SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for use of the Commission Only (as permitted by Rule
14A-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss.240.14A-11(c) or ss.240.14A-12
JLM INDUSTRIES, INC.
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(Name of Registrant as Specified In Its Charter)
JLM INDUSTRIES, INC.
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(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[ ] Fee computed on table below per Exchange Act Rule 14A-6(i)(1)
and 0-11.
1) Title of each class of securities to which transaction applies:
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2) Aggregate number of securities to which transaction applies:
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3) Per unit price or other underlying value of transaction computed pursuant to
Exchange Act Rule 0-11 (set forth the amount on which the filing fee is
calculated and state how it was determined):
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4) Proposed maximum aggregate value of transaction:
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5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the form or schedule and the date of its filing
1) Amount previously paid:
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2) Form, Schedule or Registration Statement no:
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3) Filing Party:
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4) Date Filed:
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<PAGE>
JLM INDUSTRIES, INC.
8675 Hidden River Parkway
Tampa, FL 33637
May 22, 2000
Dear Stockholder:
You are cordially invited to attend the 2000 Annual Meeting (the
"Meeting") of stockholders of JLM Industries, Inc. (the "Company"). The
Meeting will be held June 30, 2000, at 11:00 a.m., Eastern Standard Time, at
The Radisson Hotel, located at 10221 Princess Palm Avenue, Tampa, Florida,
33610.
The Notice of the Meeting and the Proxy Statement on the following pages
cover the formal business of the Meeting, which includes the election of
Directors, and a proposal to ratify the appointment of the Company's
independent certified public accountants.
IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THE MEETING. WE ASK
THAT YOU PROMPTLY SIGN, DATE AND RETURN THE ENCLOSED PROXY IN THE ENVELOPE
PROVIDED, EVEN IF YOU PLAN TO ATTEND THE MEETING. RETURNING YOUR PROXY TO US
WILL NOT PREVENT YOU FROM VOTING IN PERSON AT THE MEETING IF YOU ARE PRESENT
AND CHOOSE TO DO SO.
If your shares are held in street name by a brokerage firm, your broker
will supply you with a Proxy to be returned to the brokerage firm. It is
important that you return the form to the brokerage firm as quickly as possible
so that the brokerage firm may vote your shares. You may not vote your shares
in person at the Meeting unless you obtain a power of attorney or legal Proxy
from your broker authorizing you to vote the shares and you present this power
of attorney or Proxy at the Meeting.
On behalf of the Board of Directors and management of the Company, I want
to thank you for your support and confidence in us and I look forward to
greeting you personally at the Meeting.
Sincerely,
/s/ John L. Macdonald
John L. Macdonald
Chairman of the Board and Chief Executive Officer
<PAGE>
JLM INDUSTRIES, INC.
8675 Hidden River Parkway
Tampa, FL 33637
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON FRIDAY, JUNE 30, 2000
Notice is hereby given that the Annual Meeting of Stockholders of JLM
Industries, Inc. (the "Company"), a Delaware corporation, will be held at The
Radisson Hotel, 10221 Princess Palm Avenue, Tampa, Florida 33610, on June 30,
2000, at 11:00 a.m., Eastern Standard Time (the "Meeting") for the following
purposes:
1. To elect Directors to serve until the next Annual Meeting of Stockholders in
2001;
2. To ratify the appointment of Deloitte & Touche LLP as the Company's
independent auditors for fiscal year 2000;
3. To transact such other business as may properly come before the Meeting or
any adjournment thereof.
Your attention is directed to the Proxy Statement accompanying this Notice
for a more complete description of the matters to be acted upon at the Meeting.
Stockholders of record at the close of business on May 19, 2000 are entitled to
receive notice of and to vote at the Meeting and any adjournment thereof.
ALL STOCKHOLDERS ARE CORDIALLY INVITED TO ATTEND THE MEETING. WHETHER OR
NOT YOU EXPECT TO ATTEND, PLEASE SIGN, DATE AND RETURN THE ENCLOSED PROXY
PROMPTLY IN THE ENVELOPE PROVIDED TO ENSURE THE PRESENCE OF A QUORUM. You may
revoke your Proxy and vote in person at the Meeting, if you desire. If your
shares are held in street name by a brokerage firm, your broker will supply you
with a Proxy to be returned to the brokerage firm. It is important that you
return the form to the brokerage firm as quickly as possible so that the
brokerage firm may vote your shares. You may not vote your shares in person at
the Meeting if your shares are held in street name by a brokerage firm unless
you obtain a power of attorney or legal Proxy from your broker authorizing you
to vote the shares and you present this power of attorney or Proxy at the
Meeting.
Please note that attendance at the Meeting will be limited to stockholders
of the Company as of the record date (or their duly authorized
representatives). If your shares are held by a bank or broker, please bring to
the Meeting your bank or broker statement evidencing your beneficial ownership
of Company stock as of the record date, May 19, 2000.
