performance
Shares or Performance Units shall entitle a Participant to receive Stock or a
cash payment specified by the Committee, depending upon the attainment of
performance criteria over a Performance Period. The Performance Period and
performance criteria shall be specified by the Committee and may relate to the
performance of the Company or one or more Subsidiaries or a combination thereof.
Other than an Award intended to qualify under Section 162(m) of the Code, the
Committee may adjust previously established performance criteria and other terms
and conditions of an Award, at any time prior to the determination of the
payment amount, to reflect major unforeseen events such as changes in laws,
regulations or accounting policies or procedures, mergers, acquisitions or
divestitures or extraordinary, unusual or non-recurring items or events, in each
case in order to prevent dilution or enlargement of rights.
Payment pursuant to an Award of Performance Shares or Performance Units
shall be made following the Committee's determination of the extent to which the
performance criteria were satisfied, and shall be made in the form of Stock,
cash or a combination thereof, as the Committee may determine. Payment shall be
made as promptly as practicable following the end of the Performance Period
unless deferred subject to such terms and conditions as may be prescribed by the
Committee. The Committee may authorize payments in Stock (in the form of any
Award available under the Plan) under any previously existing performance unit
or performance share plans of the Company or any Subsidiary.
(d) Restricted Stock: Awards of Restricted Stock shall be issued in the
name of a Participant as soon as practicable following the date of grant by the
Committee. Such Awards shall be subject to such conditions, terms and
restrictions (including performance-based or employment-based vesting,
forfeiture conditions and transfer restrictions) and shall be for such period or
periods as shall be determined by the Committee or as expressly stated in the
Plan. The Committee shall have the power to permit an acceleration of the
expiration of the applicable restriction period with respect to all or part of
the shares awarded to a Participant pursuant to a Restricted Stock Award.
During the restricted period, a Participant holding shares of Restricted
Stock shall have all the rights of a shareholder, including the right to vote
and receive dividends, but shall not sell, assign, transfer, exchange, pledge,
hypothecate or otherwise encumber such shares. Shares of Restricted Stock shall
bear such legends as the Company may specify, until such time as the
restrictions on the shares shall lapse, as determined by the Committee.
(e) Supplemental Payments: Subject to the Committee's discretion, any
Award under this Paragraph 6 may provide for a supplemental payment by the
Company or a Subsidiary to a Participant after the exercise, payment or lapse of
restrictions under the Award. Such supplemental payments shall be subject to
such terms and conditions as shall be provided by the Committee at the time of
grant, provided that in no event shall the amount of each payment exceed:
(i) In the case of a Stock Option, the excess of Fair Market Value
on the date of exercise over the Stock Option exercise price,
multiplied by the number of shares for which such Stock Option is
exercised, or
(ii) In the case of a Stock Appreciation Right, Performance Unit,
Performance Share or Restricted Stock Award, the value of the shares
and other consideration issued in payment of such Award.
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(f) Performance-Based Payments: Any Awards, grants, or other payments
described or referenced in this Plan and designed to provide incentives to
participants for whom the Committee determines that compensation deductible by
the Company would be subject to limitation under Section 162(m) of the Code may
be made in a form intended to constitute "performance-based compensation"
deductible under Section 162(m) (4) (C). The payment of any amounts in such form
(other than amounts payable under Stock Options or Stock Appreciation Rights,
granted in either case with an exercise price or SAR price equal to at least
Fair Market Value at grant, or associated Supplemental Payments under
subparagraph 6(e) included in such grant) shall be contingent on attainment of
objective performance goals pre-established by the Committee and based, subject
to such further definition and adjustments as the Committee may specify in
establishing such goals, on one or more of the following business criteria:
earnings per share, total shareholder return, net income, cash flow, performance
against budget targets, return on equity, or return on capital.
When establishing such performance goals, the Committee shall
contemporaneously prescribe the Performance Period during which such goals are
to be attained and the maximum amount payable (subject to Committee discretion
to decrease but not to increase such amount) on their attainment. The maximum
amount that the Committee may prescribe as payable to any "covered employee"
within the meaning of Section 162(m) (excluding amounts payable under Stock
Options, Stock Appreciation Rights or associated Supplemental Payments) shall
not exceed (i) $500,000 in the case of a Performance Period of one year or less
and (ii) $400,000 multiplied by the number of years in the Performance Period in
the case of a Performance Period of more than one year. In determining whether
an amount payable is within the maximum amounts described in the preceding
sentence, the amount payable shall be valued at the date following completion of
the Performance Period during which such amount would be initially payable
absent any elective deferral to a future date.
