<PAGE>
<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the 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
WITCO CORPORATION
.................................................................
(Name of Registrant as Specified In Its Charter)
.................................................................
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] $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>
<PAGE>
[LOGO]
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 24, 1996
To our Shareholders:
The Annual Meeting of Shareholders of WITCO CORPORATION, a Delaware
corporation (the 'Company'), will be held at Witco Corporation, One American
Lane, 3rd Floor, Greenwich, Connecticut, on Wednesday, April 24, 1996, at 2:00
p.m., for the purpose of acting upon the following matters, as well as such
other business as may properly come before the Annual Meeting or any adjournment
thereof:
1. To elect three directors with terms expiring in 1999;
2. To approve the adoption of the Witco Corporation Long Term
Incentive Plan (copy attached as Exhibit A);
3. To approve the amendment of the 1995 Stock Option Plan for
Employees of Witco Corporation and its Subsidiaries;
4. To ratify the appointment of Ernst & Young LLP as the Company's
independent auditors for 1996; and
5. If presented at the Annual Meeting, to consider and act upon a
shareholder proposal requesting diversity on the Board of
Directors.
Only shareholders of record on the books of the Company at the close of
business on March 14, 1996 will be entitled to vote at the meeting or any
adjournment thereof.
In order that your shares of stock may be represented at the Annual
Meeting, please date and sign the enclosed proxy card and return it promptly in
the enclosed envelope. If you attend the Annual Meeting, you may vote in person
even though you have previously sent in your proxy card.
A copy of the Company's Annual Report for the year 1995 is enclosed.
By order of the Board of Directors,
Dustan E. McCoy
Vice President,
General Counsel
and Corporate Secretary
Greenwich, Connecticut
March 25, 1996
YOUR VOTE IS IMPORTANT
PLEASE COMPLETE, DATE AND SIGN YOUR PROXY CARD AND
PROMPTLY RETURN IT IN THE ENCLOSED ENVELOPE.
<PAGE>
<PAGE>
[LOGO]
WITCO CORPORATION
ONE AMERICAN LANE, GREENWICH, CT 06831-2559
------------------------
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 24, 1996
------------------------
This Proxy Statement is furnished to the shareholders of Witco Corporation
(the 'Company') in connection with the solicitation on behalf of the Board of
Directors of proxies to be used at the Annual Meeting of Shareholders to be held
on April 24, 1996 and at any adjournment thereof. The Company expects that this
Proxy Statement, with the accompanying proxy and the Annual Report for 1995,
will be mailed to shareholders on or about March 25, 1996.
TO ASSURE ADEQUATE REPRESENTATION AT THE ANNUAL MEETING, SHAREHOLDERS ARE
REQUESTED TO COMPLETE, SIGN AND RETURN THE ENCLOSED PROXY CARD PROMPTLY IN THE
ENCLOSED POSTAGE PAID ENVELOPE. Only shareholders of record at the close of
business on March 14, 1996 will be entitled to vote at the meeting.
Each share of Common Stock (par value $5 per share) and each share of $2.65
Cumulative Convertible Preferred Stock (par value $1 per share) outstanding at
the close of business on March 14, 1996 will be entitled to one vote at the
meeting and will vote together as one class for all of the stated purposes of
the meeting. As of March 14, 1996, there were outstanding and entitled to vote
at the meeting 56,542,808 shares of Common Stock and 6,825 shares of Preferred
Stock.
The Company has been informed by the Trustee under the Witco Corporation
Employee Retirement Savings Plan (the 'Savings Plan') that shares of Common
Stock held by the trustee under the Savings Plan's Company Stock Fund will be
voted by the trustee in accordance with instructions received from the
participants, and if no instructions are received, such shares will be voted in
the same proportion as shares for which instructions are received from other
participants in the plan.
The proxy will be voted in accordance with the instructions of the person
executing the same. In the absence of instructions to the contrary, proxies will
be voted FOR the election of the three nominees for director named herein; FOR
the approval and adoption of the Witco Corporation Long Term Incentive Plan; FOR
the approval of the amendment of the 1995 Stock Option Plan for Employees of
Witco Corporation and its Subsidiaries; FOR ratification of the appointment of
Ernst & Young LLP as the Company's independent auditors for 1996; and AGAINST
the shareholder proposal requesting diversity on the Company's Board of
Directors.
The proxy is revocable by a shareholder at any time before the exercise
thereof, and the giving of such proxy will not affect the shareholder's right to
vote in person if it is later found to be convenient to attend the meeting.
Abstentions and broker non-votes are each included in the determination of the
number of shares present and voting for the purposes of determining whether a
quorum is present, and each is tabulated separately. In determining whether a
proposal has been approved, abstentions and broker non-votes are not counted as
votes for or against a proposal.
1
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<PAGE>
The entire cost of this solicitation will be borne by the Company,
including reimbursement of banks, brokerage firms, custodians, nominees and
fiduciaries for their reasonable expenses in sending proxy materials to the
beneficial owners of stock. Proxies may be solicited personally, by mail, by
telephone, by facsimile or by telegraph, by the directors, officers or other
employees of the Company, without remuneration other than regular compensation.
In addition, the Company has retained Georgeson & Company Inc. to assist in the
solicitation of proxies at a fee estimated to be $8,500, excluding out-of-pocket
expenses.
At the date of this Proxy Statement, management does not know of any matter
to be brought before the meeting for action other than the matters described in
the Notice of Annual Meeting and matters incident thereto. If any other matters
should properly come before the meeting, the holders of the proxies will vote
and act with respect to such matters in accordance with their best judgment.
Discretionary authority to do so is conferred by the enclosed proxy.
PROPOSAL 1
ELECTION OF DIRECTORS
The Board of Directors currently consists of twelve directors, divided into
three classes. Each class is elected to serve a three year term, and classes are
elected on a staggered basis. Under the Board's current retirement policy, the
Board will consist of eleven directors when Mr. Ashe completes his service as a
director at the Company's 1996 Annual Meeting. The number of directors to be
elected at the 1996 Annual Meeting is fixed at three. The directors who are
nominated for election by the shareholders at the 1996 Annual Meeting are
Messrs. Hohn, Samuel and Wesson.
All of the nominees were elected by the shareholders at the 1993 Annual
Meeting for a three year term. Messrs. Hohn, Samuel and Wesson will be elected
to hold office until the Annual Meeting of Shareholders to be held in 1999, or
until their successors are elected and qualify. Under Delaware law, a director
elected to fill a vacancy on the Board serves until the next election of the
class for which the director shall have been chosen.
Unless otherwise specified, the proxies received will be voted FOR the
election of the listed nominees.
The nominees for director, their present principal occupation or employment
as of March 1, 1996, and other positions held during the past five years are set
forth below.
2
<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
NOMINEES FOR ELECTION AS DIRECTORS SERVING UNTIL THE 1999 ANNUAL MEETING:
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
[PHOTO] Mr. Hohn is Chairman of the Board and Chief Executive Officer of New York
HARRY G. HOHN Life Insurance Company, New York, N.Y. Prior to August 1990, he was Vice
Director since 1989 Chairman of New York Life Insurance Company. He is Chairman of Witco's
Pension Committee and a member of the Organization and Compensation
Committee.
Age 63
- -----------------------------------------------------------------------------------------------------------------
[PHOTO] Mr. Samuel is a business consultant. Prior to his retirement, Mr. Samuel
DAN J. SAMUEL was for many years a senior executive of the Royal Dutch/Shell Group of
Director since 1985 Companies. He is a director of Measurement Specialties, Inc. Mr. Samuel is
a member of Witco's Audit, Executive and Organization and Compensation
Committees.
Age 70
- -----------------------------------------------------------------------------------------------------------------
[PHOTO] Mr. Wesson is President of Galen Associates, a health care venture firm,
BRUCE F. WESSON and a General Partner of Galen Partners L.P. Prior to January 1991, he was
Director since 1980 Senior Vice President and Managing Director of Smith Barney, Harris Upham &
Co. Incorporated, Investment Bankers, New York, N.Y. (a subsidiary of
Primerica Corporation). He is a Director of Cryolife, Inc. Mr. Wesson is
Chairman of Witco's Finance Committee and a member of the Pension
Committee.
Age 53
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
3
<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
DIRECTORS SERVING UNTIL THE 1997 ANNUAL MEETING:
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
[PHOTO] Mr. Brinberg is Senior Vice President of BRT Realty Trust, Senior Vice
SIMEON BRINBERG President of Georgetown Partners, Inc. and Vice President of One Liberty
Director since 1987 Properties, Inc. Mr. Brinberg is a member of Witco's Audit, Nominating and
Pension Committees.
Age 62
- -----------------------------------------------------------------------------------------------------------------
[PHOTO] Mr. Grant is Chairman of Galen Associates, a health care venture firm, and
WILLIAM R. GRANT a General Partner of Galen Partners L.P. He is a Director of SmithKline
Director since 1970 Beecham p.l.c., Fluor Corporation, New York Life Insurance Company,
Allergan, Inc. and Seagull Energy Corp. Mr. Grant is Chairman of Witco's
Organization and Compensation Committee and a member of the Executive and
Nominating Committees.
Age 71
- -----------------------------------------------------------------------------------------------------------------
[PHOTO] Mr. Hayden is a Partner of Goldman, Sachs & Co., Investment Bankers, New
RICHARD M. HAYDEN York, N.Y. Mr. Hayden is a member of Witco's Audit, Finance and Nominating
Director since 1992 Committees.
Age 50
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
4
<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
[PHOTO] Mr. Toller is Chairman of the Board and Chief Executive Officer, Witco. He
WILLIAM R. TOLLER was Vice Chairman and Chief Financial Officer from March 1990 through
Director since 1987 September 1990 when he assumed his current position. Prior to March 1990,
Mr. Toller was Executive Vice President -- Finance and Administration. He
is Chairman of Witco's Nominating Committee and a member of the Executive
Committee.
Age 65
- -----------------------------------------------------------------------------------------------------------------
DIRECTORS SERVING UNTIL THE 1998 ANNUAL MEETING:
- -----------------------------------------------------------------------------------------------------------------
[PHOTO] Mr. Burns was Chief Executive Officer of Galen Associates and a General
WILLIAM G. BURNS Partner of Galen Partners L.P. from March 1990 to December 1990. Prior to
Director since 1986 his retirement in May 1989, he was Vice Chairman of NYNEX Corporation. He
is a Director of New York Life Insurance Company and Pierpont Funds. He is
Chairman of Witco's Audit Committee and a member of the Organization and
Compensation Committee.