By Order of the Board of Directors,
/s/ Michael J. Molina
Michael J. Molina
Vice President and Secretary
May 22, 2000
<PAGE>
JLM INDUSTRIES, INC.
8675 Hidden River Parkway
Tampa, FL 33637
PROXY STATEMENT
2000 ANNUAL MEETING OF STOCKHOLDERS
This Proxy Statement is furnished by the Board of Directors and management
of JLM Industries, Inc., (the "Company) in connection with the solicitation of
proxies to be voted at the Company's 2000 Annual Meeting of Stockholders, which
will be held at 11:00 a.m. Eastern Standard Time on Friday, June 30, 2000, at
The Radisson Hotel, 10221 Princess Palm Avenue, Tampa, Florida 33610 (the
"Meeting).
Any Proxy delivered pursuant to this solicitation may be revoked, at the
option of the person executing the Proxy, at any time before it is exercised,
by delivering a signed revocation to the Company, by submitting a later-dated
Proxy or by attending the Meeting in person and casting a ballot. If proxies
are signed and returned without voting instructions, the shares represented by
the proxies will be voted as recommended by the Board of Directors.
The cost of soliciting proxies will be borne by the Company. In addition
to the use of the mails, proxies may be solicited personally or by telephone by
regular employees of the Company. The Company does not expect to pay any
compensation for the solicitation of proxies, but may reimburse brokers and
other persons holding stock in their names, or in the names of nominees, for
their expense in sending Proxy materials to the actual beneficial owner and
obtaining their proxies.
The approximate date on which this Proxy Statement and enclosed form of
Proxy has been first mailed to shareholders is May 30, 2000.
The Company has common stock with a par value $.01 per share (the "Common
Stock") that is the only outstanding voting security of the Company. Employees
of the Company will tabulate all votes and will serve as inspectors of
elections.
The close of business on Friday, May 19, 2000 has been designated as the
record date for the determination of stockholders entitled to receive notice of
and to vote at the Meeting. As of May 19, 2000, the Company had 6,554,205
shares of common stock issued and outstanding, each of which is entitled to one
vote.
<PAGE>
1. ELECTION OF DIRECTORS - ITEM ONE ON YOUR PROXY CARD
There are currently seven seats on the Board of Directors of the Company.
Directors are elected to their positions until the next Annual Meeting of
Stockholders, and until their respective successors are elected and qualified
or until their earlier resignation, removal from office or death. The Board of
Directors recommends that six of the current Directors be re-elected at the
Meeting to hold office until the Company's next Annual Meeting of Stockholders
in 2001, and until their successors shall be duly elected and qualified or
until their earlier resignation, removal from office or death.
The Board of Directors has nominated the following five individuals to
stand for re-election at the 2000 Annual Meeting of Stockholders:
John L. Macdonald
Walter M. Tarpley
Frank A. Musto
Sean D. Macdonald
Jerry L. Weinstein
Charles N. Neivert
The Board of Directors has nominated the following two individuals to be
elected as directors at the 2000 Annual Meeting of Stockholders:
Vince Naimoli
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE "FOR" THE
RE-ELECTION OF MESSRS. J. MACDONALD, TARPLEY, MUSTO, S. MACDONALD, WEINSTEIN,
AND NEIVERT AS DIRECTORS, AND "FOR" THE ELECTION OF MR. NAIMOLI TO SERVE TERMS
AS DESCRIBED ABOVE.
The nominees that receive a majority of the votes cast by the shares
entitled to vote at the Meeting shall be elected. Abstentions will be counted
toward the number of shares represented at the Meeting. Broker non-votes will
be disregarded. Stockholders may not vote cumulatively in the election of
Directors.
The proposed nominees for election as Directors are willing to be elected
as such. In the unanticipated event any of the nominees should be unable to
serve, Proxies may be voted for such other person or persons for the office of
Director as the Board of Directors may select.
The following table sets forth the name, age, principal occupation, and
respective service dates of each person who has been nominated to be re-elected
director of the Company:
Name Age Principal Occupation
John L. Macdonald 57 Mr. Macdonald founded the Company in April 1986,
and has served as the President, Chief Executive
Officer throughout its history. Mr. Macdonald
also co-founded Gill and Duffus Chemical, Inc., in
1978 and served as its President and Chief
Executive Officer until the conclusion of a
leveraged buyout in 1983, in which Gill and Duffus
Chemical, Inc., merged with the Steuber Company,
Inc. Mr. Macdonald received a B.A. from Colorado
College and has more than 29 years experience in
the chemical industry. Mr. Macdonald has been a
director of the Company since 1986.
Walter M. Tarpley 55 Mr. Tarpley joined the Company in January 1999, as
President of the Company's North American Division
and Vice President of JLM Industries, Inc. Prior
to joining JLM, Mr. Tarpley served as Vice
President and General Manager of Ashland Chemical
Company's Industrial Chemicals & Solvents
Division, the United States' largest distributor
of performance chemicals and additives. Mr.
