<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant / /
Filed by a Party other than the Registrant /X/
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
MORTON INTERNATIONAL, INC.
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(Name of Registrant as Specified In Its Charter)
MORTON INTERNATIONAL, INC.
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/ / $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and 0-11.
1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
5) Total fee paid:
------------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
------------------------------------------------------------------------
2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
3) Filing Party:
------------------------------------------------------------------------
4) Date Filed:
------------------------------------------------------------------------
<PAGE>
[LOGO]
S. JAY STEWART
CHAIRMAN AND CHIEF EXECUTIVE OFFICER
September 11, 1998
Dear Shareholder:
It is my pleasure to invite you to the 1998 Annual Meeting of Shareholders of
Morton International, Inc., which will be held on Thursday, October 22, 1998, at
the Mid-America Club, 200 East Randolph Drive (80th floor), Chicago, Illinois,
commencing at 10:00 A.M. local time. Information relative to the matters to be
voted upon at the meeting is in the formal notice of the meeting and proxy
statement on the following pages.
It is important that your shares be represented at this meeting whether or not
you plan to attend in person. Therefore, please sign, date and return your proxy
promptly in the enclosed envelope. This will not limit your rights to vote in
person or attend the meeting.
A public news release covering voting results will be available immediately
after the meeting.
The Company's Annual Report for the fiscal year ended June 30, 1998, is being
distributed to shareholders with this proxy statement.
Sincerely,
/s/ S. Jay Stewart
<PAGE>
MORTON INTERNATIONAL, INC.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
The Annual Meeting of Shareholders of Morton International, Inc. (the "Company")
will be held on Thursday, October 22, 1998, at the Mid-America Club, 200 East
Randolph Drive (80th floor), Chicago, Illinois at 10:00 A.M. local time to
consider and vote upon:
1. Election of four directors (see pages 2-5).
2. Ratification of the appointment of Ernst & Young LLP as the Company's
independent auditing firm for the fiscal year ending June 30, 1999 (see
page 18).
3. Any other business that may properly come before the meeting and any
adjournment thereof.
The close of business on August 24, 1998, has been fixed as the record date for
the meeting. All shareholders of record on that date are entitled to be present
and vote at the meeting.
Attendance at the annual meeting will be limited to shareholders of record,
beneficial owners of Company common stock entitled to vote at the meeting having
evidence of ownership, the authorized representative (one only) of an absent
shareholder, and invited guests of management. Any person claiming to be an
authorized representative of a shareholder must, upon request, produce written
evidence of such authorization.
The meeting will be conducted pursuant to the Company's by-laws and rules of
order prescribed by the chairman of the meeting.
By order of the Board of Directors
/s/ Raymond P. Buschmann
Raymond P. Buschmann
Vice President for Legal Affairs,
General Counsel and Secretary
September 11, 1998
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MORTON INTERNATIONAL, INC.
100 NORTH RIVERSIDE PLAZA
CHICAGO, ILLINOIS 60606-1596
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PROXY STATEMENT
September 11, 1998
INTRODUCTION
Effective April 30, 1997, Morton International, Inc. ("Old Morton")
contributed its salt and specialty chemicals businesses to a newly created
subsidiary, New Morton International, Inc. ("New Morton"), all the outstanding
common stock of which was then spun off on a share-for-share basis to the
shareholders of Old Morton. Immediately thereafter, New Morton's corporate name
was changed to Morton International, Inc. (the "Company"), and Old Morton's
automotive safety products business was combined with the businesses of Autoliv
AB, a Swedish corporation, through the formation of a new Delaware holding
corporation, Autoliv, Inc. Since the foregoing transactions, the Company and
Autoliv, Inc. have been independent publicly owned companies with separate,
independent boards of directors and management.
The majority of the present directors and executive officers of the Company,
however, had corresponding positions and responsibilities with Old Morton prior
to April 30, 1997. Consequently, certain information in this proxy statement
concerning such persons which covers periods prior to April 30, 1997 (such as
compensation received and stock options exercised) is based on their service
with Old Morton. Therefore, the term Company as used herein includes Old Morton
during the periods when it had corresponding shareholders, directors and
officers.
SOLICITATION OF PROXIES
This Proxy Statement is furnished in connection with the solicitation by the
Company's Board of Directors (the "Board") of proxies for use at its Annual
Meeting of Shareholders, to be held on Thursday, October 22, 1998, and at any
adjournment thereof (the "1998 Annual Meeting" or the "meeting").
The shares represented by all properly executed and unrevoked proxies
received in proper form in time for the meeting will be voted. Shares will be
voted in accordance with shareholders' instructions in the accompanying proxy.
If no instructions are given, the shares will be voted in accordance with the
Board's recommendations, which are noted herein. Any proxy given may be revoked
at any time before it is voted at the meeting.
Directors will be elected by a plurality of the votes cast at the meeting in
person or by proxy and entitled to vote thereon. Votes withheld as to one or
more nominees will not be counted as votes cast for such individuals. Any other
proposal properly brought before the meeting will be decided by a majority of
votes cast with respect thereto. Consequently, abstentions and broker non-votes
(votes withheld by brokers in the absence of instructions from street-name
holders) are not counted for purposes of determining whether a proposal has been
approved, but they are counted for purposes of establishing a quorum at the
meeting.
The Company will bear the cost of the solicitation. In addition to
solicitation by mail, the Company will request banks, brokers and other
custodian nominees and fiduciaries to supply proxy material to the beneficial
owners of the Company's common stock of whom they have knowledge, and will
reimburse them for their expenses in so doing; and certain directors, officers
and other employees of the Company, not specially employed for the purpose, may
solicit proxies, without additional remuneration therefor, by personal
interview, mail, telephone or telegraph. In addition, the Company has retained
Georgeson & Company Inc. to assist in the solicitation for a fee of $11,000 plus
expenses.
1
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1. ELECTION OF DIRECTORS
The Company's by-laws provide that the size of the Board shall be fixed from
time to time by Board resolution. The Board presently consists of 10 members,
divided into 3 classes. Directors in each class are elected, on a rotating basis
at the annual shareholders meeting at which the term for such class expires, for
terms expiring (except as noted herein) at the third subsequent annual meeting
of shareholders.
Listed on the following pages as nominees for election at the 1998 Annual
Meeting for three-year terms are the four directors whose present terms will
expire at that time. All nominees are presently serving as directors, and the
Company has not been advised by any nominee that he or she will not serve if
elected.
THE BOARD RECOMMENDS A VOTE FOR THE NOMINEES FOR DIRECTOR.
BOARD MEETING ATTENDANCE AND COMPENSATION OF DIRECTORS
The Board met 7 times during the fiscal year ended June 30, 1998 (fiscal
1998). All of the directors were present for 75% or more of the total meetings
of the Board and Board committees of which they were members.