Age 63
- -----------------------------------------------------------------------------------------------------------------
[PHOTO] Mr. Mahoney is Vice Chairman and Chief Operating Officer, Witco. He was
WILLIAM E. MAHONEY Vice Chairman and Chief Operating Officer -- Chemicals from September 1992
Director since 1989 to August 1994. Prior to September 1992, Mr. Mahoney was Executive Vice
President -- Chemical Group. He is Chairman of Witco's Executive Committee
and a member of the Pension Committee.
Age 64
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
5
<PAGE>
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
[PHOTO] Mr. Polite is Chairman and Director of Rotonics Manufacturing, Inc.
L. JOHN POLITE, JR. (formerly Koala Technologies, Inc.) in Gardena, CA. Prior to his retirement
Director since 1989 in December 1992, he was Chairman of Peridot Chemicals (New Jersey), Inc.
in Clifton, N.J. He is a Director of Peridot Chemicals (New Jersey), Inc.
and Jones Medical Industries, Inc. Mr. Polite is a member of Witco's
Finance and Pension Committees.
Age 74
- -----------------------------------------------------------------------------------------------------------------
[PHOTO] Mr. Wishnick is a business consultant. He was elected Chairman of the Board
WILLIAM WISHNICK of Witco in 1964 and assumed the additional responsibility of Chief
Director since 1949 Executive Officer in 1971. He held these positions until October 1990. Mr.
Wishnick is a member of Witco's Executive, Finance and Pension Committees.
Age 71
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
6
<PAGE>
<PAGE>
OWNERSHIP OF SECURITIES BY DIRECTORS AND OFFICERS
As of March 1, 1996, the directors of the Company and each executive
officer named in the Summary Compensation Table, individually, and all directors
and executive officers of the Company as a group beneficially owned shares of
Common Stock of the Company as follows:
<TABLE>
<CAPTION>
AMOUNT OF BENEFICIAL OWNERSHIP
-------------------------------------------
DIRECT &
INDIRECT EXERCISABLE PERCENT OF
NAME OF BENEFICIAL OWNER OWNERSHIP(A) OPTIONS(B) CLASS(C)
- ------------------------------------------------------------------ ------------ ----------- ------------
<S> <C> <C> <C>
William J. Ashe................................................... 62,973 less than 1%
Simeon Brinberg................................................... 2,201 less than 1%
William G. Burns.................................................. 2,001 less than 1%
Michael D. Fullwood............................................... 10,238 57,980 less than 1%
William R. Grant.................................................. 3,375 less than 1%
Richard M. Hayden................................................. 2,001 less than 1%
Harry G. Hohn..................................................... 201 less than 1%
Gerald Katz....................................................... 28,959 42,080 less than 1%
William E. Mahoney................................................ 26,706 109,460 less than 1%
L. John Polite, Jr. .............................................. 9,001 less than 1%
Dan J. Samuel..................................................... 2,201 less than 1%
Nirmal S. Jain.................................................... 44,040 30,660 less than 1%
William R. Toller................................................. 65,128 172,740 less than 1%
Bruce Wesson...................................................... 1,501 less than 1%
William Wishnick.................................................. 297,491 less than 1%
All directors and executive officers as a group
(a total of 30 individuals including those named above)......... 675,259 571,880 2.21%
</TABLE>
- ------------
The information provided in the above chart as to each director and named
executive officer, individually, and all directors and executive officers as a
group is based on information received from such individuals. However, the
listing of such shares is not necessarily an admission of beneficial ownership
by the person. Unless otherwise indicated in the footnotes below, such
individuals held, together with certain members of their family, sole voting and
investment power over the shares.
(a) In addition to these beneficial ownership amounts, the directors listed
below follow the common stock valuation method for valuing their deferred
directors compensation (see 'Compensation of Directors' at page 10) and, as
of December 31, 1995, such amounts constitute the economic equivalent of
the following numbers of shares of the Company's Common Stock:
<TABLE>
<CAPTION>
ECONOMIC EQUIVALENT
NUMBER OF SHARES
-------------------
<S> <C>
Simeon Brinberg 1,600
William R. Grant 4,181
Richard M. Hayden 3,994
Harry G. Hohn 3,715
Bruce Wesson 2,999
</TABLE>
(b) Represents options exercisable within 60 days granted under the 1989, 1992
and 1995 Stock Option Plans to such persons. The options are exercisable at
prices ranging from $21.375 to $31.75. The closing price for Witco Common
Stock on the New York Stock Exchange on March 1, 1996 was $32.25 per share.
(c) The number of shares of Common Stock outstanding on March 1, 1996 was
56,489,369.
7
<PAGE>
<PAGE>
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors and officers, and persons who own more than 10% of the Company's
Common Stock, to file reports of ownership and changes in ownership of any class
of the Company's registered equity securities with the Securities and Exchange
Commission and the New York Stock Exchange. The Company believes that during
1995 all Section 16(a) filing requirements applicable to its directors and
officers were complied with.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
Set forth below is a table indicating those persons whom the management of
the Company believes to be beneficial owners of more than 5% of any class of the
Company's securities as of February 29, 1996. The following information is based
on reports filed with the Company and the Securities and Exchange Commission as
of December 31, 1995 in accordance with Section 13(g) of the Securities Exchange
Act of 1934.
<TABLE>
<CAPTION>
NAME AND ADDRESS SHARES PERCENT
OF BENEFICIAL OWNER BENEFICIALLY OWNED OF CLASS
- -------------------------------------------------------------- ------------------ --------
<S> <C> <C>
Delaware Management Holdings, Inc. ........................... 5,808,285(1) 10.26%
2005 Market Street
Philadelphia, Pennsylvania 19103
Putnam Investments, Inc. ..................................... 5,255,440(2) 9.3%
One Post Office Square
Boston, Massachusetts 02109
Wellington Management Company ................................ 4,205,580(3) 7.45%
75 State Street
Boston, Massachusetts 02109
Scudder, Stevens & Clark, Inc. .............................. 3,920,900(4) 7%
345 Park Avenue
New York, New York 10154
</TABLE>
- ------------
(1) Delaware Management Holdings, Inc. has advised that with respect to such
shares they have (i) sole voting power for 4,053,014 shares and shared
voting power for 52,100 shares and (ii) sole dispositive power for 5,788,685
shares and shared dispositive power for 190,600 shares.
(2) Putnam Investments, Inc. has advised that with respect to such shares they
have (i) shared voting power for 57,550 shares and (ii) shared dispositive
power for 5,255,440 shares.
(3) Wellington Management Company has advised that with respect to such shares
they have (i) shared voting power for 707,420 shares and (ii) shared
dispositive power for 4,205,580 shares.
(4) Scudder, Stevens & Clark, Inc. has advised that with respect to such shares
they have (i) sole voting power for 994,000 shares and shared voting power
for 2,557,400 shares and (ii) sole dispositive power for 3,920,900 shares.
To the best of the Company's knowledge, as of February 29, 1996, no other
person owned more than 5% of the outstanding voting securities of the Company.
8
<PAGE>
<PAGE>
OTHER TRANSACTIONS
Mr. Hohn is Chairman of the Board and Chief Executive Officer and Messrs.
Burns and Grant are Directors of New York Life Insurance Company. This firm has
issued guaranteed investment contracts for Witco's Employee Retirement Savings
Plan in the past and may provide similar services during 1996.
Mr. Hayden is a Partner of Goldman, Sachs & Co., Investment Bankers. This
firm has provided investment banking services to the Company for many years and
is expected to continue to provide such services during 1996.
BOARD OF DIRECTORS -- MEETINGS HELD AND COMMITTEES
The Board of Directors held seven meetings during 1995. Each director
attended 75% or more of the meetings of the Board of Directors and Committees of
which he was a member.
The Board of Directors has the following standing committees:
Executive Committee. The Executive Committee has been, and from time to
time is, delegated authority by the Board to exercise the powers of the Board in
matters pertaining to the management of the business (seven meetings during
1995).
Audit Committee. The functions of the Audit Committee include (a) making
recommendations to the full Board as to engagement of the Company's independent
auditors, (b) reviewing with the independent auditors the plan and results of
the audit engagement, (c) reviewing the scope and results of the Company's
internal audit procedures, (d) reviewing the independence of the independent
auditors, (e) reviewing the adequacy of the Company's system of internal
accounting controls, (f) reviewing or participating in reviews of matters
relating to audit, accounting and financial statements, (g) reviewing proposed
audit fees and other fees of the independent auditors, and (h) reviewing
non-audit services performed by the independent auditors (four meetings during
1995).
Finance Committee. The functions of the Finance Committee include (a)
reviewing and evaluating financing strategies proposed by management, (b)
reviewing proposed corporate forecasts and financial needs, (c) reviewing and
evaluating investment policies for corporate funds and (d) such other matters
affecting the financial well-being of the Company as the Committee may determine
to be appropriate (five meetings during 1995).
Nominating Committee. The Nominating Committee is responsible for (a)
reviewing qualifications and recommendations for replacement and/or additional
nominees to the Board of Directors, (b) reviewing and recommending the amount of
compensation to be paid to non-employee members of the Board, including
compensation for committee memberships, meeting fees or such other compensation
as may be deemed appropriate, (c) recommending policies regarding directors to
the Board, and (d) such other duties and responsibilities as may be delegated to
the Nominating Committee by the Board of Directors (no meetings during 1995).
Organization and Compensation Committee. The functions of the Organization
and Compensation Committee include (a) recommending approval to the full Board
of the remuneration arrangements for officers, (b) recommending the adoption of
compensation and benefit plans applicable to employee directors and officers,
(c) exercising plenary authority in its discretion to determine the purchase
price of the Common Stock issuable upon the exercise of each option, to
determine the employees to whom, and the time or times at which options shall be
granted and the number of shares to be issuable upon the exercise of each
option, to interpret the option plans, to prescribe, amend and rescind rules and
provisions relating to option plans, to determine the terms and provisions of
the respective option
9
<PAGE>
<PAGE>
agreements and to make all other determinations deemed necessary or advisable
for the administration of the option plans, (d) reviewing the performance of the
Chief Executive Officer and approving his overall compensation, (e) reviewing
with the Chief Executive Officer the management and corporate organization
structures, management organization succession plans, performance of officers
and overall compensation policy of the Corporation, (f) reviewing and approving
for submission to the Board of Directors election of officers and (g) jointly
reviewing with Nominating Committee recommendations for employee members of the
Board of Directors prior to submission to the Board (six meetings during 1995).