Tarpley served 26 years with Unocal Chemicals in
various General Management positions and joined
Ashland in 1993 in a merger of these firms. Upon
joining Ashland, Mr. Tarpley was named Business
Director for the IC&S Divisions Coatings,
Adhesives and Inks business. In this capacity,
Mr. Tarpley also managed the Divisions'
International Group and Technical Services
Laboratories. Mr. Tarpley received a B.S. in
Marine Biology from the University of Miami. Mr.
Tarpley has been a director of the Company since
1999.
<PAGE>
Frank A. Musto 43 Mr. Musto has been with the Company since its
formation in 1986. Mr. Musto was elected Vice
President and Chief Financial Officer in 1994.
Mr. Musto is principally responsible for the
Company's banking relationships, current cash
management systems, and investment of excess
funds. Prior to joining the Company, from 1979 to
1981, and from 1983 to 1985, Mr. Musto was the
Marine Accountant, Controller and Treasurer for
the Steuber Company, Inc. From 1981 to 1982, Mr.
Musto was the controller for Amerpol
International, New York City, a custom house
broker, freight forwarder, and agent for the
government-controlled fishing fleet in Poland.
Mr. Musto graduated from Bernard M. Baruch College
with a B.B.A. in Accounting.
Sean D. Macdonald 29 Mr. Macdonald joined the Company in May 1994.
Mr. Macdonald worked as a sales representative in
the Company's Southwest region until January
1997. In January 1997, Mr. Macdonald was
relocated to the Company's Dutch subsidiary, JLM
Industries (Europe) B.V. in the olefins trading
group. In November 1997, Mr. Macdonald was
appointed Managing Director of JLM Industries
(Europe) B.V. in order to facilitate the
integration of the Tolson acquisition. Mr.
Macdonald was managed to the Company's Singapore
operation, JLM Chemicals (Asia) Pte. Ltd. In
November 1998. In April 1999, Mr. Macdonald was
appointed Vice President International and
transferred to the Company's headquarters in
Tampa. Mr. Macdonald received a B.A. in
political science and a minor in international
marketing from the University of Tampa. Mr.
Macdonald has been a director of the Company
since 1999.
Jerry L. Weinstein 64 Mr. Weinstein served as Vice President of Owens
Corning - Specialty & Foam Products Division since
1994. From 1980 until 1994, Mr. Weinstein was
President and Chief Executive Officer of UC
Industries, Inc., an independent manufacturer of
plastic products for the building materials
industry. Mr. Weinstein has been a director of
the Company since 1997.
Charles N. Neivert 42 Mr. Neivert co-founded and is currently the
Executive Vice President of New Vernon Associates,
which is an investment advisory boutique focusing
on select global chemical, life science and
pharmaceutical companies. From 1987 to 1992, Mr.
Neivert was the Vice President and Senior Sector
Analyst of Anantha Raman & Company, Inc., a
leading equity research boutique. From 1980 until
1986, Mr. Neivert worked with Data Resources, Inc.
as a Manager and Economist wherein he developed,
designed and marketed new computer-based
forecasting and cost models for the chemical
industry. Mr. Neivert is a candidate for his
M.B.A. at Rutgers University and received his B.A.
from the University of Pennsylvania Economics and
Chemistry. Mr. Neivert has been a director of the
Company since 1999.
The following table sets forth the name, age, and principal occupation, of
each person who has been nominated to be a director of the Company:
Name Age Principal Occupation
Vince Naimoli 63 Mr. Naimoli has been Managing General Partner and
Chief Executive Officer of the Tampa Bay Devil
Rays since 1995. Mr. Naimoli was instrumental in
bringing baseball to the Tampa Bay area. From
1975 to 1995, Mr. Naimoli held executive positions
with various companies such as Harvard Industries,
Inc., Ladish Co., Inc., Tampa Bay Baseball group,
Doehler-Jarvis, Inc., Harding Services Corp.,
Lancaster Capital Corp., Electrolux and Regina
Corps., and Anchor Industries International.
Sean D. Macdonald is the son of the Company's President and Chief
Executive Officer, John L. Macdonald. None of the other executive officers or
directors are related to one another.
<PAGE>
MEETINGS OF THE BOARD OF DIRECTORS AND STANDING COMMITTEES
The Board of Directors held three formal meetings during 1999. Each of
the incumbent Directors attended at least 75% of the aggregate of all meetings
of the Board and all committees of which he was a member. All other actions
during such year were accomplished through unanimous written consents without a
meeting of the Directors.
The Board of Directors has a standing Audit Committee and Compensation
Committee; it does not have a Nominating Committee. The Board of Directors
functions as a Nominating Committee, and the Board will consider written
recommendations from stockholders for positions on the Board of Directors in
accordance with the procedures set forth in the Amended and Restated Articles
of Incorporation of the Company. See "Stockholder Proposal" for further
information.