Directors who are employees of the Company or any subsidiary thereof do not
receive compensation for service on the Board or Board committees. Non-employee
directors receive for their services a retainer of $28,000 per year, plus a fee
of $1,500 for each Board meeting attended.
In addition, non-employee directors who are chairmen of the Audit Committee
and Compensation Committee each receive additional annual retainers of $2,500;
the chairman of the Nominating & Organization Committee receives an additional
annual retainer of $1,500; and all committee chairmen and members receive $750
for attendance at each meeting of their particular committees.
Non-employee directors who are elected or continuing as such at annual
shareholders meetings also receive grants of 500 shares of Company common stock
as of the dates of each such meeting under the 1994 Non-Employee Director Stock
Plan. The value of the 500 shares received by each director as of the October
1997 annual meeting was $17,359.40.
The Company has a Non-Employee Directors Deferred Compensation Plan, under
which participants may elect to defer all or a portion of their cash (but not
stock) compensation. This Plan utilizes phantom Company stock, plus amounts
equivalent to dividends paid thereon, to value deferred balances, which as a
result fluctuate from time to time in accordance with the stock's market
performance. Distributions of Plan balances are made in cash following a
participant's death or termination of service as a director, in amounts based on
the stock's market value at the time of the particular distribution.
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2
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NOMINEES FOR DIRECTOR AT THE OCTOBER 1998 ANNUAL MEETING
W. JAMES FARRELL, age 56, has been a director of the
Company and its predecessor since August 1996. He is Chairman
(since May 1996) and Chief Executive Officer and a director
(since 1995) of Illinois Tool Works Inc. (ITW), a
multinational manufacturer of fasteners, components,
assemblies and systems. Mr. Farrell joined ITW in 1965, and
since 1972 he has served in numerous senior executive
capacities before election to his present positions. In
addition, he is a director of Premark International, Inc. and
The Quaker Oats Company. He holds a degree in Electrical
Engineering from the University of Detroit.
[PHOTO]
RICHARD L. KEYSER, age 55, is Chairman of the Board (since
September 1997), Chief Executive Officer (since March 1995),
and a director (since 1992) of W. W. Grainger, Inc., a
nationwide distributor of maintenance, repair and operating
supplies. He joined Grainger in 1986 as a vice president, and
subsequently served in several senior executive capacities
before assuming his present positions. He has been a director
of the Company and its predecessor since January 1995. He has
a B.S. in Nuclear Science from the U.S. Naval Academy and an
M.B.A. from Harvard University.
[PHOTO]
REBECCA A. MCDONALD, age 46, is President and Chief
Executive Officer (since 1997) of Amoco Energy Development
Company, a petroleum company. From 1993 to 1997, Mrs. McDonald
served as President, Natural Gas Group, Worldwide, for Amoco
Corporation. Mrs. McDonald was elected a director of the
Company in January 1998. She is also a director of Granite
Construction Incorporated. Mrs. McDonald holds a B.S. degree
from Stephen F. Austin University.
[PHOTO]
ROGER W. STONE, age 63, is Chairman of the Board (since
1983), President (since 1975), and Chief Executive Officer
(since 1979) of Stone Container Corporation, a multinational
producer and marketer of pulp, paper, and packaging products.
He has been a director of the Company and its predecessor
since 1987. Mr. Stone is also a director of
Abitibi-Consolidated, Autoliv, Inc., McDonald's Corporation,
Option Care, Inc. and Venepal S.A.C.A. He is a graduate of the
University of Pennsylvania Wharton School of Finance.
[PHOTO]
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3
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INCUMBENT DIRECTORS -- TERMS EXPIRING AT THE OCTOBER 1999 ANNUAL MEETING*
DENNIS C. FILL, age 69, is (since June 1992) Chairman and
Chief Executive Officer of Advanced Technology Laboratories,
Inc., formerly named Westmark International Incorporated, a
medical electronics systems manufacturer, where he held
corresponding offices since 1986. Mr. Fill has been a director
of the Company and its predecessors since 1978. He is also a
director of Beckman Coulter, Inc. and Cytran, Inc. Mr. Fill
attended Ealing College, the Institute of Export and the
Borough Polytechnic branch of London University. He also
served in the Royal Air Force.
[PHOTO]
WILLIAM E. JOHNSTON, age 58, has been a director of the
Company and its predecessor since January 1996. He is
President and Chief Operating Officer of the Company (since
October 1995), prior to which he was (since 1993) its
Executive Vice President, Administration and (from 1981 until
1993) President of its Salt Group. He is also a director of
Unitrin, Inc. Mr. Johnston holds a B.A. degree from St.
Joseph's College and an M.B.A. degree from the University of
Chicago.
[PHOTO]
EDWARD J. MOONEY, age 57, is Chairman (since July 1994),
Chief Executive Officer (since April 1994), President (since
1990) and a director (since 1988) of Nalco Chemical Company, a
producer and marketer of specialty chemicals and services for
water and industrial process treatment. Mr. Mooney was Chief
Operating Officer of Nalco from 1992 to 1994. He has been a
director of the Company and its predecessor since August 1995.
In addition, he is a director of FMC Corporation, as well as
Northern Trust Corporation and its subsidiary The Northern
Trust Company. He has a B.S. in Chemical Engineering and a
J.D. degree from the University of Texas.
[PHOTO]
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* Except for Mr. Fill whose term will expire in July 1999, when he will reach
age 70.
4
<PAGE>
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INCUMBENT DIRECTORS -- TERMS EXPIRING AT THE OCTOBER 2000 ANNUAL MEETING*
RALPH M. BARFORD, age 69, is President of Valleydene Corp.
Ltd., an investment company. He is also Chairman of GSW, Inc.,
a manufacturer of consumer products, and a director of Bank of
Montreal, BCE Inc., Bell Canada, Hollinger, Inc. and Northern
Telecom Limited. Mr. Barford has been a director of the
Company and its predecessors since 1971. He holds a Bachelor
of Commerce degree from the University of Toronto and an
M.B.A. degree from Harvard University.
[PHOTO]
JAMES R. CANTALUPO, age 54, is Vice Chairman (since 1998)
of McDonald's Corporation, a global foodservice retailer. He
also serves as Chairman (since 1998) and Chief Executive
Officer--International (since 1991) for McDonald's Corporation
and is a member of its board of directors. Mr. Cantalupo has
been a director of the Company and its predecessor since
January 1996. He is a graduate of the University of Illinois
as well as a certified public accountant.
[PHOTO]
S. JAY STEWART, age 60, became Chairman and Chief
Executive Officer of the Company in April 1994. Also, he has
been a director of the Company and its predecessors since
1986, and was its President and Chief Operating Officer from
1986 through March 1994. In addition, he is a director of
Household International, Inc. and Autoliv, Inc. Mr. Stewart
holds a B.S. degree in Chemical Engineering from the
University of Cincinnati and an M.B.A. degree from West
Virginia University.