Pension Committee. The Pension Committee is responsible for (a) reviewing
the pension actuarial reports, (b) reviewing pension fund performance and (c)
establishing fund investment policies. In addition, it recommends to the
Executive Committee or the full Board changes in plan benefits, trustees or fund
managers and recommends annual fund contributions to the plans (six meetings
during 1995).
COMPENSATION OF DIRECTORS
Non-employee directors are paid an annual retainer of $25,000, an
attendance fee of $1,000 per Board meeting, and reimbursement of travel
expenses. Non-employee members of the Board who are chairpersons of a committee
receive an attendance fee of $1,000 per meeting of the committee, and other
members of committees receive $750 per meeting of the committee. Non-employee
members of committees also receive an annual retainer of $2,500 for each
committee on which they serve. Any director entitled to receive annual retainers
and attendance fees may elect to defer payment of all or any part of such
compensation pursuant to the Company's Deferred Directors' Fees Plan until,
generally, after the termination of the directors' relationship with the Company
or in the event of death, in which case such deferred compensation will be paid
to a beneficiary as designated. The Company provides non-employee directors with
coverage under the Company's basic life and accidental death and dismemberment
policy with a death benefit of $50,000.
The Company retained Mr. Wishnick, upon his retirement as Chairman of the
Board and Chief Executive Officer, as an independent consultant for the period
February 1, 1991 through January 31, 1993 at an annual retainer of $100,000. On
October 22, 1992, the Company extended the consultancy agreement with Mr.
Wishnick for the period February 1, 1993 through January 31, 1995 at an annual
retainer of $110,000. Thereafter, the agreement is automatically extended for
additional terms of one (1) year each unless either party gives ninety (90) days
written notice of its intention not to continue such agreement. In addition, the
Company makes office space and a part-time secretary available for use by Mr.
Wishnick.
EXECUTIVE COMPENSATION
Cash Compensation
The following table shows cash compensation paid, and certain other
compensation paid or accrued, by the Company during the years ended December 31,
1995, 1994 and 1993, to each of the Company's five most highly compensated
executive officers, including the Chief Executive Officer, in all capacities in
which they served. All individuals included in the table were executive officers
of the Company as of December 31, 1995 and at all times during the periods
shown.
10
<PAGE>
<PAGE>
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
AWARDS
------------
ANNUAL COMPENSATION SECURITIES
--------------------- UNDERLYING
NAME AND SALARY OPTIONS/ ALL OTHER
PRINCIPAL POSITION YEAR ($) BONUS ($) SAR'S (#)(1) COMPENSATION ($)(2)
- --------------------------------------------------- ---- --------- --------- ------------ -------------------
<S> <C> <C> <C> <C> <C>
William R. Toller 1995 $ 650,000 $ -- 154,000 $ 25,465
Chairman and Chief 1994 590,000 430,100 125,000 166,945
Executive Officer 1993 545,000 364,100 97,600 14,643
William E. Mahoney 1995 $ 475,000 $ -- 95,000 $ 12,770
Vice Chairman and Chief 1994 437,500 252,300 69,100 6,984
Operating Officer 1993 400,000 204,200 62,500 12,897
Michael D. Fullwood 1995 $ 315,000 $ -- 48,500 $ 322,999
Executive Vice President and 1994 295,000 151,400 38,500 4,500
Chief Financial Officer 1993 275,000 137,800 32,200 7,075
Gerald Katz 1995 $ 252,000 $ -- 32,000 $ 15,978
Senior Vice President 1994 240,000 70,700 25,600 150,942
1993 225,000 103,700 21,600 62,215
Nirmal S. Jain 1995 $ 214,500 $ 45,400 23,500 $ 6,204
Group Vice President 1994 207,000 77,900 19,000 6,668
Polymer Additives 1993 195,000 95,200 8,100 8,250
</TABLE>
- ------------
(1) The stock options granted during 1995, 1994 and 1993 were granted pursuant
to the 1992 Stock Option Plan and the 1995 Stock Option Plan which do not
provide for tandem or stand alone stock appreciation rights (SAR's).
(2) All Other Compensation includes: (i) the Company's contribution on behalf of
the respective executive officer pursuant to the terms of the Company's
Employee Retirement Savings Plan ('Savings Plan'); (ii) amounts for
financial planning services ('FPS'); (iii) amounts for auto allowances
('AA'); and (iv) Mortgage Interest Differential ('MID') for employees that
have relocated at the Company's request. Such employees are compensated for
the difference in mortgage interest between the old and new mortgage during
the first five years after relocation starting at 100% in the first year and
decreasing by 20% in each of the succeeding years. The table below sets
forth the components of All Other Compensation described in (i) through (iv)
above, for the year ended December 31, 1995, for the above named executive
officers:
<TABLE>
<CAPTION>
SAVINGS FPS AA MID
------- ------ ------ -------
<S> <C> <C> <C> <C>
William R. Toller........................................... $4,500 $7,000 $2,520 $11,445
William E. Mahoney.......................................... 4,500 5,750 2,520 --
Michael D. Fullwood......................................... 4,500 7,000 2,520 28,020
Gerald Katz................................................. 4,500 -- 1,420 --
Nirmal S. Jain.............................................. 4,500 -- 1,704 --
</TABLE>
The 1995 amounts shown above in the All Other Compensation column also
include $280,959 and $10,058 for relocation expenses paid or reimbursed by
the Company on behalf of Messrs. Fullwood and Katz, respectively.
11
<PAGE>
<PAGE>
1994 Deferred Compensation Plan
The Board of Directors adopted the 1994 Deferred Compensation Plan (the
'Deferred Plan') to provide certain employees with the opportunity to defer some
or all of the base salary and/or bonus otherwise payable to them by the Company.
An employee who is a participant in either the Officers' Annual Incentive Plan
or the Management Incentive Plan is eligible to participate in the Deferred
Plan. Amounts deferred for 1996 can either earn interest at an annual rate equal
to the yield quotation as of the end of the calendar quarter for the U.S.
Treasury 10-year note or be converted into phantom shares of the Company's
Common Stock which will earn additional phantom shares on each day the Company
pays a dividend. Deferred account balances are payable in cash and are
distributed at the election of the participant in a lump sum or installments at
the time specified by the participant or at retirement or termination. In the
event of a change in control, as defined in the Deferred Plan, deferred account
balances are paid in cash and are distributed not later than 15 days after the
date of the change in control.
Stock Option Grants
The following table provides certain information concerning the grant of
options during the year ended December 31, 1995 to the executive officers named
in the Summary Compensation Table. In addition, hypothetical gains or spreads,
calculated based on assumed rates of annually compounded stock price
appreciation of 5% and 10% over the term of the option, have been included in
the table.
OPTIONS GRANTED DURING THE YEAR ENDED DECEMBER 31, 1995
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS (1)(2)
--------------------------------------------------- POTENTIAL REALIZABLE VALUE AT
NUMBER OF % OF TOTAL ASSUMED ANNUAL RATES
SECURITIES OPTIONS OF STOCK PRICE APPRECIATION FOR
UNDERLYING GRANTED TO EXERCISE OR OPTION TERM
OPTIONS EMPLOYEES BASE PRICE EXPIRATION ----------------------------------
NAME GRANTED (#) IN FISCAL YEAR ($/SHARE) (3) DATE 5% 10%
- ----------------------- ----------- -------------- ------------- ---------- -------------- --------------
<S> <C> <C> <C> <C> <C> <C>
William R. Toller...... 154,000 17.52% $ 28.00 6/1/05 $ 2,711,794 $ 6,872,217
William E. Mahoney..... 95,000 10.81% $ 28.00 6/1/05 $ 1,672,860 $ 4,239,355
Michael D. Fullwood.... 48,500 5.52% $ 28.00 6/1/05 $ 854,039 $ 2,164,302
Gerald Katz............ 32,000 3.64% $ 28.00 6/1/05 $ 563,490 $ 1,427,993
Nirmal S. Jain......... 23,500 2.67% $ 28.00 6/1/05 $ 413,813 $ 1,048,683
</TABLE>
- ------------
(1) Each option was granted on June 1, 1995 to purchase shares of the Company's
$5.00 par value Common Stock. Twenty percent of the shares subject to the
options become exercisable one year from the date of grant and 20% become
exercisable on each of the four succeeding anniversaries, provided the
optionee continues to be employed by the Company or any of its subsidiaries.
Only those options exercisable as of the date of the optionee's termination
may be exercised during the 90 day period following such termination date;
however, upon termination by (i) early or normal retirement, (ii) death or
(iii) disability any option not then exercisable shall become immediately
exercisable and shall be exercisable during the three year period following
such termination; provided that in no event shall options be exercisable
after the expiration of 10 years from the date of grant. The actual value an
optionee receives is dependent on future stock market conditions and there
can be no assurance that the amounts reflected in the right hand columns of
the table will actually be realized. No gain to the optionee is possible
without an appreciation in stock value which will benefit all shareholders
commensurately.
(footnotes continued on next page)
12
<PAGE>
<PAGE>
(footnotes continued from previous page)
(2) The options were granted pursuant to the 1992 Stock Option Plan and the 1995
Stock Option Plan which do not provide for tandem or stand alone stock
appreciation rights.
(3) Payment for shares of Common Stock of the Company upon exercise of a stock
option may be made in cash, or in such other form of consideration, as
deemed appropriate by the Committee (including cashless exercise
procedures), or shares of Common Stock, or a combination of cash and shares
of Common Stock.
Stock Option Exercises
The following table provides information regarding stock option exercises
by the named executive officers during the year ended December 31, 1995,
including the aggregate value realized on the date of exercise. In addition,
unexercised stock options (both exercisable and unexercisable) as of December
31, 1995, as well as the value of in-the-money unexercised options (i.e. options
which had a positive spread between the exercise price and the fair market value
of the Company's Common Stock as of December 31, 1995) have been included in the
table. The closing price of the Company's Common Stock on the New York Stock
Exchange on December 31, 1995 was $29.25.