The Audit Committee held one meeting during 1999. The Audit Committee
consisted of Messrs. Neivert, Kennedy, and Weinstein. The Audit Committee
recommends the appointment of the independent public accountants of the
Company, discusses and reviews the scope and fees of the prospective annual
audit, and reviews the results thereof with the independent public accountants,
reviews and approves non-audit services of the independent public accountants,
reviews compliance with existing major accounting and financial policies of the
Company, reviews the adequacy of the financial organization of the Company,
reviews management's procedures and policies relative to the adequacy of the
Company's internal accounting controls and compliance with federal and state
laws relating to accounting practices, and reviews and approves (with the
concurrence of the majority of the disinterested Directors of the Company)
transactions, if any, with affiliated parties.
The Compensation Committee held one meeting in 1999. The Compensation
Committee consisted of Directors, Messrs. Neivert, Weinstein and Kennedy. The
Compensation Committee's principal function is to make recommendations to the
Board of Directors with respect to the compensation and benefits to be paid to
officers and perform other duties prescribed by the Board with respect to
employee stock plans and benefit programs.
COMPENSATION OF DIRECTORS
Base Compensation. In fiscal 1998, non-employee directors received an
annual retainer fee of $10,000 plus $2,500 for each committee meeting
physically attended or held by telephone and whether or not coinciding with a
Board meeting. In addition, all directors were entitled to receive
reimbursement of reasonable out-of-pocket expenses incurred in connection with
meetings of the Board of Directors or committees thereof; no additional per
meeting fees were paid.
Options. Pursuant to the Non-Employee Directors' Stock Option Plan, as
amended in January 1999, each non-employee director receives an automatic grant
of options to purchase 5,000 shares of Common Stock upon their initial
appointment to the Board of Directors and 2,500 shares of Common Stock upon
their reelection to the Board of Directors. In general, each option granted
under the plan vests in full on the date of the next annual meeting following
the date of grant, has a five year term and permits the holder to purchase
shares at their fair market value on the date of grant. The Board of Directors
may also make discretionary grants of options under the plan.
Indemnification. The Company indemnifies its directors and officers to
the fullest extent permitted by law so that they will serve free from undue
concern that they will not be indemnified. Each of the Company's directors and
executive officers have entered into indemnification agreements with the
Company.
<PAGE>
SECURITY OWNERSHIP OF MANAGEMENT AND OTHERS
The following table sets forth certain information with respect to the
beneficial ownership of the Company's Common Stock as of May 19, 2000, for (i)
each person known by the Company to own beneficially more than 5% of the
outstanding Common Stock, (ii) each Director and Nominee for Director of the
Company, (iii) each of the Named Executive Officers and (iv) all Executive
Officers and Directors as a group.
Number Percent
Beneficially Of
Name of Beneficial Owner Owned (1) Class
------------------------ ------------ -------
John L. Macdonald 4,285,814 (2) 65.4
Maxwell Stolzberg, as Trustee of an
Irrevocable Trust 2,521,308 (2) 38.5
Derry Macdonald 1,435,500 (2) 21.9
Frank A. Musto 32,146 (3) *
Walter M. Tarpley 29,500 (3) *
Sean D. Macdonald 14,199 (3) *
Jerry L. Weinstein 7,500 (4) *
Thomas F. Kennedy 5,000 (4) *
Charles N. Neivert - *
Vince Naimoli - *
Brinson Partners 476,853 (6) 7.3
Dimensional Fund Advisors 420,000 (7) 6.4
All Directors, Nominees, for Directors and
Executive Officers As a Group (10 persons)(5) 4,417,015 67.4
*Less than one percent ownership
(1) Beneficial ownership of shares, as determined in accordance with applicable
Securities and Exchange Commission rules, includes shares as to which
person has or shares voting power and/or investment power. Except as
otherwise indicated, all shares are held of record with sole voting and
investment power.
(2) Of the shares shown for Mr. Macdonald and Mr. Stolzberg, as Trustee,
2,518,308 shares are held of record by an Irrevocable Trust of which Mr.
Stolzberg is Trustee and Mr. Macdonald is the grantor and sole beneficiary.
Under terms of the Irrevocable Trust, Mr. Stolzberg, as Trustee, has the
full and exclusive right and power to vote and dispose of all shares of
Common Stock held by the Irrevocable Trust. However, as a result of Mr.
Macdonald's right to terminate the Irrevocable Trust by providing written
notice at certain specified times and acquire beneficial ownership of the
shares of Common Stock held by the Irrevocable Trust, Mr. Macdonald and the
Trustee may be deemed to share voting and investment control with respect
to the shares of Common Stock held by the Irrevocable Trust. Also, of the
shares shown for Mr. Macdonald, 1,435,500 are held of record by Derry L.
Macdonald, but Mr. Macdonald is deemed to beneficially own these shares
because pursuant to a Stockholders Voting Agreement, Irrevocable Proxy and
Right of First Refusal Mr. Macdonald has a right to vote the shares. The
number of shares shown for Mr. Macdonald also includes 167,040 shares of
Common Stock held by two irrevocable trusts created for the benefit of Mr.