Any Awards, grants or other payments of performance-based compensation
pursuant to this subparagraph 6(f), and any grants of Stock Options or Stock
Appreciation Rights or associated Supplemental Payments intended to be exempt
from the limitations of Section 162(m) of the Code, shall be made by a Committee
consisting solely of two or more "outside directors" within the meaning of
Section 162(m).
7. Conversion Awards - Employees
(a) Employees designated by the Committee may elect, subject to the
following provisions and such terms and conditions as shall be determined by the
Committee, to receive Share Units in exchange for cash compensation otherwise
payable to such individuals by the Company:
(i) Share Units may be acquired by an Employee at a per share
exchange price of eighty-five percent of the Fair Market Value of a
share of stock determined as of the Exchange Date.
(ii) Share Units issued to Employees shall be subject to those
conditions, terms and restrictions as the Committee may require and
shall vest three (3) years from Exchange Date or in the event of a
Rollover Election by Employee, two (2) years from effective date of
last Rollover Election. For purposes of this Agreement, this three
(3) year vesting period, plus any extensions thereof pursuant to a
Rollover Election, shall be hereinafter referred to as the "Employee
Restricted Period", the initial three (3) year vesting period shall
be hereinafter referred to as the "Initial Employee Restricted
Period" and any two (2) year extension of the Employee Restricted
Period pursuant to a Rollover Election shall be hereinafter referred
to as a "Rollover Employee Restricted Period". Employee shall have
the option to defer the vesting of any Share Unit issued hereunder
for an additional period of two (2) years by making an irrevocable
Rollover Election at least six (6) months prior to the date on which
such Share Unit vests under the terms of Section 7. There is no
limit to the number of Rollover Elections Employees may make with
respect to a particular Share Unit.
(iii) With respect to annual incentives, it is expressly understood
that Employees have no right to any annual incentive award if
terminated for any reason prior to the end of the Performance
Period. Further, Employees who are employed at the end of the
Performance Period will not be entitled to any award unless the
Board determines in its sole and absolute discretion to grant such
award.
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(iv) In addition, no cash or other property will be set aside in a
trust or other account to secure the Company's performance under
this Plan. Assets to be paid to Employees under this Plan will be
subject to the claims of the Company's general creditors.
(v) Employees cannot transfer, pledge, or assign any of the benefits
under this Plan.
(vi) No interest will accrue or be paid with respect to any amounts
deferred under the Plan.
(b) At a time specified by the Committee which is prior to the Exchange
Date for base salary and at least six (6) months prior to the end of the
applicable fiscal year for annual incentives, Employee may make an irrevocable
election to defer up to the lesser of 30% or $30,000 of a year's base salary
and/or up to the lesser of 50% or $50,000 of an annual incentive award (for
purposes of this Agreement, the "Deferral Amount") and exchange it for Share
Units in accordance with the following provisions and such other terms,
conditions and limitations as shall be determined by the Committee from time to
time:
An Employee's base salary or annual incentive award may be exchanged for
Share Units in the following manner:
(1) If an Employee elects to receive Share Units, he or she shall
receive that number of units equal in value to the Deferral Amount,
as determined pursuant to Subparagraph (a)(i) above. The Deferral
Amount shall be deducted from the Employee's base salary in equal
installments beginning the month of the Exchange Date, or, in the
case of annual incentive, the full Deferral Amount shall be deducted
from the applicable annual incentive award at the time of payment.
(2) Except as otherwise determined by the Committee, if the
Employee's employment with the Company or a Subsidiary is terminated
by the Company or Subsidiary for cause during the Employee
Restricted Period or the Employee voluntarily terminates his
employment during the Initial Employee Restricted Period with
respect to a Share Unit, such non-vested Share Unit shall be
forfeited and returned to the Company and in substitution thereof
the Employee shall receive a cash payment equal to, (x) the lower of
the Fair Market Value of the Share Unit (for purposes of this
Agreement, Fair Market Value of a Share Unit shall be the average of
the highest and lowest company stock price on the day of valuation
or, if the Company's stock is not traded on such date, on the
immediately preceding trading date) on the date of termination or
the Deferral Amount, multiplied by (y) the percentage of the
Deferral Amount collected by the Company prior to the date of
termination.