AGGREGATED OPTION EXERCISES IN THE YEAR ENDED DECEMBER 31, 1995
AND YEAR-END OPTION VALUES
YEAR-END VALUE -- $29.25
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
SHARES UNDERLYING UNEXERCISED OPTIONS VALUE OF UNEXERCISED IN-THE-
ACQUIRED ON AT YEAR-END (#) MONEY OPTIONS AT YEAR-END
EXERCISE VALUE ------------------------------ ------------------------------
NAME (#) REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- -------------------------------------- ----------- --------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
William R. Toller..................... 16,902 $ 187,540 102,098 351,520 $ 404,627 $ 656,690
William E. Mahoney.................... 18,224 $ 206,881 64,140 204,660 $ 266,583 $ 352,461
Michael D. Fullwood................... 12,800 $ 138,425 34,140 107,660 $ 141,400 $ 183,738
Gerald Katz........................... -- -- 26,240 73,760 $ 121,500 $ 140,350
Nirmal S. Jain........................ 1,248 $ 13,962 18,920 54,180 $ 85,455 $ 100,858
</TABLE>
Certain Benefit Plans
Defined Benefit Pension Plan
The Company currently has a qualified, non-contributory defined benefit
plan, the Witco Corporation Retirement Plan, which covers executive officers and
non-bargaining employees. Because the pension plan was sufficiently funded, no
contributions were made thereto in 1995. The remuneration covered by the plan
represents the base salary plus commissions.
Under the pension plan, a normal retirement benefit is based on (a) 1.5% of
the individual's final average earnings (average base salary for the 60 months
preceding retirement using 1992 base salary for years prior to 1992) multiplied
by years of credited service, reduced by (b) 1.5% of the individual's Social
Security benefit at retirement multiplied by years of credited service (to a
maximum of 50% of the Social Security benefit). Pension benefits will not be
less than the amount accrued as of December 31, 1993 under the pre-amended plan.
13
<PAGE>
<PAGE>
To the extent that benefits under the qualified plan exceed limits
established by the Internal Revenue Code of 1986, as amended (the 'Code'), they
are payable under the Excess Benefit and Compensation Cap Plan of Witco
Corporation (the 'Excess Plan') which provides for the payment of benefits in
excess of certain limitations imposed by the provisions of the Employee
Retirement Income Security Act of 1974, as amended ('ERISA'), or limitations on
compensation or benefits that may be imposed by the Code.
The following table illustrates the estimated annual benefits payable to an
employee, including those named in the Summary Compensation Table on page 11,
under the qualified and excess plans. These estimates assume continued
employment until the normal date of retirement at age 65, and are based on a
straight-life annuity form of retirement income. Amounts shown in the table will
be reduced by the Social Security offset.
<TABLE>
<CAPTION>
YEARS OF SERVICE
FINAL -------------------------------------------------------------------------------------
AVERAGE PAY 10 15 20 25 30 35 40
- ----------- ------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
$ 100,000 $15,000 $ 22,500 $ 30,000 $ 37,500 $ 45,000 $ 52,500 $ 60,000
150,000 22,500 33,750 45,000 56,250 67,500 78,750 90,000
200,000 30,000 45,000 60,000 75,000 90,000 105,000 120,000
250,000 37,500 56,250 75,000 93,750 112,500 131,250 150,000
300,000 45,000 67,500 90,000 112,500 135,000 157,500 180,000
350,000 52,500 78,750 105,000 131,250 157,500 183,750 210,000
400,000 60,000 90,000 120,000 150,000 180,000 210,000 240,000
450,000 67,500 101,250 135,000 168,750 202,500 236,250 270,000
500,000 75,000 112,500 150,000 187,500 225,000 262,500 300,000
550,000 82,500 123,750 165,000 206,250 247,500 288,750 330,000
600,000 90,000 135,000 180,000 225,000 270,000 315,000 360,000
650,000 97,500 146,250 195,000 243,750 292,500 341,250 390,000
700,000 105,000 157,500 210,000 262,500 315,000 367,500 420,000
750,000 112,500 168,750 225,000 281,250 337,500 393,750 450,000
800,000 120,000 180,000 240,000 300,000 360,000 420,000 480,000
</TABLE>
As of December 31, 1995, Messrs. Toller, Mahoney, Fullwood, Katz and Jain
had completed 10, 15, 8, 30 and 32 years of credited service, respectively.
Supplemental Executive Retirement Plan
The Company has a Supplemental Executive Retirement Plan (the 'SERP') and
participants in the plan are or have been corporate officers selected by the
Board of Directors. The SERP supplements coverage under the Company's pension
plan and provides a participant, who retires at or after age 65, with 50% of his
average base salary plus average bonus (base salary is averaged over three years
preceding retirement, and bonus is the average of the three highest bonuses
awarded in the 60 months preceding retirement) less amounts paid under the
pension plan, the Excess Plan and 50% of Social Security benefit.
Estimated annual target retirement benefits under all Retirement Plans
including the Supplemental Executive Retirement Plan, payable as a 50% Joint and
Survivor annuity or 15 year certain annuity (if unmarried) at age 65 are as
follows, assuming future base salary and bonus remain at current levels: Mr.
14
<PAGE>
<PAGE>
Toller $477,800, Mr. Mahoney $340,200, Mr. Fullwood $220,300, Mr. Katz $168,500,
and Mr. Jain $142,200.
In the event of death, the Company will pay a benefit to the executive's
beneficiary.
In the event of the actual or constructive termination of employment of a
participant within three years after a change in control, as defined in the
SERP, he will be entitled to a lump-sum payable in cash equal to three times his
average total pay (averaged over five years) less $1.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During the fiscal year ended December 31, 1995, the Organization and
Compensation Committee (the 'Committee') was composed of Messrs. Ashe, Burns,
Grant, Hohn and Samuel. All members of the Committee participated in decisions
related to compensation of the Company's executive officers.
Prior to his retirement in May 1986, Mr. Ashe was President and Chief
Operating Officer of the Company.
Mr. Hohn is Chairman of the Board and Chief Executive Officer of New York
Life Insurance Company. This firm has issued guaranteed investment contracts for
Witco's Employee Retirement Savings Plan in the past and may provide services
during 1996.
No executive officer of the Company served as a director or member of a
compensation committee of another entity, one of whose executive officers served
as a director or on the Committee of the Company.
REPORT OF THE ORGANIZATION AND COMPENSATION COMMITTEE
This report describes the role of the Organization and Compensation
Committee and provides an overview of the Company's executive compensation
philosophy. The report also describes how the executive compensation program was
administered in 1995 with specific emphasis on the Committee's decisions
affecting the compensation of the Chief Executive Officer.
THE COMMITTEE'S ROLE
The Committee reviews and approves each element of the Company's executive
compensation program and periodically assesses the effectiveness of the program
as a whole. This program covers the chief executive officer, the four other
named executive officers, and all other executive officers of the Company.
Specifically, the Committee approves the salaries of all executive officers,
cash awards under the Company's Officers' Annual Incentive Program, the grant of
stock options under the Stock Option Plans, and the provision of any special
benefits or perquisites to executive officers. In addition to approving salaries
and grants for individual executive officers, the Committee also reviews the
aggregate expenditure of funds for cash incentives, the aggregate allocation of
shares for proposed stock option and long term incentive plans, and the ongoing
operation of the executive compensation program described above. In addition,
the Committee periodically reviews the design of each component of the executive
compensation program and considers alternatives which may better meet the
Company's objectives.
To carry out its responsibilities, the Committee's five non-employee
directors met six times during 1995.
15
<PAGE>
<PAGE>
OBJECTIVES OF THE EXECUTIVE COMPENSATION PROGRAM
The two principal objectives of the Company's executive compensation
program are to:
-- Provide competitive total compensation opportunities that will
serve to attract and retain highly qualified executives who can
achieve the long-term financial and strategic goals of the Company
and produce increased value for shareholders.
-- Provide a comprehensive compensation program which emphasizes the
pay-for-performance philosophy of the Company by integrating
executive compensation with short and long-term performance goals
of the Company and its key business units and rewarding each
executive's individual initiative and achievements.
With respect to the first objective, it is the Committee's intention to set
total compensation opportunity levels which are competitive with a comparison
group of chemical and petroleum product companies and other major
publicly-traded companies of similar size and complexity (the 'Comparison
Group') because the Committee believes that the relevant market for executive
talent is broader than those companies against which it directly competes. The
Committee regularly reviews information derived from various sources, including
proxy statements, industry surveys, and external compensation consultants. Thus,
the companies included in the Comparison Group are not the same as the companies
represented in the published industry indexes in the Comparison of Five-Year
Cumulative Total Return graph included in this Proxy Statement.
The Committee examines specific salary and incentive target recommendations
for each executive officer based on the requirements, responsibilities, and
specific goals for each position. In general, it is the Committee's intention to
target base salary, incentive compensation, and stock option grants to the
median compensation levels of the Comparison Group when the Company is operating
at fully acceptable levels of performance.
With respect to the second objective, the Company's executive compensation
programs are designed to place a significant portion of the total compensation
opportunity at risk. The three principal incentive programs of the Company for
1995, the existing Officers' Annual Incentive Program ('OAIP') and the 1995 and
1992 Stock Option Plans ('SOPs'), use different performance measures and periods
to create a significant variable opportunity linking total compensation to a
broad range of performance parameters.
It is the general intention of the Committee to attempt to assure that
executive compensation will meet the requirements for deductibility under
Section 162(m) of the Code. That provision establishes a limit on the
deductibility of annual compensation for certain executive officers which
exceeds $1,000,000. The Committee has directed the Company's management to
review executive compensation arrangements and employee benefit plans with a
view to determining the procedures and changes necessary to comply with this
provision of the Code. The Long Term Incentive Plan that the stockholders are
being asked to approve at the Annual Shareholders Meeting has been structured to
comply with such provisions of the Code. However, the Committee reserves the
right, under appropriate circumstances and where merited by individual
performance, to nevertheless authorize compensation payments which may not, in a
specific case, be fully deductible by the Company.