Macdonald's children for which Mr. Macdonald disclaims beneficial
ownership, and 86,666 shares deemed to be beneficially owned by Mr.
Macdonald by virtue of certain stock options that are currently
exercisable. The number of shares shown for Mr. Stolzberg includes 3,000
shares held by Mr. Stolzberg's wife.
(3) For Mr. Tarpley, the number of shares include 10,000 shares of vested
options, 14,400 shares of vested restricted stock, and 5,100 shares
personally owned. For Mr. Musto, the number of shares include 21,666
shares of vested options, 8,100 shares of vested restricted stock, and
2,380 shares personally owned. For Mr. Macdonald, the number of shares
include 4,999 shares of vested options and 9,200 share personally owned.
(4) For each of Messrs. Weinstein and Kennedy, the number of shares shown
represent vested options that are currently exercisable
(5) The number of shares shown includes, in addition to the options held by the
officers and Directors named in the table, an additional 42,856 shares
deemed to be beneficially owned by two other executive officers not shown
in the table that are currently exercisable.
<PAGE>
(6) This information is derived from Schedule 13G/A dated February 4, 2000
filed jointly by Brinson Partners, Inc. ("BPI") and UBS AG ("UBS"). BPI
and UBS may be deemed the beneficial owners with respect to all of the
shares shown, with shared voting and dispositive power as to all such
shares. The address of BPI is 209 South LaSalle Street, Chicago, Illinois
60604-1295 and the address of UBS is Bahnhofstrasse 45, 8021, Zurich,
Switzerland.
(7) This information is derived from Schedule 13G/A dated February 11, 2000
filed by Dimensional Fund Advisors. The address of Dimensional Fund
Advisors is 1299 Ocean Avenue, 11th floor, Santa Monica, CA 90401.
Executive Compensation
The following table sets forth all compensation awarded to, earned by, or
paid for services rendered to the Company in all capacities during the years
ended December 31, 1997, 1998 and 1999 for each of the named executive officers
(as defined under applicable Securities and Exchange Commission Rules) of the
Company (the "Named Executive Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long-Term Compensation
Annual Compensation Awards
----------------------- ------------------------
Name Restricted All Other
And Salary Bonus Stock Options Compensation
Position Year ($) ($) Awards ($)(2) (#) ($)(1)
--------------------- ----- -------- -------- ------------ -------- ------------
<S> <C> <C> <C> <C> <C> <C>
John L. Macdonald 1999 $400,000 $ - $ - 10,000 $22,551
President & CEO 1998 410,769 180,000 - - 23,271
1997 401,541 200,000 - 125,000 17,056
Walter M. Tarpley 1999 175,000 - 200,000 40,000 84,171
Vice President 1998 - - - - -
1997 - - - - -
Wilfred J. Kimball(3) 1999 135,483 - - 5,000 16,346
Vice President 1998 136,437 20,000 - - 12,694
1997 136,437 22,000 20,000 30,000 15,266
Frank A. Musto 1999 135,769 - - 5,000 32,470
Vice President & CFO 1998 128,365 25,000 - - 12,400
1997 121,274 27,000 150,000 30,000 15,841
John T. White(3) 1999 132,200 - - 2,000 10,420
Vice President & 1998 123,759 11,000 - 5,000 16,861
General Counsel 1997 114,462 27,500 - 15,000 11,888
</TABLE>
(1) Amount in 1999 for Mr. Macdonald consists of $7,913 for a car allowance and
$14,638 representing the dollar value, on a term loan, of the benefit to
Mr. Macdonald of the $128,338 premium paid by the Company during 1999, for
a split-dollar life insurance plan covering Mr. Macdonald and his wife.
Under the terms of the split-dollar life insurance agreement, the Company
has the right to recover all of the premiums paid by the Company under the
agreement. Amount in 1999 for Mr. Tarpley consists of $50,000 in stock,
relocation expense reimbursement of $29,564 and $3,859 for a car
allowance. Amount in 1999 for Mr. Kimball consists of $2,500 in stock,
$3,300 for a car allowance and $9,715 contributed by the Company to the
Company's Deferred Plan. Amount in 1999 for Mr. Musto consists of $18,750
in stock, $3,600 for a car allowance and $10,000 contributed by the Company
to the Company's Defined Contribution Plan. Amount in 1999 for Mr. White
consists of a car allowance of $1,650 and $7,920 that was contributed by
the Company to the Company's Defined Contribution Plan.
(2) The aggregate restricted stock holdings and value of such holdings at
December 31, 1999 for Mr. Tarpley were 30,000 shares and $101,250,
respectively, for Mr. Kimball were 1,000 shares and $3,375, respectively,
and for Mr. Musto were 7,500 shares and $25,313, respectively. For Mr.
Tarpley, 25% of the shares vested immediately upon grant and 25% vest each
year thereafter. For Messrs. Musto and Kimball, the shares of restricted
stock are subject to a substantial risk of forfeiture which lapses as to
one-quarter of the shares each January 1st, commencing on January 1, 1998.