[PHOTO]
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IN MEMORIAM
WILLIAM T. CRESON. We are saddened by the loss of William
Creson, who died August 2, 1998, at age 69. His contributions
to the Company and the Board were many and he will be missed.
Mr. Creson served as a director of the Company and its
predecessors since March 23, 1981. He also served as the
Chairman of the Audit and Compensation Committees and as a
member of the Nominating and Organization Committee, and would
have retired in July of 1999. Mr. Creson retired in 1986 from
Crown Zellerbach Corporation, where he served as Chairman,
President and Chief Executive Officer.
[PHOTO]
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* Except for Mr. Barford whose term will expire in July 1999, when he will reach
age 70.
5
<PAGE>
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COMMITTEES OF THE BOARD
There are four standing committees of the Board: Audit, Compensation,
Executive, and Nominating & Organization.
The Audit Committee recommends to the Board the independent auditors to be
selected to audit the Company's annual financial statements and reviews the fees
charged for such audits and for any special assignments given such auditors. The
committee also reviews the annual audit and its scope, including the independent
auditors' letter of comments and management's responses thereto; possible
violations of the Company's business ethics and conflicts of interest policies;
any major accounting changes made or contemplated; and the effectiveness and
efficiency of the Company's internal audit staff. In addition, the committee
confirms that no restrictions have been imposed by Company personnel on the
scope of independent auditors' examinations. Members of this committee are
Messrs. Cantalupo (Chairman), Farrell and Keyser, Mrs. McDonald and Mr. Mooney.
The committee met twice in fiscal 1998.
The Compensation Committee annually reviews and reports to the Board on
pension plan investment performance, and makes recommendations to the Board with
respect to the creation and amendment of pension and welfare plans of the
Company and its subsidiaries. The committee also approves senior officers'
salaries and administers the Company's employee cash and stock incentive
compensation plan. Members of this committee are Messrs. Stone (Chairman),
Barford, Fill and Keyser. The committee met 3 times in fiscal 1998.
The Executive Committee has and may exercise all the powers and authority of
the Board in the management of its business and affairs, except that the
committee does not have the power to amend the Company's by-laws or articles of
incorporation (except to fix the designations, preferences and other terms of
any of its preferred stock), authorize the issuance of stock, authorize
distributions (other than pursuant to a formula set by the Board), adopt an
agreement of merger or consolidation, approve a plan of merger that does not
require a vote of shareholders under Indiana law, fill vacancies in the Board or
Executive Committee or recommend to shareholders action that Indiana law
requires be approved by shareholders. Members of this committee are Messrs.
Stewart (Chairman), Cantalupo and Johnston, Mrs. McDonald and Mr. Stone. The
committee met once in fiscal 1998.
The Nominating & Organization Committee identifies and evaluates individuals
for potential directorships and makes recommendations accordingly to the Board
to fill vacancies or new positions on the Board, as well as recommending to the
Board the management slate of nominees for election as directors at annual
shareholders meetings. The committee also makes recommendations to the Board
regarding the size and composition of the Board and Board committees;
compensation of non-employee directors; and management succession. In addition,
the committee reviews the development of the management organization structure.
Members of this committee are Messrs. Barford (Chairman), Farrell, Fill and
Mooney. The committee met twice in fiscal 1998.
Written nominations by shareholders for directors will be considered by the
Nominating & Organization Committee provided they are received by the Corporate
Secretary of the Company at its principal executive offices pursuant to timely
advance written notice in accordance with its by-laws* and contain all
information specified in such by-laws. No such nominations were received for the
1998 Annual Meeting. For the Company's 1999 Annual Meeting, any such nominations
must be received by the Company between July 24 and August 24, 1999.
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* A copy of the Company's by-laws may be obtained by written request to its
Corporate Secretary.
6
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VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
On August 24, 1998, the record date for the 1998 Annual Meeting, there were
124,812,931 shares of common stock outstanding, each entitled to one vote. Only
shareholders of record on that date will be entitled to vote at the meeting. The
Company has no other class of equity securities outstanding. As of the date of
this proxy statement, there was no known beneficial ownership of more than 5% of
the Company's common stock.
The following table shows the Company's common stock beneficially owned as
of August 24, 1998, by each director and each executive officer named in the
Summary Compensation Table on page 12; and by all directors and executive
officers of the Company as a group. Each of the following persons and members of
the group had sole voting and investment power with respect to the shares shown
unless otherwise indicated. No director or executive officer owns more than 1%
of the Company's common stock. Directors and officers as a group own 2.28%
<TABLE>
<CAPTION>
SHARES
BENEFICIALLY
OWNED(1)
------------
<S> <C>
Ralph M. Barford............................................................................... 101,000
Walter W. Becky II............................................................................. 144,753
James R. Cantalupo............................................................................. 5,419 (2)
W. James Farrell............................................................................... 1,500
Dennis C. Fill................................................................................. 14,400
James J. Fuerholzer............................................................................ 157,816
Stephen A. Gerow............................................................................... 175,699
William E. Johnston............................................................................ 499,673
Richard L. Keyser.............................................................................. 8,287 (2)
Rebecca A. McDonald............................................................................ 500
Edward J. Mooney............................................................................... 2,400
S. Jay Stewart................................................................................. 1,094,335
Roger W. Stone................................................................................. 10,921 (2)
All directors and executive officers as a group (22 persons including those named)............. 2,895,178
</TABLE>
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(1) Includes shares which the individuals have the right to acquire within 60
days through the receipt of 500 shares each under the Non-Employee Directors
Stock Plan for Directors Barford, Cantalupo, Farrell, Fill, Keyser,
McDonald, Mooney and Stone; and upon the exercise of stock options which are
exercisable presently or within 60 days: Mr. Stewart, 831,865 shares; Mr.
Johnston, 394,885 shares; Mr. Fuerholzer, 138,144 shares; Mr. Gerow, 164,315
shares; and Mr. Becky, 117,257 shares; and all directors and officers as a
group, 2,186,241 shares.
(2) The shares owned by Messrs. Cantalupo, Keyser and Stone include,
respectively, 1,919, 5,287 and 5,421 shares of phantom stock credited as of
June 30, 1998, to their accounts under the Non-Employee Directors Deferred
Compensation Plan described on page 2 of this proxy statement.
7
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SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
For the period July 1, 1997 to June 30, 1998, the Company believes all
Section 16(a) filing requirements applicable to its officers and directors were
complied with, except that a Form 4 report inadvertently was not filed on a
timely basis for one transaction for Nancy A. Hobor, an officer of the Company.
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COMPENSATION COMMITTEE INTERLOCKS
AND INSIDER PARTICIPATION
The Compensation Committee is comprised exclusively of directors who are not
and have never been Company employees. No Company executive officer serves on
the compensation committee of another company for which any member of the
Company's Compensation Committee serves as an executive officer.