OVERVIEW OF EXECUTIVE COMPENSATION AND 1995 COMMITTEE ACTIONS
As indicated above, the Company's existing executive compensation program
has three principal components: base salary, annual cash incentives under the
OAIP, and stock options under the SOPs.
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<PAGE>
<PAGE>
The Committee's decisions and actions during 1995 with respect to each of these
components are discussed below.
THE BASE SALARY PROGRAM
The base salary program is intended to provide base salary levels that are
externally competitive and internally equitable, and to reflect each
individual's sustained performance and cumulative contribution to the Company.
The current salary of each executive officer is compared to salary surveys and
proxy statement data for similar positions having approximately the same scope
of responsibility. Each executive officer's individual performance is then
reviewed to arrive at merit increase determinations. These merit increases are
then reviewed within the context of the total merit increase budget to determine
reasonableness. In 1995, merit increases for individual executive officers of
the Company ranged from 2.74% to 10.17% of base salary producing an average
merit increase of 5.35% for all executive officers of the Company. This analysis
is necessarily a subjective process which utilizes no specific weighting or
formula with respect to the described factors in determining the base salaries
of executive officers.
THE OFFICERS' ANNUAL INCENTIVE PROGRAM
The OAIP provides for annual cash incentive compensation based on various
performance measures for executive officer positions. Bonus awards are paid
under the OAIP only if performance exceeds a predetermined performance target
reflecting minimally acceptable performance. The minimum or threshold level of
performance, which provides a basic award of 50% of the target payout, is set at
80% of the performance target. If actual results fall short of this threshold no
incentive compensation is paid to executive officers. Target payouts under the
plan are made if fully acceptable performance is achieved. Maximum payouts can
exceed target payouts by 50% or more if outstanding levels of performance are
achieved.
For Management Committee members (which include four of the five named
executive officers, one of whom is the chief executive officer), the most
important performance criterion is the achievement of an earnings per share
('EPS') target. An annual EPS target is recommended by the Committee and
approved annually by the entire Board for strategic and financial planning
purposes. By setting EPS targets at levels which will be difficult to reach, the
Committee assures that executive pay is truly at risk and that compensation will
bear a strong relationship to corporate performance. Primary EPS (the primary
performance measure for OAIP awards for Management Committee members) is
adjusted by a 'supplementary performance multiplier' determined by the
Committee. In most years, the multiplier is intended to reflect the Committee's
subjective assessment of the Management Committee's performance as a team in
areas that may not be fully reflected in current EPS results. These areas
include the strategic positioning of the Company, the quality of the Company's
products, social and environmental responsibility initiatives, and the efficient
use of capital. Usually the multiplier can increase or decrease the basic award
by up to 20%. The Committee may, in special circumstances, recognize an
exceptional individual contribution. All of the named executive officers were
Management Committee members during 1995 except for Mr. Jain, who is included in
the group discussed immediately below.
For Mr. Jain and other executive officers having direct responsibility for
the profitability of a business unit, the primary performance measure is the
operating income for their assigned business units. Operating income targets for
each business unit are consistent with and contribute to the Company's overall
EPS target. Awards for this group are adjusted by two multipliers, each of which
can
17
<PAGE>
<PAGE>
increase or decrease the basic award by 20%. One is based on the Company's
overall EPS performance and the other is based on personal performance factors
which may not be reflected in financial results. For executive officers having
staff responsibilities, the basic performance measure is EPS. Basic awards can
be increased or decreased up to 30% to reflect personal performance factors and
contributions.
For 1995 OAIP bonus awards, the EPS target was adjusted by the Committee to
reflect the fact that certain items did not pertain to the operating performance
of the Company in that year. On this basis, EPS performance fell below the
target level of performance (which would generate target basic awards). In
addition, while operating income for certain of the business units of the
Company exceeded operating income targets, other business units' operating
income was insufficient to trigger payment of any OAIP awards. As a result, only
three officers of the Company received awards under the OAIP for 1995.
STOCK OPTION PLANS
The SOPs are designed to reward executive officers and other key employees
directly for appreciation in the long-term price of the Company's stock. The
plan directly links the compensation of executive officers to gains by the
shareholders and encourages executive officers to adopt a strong ownership
orientation in their work. The SOP also places what can be a significant element
of compensation at risk because the options have no value unless there is
appreciation over time in the value of Company stock.
In 1992 and 1995, respectively, shareholders approved the 1992 Stock Option
Plan for Employees of Witco Corporation and its Subsidiaries and the 1995 Stock
Option Plan for Employees of Witco Corporation and its Subsidiaries
(collectively, the 'SOPs'). The 1992 Plan replaced all earlier stock option
plans in effect and the 1995 Plan supplemented the number of shares available
for issuance under the 1992 Plan. The SOPs enable the Committee to grant both
incentive stock options (as defined under Section 422 of the Code) and
non-qualified stock options. Other than the proposed Long Term Incentive Plan,
which shareholders are being asked to approve at the 1996 Annual Shareholders
Meeting, stock options are the only form of long-term incentive compensation
currently used by the Company. However, the Committee periodically assesses the
relative merits of alternative approaches to long-term incentives and may at
some future time introduce other long-term incentives to either supplement or
replace stock options.
With the understanding that the value (if any) of stock options is based on
future performance, the Committee bases annual stock option grants on median
levels of expected value for long-term incentive grants among Comparison Group
companies and other comparable corporate employers. The Committee periodically
reviews the practices, grant levels, and grant values of the Comparison Group to
ensure the plan continues to meet the Company's objectives. Although options are
intended to reward future performance more than past or current performance, the
Committee reserves the right to adjust annual grants in light of unusually poor
or exceptional corporate or individual performance.
COMPENSATION OF THE CHIEF EXECUTIVE OFFICER
In determining the appropriate level of total compensation for Mr. Toller,
the Company's Chief Executive Officer, the Committee reviewed the internal
compensation levels of the Company, total compensation packages provided to
other chief executive officers in the Comparison Group and the Company's short
and long-term financial and strategic performance.
In determining Mr. Toller's 1995 base salary and merit increase, the
Committee took into account the Company's continued expansion of its global
manufacturing and marketing presence, and increases
18
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<PAGE>
in the Company's total level of sales and return on equity. In addition, the
Committee considered Mr. Toller's outstanding individual performance, including
his contributions to the continuing success and increased value of the Company
and his leadership. Based on its consideration of all of these factors, the
Committee awarded Mr. Toller a base salary of $650,000, reflecting a merit
increase of 10.17%.
The Committee did not approve any OAIP award to Mr. Toller for performance
in 1995 as the Company's EPS performance fell below the threshold level of
performance under the terms of the plan.
In addition, on June 1, 1995 the Committee approved a stock option grant of
154,000 shares to Mr. Toller pursuant to the provisions of the Stock Option
Plans. In determining the total amount of options to be granted to Mr. Toller,
the Committee assessed grant values provided to other chief executive officers
in the Comparison Group, the success of the Company in achieving its financial
and strategic performance goals and the individual performance of Mr. Toller.
The Committee believes that this award will further serve to place Mr. Toller's
compensation at risk while providing the potential for significant gain only if
the Company's shareholders also participate in an appreciation in their
investment.
SUMMARY
The Committee believes that the executive compensation program continues to
attract and retain the executive resources needed to maximize shareholder
returns. The emphasis on compensation incentives, which address both long-term
and annual performance as well as both financial and stock performance, ensures
that the program functions in the best interests of the Company's shareholders.
SUBMITTED BY THE ORGANIZATION AND COMPENSATION COMMITTEE OF THE BOARD OF
DIRECTORS:
<TABLE>
<S> <C>
William R. Grant, Chairman Harry G. Hohn
William J. Ashe Dan J. Samuel
William G. Burns
</TABLE>
19
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PERFORMANCE GRAPH
The following chart compares the yearly percentage change in the cumulative
total shareholder return on the Company's Common Stock during the five fiscal
years ended December 31, 1995 with the cumulative total return on the S&P 500
Stock Index and the S&P Chemicals and Specialty Chemicals Indices. The year-end
investment values are shown beneath the graph.
WITCO CORPORATION
COMPARISON OF 5-YEAR CUMULATIVE TOTAL RETURN:
S&P 500, S&P CHEMICALS, S&P SPECIALTY CHEMICALS
VALUE OF $100 INVESTED ON DECEMBER 31, 1990
[PERFORMANCE GRAPH]
SOURCE: GEORGESON & COMPANY, INC.
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
WITCO $100 $143 $177 $233 $187 $230
S&P 500'r' $100 $130 $140 $155 $157 $215
S&P'r' CHEMICALS INDEX $100 $130 $143 $160 $185 $242
S&P'r' CHEMICALS $100 $141 $150 $171 $149 $196
(SPECIALTY) INDEX
</TABLE>
The Stock Price Performance Graph above and the foregoing Organization and
Compensation Committee Report shall not be deemed incorporated by reference by
any general statement incorporating by reference this proxy statement into any
filing under the Securities Act of 1933 or under the Securities Exchange Act of
1934, except to the extent Witco Corporation specifically incorporates this
information by reference, and shall not otherwise be deemed filed under such
Acts.
20
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PROPOSAL 2
PROPOSAL TO APPROVE ADOPTION OF THE WITCO CORPORATION
LONG TERM INCENTIVE PLAN
At a meeting held on March 5, 1996, the Board adopted, subject to
shareholder approval, the Witco Corporation Long Term Incentive Plan (the
'LTIP'). The LTIP awards participants in Common Stock for their achievement of
one or more objective performance goals over the three-year performance period.
By making awards in Common Stock, the LTIP encourages LTIP participants to adopt
a strong ownership orientation in their work and makes a part of their total
compensation dependent on objective business and performance based criteria. A
copy of the LTIP is annexed to the Proxy Statement as Exhibit A and should be
read in its entirety. The following is a brief summary of significant provisions
of the LTIP.
ADMINISTRATION
The LTIP will be administered by a committee of the Board (the 'LTIP
Committee') comprised solely of two or more outside directors, all of whom are
'disinterested persons' (within the meaning of Rule 16b-3 promulgated by the
Securities and Exchange Commission pursuant to the Securities Exchange Act of
1934). Members of the LTIP Committee are not eligible to receive awards.