In the event Employee voluntarily terminates his or her employment
with the Company or a Subsidiary during a Rollover Employee
Restricted Period with respect to a Share Unit, such non-vested
Share Unit shall be forfeited and returned to the Company and in
substitution thereof, the Employee shall receive a cash payment
equal to (i) the Fair Market Value of the Share Unit on the
effective date of the most recent Rollover Election if the Fair
Market Value of such Share Unit on the date of termination is higher
than the Fair Market Value of such Share Unit on the effective date
of the most recent Rollover Election or (ii) the lower of the Fair
Market Value of the Share Unit on the date of termination or the
Deferral Amount if the Fair Market Value of such Share Unit on the
date of termination is lower than the Fair Market Value of such
Share Unit on the effective date of the most recent Rollover
Election.
In the event Employee's employment with the Company is terminated by
the Company without cause or Employee's employment is terminated due
to Employee's Death, Disability, or Normal Retirement (which for
purposes of this Section 7 shall be defined as retirement at age 65
or older) or termination is for any reason not specified elsewhere
in this Subparagraph (b)(2) during an Employee Restricted Period
with respect to a Share Unit, each such non-vested Share Unit shall
be forfeited and returned to the Company and in substitution thereof
Employee shall receive a cash payment equal to (x) the higher of the
Fair Market Value of the Share Unit on the date of termination or
the Deferral Amount, multiplied by (y) the percentage of the
Deferral Amount collected by the Company prior to the date of
termination.
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(c) During any Employee Restricted Period, Employee shall be entitled to
receive additional Share Units equal in value (based on the Fair Market Value of
a Share Unit on the record dividend date) to the amount of cash dividends said
Employee would have received had he or she owned one (1) share of the Company's
Common Stock for each Share Unit owned by such Employee on each record dividend
date during such Employee Restricted Period.
(d) Once a Share Unit becomes vested, each Share Unit shall be returned to
the Company in exchange for payment in the form of cash or stock, as determined
by the Committee, in an amount equal to the Fair Market Value of the Share Unit
on the Vesting Date of Record. Payment shall be made within ninety (90) days of
vesting.
8. Stock Option Exercise
(a) The exercise price for Stock Options issued under the Plan shall be
paid in full when the Stock Option is exercised. The exercise price may be paid
(i) in cash, (ii) in whole shares of Stock owned by the option holder at least
six months prior to exercise, valued at Fair Market Value on the date of
exercise, or (iii) by a combination of such methods of payment. In addition, a
Stock Option holder may exercise the Stock Option by providing assurance from a
broker registered under the Exchange Act of the delivery of the proceeds of an
imminent sale of the Stock to be issued pursuant to the exercise of the Stock
Option, such sale to be made at the direction of the Stock Option holder. In the
case of Participants, the foregoing shall be subject to such terms, conditions
and limitations as the Committee may specify from time to time.
(b) The holder of a Stock Option shall have none of the rights of a
shareholder until exercise of the Option and the issuance of shares of Stock
pursuant to it.
9. General Restrictions
The Committee may, in its sole discretion, elect to defer the exercise,
vesting or payment of an Award (or any part thereof) granted under the Plan, if
necessary to avoid the loss of a deduction by the Company under Section 162(m)
of the Code.
10. Rights of a Participant
A Participant receiving any Award under the Plan, unless otherwise
provided by the Plan or decided by the Committee, shall have no rights as a
shareholder unless and until certificates for shares of stock are issued to him.
11. Termination of Employment or Service
(a) Except as provided in Paragraph 7, the effect of termination of a
Participant's employment with the Company upon any outstanding Awards shall be
determined by the Committee in its sole discretion as specified in the
documentation evidencing a particular award.
(b) Nothing in the Plan or in any agreement entered into pursuant to the
Plan shall confer upon any Participant the right to continue in the employment
or service of the Company or its Subsidiaries as an Participant, or affect any
right which the Company or such Subsidiaries may have to terminate the
employment or service of such Participant. For purposes of this Plan and
notwithstanding anything to the contrary contained elsewhere in this Plan, no
termination of a Participant's employment, Board service, or consulting service
with the Company within the meaning of this Plan shall be deemed to have
occurred by virtue of the Company entering into any agreement with respect to,
the public announcement of, the approval by the Company's shareholders or
directors of, or the consummation of, any transaction or series of integrated
transactions, if, prior to the occurrence of such transaction or series of
integrated transactions, a majority of the Continuing Directors (as defined in
Section 18 hereof) then in office determine that such transaction or series of
integrated transactions should not be treated as a termination of a
Participant's employment or Board service or consulting service with the Company
within the meaning of this Plan.