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REPORT OF THE COMPENSATION COMMITTEE
ON EXECUTIVE COMPENSATION
As reported on page 6, the Compensation Committee of the Board (the
"Committee") approves senior officers' salaries and administers the Company's
cash and stock incentive compensation plan. The purpose of this plan and the
objectives of the Committee are to:
- pay for performance, motivating both long-and short-term performance on
behalf of Company shareholders,
- provide competitive compensation programs so as to be able to attract,
retain and motivate top management talent,
- place greater emphasis on at risk incentive compensation than on fixed
salaries, particularly for senior executives,
- base the incentive compensation of business unit executives in large part
on the performance of their operations, while including a component which
recognizes overall Company performance as well, and
- most importantly, join shareholder and management interests.
To further these objectives, the compensation of senior executive officers
includes four components: (1) base salaries, (2) annual bonus programs, (3) a
long-term incentive program, and (4) stock options.
Periodically, the Committee arranges for studies by independent compensation
consulting firms comparing total compensation of the Company's senior executive
officers with compensation of executives in similarly sized companies. These
companies include, but are not limited to, companies represented in the S&P
Chemicals (Specialty) Index in the Stock Performance Graph on page 11, since the
Company's competitors for executive employees are not always the same as those
for shareholders' investments. The last such study, which was performed in
August 1998, confirmed that base salaries are slightly lower than the averages
in the study group. The study also showed that the Company continues to place
emphasis on performance based compensation, so that total compensation is above
such averages when goals are significantly exceeded.
8
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BASE SALARIES
The Committee approves salary changes for senior executive officers in
accordance with the Company's written salary administration policy. This policy
is a long-standing one designed and periodically reviewed in consultation with
external compensation consultants. Salary ranges are established for various
positions through job evaluation and comparison with competitive salary data.
Within the ranges, adjustments are recommended on the basis of position within
the range, individual performance, and a corporate merit salary percentage
factor. Consistent with the Company's overall objectives, these adjustments,
combined with bonuses as outlined below, emphasize payment for performance.
ANNUAL BONUS PROGRAMS
Following fiscal 1998, the Committee considered annual bonus payments based
on performance during that year. Under the annual bonus program applicable to
senior executive officers, award levels may range from zero to 120% of their
base salaries as of the beginning of the performance period, depending on salary
grade and attainment of Company and applicable business unit profit targets as
approved by the Committee. Company earnings per share ("EPS") from continuing
operations for fiscal 1998 improved over fiscal 1997 but fell below
expectations. Diluted EPS on a continuing basis (before the $15.0 million
special charge in fiscal 1998) increased 11% over 1997. Based on these factors
and the terms of such annual bonus program, the Committee approved one bonus
payment to a senior business unit executive officer.
LONG-TERM INCENTIVE PROGRAM (LTIP)
Also following fiscal 1998, the Committee considered LTIP payments to senior
executive officers based on performance during the three-year period from fiscal
1996 through fiscal 1998. LTIP participants are selected by the Committee
annually prior to the beginning of each particular three-year performance
period. Depending on the participant's salary grade, possible award levels range
from zero if less than 5% compound annual growth in Company or applicable
business unit profit goals as approved by the Committee is realized over the
three-year period to a maximum 240% of base salary if 20% or greater compound
annual growth is realized. Based on the terms of the LTIP for fiscal 1996
through fiscal 1998, the Committee approved LTIP payments to 7 senior executive
officers ranging from 50% to 161% of their annual base salaries as of the
beginning of the performance period.
STOCK OPTIONS
In addition, the Committee authorizes stock option grants to selected
employees, currently including all executive officers, at approximate one-year
intervals. The Company's stock option guidelines were designed and have been
revised periodically with the assistance of external compensation consultants.
These guidelines provide for a specific number of options, the value of which is
derived from the midpoint of the salary range for each specific salary grade, as
periodically adjusted by means of a formula that utilizes the stock's average
market value during the last month of the most recent fiscal year. The formula
does not, however, consider an individual's previous option grants. All options
granted to executive officers in fiscal 1998 are for 10 year terms, with an
exercise price equal to the stock's market value on the date of grant, and
become exercisable after one year of continued employment following the grant
date. Executive officers received grants in August 1997 (fiscal 1998) ranging
from 5,800 shares to 56,700 shares.
9
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CHIEF EXECUTIVE OFFICER
The fiscal 1998 compensation of the Company's Chairman and Chief Executive
Officer, S. J. Stewart, was determined in accordance with the salary policy,
bonus programs and stock option guidelines previously discussed.
In August 1997 the Committee approved a stock option grant of 56,700 shares,
and a salary increase of $30,000 (effective September 1, 1997), for Mr. Stewart.
His resulting base salary, $720,000, is slightly above the middle of the salary
range established for this position.
As previously discussed, Company earnings for fiscal 1998 were below
expectations and in accordance with the terms of the annual bonus program, no
annual incentive payment was made to Mr. Stewart. Under the terms of the LTIP,
the Committee approved a payment of $1,032,896 to Mr. Stewart, since the Company
exceeded the goal of 10% compound growth in earnings per share for the three
year period from fiscal 1996 through fiscal 1998 by achieving an actual
compounded growth rate of approximately 15.5%.
LIMITATION ON DEDUCTIBILITY OF CERTAIN COMPENSATION
Section 162(m) of the Internal Revenue Code (the "Code") generally disallows
a tax deduction to public companies for annual compensation over $1 million paid
to their chief executive officers and the four other most highly compensated
executive officers that is not "performance-based" (as defined in the Code). It
is the Committee's general policy to avoid the loss of tax deductibility
whenever compliance with Section 162(m) would be consistent with the Company's
incentive compensation objectives. Consequently, the employee incentive
compensation programs in which the Company's most highly compensated officers
participate have been restructured to comply with the Code's definition of
performance-based compensation. Notwithstanding its general policy, however, the
Committee retains the discretion to authorize incentive payments that may not be
deductible if it believes that doing so would be in the best interests of the
Company and its shareholders.
The Compensation Committee
Roger W. Stone, CHAIRMAN
Ralph M. Barford
Dennis C. Fill
Richard L. Keyser
10
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STOCK PERFORMANCE GRAPH
The following graph compares the cumulative shareholder returns on the
Company's common stock; the Standard & Poor's-Registered Trademark- 500 Stock
Index; and the Standard & Poor's-Registered Trademark- Chemicals (Specialty)
Index. Public trading of Company stock began on May 1, 1997; public trading of
Old Morton stock ended on April 30, 1997. Consequently, the period covered on
the graph is limited to the Company's returns from May 1, 1997.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
CUMULATIVE TOTAL RETURN
<S> <C> <C> <C>
Based on initial investment of $100 beginning May 1,
1997
with dividends reinvested
Morton International
Inc. S&P 500(R) S&P Chemicals (Specialty) Index
01-May-97 $100.00 $100.00 $100.00
Jun-97 $100.21 $110.84 $114.36
Sep-97 $117.86 $119.14 $121.77
Dec-97 $114.92 $122.56 $127.85
Mar-98 $110.09 $139.66 $128.38
Jun-98 $84.19 $144.27 $114.70
SOURCE: GEORGESON & COMPANY, INC.