Dividends on all restricted shares issued to the named executive officers
are paid at the same rate as paid to all stockholders. The Company
currently intends to retain all future earnings for the development of its
business and does not anticipate paying cash dividends for the foreseeable
future.
(3) Mr. Kimball and Mr. White terminated employment with the Company as of
December 31, 1999.
<PAGE>
STOCK OPTION GRANTS
The following table summarizes certain information concerning stock
options granted during fiscal year 1999 to the Named Executive Officers:
<TABLE>
<CAPTION>
Individual Grants
-----------------------------------------------------------------------
% of Total Potential Realizable
Options Value at Assumed
Granted to Exercise Annual Rates of
Employees or Base Stock Price Appreciation
Options in Fiscal Price Expiration for Option Term
Name Granted(#) Year ($/Share) Date 5% ($) 10% ($)
---- ---------- --------- --------- ---------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
John L. Macdonald 5,000 5.0% 5.00 01/01/09 15,700 39,850
Walter M. Tarpley 40,000 40.0% 5.00 01/01/09 125,600 318,800
Wilfred J. Kimball 5,000 5.0% 5.00 01/01/09 15,700 39,850
Frank A. Musto 5,000 5.0% 5.00 01/01/09 15,700 39,850
John T. White 2,000 2.0% 5.00 01/01/09 6,280 15,940
</TABLE>
The following table provides information regarding the exercise of stock
options during fiscal year 1999 and stock options held as of the end of fiscal
year 1999 by the Named Executive Officers:
<TABLE>
<CAPTION>
Value of Unexercised
Number of Unexercised In-the-Money Options
Options At Fiscal Year End At Fiscal Year End (1)
-----------------------------------------------------
Shares
Acquired on Value
Name Exercise Realized($) Exercisable Unexercisable Exercisable Unexercisable
---- ----------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
John L. Macdonald 0 0 86,666 48,334 $0 $0
Walter M. Tarpley 0 0 10,000 30,000 0 0
Wilfred J. Kimball 0 0 21,666 13,334 0 0
Frank A. Musto 0 0 21,666 13,334 0 0
John T. White 0 0 13,999 8,001 0 0
</TABLE>
(1) This represents the amount by which the fair market value of the Company's
Common Stock of $3.375 per share as of December 31, 1999, exceeded the exercise
price of the options held by the Named Executive Officers.
<PAGE>
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's directors, officers and holders of more than 10% of the Company's
Common Stock to file with the Securities and Exchange Commission initial
reports of ownership and reports of changes in ownership of Common Stock and
any other equity securities of the Company. The Company did not become subject
to such requirements until the Offering. To the Company's knowledge, based
upon a review of the forms, reports and certificates filed with the Company by
the Company's directors, officers, and stockholders, all Section 16(a) filing
requirements have been complied with by such persons during 1999, except that
for each of the following directors and officers, one form was not timely filed
relating to the indicated number of transactions: Mr. Musto, Ms. Sato, Mr.
Molina, Mr. Kimball, and Mr. Lelek, one transaction; Mr. Weinstein, two
transactions. In addition, for Sean Macdonald, four forms were filed late
reporting an aggregate of five transactions.
REPORT OF THE COMPENSATION COMMITTEE
The following report was prepared as of the date of this Proxy statement
by Directors Neivert, Weinstein and Kennedy, as the members of the Company's
Compensation Committee that was formed after the Company's July 24, 1997,
Offering.
The duties of the Compensation Committee (the "Committee") include the
review of compensation levels of the Company's executive officers, the
evaluation of the performance of the executive officers and the administration
of any stock-based compensation plans except the Non-Employee Directors' Stock
Plan.
General Policies
The Company's executive compensation system, which is set by the
Compensation Committee, is intended to attract, retain and motivate high
quality executives with market and performance based compensation packages that
reward the achievement of specific financial goals and the enhancement of
stockholder value. The Committee believes that linking executive compensation
to corporate performance through a more significant emphasis on performance
bonuses results in a better alignment of compensation with corporate goals and
stockholder interests.
In evaluating the performance of executive officers, the Compensation
Committee's approach is to consult with the Chief Executive Officer, except
when evaluating his performance, in which case the Compensation Committee's
approach is to meet and deliberate independently without the Chief Executive
Officer being present. The Compensation Committee will review with the Board
of Directors in detail all aspects of compensation for the executive officers.
The Compensation Committee has access to independent compensation data and may,
from time to time in the future, consult with an outside compensation
consultant.
The key elements of the Company's executive officers' compensation in
fiscal 1998 consisted principally of (1) base salary, (2) potential bonuses
based on overall Company performance for the Company's Chief Executive Officer,
Chief Financial Officer and all of the executive officers, and based in part on
overall Company performance and in part on specific performance criteria keyed
to areas of responsibility for each of the non-executive officers and (3) the
award of stock options and restricted stock under the 1997 Long-Term Incentive
Plan that is designed to give certain of the officers and other employees the
opportunity to be awarded long-term, stock-based incentives.