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12. Withholding
The Company shall have the right to withhold from any payments made under
this Plan, or to collect as a condition of payment, any taxes required by law to
be withheld. At any time when a Participant is required to pay to the Company an
amount required to be withheld under applicable income tax laws in connection
with a distribution of shares of Stock pursuant to this Plan, the Participant
may satisfy this obligation in whole or in part by electing to have the Company
withhold from such distribution shares of Stock having a value equal to the
amount required to be withheld. The value of the shares of Stock to be withheld
shall be based on the Fair Market Value of the Stock on the date that the amount
of tax to be withheld shall be determined. The rules governing such withholding
elections, including the date or dates by which such an election must be made,
shall be determined by the Committee as necessary and in compliance with Rule
16b-3.
13. Restrictions on Transfer
Except as otherwise provided in this Paragraph 13, no Stock Option or
other Award under the Plan shall be assignable or transferable by the
Participant other than by will or by the laws of descent and distribution and
all Stock Options shall be exercisable during the Participant's lifetime only by
the Participant. The Committee may, in its sole discretion, when and if
permitted by Rule 16b-3, establish guidelines providing for the irrevocable
transfer, without payment of consideration, of any Stock Option, other than
Incentive Stock Options, by the Participant to a member of the Participant's
immediate family or to a trust, partnership or other pass-through entity, whose
beneficiaries are members of the Participant's immediate family. For purposes of
this Paragraph 13, the term "immediate family" shall include the Participant's
spouse, children and grandchildren.
14. Non-Uniform Determinations
The Committee's determinations under the Plan (including without
limitation determinations of the Participants to receive Awards, the form,
amount and timing of such Awards, the terms and provisions of such Awards and
the agreements evidencing same, and the establishment of values and performance
targets) need not be uniform and may be made by the Committee selectively among
Participants who receive, or are eligible to receive, Awards under the Plan,
whether or not such Participants are similarly situated.
15. Adjustments in Stock and Related Adjustments
In the event of a reclassification, recapitalization, merger,
consolidation, reorganization, issuance of warrants or other rights, stock
dividend, stock split or reverse stock split, cash dividend, property dividend,
including, without limitation, a distribution of the stock of a Subsidiary,
combination or exchange of shares, repurchase of shares, or any other change in
the capital structure of the Company in order to prevent dilution or enlargement
of rights, the Committee shall determine the appropriate adjustments, if any, to
(a) the number of shares of stock which may be issued under the Plan, (b) the
number of shares issuable and the exercise price per share pursuant to an
outstanding Award theretofore granted under this Plan and, (c) the number and
kind of shares which may underlie an Award granted pursuant to Paragraph 5(d).
16. Amendment or Termination
The Committee at any time and from time to time may suspend, terminate,
modify or amend the Plan; provided, however, that an amendment which requires
stockholder approval in order for the Plan to continue to comply with Rule
16b-3, Section 162(m), or Section 422 of the Code or any other law, regulation
or stock exchange requirement shall not be effective unless approved by the
requisite vote of stockholders. No suspension, termination, modification or
amendment of the Plan may adversely affect any Award previously granted without
the written consent of the Participant.
17. Duration of the Plan
The Plan shall remain in effect until all Awards under the Plan have been
satisfied by the issuance of Stock or the payment of cash, but no Award shall be
granted more than ten years after the date the Plan is approved by the
shareholders of the Company, which shall be the Plan's effective date.
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18. Change of Control
For purposes of the Plan, a "Change of Control" shall have occurred if:
(a) Any corporation, person or other entity (other than the Company) makes
a tender or exchange offer for shares of Stock and shares are purchased pursuant
thereto ("Offer");
(b) More than fifty percent of the Company Stock is acquired by any person
or group;
(c) During the period of two consecutive years, individuals who at the
beginning of such period were members of the Board cease for any reason to
constitute at least a majority thereof (unless the election, or the nomination
for election by the Company's shareholders, of each new Director was approved by
a vote of at least two-thirds of the Directors then still in office who were
Directors at the beginning of the period); or
(d) The shareholders of the Company approve a definitive agreement to
merge the Company with another corporation where the Company is not the
surviving corporation or survives only as a subsidiary of another corporation,
to consolidate the Company with another corporation, or sell or otherwise
dispose of substantially all of the Company's assets.