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
MAY 1 JUNE SEPT. DEC. MARCH JUNE
1997 1997 1997 1997 1998 1998
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Morton International, Inc.............. $ 100.00 $ 100.21 $ 117.86 $ 114.92 $ 110.09 $ 84.19
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
S&P 500-Registered Trademark-.......... 100.00 110.84 119.14 122.56 139.66 144.27
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
S&P Chemicals (Specialty) Index........ 100.00 114.36 121.77 127.85 128.38 114.70
<CAPTION>
</TABLE>
Note: The total return for the S&P indices begins April 30, 1997. The total
return for Morton International, Inc. is based on the company's opening price of
$30.125 on May 1, 1997.
11
<PAGE>
- --------------------------------------------------------------------------------
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
---------------------
ANNUAL COMPENSATION AWARDS PAYOUTS
-------------------------------------- ---------------------
SECURITIES
OTHER ANNUAL UNDERLYING LTIP ALL OTHER
NAME AND PRINCIPAL COMPENSATION OPTIONS PAYOUTS COMPENSATION
POSITION FISCAL YEAR SALARY($) BONUS($) ($)(1) (#) ($)(2) ($)(3)
<S> <C> <C> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------------------------
S. JAY STEWART 1998 $ 715,000 $ -0- $ -0- 56,700 $1,032,896 $ 21,450
Chairman and Chief 1997 685,833 661,991 3,031,697 66,689 1,440,000 20,575
Executive Officer 1996 660,833 654,528 174,365 74,797 1,070,000 19,825
- --------------------------------------------------------------------------------------------------------------------------------
WILLIAM E. JOHNSTON 1998 $ 465,417 $ -0- $ -0- 30,200 $426,070 $ 13,963
President and Chief Operating Officer 1997 443,750 387,821 959,056 35,306 500,000 13,313
1996 396,000 299,992 153,861 66,428 500,000 11,880
- --------------------------------------------------------------------------------------------------------------------------------
JAMES J. FUERHOLZER 1998 $ 288,333 $ -0- $ -0- 18,800 $ -0- $ 8,650
Executive Vice President of Portfolio 1997 275,417 152,673 -0- 22,360 67,556 8,263
and Technology Development 1996 243,250 104,397 -0- 27,983 154,500 7,415
- --------------------------------------------------------------------------------------------------------------------------------
STEPHEN A. GEROW 1998 $ 270,167 $ -0- $ 149,395 11,300 $124,150 $ 8,105
President, Coatings 1997 259,167 225,000 -0- 13,469 268,250 7,775
Group 1996 248,167 162,791 -0- 14,907 360,000 7,445
- --------------------------------------------------------------------------------------------------------------------------------
WALTER W. BECKY, II 1998 $ 229,417 $ 68,000 $ -0- 11,300 $ 96,720 $ 6,883
President, Salt Group 1997 217,000 151,113 -0- 13,861 -0- 6,510
1996 205,000 153,004 -0- 14,907 -0- 6,150
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Amounts in this column consist of cash payments to the indicated individuals
pursuant to pre-fiscal 1991 stock option agreement provisions for
reimbursement of their income tax liability upon exercise of the related
options (for a description of such payments, see note (2) to the option
exercise table on page 14).
(2) Amounts in this column consist of Long-Term Incentive Program (LTIP) awards
earned during three-year performance periods ending on the last day of the
indicated fiscal years and paid out approximately two months thereafter.
(3) Amounts in this column consist of Company contributions to the named
individuals' accounts in the Company's basic and supplemental Employee
Savings and Investment (defined contribution) Plans.
12
<PAGE>
- --------------------------------------------------------------------------------
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS(2)
----------------------------------------------------- POTENTIAL REALIZABLE VALUE
NUMBER OF % OF TOTAL EXERCISE AT ASSUMED ANNUAL RATES OF
SECURITIES OPTIONS OR BASE STOCK PRICE APPRECIATION
UNDERLYING GRANTED TO PRICE FOR OPTION TERM
OPTIONS EMPLOYEES IN (PER EXPIRATION --------------------------------------
NAME(1) GRANTED(#) FISCAL YEAR SHARE)(2) DATE 0% 5%($)(3) 10%($)(3)
<S> <C> <C> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------------------------
Mr. Stewart 56,700 6.4% $ 33.53 8/28/07 -0- $1,195,744 $3,030,136
Mr. Johnston 30,200 3.4% 33.53 8/28/07 -0- 636,886 1,613,935
Mr. Fuerholzer 18,800 2.1% 33.53 8/28/07 -0- 396,472 1,004,701
Mr. Gerow 11,300 1.3% 33.53 8/28/07 -0- 238,305 603,890
Mr. Becky 11,300 1.3% 33.53 8/28/07 -0- 238,305 603,890
All Shareholders N/A N/A N/A N/A -0- 2,621,705,667 6,643,916,901
All Optionees 883,740 100% 33.40 various(4) -0- 18,563,030 47,042,362
Optionee Gain as % of All N/A N/A N/A N/A N/A 0.7% 0.7%
Shareholders' Gain
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) All options held by the named individuals include limited stock appreciation
rights (LSARs), which are issued in tandem with stock options. LSARs give
the holders thereof the right to receive cash in an amount equal to the
spread between the exercise price of the related options and the stock's
fair market value during the 90-day period following a change in control of
the Company (as such term may be defined from time to time by the Board of
Directors) in lieu of exercising the related options, which are canceled
upon exercise of LSARs.
(2) The exercise price shown for individual optionees is the fair market value
of the Company's common stock on the date of grant (calculated as the
average of its high and low sales prices on that date reported on the New
York Stock Exchange Composite Tape). The exercise price shown for all
optionees is the weighted average of all options granted in fiscal 1998.
Options become exercisable one year following the dates of grant, and
exercise prices may be paid in cash or previously owned shares of Company
common stock.
(3) The amounts shown in these two columns represent potential realizable values
using the options granted and exercise prices. The assumed rates of stock
price appreciation are set by SEC rules and are not intended to forecast the
future appreciation of Company common stock.
(4) The expiration dates of options granted during fiscal 1998 are 8/28/07,
9/14/07, 10/23/07, 1/22/08, 3/7/08, 4/1/08, 5/22/08 and 6/27/08.