The Compensation Committee's policies with respect to each of these
elements are discussed below. In addition, although the elements of
compensation described below are considered separately, the Compensation
Committee takes into account the full compensation package afforded by the
Company to the individual.
Base Salary
Each officer's base salary is reviewed annually. The specific base
salaries are based upon the Chief Executive Officer's subjective determination
of appropriate salary levels, taking into consideration the scope of
responsibility, experience, Company and individual performance, as well as pay
practices of other companies relating to executives with similar
responsibility.
The Chief Executive Officer then makes recommendations to the Compensation
Committee, which is responsible for approving or disapproving those
recommendations.
In determining the base salary of the Chief Executive Officer,
consideration was given to a comparison of base salaries of persons with
comparable positions and responsibilities in peer companies and an assessment
of the individual performance of the Chief Executive Officer.
<PAGE>
Annual Bonus Program
The Compensation Committee believes that an executive's performance is
most appropriately measured based on progress toward achieving operating goals
that are formulated to promote advancement of key aspects of the Company's
business. The annual bonus plan for the Chief Executive Officer and President
is usually measured based on 1) the Company's ability to achieve growth in
operating income from year to year, 2) an increase in annual volumes
distributed, 3) increase in sales dollars, 4) increase in net margins and 5)
performance compared to the Company's peer group. All of these goals were
either met or exceeded except for item 1) above. The Company's incentive
compensation for executive officers other than the CEO and President is
somewhat discretionary under the Company's annual bonus program, but through
objective overall performance criteria established under the program, bonuses
are expected to be paid based on current year's performance. There were no
bonuses paid to executive officers in fiscal year 1999.
Long-Term Compensation
The Compensation Committee awards stock options under the 1997 Long-Term
Incentive Plan to executive officers, other members of management and key
individual contributors. Generally, the Chief Executive Officer will recommend
the number of options to be granted and will present this number along with
appropriate supporting data to the Compensation Committee for its review and
approval. Options are granted at fair market value on the date of grant and
therefore any value that ultimately accrues to employees under such options is
based entirely on the Company's performance, as perceived by investors who
establish the price for the Company's stock. These options generally vest 33%
a year beginning after the first year and have a 10-year duration.
Stock option grants are designed to retain key employees, by ensuring that
each has a continuing stake in the long-term success of the Company, and to
provide an incentive for employees to improve the return to stockholders. In
fiscal 1999, the Compensation Committee awarded 57,000 stock options to various
executive officers as listed in the Stock Option Grants table, and 43,000 to
all other employees. The grants were based on the employees respective
responsibilities, their relative positions in the Company and their respective
contributions to the Company's financial performance.
Other
The Committee believes that linking executive compensation to corporate
performance through a more significant emphasis on performance bonuses results
in a better alignment of compensation with corporate goals and stockholder
interest. As performance goals are met or exceeded, resulting in increased
value to stockholders, executives are rewarded commensurately. The Committee
believes that compensation levels during fiscal 1999 adequately reflect the
Company's compensation goals and policies.
No member of the Compensation Committee is a former or current officer of
the Company.
COMPENSATION COMMITTEE: Charles N. Neivert
Jerry L. Weinstein
Thomas F. Kennedy
<PAGE>
2. RATIFICATION OF APPOINTMENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS -
ITEM TWO ON YOUR PROXY CARD
The Company has engaged the firm of Deloitte & Touche LLP, independent
public accountants, to report upon the consolidated financial statements
included in the Annual Report submitted herewith. A representative from said
firm will be in attendance at the Meeting, will have the opportunity to make a
statement, if desired, and will be available to respond to any questions from
those in attendance. The Company has appointed Deloitte & Touche LLP to report
upon its 2000 consolidated financial statements, subject to ratification of
such appointment by the stockholders at the Meeting. Stockholder ratification
of the Company's independent certified public accountants is not required by
the Company's Bylaws or otherwise. The Board of Directors has elected to seek
such ratification as a matter of good corporate practice and unanimously
recommends that you vote "FOR" such ratification. If the Stockholders do not
ratify this appointment, other certified public accountants will be considered
by the Board of Directors upon recommendation of the Audit Committee.
The affirmative vote of the holders of a majority of the shares
represented, in person or by Proxy, and entitled to vote at the Meeting will be
required to ratify the appointment of Deloitte & Touche LLP. Abstentions will
be counted toward the number of shares represented at the Meeting. Broker non-
votes will be disregarded.
3. OTHER BUSINESS
Management of the Company does not know of any other business that may be
presented at the Meeting. If any matter not described herein should be
presented for stockholder action at the Meeting, the persons named in the
enclosed Proxy will vote the shares represented thereby in accordance with
their best judgment.