SHARES AVAILABLE
The number of shares of Common Stock available for awards under the LTIP is
600,000 shares, reduced by the aggregate amount of shares which are issued upon
award or that become subject to an outstanding award. To the extent that shares
of Common Stock related to outstanding awards are not issued either because the
targets for awarding such shares have not been met or because such awards are
(i) forfeited, (ii) terminated or (iii) delivered or withheld to satisfy tax
withholding obligations, such shares shall again immediately become available
for awards.
PARTICIPATION AND ELIGIBILITY
Not later than 90 days after the commencement of each three-year
performance period, the LTIP Committee will determine in writing the corporate
officers that will participate in the LTIP for the performance period, and for
each participant (i) the applicable performance measurement(s) for the
performance period (based on one or more of the performance measurements defined
in Appendix A of the LTIP (including, for example, return on equity, earnings
per share, return on investment and shareholder value)) and the corresponding
performance target(s), (ii) a Target Award (corresponding to the number of
shares that the participant will receive if, as of the end of the performance
period, the Company's actual performance equals the targeted performance levels)
and (iii) an Award Range (the range of the percentage of the Target Award to be
obtained upon the attainment of various percentages of the targeted performance
measurement(s)). The performance measurement and the corresponding performance
target applicable to each LTIP participant for the first performance period will
be based on a targeted Return on Equity (as defined) for the 1996-1998
performance period. The LTIP Committee may cause an individual who becomes an
eligible employee after a performance period has commenced (but within the first
year of such performance period) to become a participant in the LTIP, provided
that the LTIP Committee establishes the performance measurement(s) and related
performance target(s), a Target Award and an Award Range which will apply to the
participant for the performance period.
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AWARDS
As soon as practicable following the last day of each three-year
performance period, but in any event no later than 90 days following such date,
the Company will determine for the period whether the performance target(s) in
respect of each participant's performance measurement(s) has been achieved.
Subject to certain exceptions, each participant's award for a performance period
shall be a percentage of the participant's Target Award corresponding to the
level or percentage of the performance target(s) achieved; provided, however,
that the participant's award may not exceed the Maximum Award (generally, 50,000
shares of Common Stock); and provided, further, the LTIP Committee has
discretion to reduce any participant's award. If a participant did not
participate in the LTIP for the entire performance period, the participant's
award will be determined for the entire performance period but then shall be
pro-rated based on the number of full and partial months within the performance
period that the participant participated in the LTIP.
Participants will receive their awards no later than 30 days after their
awards are determined; provided, however, that no awards will be distributed
prior to the time that the LTIP Committee certifies in writing that the
performance target(s) applicable to each such award has been satisfied. The
shares of Common Stock awarded to each participant will consist of one-third
unrestricted shares and two-thirds restricted shares. Unless a participant's
individual grant letter provides otherwise, participants will receive dividends
and will have voting rights on their restricted shares.
Restricted shares generally may not be transferred. However, unless a
participant's individual grant letter provides otherwise, restricted shares may
be transferred for certain limited purposes (for example, to an estate or trust
upon a participant's death or to a participant's immediate family for estate
planning purposes) and, in any event, only if the transferee agrees to be bound
by the terms of the LTIP. With certain exceptions, the restrictions on one-half
of the restricted shares will lapse on the January 1st following the date the
shares are awarded; restrictions on the remainder will lapse on the following
January 1st.
EFFECT OF CHANGES; MID-PERFORMANCE PERIOD
Except as set forth below, no participant will be entitled to an award with
respect to any performance period unless he or she is employed by the Company on
the last day of such performance period. In addition, except as otherwise
provided below, upon a participant's termination of employment, a participant
will forfeit all shares of restricted Common Stock for which the restrictions
have not yet lapsed.
In the event of the death, disability, retirement or termination of
employment without cause, restrictions on any restricted shares held by the
participant will lapse, and if such death, disability, retirement or termination
of employment without cause occurs in the middle of a performance period, the
participant's award for the performance period will be paid to the participant
(or, if applicable, the participant's estate) pro-rated based on the number of
full and partial months within the performance period that the participant
participated in the LTIP.
The LTIP also contains provisions addressing the possibility that in the
middle of a performance period a participant will be transferred to a position
with different performance criteria (i.e., performance measurement(s),
performance target(s), Target Award and Award Range). In the event of such a
transfer, the performance criteria applicable to the new position will apply to
the participant for the remainder of the performance period (with the amount of
the award determined pro-rata for each
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portion of the performance period based on the applicable criteria) unless (i)
the Committee determines that the participant shall not be eligible for the
remainder of the performance period (in which case the participant's award shall
be determined on a pro-rata basis based on his or her performance criteria in
effect prior to the date of transfer), or (ii) attainment of the performance
target(s) applicable to the new position is substantially certain (in which case
the participant's award for the performance period will be based entirely on the
criteria applicable to his or her former position). If a participant is
transferred to a new position for which no performance criteria have been
previously established, the participant will continue to be covered by the
criteria applicable to his or her former position unless, within 90 days
following the date of the transfer, the Committee establishes new performance
criteria which shall apply to the participant for the remainder of the
performance period.
CHANGE IN CONTROL
The LTIP provides that, in the event of a Change in Control of the Company
(as defined in the LTIP), all performance periods under the LTIP will end and
all participants will receive a cash amount equal to 150% of the Target Award
multiplied by (i) a fraction, the numerator of which will be the number of full
and partial months in which the participant participated in the performance
period and the denominator of which will be the total number of full and partial
months in the performance period, and (ii) the highest price per share of Common
Stock paid on or during the 60-day period immediately preceding the first public
disclosure of events that lead to a Change in Control or the actual Change in
Control. If there is a Subsequent Change in Control (as defined in the LTIP),
LTIP participants will receive an additional cash payment equal to an excess (if
any) of the amount they would have received had the Subsequent Change in Control
been the initial Change in Control. In determining the foregoing award, the LTIP
Committee has no discretion to reduce the award. In addition, in the event of a
Change in Control (i) the restriction on the maximum number of shares that may
be awarded to any participant for any performance period will not apply and (ii)
all restrictions on restricted shares awarded under the LTIP will immediately
lapse.
AMENDMENT/TERMINATION
The LTIP Committee may at any time amend the LTIP with respect to any
performance period which has not yet commenced; provided, however, that (i) no
amendment for which shareholder approval would be required to satisfy either the
requirements of Rule 16b-3 under the Securities Exchange Act of 1934 or the
requirements necessary for amounts payable to be 'performance-based
compensation' (within the meaning of Code Section 162(m)(4)(C)) shall be
effective until such shareholder approval has been obtained and (ii) the Maximum
Award may be increased only if shareholder approval is obtained. The LTIP
Committee may at any time terminate or suspend the LTIP; provided, however, that
if the LTIP Committee terminates or suspends the LTIP prior to the end of a
performance period, each participant will receive the greater of: (i) the award
he or she would have received had such termination or suspension not been
effected, and (ii) the award he or she is entitled to receive under any
replacement plan covering the same time period. Subject to the foregoing
requirement, upon termination of the LTIP, all other rights of each participant
with respect to any performance period that has not ended on or prior to the
date of termination shall become null and void.
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CURRENT DETERMINATION OF AWARDS
For the three year performance period 1996-1999, the LTIP Committee has,
subject to approval of the LTIP by the Company's shareholders, established an
aggregate award for 16 of the Company's executive officers of 64,200 shares of
Common Stock, including the following target awards to the five most highly
compensated executive officers: Mr. Toller (18,500 shares), Mr. Mahoney (11,500
shares), Mr. Fullwood (5,900 shares), Mr. Katz (3,900 shares) and Mr. Jain
(2,900 shares). The target award for the 1996-1999 performance period will be
earned if the Company's Return on Equity for the period averages 12.5%. It is
not possible to state which employees will be granted awards under the LTIP for
performance periods commencing after 1996 because these matters will be
determined by the LTIP Committee in the future in accordance with the plan. In
addition, it is not possible to state the amount of shares of Common Stock that
may be earned at the end of the 1996-1999 performance period or thereafter
because the amount of shares earned pursuant to an award in respect of any
three-year performance period is based on the Company's performance during the
relevant three-year period. For information concerning previous long-term
compensation awards to the Company's five most highly compensated executive
officers in the form of options to acquire shares of Common Stock under the 1992
and 1995 Stock Option Plans, see the information set forth under the captions
'Executive Compensation -- Cash Compensation -- Summary Compensation Table' and
' -- Stock Option Grants'.
U.S. FEDERAL TAX ISSUES AND OTHER INFORMATION
A participant who receives restricted shares of Common Stock under the LTIP
will not recognize taxable income at the time of receipt unless the participant
elects otherwise under Section 83(b) of the Code. In the absence of any such
election, such participant will recognize ordinary income at the time the
restrictions lapse equal to the excess of the fair market value of the shares at
that time over the amount, if any, paid for such shares. The fair market value
of unrestricted shares of Common Stock paid under the LTIP will constitute
ordinary income taxable to a participant in the year in which received by the
participant. The participant's holding period for the shares received will begin
at the time taxable income is recognized under these rules, and the tax basis in
the shares will be the amount of ordinary income so recognized plus the amount,
if any, paid for the shares. Moreover, any dividends received by the participant
on the restricted shares prior to the date that the employee recognizes income
as described above will be taxable compensation income (rather than as dividend
income) when received and the Company will be entitled to a corresponding
deduction, except to the extent the deduction limits of Section 162(m) of the
Code and the regulations thereunder apply. Subject to Section 162(m) of the Code
and regulations thereunder, the Company generally will be entitled to a
deduction equal to the amount of income recognized by a participant.
Special rules may apply to officers subject to liability under Section
16(b) of the Securities Exchange Act of 1934 that may prevent the recognition of
income by such individuals and the corresponding deduction by the Company before
the date six months following the grant of restricted stock (unless the employee
elects to be taxed upon such receipt).