13
<PAGE>
- --------------------------------------------------------------------------------
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR END OPTION
VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED
OPTIONS AT FISCAL VALUE OF UNEXERCISED IN-THE-
YEAR END(#) MONEY OPTIONS AT FISCAL YEAR
---------------------------- END($)
SHARES ACQUIRED VALUE ----------------------------
NAME ON EXERCISE (#) REALIZED($)(1) EXERCISABLE(2) UNEXERCISABLE EXERCISABLE(3) UNEXERCISABLE
<S> <C> <C> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------------------
Mr. Stewart -0- N/A 775,165 56,700 5,770,741 -0-
Mr. Johnston -0- N/A 364,685 30,200 3,083,793 -0-
Mr. Fuerholzer 5,015 $ 95,041 119,344 18,800 617,580 -0-
Mr. Gerow 9,000 189,754 153,015 11,300 1,333,845 -0-
Mr. Becky 9,564 157,412 105,957 11,300 710,820 -0-
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) The average of the Company stock's high and low sales prices reported on the
New York Stock Exchange Composite Tape for the particular exercise dates,
minus the applicable exercise prices, multiplied by the number of option
shares exercised.
(2) Non-qualified options in this column that were granted to the named
individuals prior to fiscal 1991 (provided they were executive officers on
the grant dates) include supplemental cash payment rights, pursuant to which
payments are made to optionees upon exercise of such options or the related
LSARs described in note (1) to the option grants table on page 13 in
reimbursement of their income tax liability from such exercises and
payments.
(3) The average of the Company stock's high and low trading prices (calculated
as in note (1) above) on the last trading day of fiscal 1998 ($25.375 per
share), minus the applicable exercise prices, multiplied by the number of
option shares held. Such values do not include the supplemental cash payment
rights described in note (2) above.
14
<PAGE>
- --------------------------------------------------------------------------------
LONG-TERM INCENTIVE PROGRAM (LTIP) -- AWARDS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
ESTIMATED FUTURE PAYOUTS UNDER
PERFORMANCE OR NON-STOCK PRICE-BASED PROGRAM
OTHER PERIOD -------------------------------
UNTIL MATURATION
NAME OR PAYOUT THRESHOLD TARGET MAXIMUM
<S> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------
Mr. Stewart 3 years $ 360,000 $720,000 $1,440,000
Mr. Johnston 3 years 234,500 469,000 938,000
Mr. Fuerholzer 3 years 116,000 232,000 464,000
Mr. Gerow 3 years 109,000 218,000 436,000
Mr. Becky 3 years 92,500 185,000 370,000
</TABLE>
- --------------------------------------------------------------------------------
Individual target incentive awards under the LTIP are percentages of
participants' salaries ranging from 60% to 100%, depending on their salary
grades, subject to 20% plus or minus adjustments authorized prior to the
beginning of the applicable performance period by the Compensation Committee.
The target awards reported in the foregoing table require a 10% compound annual
growth in Company or applicable business unit profits and the achievement of
return on net assets ("RONA") goals over the three-year performance period
beginning on July 1, 1998, and ending on June 30, 2001. Maximum awards can be up
to two times target award levels to reflect 20% or greater compound earnings
growth and full achievement of RONA goals over the performance period, but are
zero if compound earnings growth is less than the 5% threshold level and minimum
RONA goal levels are not achieved.
In the event of a change in control of the Company (as defined in the LTIP),
the performance periods with respect to all outstanding incentive awards would
terminate and the related incentive awards would be payable. The amount payable
with respect to any award would be equal to the percent of target based upon the
greater of 100% or the weighted average of (i) the percent of target earned to
the most recent fiscal quarter prior to the change of control ("Measurement
Date") and (ii) 100% of target from the Measurement Date to the end of the
three-year performance period.
15
<PAGE>
- --------------------------------------------------------------------------------
CHANGE OF CONTROL EMPLOYMENT AGREEMENTS
All individuals named in the Summary Compensation Table except Mr. Stewart
have change of control employment agreements with the Company ("agreements")
which are effective for 3-year periods and are automatically extended annually
for additional 1-year periods unless notice to the contrary is given. The
agreements are otherwise terminable during their periods of effectiveness only
by termination of the executives' employment. Such termination in connection
with a change in control of the Company (as defined in the agreements) will
entitle an executive to benefits under the agreements. The agreements require
continued employment of the executive following a change of control on an
equivalent basis to employment immediately before such change of control. In the
event that during the three-year period following a change of control, the
executive terminates the executive's employment for good reason (as defined in
the agreements) or, during the 30-day period commencing one year after the
change of control, for any reason, or the Company terminates the executive's
employment without cause (as defined in the agreements), the executive would be
entitled to receive an immediate lump sum payment in an amount equal to three
times the sum of such executive's then current salary, average long-term bonus
and highest annual bonus plus service and earnings credits under any Company
retirement plan, which would have been earned over, and the continuance of
fringe benefits during, the three years after such termination (except as
reduced by payments under long-term bonus plans made to an executive upon a
change of control which relate to performance periods subsequent to such
termination). The agreements provide that executives are to be made whole on an
after-tax basis with respect to excise taxes payable under Section 4999 of the
Code as a consequence of any payments made to them (whether or not under the
agreements) being classified as "parachute payments" as defined in Section 280G
of the Code.
Mr. Stewart's employment agreement has a term ending March 31, 2000,
provided three years' advance notice of termination is given by the Company.
Unless and until such notice is given, the employment agreement will continue on
a year-to-year basis through September 30, 2003 (Mr. Stewart's normal retirement
date). Mr. Stewart's agreement provides that in the event of his voluntary or
involuntary termination without cause following a change in control of the
Company, he would be entitled to receive an immediate payment of salary and
bonuses plus credits and benefits similar to those described in the preceding
paragraph through the then current term of his agreement.
- --------------------------------------------------------------------------------
SURVIVOR INCOME BENEFITS PLAN
All named Executive Officers participate in this plan, under which benefits
are payable to participants' surviving spouses (or dependent children if there
is no spouse) if a participant dies prior to age 65 while employed by the
Company. The benefit is approximately 50% of the participant's base pay at death
and continues until the participant would have attained age 65. Accruals were
made in fiscal 1998 for aggregate potential benefits payable under this plan,
but no specific amounts for individual participants were calculated.
- --------------------------------------------------------------------------------
POST-RETIREMENT LIFE INSURANCE PLAN
Messrs. Stewart and Johnston participate in this plan, under which life
insurance after retirement is provided at no cost to retirees in amounts equal
to their base salaries at retirement. Such coverage is in addition to that
provided under the Company's regular life insurance program. Accruals were made
in fiscal 1998 for aggregate potential benefits payable under all Company life
insurance plans, but no specific amounts for individual participants were
calculated.
16
<PAGE>
- --------------------------------------------------------------------------------
PENSION PLANS
The following table contains estimated annual retirement benefits payable
under the Company's basic and excess defined benefit pension plans.