In the event of the occurrence of a Change of Control, then from and after
the date of the first purchase of Stock pursuant to the Offer, or the date on
which public announcement of the acquisition of such percentage of stock shall
have been made, or the date on which such change in the composition of the Board
shall have occurred, or the date of any such shareholder approval, all Stock
Options and Stock Appreciation Rights and other Awards granted pursuant to the
Plan which remain outstanding shall automatically become exercisable in full,
whether or not otherwise exercisable, and all other Awards under the Plan shall
be vested as determined by the Committee. Notwithstanding the foregoing, no
"Change of Control" shall be deemed to have occurred by virtue of any of the
events set forth above if, prior to the occurrence of such event, a majority of
the Continuing Directors then in office determine that such event should not be
treated as a "Change of Control" for purposes of this Plan. "Continuing
Director" shall mean any member of the Board of Directors of the Company who is
a member of the Board of Directors as of the date of this Agreement and any
person who subsequently becomes a member of the Board of Directors, if such
person's nomination for election or election to the Board of Directors is
recommended or approved by a majority of the Continuing Directors.
19. Intent; Separability
All Incentive Stock Options granted hereunder are intended to comply with
Section 422 of the Code and, to the extent applicable, Section 424 of the Code,
and all provisions of this Plan and all Incentive Stock Options granted
hereunder shall be construed in such manner as to effectuate that intent. This
Plan and all Stock Options, stock appreciation rights, and other awards and
rights granted hereunder are intended to satisfy the conditions of Rule 16b-3,
as amended, and all provisions of this Plan and all Stock Options, Stock
Appreciation Rights, and other awards and rights granted hereunder shall be
construed in such manner as to effectuate that intent. If any of the terms or
provisions of this Plan conflict with the requirements of Rule 16b-3 (as it may
be amended from time to time) or Sections 422 and 424 of the Code (as they may
be amended from time to time), then such terms or provisions shall be deemed
inoperative to the extent that they so conflict with such requirements.
20. Governing Law
To the extent that Federal laws do not otherwise control, this Plan shall
be construed in accordance with and governed by the law of the state of
Mississippi.
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[LOGO] ChemFirst Inc. 2000 ANNUAL MEETING
You are cordially invited to attend the annual meeting of stockholders of
ChemFirst Inc. The meeting will be held Tuesday, May 23, 2000, at 1:30 p.m.
(CST) at the Hilton Jackson, 1001 East County Line Rd, 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
[GRAPHIC OMITTED] [GRAPHIC OMITTED]
- --------------------------------------------------------------------------------
Election |X| FOR all nominees |X| WITHHOLD AUTHORITY *EXCEPTIONS |X|
of Directors listed below to vote for all
nominees listed below.
Nominees: Three year term to expire in 2003 - Michael J. Ferris, John F.
Osborne, William A. Percy II and R. Gerald Turner
One year term to expire in 2001 - Richard P. Anderson
(INSTRUCTIONS: To withhold authority to vote for any individual nominee(s), mark
the "Exceptions" box and write that nominee's name in the space provided below).
* Exceptions____________________________________________________________________
Amendment to the 1998 Long-Term Incentive Plan
FOR |X| AGAINST |X| ABSTAIN |X|
In their discretion upon such other matters as may properly come before the
meeting. (Crossout if vote is withheld)
I will Change of Address
attend meeting. |X| and or Comments Mark Here |X|
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)
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SIGNATURE(S)
Please Sign, Date and Return the Proxy Promptly Using the Enclosed Envelope.
Votes MUST be indicated (x) in Black or Blue ink. |X|
Please Detach Here
You Must Detach This Portion of the Proxy Card
Before Returning it in the Enclosed Envelope
[GRAPHIC OMITTED] [GRAPHIC OMITTED]
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CHEMFIRST INC.
This Proxy is Solicited on Behalf of the Board of Directors
for the Annual Meeting on May 23, 2000
The undersigned hereby appoints Paul A. Becker, Dan F. Smith, and Leland
R. Speed, 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 23, 2000
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, (2) FOR the Amendment to the 1998 Long-Term Incentive Plan and (3) 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.
CHEMFIRST INC.
See Reverse Side P.O. BOX 11270
NEW YORK, N.Y. 10203-0270