Pursuant to Code Section 162(m) and the regulations issued thereunder, the
allowable deduction for compensation paid or accrued with respect to each of the
chief executive officer and the four other most highly compensated officers of a
publicly held corporation at the end of each fiscal year is limited to
$1,000,000 per year. However, certain types of compensation are excluded from
this deduction limit, including payments subject to the attainment of objective
performance measures and satisfaction of outside director and shareholder
approval requirements. Awards under the LTIP are expected to meet
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the performance-based compensation requirement because the amounts are awarded
upon meeting the performance measures based on objective business criteria
established by the LTIP Committee for each three-year performance period. The
administration by the LTIP Committee, as limited by provisions in the LTIP
governing the LTIP Committee's discretion in making awards to participants,
meets the second requirement. The submission for shareholder approval of the
LTIP (including the performance measurements continued in Appendix A and the
methodology for calculating LTIP awards) is intended to qualify LTIP awards as
performance based compensation so as to preserve the Company's tax deduction if
and when any LTIP awards are made.
Upon the occurrence of a Change in Control or Subsequent Change in Control,
all or a portion of a participant's Target Award payments and any restricted
shares whose restrictions lapse upon the occurrence of a Change in Control may
be a parachute payment for purposes of determining whether a 20% excise tax is
payable by the participant as a result of the receipt of an excess parachute
payment pursuant to Section 4999 of the Code. If the participant is also a
participant in the Company's Supplemental Executive Retirement Plan, he or she
will be entitled under such plan to a tax gross-up payment to offset any such
excise tax imposed on benefits payable under that plan or under any other plan
or arrangement, including the LTIP. Any such parachute payments which are
determined to be excess parachute payments will generally be nondeductible by
the Company.
The affirmative vote of the holders of a majority of the shares having
voting power present in person or represented by proxy at the meeting is
required to approve the adoption of the LTIP.
THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS THAT SHAREHOLDERS VOTE FOR
THIS PROPOSAL TO APPROVE THE ADOPTION OF THE WITCO CORPORATION LONG TERM
INCENTIVE PLAN.
PROPOSAL 3
PROPOSAL TO APPROVE THE AMENDMENT OF THE
1995 STOCK OPTION PLAN FOR EMPLOYEES OF WITCO
CORPORATION AND ITS SUBSIDIARIES
At a meeting held on March 5, 1996, the Board adopted, subject to
shareholder approval, an amendment to the 1995 Stock Option Plan (i) increasing
the number of shares of Company Common Stock available for option awards from
2,600,000 shares to 3,600,000 shares and (ii) increasing the maximum number of
option shares of Company Common Stock that may be granted to any person during
the term of the plan from 1,300,000 shares to 2,000,000 shares. The plan
directly links the compensation of executive officers to gains by the
shareholders and encourages executive officers to adopt a strong ownership
orientation in their work. The 1995 Stock Option Plan also places what can be a
significant element of compensation at risk because the options have no value
unless there is appreciation over time in the value of Company stock. The 1995
Stock Option Plan was approved by the shareholders at the 1995 Annual Meeting.
No other amendments to the 1995 Stock Option Plan are proposed. Set forth below
are the material provisions of the 1995 Stock Option Plan.
ADMINISTRATION
The 1995 Stock Option Plan is administered by a committee (the '1995 SOP
Committee') which consists of not less than three non-employee Directors.
Members of the 1995 SOP Committee are not eligible to receive awards.
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PARTICIPATION AND ELIGIBILITY
The 1995 SOP Committee may grant options to the officers and other key
employees of the Company and its Subsidiaries to purchase up to 3,600,000 shares
of the Company's Common Stock at a price which may not be less than fair market
value (as defined in the plan) of the Common Stock on the date the option is
granted; provided, however, that no person may be granted options for more than
2,000,000 shares during the term of the 1995 Stock Option Plan. The plan permits
the 1995 SOP Committee to grant either incentive stock options, as defined in
Section 422 of the Code, or nonqualified stock options which do not meet the
requirements of incentive stock options, or both. As of March 1, 1996, the fair
market value of the Common Stock was $32.25 per share. Options under the 1995
Stock Option Plan may not be granted after March 1, 2005.
The 1995 SOP Committee determines, subject to the terms of the 1995 Stock
Option Plan, the individuals to whom options will be granted, the time at which
options will be granted, the number of options granted to each individual, the
option price per share, and all other matters necessary for administration of
the 1995 Stock Option Plan.
No option may be exercised after the expiration of ten years from the date
it is granted. If the optionee and the Company agree to the amendment of an
incentive stock option agreement in a manner which grants the employee
additional benefits, the amendment is deemed to be a grant of a new option, and
if the requirements for incentive stock option treatment are not met at that
time, the option will no longer qualify as an incentive stock option. The 1995
Stock Option Plan also contains provisions concerning the exercisability of
stock options upon the optionee's retirement, permanent and total disability,
death or other termination of employment. Unless otherwise determined by the
1995 SOP Committee, an option may not be exercised until one year following the
date of grant, at which time 20% of the shares subject to the option become
exercisable and an additional 20% become exercisable on each of the four
succeeding anniversaries as long as the optionee continues to be employed by the
Company.
Payment for shares of Common Stock of the Company upon exercise of stock
option may be made in cash, or in such other form of consideration, as deemed
appropriate by the 1995 SOP Committee (including cashless exercise procedures),
or shares of Common Stock, or a combination of cash and shares of Common Stock.
CHANGE OF CONTROL
The 1995 Stock Option Plan provides that the options will be exercisable in
full for a period of thirty days following the date of a change in control of
the Company (as defined in the plan), unless exempted by the 1995 SOP Committee,
or commencing on the date of shareholder approval of an agreement providing for
a merger in which the Company will not remain independent. All options
outstanding at the end of the thirty-day period are to be surrendered to the
Company for cancellation in exchange for a cash settlement payment.
AMENDMENT/TERMINATION
The 1995 Stock Option Plan is subject to amendment or termination by the
Board of Directors, as deemed in the best interest of the Company, without
shareholder approval; provided, however, that unless shareholders shall first
approve thereof, no such amendment shall be effective for which
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shareholder approval is required in order to satisfy the requirements of Rule
16b-3 of the Securities Exchange Act of 1934, the Code, the New York Stock
Exchange, or any applicable state law.
FEDERAL INCOME TAX CONSEQUENCES
Under current tax law, there are no Federal income tax consequences to
either the employee or the Company on the grant of nonqualified stock options.
Upon exercise of a nonqualified stock option, the excess of the fair market
value of the shares subject to the option over the option price ('Spread') at
the date of exercise is taxable as ordinary income to the optionee in the year
it is exercised and, subject to the limitation described below, is deductible by
the Company for Federal income tax purposes. The optionee's basis in the shares
will be equal to the fair market value on the date of exercise and the holding
period commences on such date.
Special rules may apply to officers subject to liability under Section
16(b) of the Securities Exchange Act of 1934 that may prevent the recognition of
income by such individuals and the corresponding deduction by the Company before
the date six months following the grant of the nonqualified stock options
(unless the employee receives the shares before that date and elects to be taxed
upon such receipt).
Incentive stock option holders incur no regular Federal income tax
liability at the time of grant or upon exercise of such option. However, upon
exercise, the Spread will be included as alternative minimum taxable income
which may give rise to 'alternative minimum tax' liability. An optionee's basis
in the shares received on exercise of an incentive stock option will be the
option price of such shares for regular income tax purposes. No deduction is
allowable to the Company for Federal income tax purposes in connection with the
grant or exercise of such option.
If the holder of shares acquired through exercise of an incentive stock
option sells such shares, within two years of the date of grant of such option
or within one year from the date of exercise of such option (a 'Disqualifying
Disposition'), the optionee will realize income taxable at ordinary rates.
Ordinary income is reportable during the year of such sale equal to the
difference between the option price and the fair market value of the shares at
the date the option is exercised, but the amount includable as ordinary income
shall not exceed the excess, if any, of the proceeds of sale over the option
price. In addition to ordinary income, a Disqualifying Disposition may result in
taxable income subject to capital gains treatment, if the sales proceeds exceed
the optionee's basis in the shares (i.e. the option price plus the amount
includable as ordinary income). Subject to the limitation described below, the
amount of the optionee's taxable ordinary income will be deductible by the
Company in the year of the Disqualifying Disposition.
Shares delivered to pay for shares purchased on the exercise of an
incentive stock option or nonqualified stock option will be valued at the fair
market value at the date of exercise. Unless the delivery of shares constitutes
a Disqualifying Disposition of shares acquired upon exercise of an incentive
stock option, no taxable gain or loss on the surrendered shares will be realized
at that time. For Federal income tax purposes, the optionee receives a basis and
holding period in the same number of new shares equal to his original tax basis
and holding period in the old shares exchanged. The optionee also receives
additional shares equal in value to the aggregate Spread which have a zero tax
basis in the case of an incentive stock option or a tax basis equal to the fair
market value at the date of exercise in the case of a nonqualified stock option
and a new holding period in either case.
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At the time of the sale of those shares received upon the exercise of an
option (other than a Disqualifying Disposition of shares received upon the
exercise of an incentive stock option), any gain or loss is long-term or
short-term capital gain or loss, depending upon the holding period. The holding
period for long-term capital gain or loss treatment is more than one year.
Pursuant to Code Section 162(m), the Company's tax deduction for all
compensation paid to each of certain specified officers in any one year after
1993 is limited to $1,000,000. The Company's deduction arising from an officer's
exercise of a stock option (or a Disqualifying Disposition of the underlying
stock acquired through the exercise of an incentive stock option) will be exempt
from this limitation if certain outside director and shareholder approval
requirements are met. It is anticipated that such requirements will be met for
options granted under the 1995 Stock Option Plan.
If the exercisability of an option is accelerated as a result of a Change
in Control, all or a portion of the value of the option at that time may be a
parachute payment for purposes of determining whether a 20% excise tax is
payable by the participant as a result of the receipt of an excess parachute
payment pursuant to Section 4999 of the Code. If the participant is also a
participant in the Company's Supplemental Executive Retirement Plan, he or she
will be entitled under such plan to a tax gross-up payment to offset any such
excise tax imposed on benefits payable under that plan or under any other plan
or arrangement, including the 1995 Stock Option Plan. Any such parachute
payments which are determined to be excess parachute payments will generally be
nondeductible by the Company.