Performance Graph
The following graph compares the cumulative total return on the Company's
Common Stock since the Company's shares began trading on July 24, 1997 to the
cumulative total returns of (i) the S&P 500 Index; (ii) an Old Peer Group
Index comprised of the following marketers, distributors, and or manufacturer
of certain chemicals, principally acetone and phenol: Aceto Corporation,
Georgia Gulf Corporation, Great Lakes Chemicals Corporation, Hanna M.A.
Company, and Methanex Corporation; and (iii) a New Peer Group Index comprised
of the following marketers, distributors, and or manufacturer of certain
chemicals, principally acetone and phenol: Aceto Corporation, Georgia Gulf
Corporation, Methanex Corporation, Hawkins Chemical, Inc., Holland Chemical
International NV, and Ellis & Everard PLC. A New Peer Group Index is presented
because the businesses of the Old Peer Group has changed as to make it not
comparable to that of the Company. Management believes that the New Peer Group
is a better representation of the Company's current business.
COMPARISON OF CUMULATIVE TOTAL RETURN
[GRAPH]
7/24/97 12/31/97 12/31/98 12/31/99
-------- -------- -------- --------
JLM Industries, Inc. 100.00 102.50 51.25 33.75
S&P 500 Index 100.00 103.20 130.73 156.25
Old Peer Group 100.00 100.11 71.07 76.40
New Peer Group 100.00 109.74 72.23 92.58
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS:
The Company's Spanish distributor is Chemical Trading, S.L. ("CTSL"),
which is owned 100.0% by Eduardo Delgadillo, a stockholder of the Company. The
Company and CTSL have an arrangement pursuant to which the Company pays CTSL's
operating expenses. The Company treats the difference between such payments and
the amount of commissions and other amounts due to CTSL as a loan. Under such
arrangement CTSL was indebted to the Company for approximately $650,000 as of
December 31, 1999. As of December 31, 1999, Mr. Delgadillo was the beneficial
owner of approximately 1.8% of the Company's outstanding Common Stock.
In 1997, the Company entered into an agreement for sale and purchase of
common stock with the majority stockholder of JLM to purchase for a total
purchase price of $500,000 all of the issued and outstanding shares of Phoenix
Tank Car Corporation ("Pheonix"), a Connecticut corporation. Under the terms
of the agreement, the Company purchased this ownership interest in Phoenix for
$500,000, of which $250,000 was offset against advances owed to the Company by
JLM's majority stockholder and $250,000 paid by means of a promissory note that
matures on June 1, 2002 and bears interest at a rate of 10.0% per annum.
JLM has loans payable to its majority stockholder of $905,148 at December
31, 1998 and 1999. The loan payable bears interest at the prime rate, which
was 7.75% and 8.25% at December 31, 1998 and 1999, respectively, and matures on
June 1, 2002. Additionally, the Company has approximately $1,700,000 of
miscellaneous receivables owed by the majority stockholder. These items are
netted together and included as part of other accounts receivable in the
accompanying consolidated balance sheet.
The Company believes that each of the certain transactions described above
were on terms no less favorable to the Company than those which could have been
obtained in arm's length transactions with unaffiliated third parties.
However, except as indicated above, the Company did not obtain independent
objective information to support its belief in this respect.
OTHER MATTERS
STOCKHOLDER PROPOSALS
The Board of Directors requests that any stockholder proposals intended
for presentation at the 2001 Annual Meeting be submitted to Michael J. Molina,
Secretary, in writing no later than January 22, 2001, for consideration for
Inclusion in the Company's Proxy materials for such meeting.
The Company's By-laws and Restated Certificate of Incorporation require
certain advance notice to the Company of any nominations by stockholders of
persons to stand for election as directors at stockholders' meetings. Notice
of director nominations must be timely given in writing to the Secretary of the
Company prior to the meeting at which the directors are to be elected. To be
timely, notice must be received at the principal executive offices of the
Company not less than 60 nor more than 90 days prior to the meeting of
stockholders; provided, however, that in the event that less than 70 days'
notice or prior public disclosure of the date of the meeting is given or made
to the stockholders, notice by the stockholder in order to be timely must be so
received not later than the close of business on the tenth day following the
day on which such notice of the date of the annual meeting was mailed or public
disclosure of the date of the annual meeting was made, whichever first occurs.
A stockholder's notice with respect to a director nomination must be set
forth (i) certain information about the nominee, (ii) the consent of the
nominee to serve as a director, if elected, (iii) the name and record address
of the nominating stockholder, (iv) the class or series and number of shares of
the Company which are beneficially owned by such stockholder, (v) a description
of all arrangements or understandings between such stockholder and each
proposed nominee and any other person pursuant to which the nominations are to
be made, (vi) a representation that such stockholder intends to appear in
person or by Proxy at the meeting to nominate the persons named and (vii)
certain other information.
The complete provisions governing these requirements are available to any
stockholder without charge upon request from the Secretary of the Company.
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. THEREFORE,
SHAREHOLDERS ARE URGED TO DATE, SIGN, AND RETURN THE ACCOMPANYING FORM OF PROXY
IN THE ENCLOSED ENVELOPE.