<TABLE>
<CAPTION>
YEARS OF SERVICE
-----------------------------------------------------
COMPENSATION 15 20 25 30 35
- ------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$ 200,000 $ 48,466 $ 64,621 $ 80,777 $ 96,948 $ 114,448
400,000 100,966 134,621 168,277 201,948 236,948
600,000 153,466 204,621 255,777 306,948 359,448
800,000 205,966 274,621 343,277 411,948 481,948
1,000,000 258,466 344,621 430,777 516,948 604,448
1,200,000 310,966 414,621 518,277 621,948 726,948
1,400,000 363,466 484,621 605,777 726,948 849,448
1,600,000 415,966 554,621 693,277 831,948 971,948
1,800,000 468,466 624,621 780,777 936,948 1,094,448
</TABLE>
All individuals named in the Summary Compensation Table participate in the
Company's pension plans. The number of full years of credited service at June
30, 1998, for each is as follows: Mr. Stewart, 25 years; Mr. Johnston, 21 years;
Mr. Fuerholzer, 40 years; Mr. Gerow, 8 years; and Mr. Becky, 23 years.
Upon reaching age 65, pension plan participants are eligible to receive
annual retirement income, on a straight-life annuity basis, in monthly
installments for life equal to 1.75% of salary plus annual bonus (as reported in
the Summary Compensation Table), averaged over the five consecutive calendar
years during which such compensation was highest out of the last ten years
completed before age 65, for each year of credited service, less 1.67% of
primary social security for each year of credited service (up to 30 years).
Mr. Stewart participated in a predecessor company's pension plan prior to
1984. Upon retirement, he will receive 2% of compensation (calculated as
described in the preceding paragraph), less 1.67% of primary social security,
for each year of credited service prior to 1984. For subsequent credited
service, he will receive benefits as described in the preceding paragraph.
Consequently, his benefits will slightly exceed those in the above table in
amounts varying with the extent of his pre-1984 credited service.
Mr. Johnston participates in a supplemental executive retirement program
(SERP). Under the SERP, participants are entitled, upon normal or approved early
retirement, to receive amounts which, together with standard Company pensions
(including pensions of prior employers), equal 50% of their average compensation
(salary plus standard annual bonus) with respect to the five consecutive highest
earnings years out of the final ten years' service prior to retirement.
Consequently, unless reduced as described below, the estimated total annual
pension benefits of a SERP participant will approximate those shown in the
column of the foregoing pension table which sets forth benefits for employees
with 30 years of credited service.
If approved early retirement occurs prior to age 62, the SERP pension is
reduced by 0.33% for each full month from the early retirement date to age 62.
If a change in control of the Company occurs and thereafter the employment of
the SERP participant is terminated by the Company (other than for cause as
defined in the employment agreements) or the individual's status as a SERP
participant is terminated, the SERP pension vests as though the individual had
retired early with approval on the date of such termination.
In addition, SERP participants' rights under employment agreements
concerning pension benefits following a change of control are preserved.
17
<PAGE>
- --------------------------------------------------------------------------------
2. RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
Upon recommendation by the Audit Committee, the Board has appointed Ernst &
Young LLP as the independent auditing firm for the Company's fiscal year ending
June 30, 1999. The Company has been advised that Ernst & Young LLP has no
relationship with the Company or its subsidiaries other than that arising from
the firm's employment as auditors.
In accordance with a resolution of the Board, this selection is being
presented to the shareholders for ratification at the 1998 Annual Meeting. While
ratification by shareholders of this appointment is not required by law or the
Company's articles of incorporation or by-laws, management believes that such
ratification is desirable. In the event this appointment is not ratified by a
majority vote of shareholders, the Board will consider that fact when it
appoints independent auditors for the next fiscal year.
Ernst & Young LLP has been the independent auditing firm for the Company and
Old Morton since the latter's formation in 1989. Audit services provided to the
Company by Ernst & Young LLP during fiscal 1998 consisted of the examination of
the financial statements of the Company and its subsidiaries for that year and
the preparation of various reports based thereon, as well as services relating
to filings with the SEC and employee benefit plan audits.
Representatives of Ernst & Young LLP are expected to be present at the 1998
Annual Meeting with the opportunity to make a statement if they so desire and to
be available to respond to appropriate questions relating to that firm's
examination of the Company's financial statements for fiscal 1998.
THE BOARD RECOMMENDS A VOTE FOR THE PROPOSAL TO RATIFY THE APPOINTMENT OF
ERNST & YOUNG LLP.
18
<PAGE>
- --------------------------------------------------------------------------------
3. DISCRETIONARY VOTING OF PROXIES ON OTHER MATTERS
Management does not now intend to bring before the 1998 Annual Meeting any
matters other than those disclosed in the notice of the meeting. Should any
matter requiring a vote of the shareholders be properly brought before the
meeting by or at the direction of the Board, the proxies in the enclosed form
confer upon the person or persons entitled to vote the shares represented by
such proxies discretionary authority to vote such shares in respect of any such
matter in accordance with their best judgment.
For business to be properly brought before an annual shareholders meeting by
a shareholder, timely advance written notice thereof must be received by the
Corporate Secretary of the Company at its principal executive offices in
accordance with the Company's by-laws. No such notices were received for the
1998 Annual Meeting. For the Company's 1999 Annual Shareholders Meeting, any
such notices must be received by the Company between July 24 and August 24,
1999.
SHAREHOLDER PROPOSALS FOR 1999 ANNUAL MEETING
Shareholder proposals, to be considered for inclusion in the proxy statement
for the 1999 Annual Meeting of Shareholders, must be received by the Corporate
Secretary of the Company at its principal executive offices no later than May
14, 1999.
By Order of the Board of Directors
/s/ Raymond P. Buschmann
Raymond P. Buschmann
Vice President for Legal Affairs,
General Counsel and Secretary
Chicago, Illinois
September 11, 1998
19
<PAGE>
PROXY
MORTON INTERNATIONAL, INC. PROXY/VOTING INSTRUCTION CARD
100 NORTH RIVERSIDE PLAZA
CHICAGO, ILLINOIS 60606
- -------------------------------------------------------------------------------
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF SHAREHOLDERS
ON OCTOBER 22, 1998
The undersigned hereby appoints James R. Cantalupo, Edward J. Mooney and
Raymond P. Buschmann, or any of them, each with power of substitution, as
proxies to vote as specified on this card all shares of common stock of
Morton International, Inc. (the "Company") registered in the name(s) of the
undersigned on August 24, 1998, or in the name(s) of agents for the benefit
of the undersigned in the Company's Book Entry Ownership Program, Dividend
Reinvestment Plan, and/or Employee Savings & Investment Plan, at the
Company's Annual Meeting of Shareholders on October 22, 1998, and at any and
all adjournments thereof. Said proxies are authorized to vote in their
discretion as to any other business which may properly come before the
meeting. IF A VOTE IS NOT SPECIFIED, SAID PROXIES WILL VOTE FOR PROPOSALS 1
and 2.
Receipt is acknowledged of the Company's Annual Report to Shareholders for
the fiscal year ended June 30, 1998, and Notice and Proxy Statement for the
above Annual Meeting.
YOU ARE ENCOURAGED TO SPECIFY YOUR CHOICES BY MARKING THE APPROPRIATE BOXES
(SEE REVERSE SIDE) BUT YOU NEED NOT MARK ANY BOXES IF YOU WISH TO VOTE IN
ACCORDANCE WITH THE RECOMMENDATIONS OF THE BOARD OF DIRECTORS.
THE PROXIES CANNOT VOTE YOUR SHARES UNLESS YOU SIGN AND RETURN THIS CARD.
THE SIGNER(S) HEREBY REVOKES ALL PROXIES HERETOFORE GIVEN BY THE SIGNER(S) TO
VOTE AT SAID MEETING OR ANY ADJOURNMENTS THEREOF.
----------------
SEE REVERSE SIDE
----------------
- -------------------------------------------------------------------------------
FOLD AND DETACH HERE
<PAGE>
1601
/X/ PLEASE MARK YOUR
VOTES AS IN THIS
EXAMPLE.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED SHAREHOLDER(S). IF NO DIRECTION IS MADE, THIS PROXY WILL
BE VOTED FOR PROPOSALS 1 AND 2. THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR
PROPOSALS 1 AND 2.
FOR WITHHELD AS TO
ALL NOMINEES
1. Election of / / / / NOMINEES: W. James Farrell,
Directors. Richard L. Keyser,
Rebecca A. McDonald and
Roger W. Stone
To withhold authority to vote for any nominee(s), mark the "FOR" box and
write the name of each nominee not being voted for on the line below.
- -------------------------------------------------
FOR AGAINST ABSTAIN
2. Ratification of appointment of
Ernst & Young LLP as the Company's / / / / / /
independent auditors for fiscal 1999.
NOTE: Please date and sign exactly as name(s) appears hereon. If shares are
held jointly or by two or more persons, each shareholder named should
sign. Executors, administrators, trustees, etc., should so indicate
when signing. If the signer is a corporation, please sign corporate name
by duly authorized officer. If a partnership, please sign in
partnership name by authorized person.
- -------------------------------------------------------------------------------
SIGNATURE(S) DATE
------------------------------------ ------------------------------
FOLD AND DETACH HERE
<PAGE>
PROXY
MORTON INTERNATIONAL, INC. PROXY/VOTING INSTRUCTION CARD
100 NORTH RIVERSIDE PLAZA
CHICAGO, ILLINOIS 60606
- -------------------------------------------------------------------------------
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF SHAREHOLDERS
ON OCTOBER 22, 1998
The undersigned hereby appoints James R. Cantalupo, Edward J. Mooney and
Raymond P. Buschmann, or any of them, each with power of substitution, as
proxies to vote as specified on this card all shares of common stock of
Morton International, Inc. (the "Company") registered in the name(s) of the
undersigned on August 24, 1998, or in the name(s) of agents for the benefit
of the undersigned in the Company's Book Entry Ownership Program, Dividend
Reinvestment Plan, and/or Employee Savings & Investment Plan, at the
Company's Annual Meeting of Shareholders on October 22, 1998, and at any and
all adjournments thereof. Said proxies are authorized to vote in their
discretion as to any other business which may properly come before the
meeting. IF A VOTE IS NOT SPECIFIED, SAID PROXIES WILL VOTE FOR PROPOSALS 1
and 2.
Receipt is acknowledged of the Company's Annual Report to Shareholders for
the fiscal year ended June 30, 1998, and Notice and Proxy Statement for the
above Annual Meeting.
YOU ARE ENCOURAGED TO SPECIFY YOUR CHOICES BY MARKING THE APPROPRIATE BOXES
(SEE REVERSE SIDE) BUT YOU NEED NOT MARK ANY BOXES IF YOU WISH TO VOTE IN
ACCORDANCE WITH THE RECOMMENDATIONS OF THE BOARD OF DIRECTORS.
THE PROXIES CANNOT VOTE YOUR SHARES UNLESS YOU SIGN AND RETURN THIS CARD.
THE SIGNER(S) HEREBY REVOKES ALL PROXIES HERETOFORE GIVEN BY THE SIGNER(S) TO
VOTE AT SAID MEETING OR ANY ADJOURNMENTS THEREOF.
----------------
SEE REVERSE SIDE
----------------
- -------------------------------------------------------------------------------
FOLD AND DETACH HERE
<PAGE>
4856
/X/ PLEASE MARK YOUR
VOTES AS IN THIS
EXAMPLE.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED SHAREHOLDER(S). IF NO DIRECTION IS MADE, THIS PROXY
WILL BE VOTED FOR PROPOSALS 1 AND 2. THE BOARD OF DIRECTORS RECOMMENDS A
VOTE FOR PROPOSALS 1 AND 2.
FOR WITHHELD AS TO
ALL NOMINEES
1. Election of / / / / NOMINEES: W. James Farrell,
Directors. Richard L. Keyser,
Rebecca A. McDonald and
Roger W. Stone
To withhold authority to vote for any nominee(s), mark the "FOR" box and
write the name of each nominee not being voted for on the line below.
- -------------------------------------------------
FOR AGAINST ABSTAIN
2. Ernst & Young LLP as the Company's / / / / / /
independent auditors for fiscal 1999.
NOTE: Please date and sign exactly as name(s) appears hereon. If shares are
held jointly or by two or more persons, each shareholder named should
sign. Executors, administrators, trustees, etc., should so indicate
when signing. If the signer is a corporation, please sign corporate name
by duly authorized officer. If a partnership, please sign in
partnership name by authorized person.
- -------------------------------------------------------------------------------
SIGNATURE(S) DATE
------------------------------------ ------------------------------
FOLD AND DETACH HERE
September 11, 1998
To: Participants in the Morton International, Inc. ("Company") Stock Fund of
Employee Savings Plans
Re: Annual Meeting of Company Shareholders to be held on October 22, 1998
Enclosed are the following:
1. The Company's Annual Report to Shareholders for fiscal 1998
2. The Company's proxy statement dated September 11, 1998, which describes
the matters to be voted upon at the meeting
3. Proxy/Voting instruction card and postage-paid return envelope
Please complete, sign and return the proxy/voting instruction card. The
Company stock allocated to your savings plan account as of August 24, 1998
(the Annual Meeting record date) will be voted in accordance with your
instructions. These instructions will be kept confidential - they will not
be disclosed to the Company or the Plan Administration Committee.
Your voting instructions must be received prior to October 19, 1998 to be
included in the Trustee's vote at the Annual Meeting. Savings Plan shares
for which voting instructions have not been received by that date will be
voted by the Trustee as directed by the Company (subject to the Trustee's
right to override).
In addition to voting shares in your savings plan account as you instruct,
the enclosed card covers and will vote Company shares, if any, registered
directly under the same social security number on the Company's shareholder
records. Please request another proxy card from the Corporate Secretary's
office (312-807-2420) if you wish to vote such other shares separately.
/s/ Christopher K. Julsrud
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Christopher K. Julsrud
Chairman, Company Savings Plans' Administration Committee