CURRENT DETERMINATION OF AWARDS
It is not possible to state which employees will be granted awards under
the 1995 Stock Option Plan in the future or the amount of options that may be
awarded to a participant or the exercise price of any options because these
matters will be determined by the 1995 SOP Committee in the future in accordance
with the plan. For information concerning previous stock option awards to the
Company's five most highly compensated executive officers under the 1992 and
1995 Stock Option Plans, see the information set forth under the captions
'Executive Compensation -- Cash Compensation -- Summary Compensation Table' and
' -- Stock Option Grants'.
The affirmative vote of the holders of a majority of the shares having
voting power present in person or represented by proxy at the meeting is
required to approve the amendment of the 1995 Stock Option Plan.
THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS THAT SHAREHOLDERS VOTE FOR
THIS PROPOSAL TO AMEND THE 1995 STOCK OPTION PLAN FOR EMPLOYEES OF WITCO
CORPORATION AND ITS SUBSIDIARIES.
PROPOSAL 4
PROPOSED RATIFICATION OF APPOINTMENT
OF INDEPENDENT AUDITORS
The Board of Directors has appointed Ernst & Young LLP as the independent
auditors to examine the accounts of the Company for the 1996 fiscal year. Ernst
& Young LLP has been serving the Company in this capacity for many years. In the
event that ratification of this selection of auditors is not approved by the
affirmative vote of a majority of the shares voting on the proposal, the
selection of independent auditors will be reconsidered by the Board of
Directors.
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A member of Ernst & Young LLP is expected to be in attendance at the Annual
Meeting with the opportunity to make a statement and respond to questions.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR RATIFICATION OF THE
APPOINTMENT OF ERNST & YOUNG LLP AS THE COMPANY'S INDEPENDENT AUDITORS.
PROPOSAL 5
SHAREHOLDER PROPOSAL REQUESTING DIVERSITY ON THE
WITCO CORPORATION BOARD OF DIRECTORS
The General Board of Pension and Health Benefits of the United Methodist
Church, 1201 Davis Street, Evanston, Illinois, the beneficial owner of 347,000
shares of Common Stock of the Company has submitted the following shareholder
proposal for consideration at the 1996 Annual Meeting.
WHEREAS, we believe the employee and board composition of major
corporations should reflect the people in the workforce and marketplace of
the 21st Century, if our company is going to remain competitive. Our
employees, customers and stockholders are made up of a greater diversity of
backgrounds than ever before. The Department of Labor's 1995 bi-partisan
Glass Ceiling Commission report 'Good for Business: Making Full Use of the
Nation's Human Capital' confirms diversity and inclusiveness in the
workplace has a positive impact on the bottom line. A Covenant Fund Report
of Standard and Poor 500 companies revealed '. . . firms that succeed in
shattering their own glass ceiling racked up stock market records that were
nearly 2 1/2 times better than otherwise comparable companies'.
The Equal Employment Opportunity Commission reports 97% of senior
ranks of corporations are occupied by white males. We believe our company
needs to open up top management and the board to qualified people of all
races and to women.
The Office of Federal Contract Compliance mandates that companies must
not discriminate on the basis of race, sex, color, religion, national
origin, disability, or veterans status. Women and minorities comprise fifty
percent of America's workforce, and the U.S. Department of Labor reports
their advancement is oftentimes hindered by artificial barriers -- glass
ceilings. Our company must make a strong and continued commitment to use
its available tools and resources to remove glass ceiling barriers, because
it is our responsibility under the law, and the right thing to do.
In 1994, the Investor Responsibility Research Center reported
inclusiveness at senior management and board levels was only 9% within the
Fortune 500 companies, in a comparable workforce of 57% diversity. The
Glass Ceiling Commission reported that companies are selecting only half of
the available talent in our workforce. If our company is to be competitive
in the 21st Century, we must recognize the truth that we exist in an
increasingly diverse global market, and must look to select the most
qualified people, regardless of race, gender or physical challenges. We
urge our corporation to enlarge its search for the best qualified board
members by casting a wider net.
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THEREFORE, BE IT RESOLVED that the shareholders request:
1. The nominating committee of the Board, in its search for
suitable board candidates, make a greater effort to search for
qualified women and minority candidates for nomination to the
Board of Directors;
2. A report on our company's efforts to encourage diversified
representation on our Board of Directors;
3. Report on our company's use of minority and women executive
search firms;
4. Issue a statement making a public commitment to a policy of
inclusiveness on our Board of Directors, with the Chief
Executive Officer's policy program outlining steps to be taken
and an anticipated time line.
The affirmative vote of a majority of the shares having voting power
present in person or represented by proxy at the meeting is required to approve
the adoption of the foregoing resolution.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE AGAINST THIS
PROPOSAL.
The Company is committed to providing equal opportunity to all of its
employees and a work place free of discrimination. The Company abides by federal
and state regulations regarding equal employment opportunity and does not
discriminate on the basis of race, color, religion, national origin, disability,
veteran status, age or sex.
The Company's Board of Directors has a long-standing commitment to seek the
best qualified persons for membership on the Board, without regard to their
gender or race. The Board's objective is to identify candidates whose
experience, background, abilities and talents complement those of the other
members of the Board. The Board believes that requiring it to establish a policy
focused on a subset (women and minority candidates) of the universe of potential
candidates could be inconsistent with the Board's obligation to recruit the best
qualified candidates, if such candidates turn out to be neither women nor
members of a minority group. In the Board's view, the principal criteria for
Board membership is a candidate's ability to contribute to the enhancement of
shareholder value, not a candidate's gender or minority status. The Board does
not believe that gender or minority status alone is indicative of a candidate's
qualifications. The Board has concluded, therefore, that the requirements of the
shareholder proposal are not in the best interests of the Company or its
shareholders. Rather, the Board believes that the interests of the Company and
its shareholders are best served by allowing the Board maximum flexibility to
seek highly qualified directors with complementary skills and backgrounds.
SHAREHOLDER PROPOSALS
If any shareholder intends to present a proposal to the Company for
inclusion in its proxy statement relating to the annual meeting of shareholders
to be held in April 1997, or wishes to recommend nominees to the Board of
Directors, such proposal, in writing and addressed to the Secretary, must be
received by the Company no later than November 26, 1996. A shareholder may bring
other business before an annual meeting by giving written notice of such
proposed business, either by personal delivery or by United States mail, either
certified or registered, return receipt requested, to the Secretary of the
Company at least ninety days prior to the anniversary date of the last annual
meeting held or not later than ten days after notice of public disclosure of the
date of the annual meeting is given or made to shareholders, whichever date is
earlier. Such notice shall set forth as to each item of
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business the shareholder proposes to bring before the annual meeting (i) a brief
description of such item of business and the reasons for conducting it at the
meeting and, in the event that such item of business includes a proposal to
amend either the certificate of incorporation of the Company or the by-laws, the
language of the proposed amendment, (ii) the name and address of the shareholder
proposing such item of business, (iii) a representation that the shareholder is
a holder of record of stock of the Company entitled to vote at such meeting
having a market value of at least one thousand dollars and intends to appear in
person or by proxy at the meeting to propose such item of business, and (iv) any
material interest of the shareholder in such item of business. Only business
which has been properly brought before an annual meeting of shareholders in
accordance with the by-laws shall be conducted at such meeting, and the Chairman
of such meeting may refuse to permit any business to be brought before such
meeting which has not been properly brought before it in accordance with the
by-laws.
By order of the Board of Directors,
Dustan E. McCoy
Vice President,
General Counsel
and Corporate Secretary
March 25, 1996
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EXHIBIT A
WITCO CORPORATION
LONG TERM INCENTIVE PLAN
TO BE APPROVED BY SHAREHOLDERS ON APRIL 24, 1996
SECTION 1. ESTABLISHMENT
Witco Corporation hereby establishes the Witco Corporation Long Term
Incentive Plan.
SECTION 2. PURPOSE
The purpose of this plan is to encourage selected key employees of Witco
Corporation to adopt a strong ownership orientation in their work, and to make a
part of their total compensation dependent on objective business and performance
based criteria.
SECTION 3. DEFINITIONS
When capitalized herein, the terms below shall have the following meanings:
(a) 'Award' shall mean, with respect to each Participant, shares of
Common Stock awarded to a Participant with respect to any Performance
Period, in accordance with the terms of this Plan.
(b) 'Award Range' shall mean, with respect to each Performance Period,
the range of the percentage of the Target Award to be awarded upon the
attainment of various percentages of the Target.
(c) 'Board' shall mean the Board of Directors of the Company.
(d) 'Cause', when used in connection with the termination of a
Participant's employment with the Company, shall mean (i) the willful
engaging by the Participant in misconduct in the performance of duties with
the Company; (ii) the failure of the Participant (other than due to the
Participant's disability) to substantially perform the duties of his or her
job; or (iii) the engaging by the Participant in illegal conduct (other
than any misdemeanor, traffic violation or similar misconduct), in
connection with the performance of his or her duties with the Company;
provided, however, that, for purposes of this Plan, a Participant shall not
be deemed to have been terminated for 'Cause' unless the Participant shall
have first been notified by delivery to the Participant of a copy of a
resolution duly adopted at a meeting of the Organization and Compensation
Committee of the Board (at which the Participant is offered a reasonable
opportunity, together with his or her counsel, to be heard before the
Organization and Compensation Committee prior to such vote) by unanimous
vote of the entire membership of the Organization and Compensation
Committee determining that the Participant has engaged in conduct which
constitutes Cause, which resolution represents the good faith opinion of
the members of the Organization and Compensation Committee that the
Participant's conduct meets the definition of Cause and sets forth the
basis for such conclusion.
(e) 'Code' shall mean the Internal Revenue Code of 1986, as amended.
(f) 'Committee' shall mean a committee of the Board comprised solely
of two or more outside directors (within the meaning of Code Section
162(m)(4)(C)) all of whom are 'disinterested
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persons' (within the meaning of Rule 16b-3 promulgated by the Securities
and Exchange Commission pursuant to the Exchange Act).
(g) 'Common Stock' shall mean the common stock of the Company, par
value $5.
(h) 'Company' shall mean Witco Corporation, a Delaware corporation.
(i) 'Determination Date' shall mean the last day of the Performance
Period.
(j) 'Disability' shall mean total and permanent disability such that
the Participant would be eligible to receive payments under the Witco
Corporation Long-Term Disability Plan assuming the Participant were covered
by such plan.
(k) 'Disability Date' shall mean the date as of which the Committee
determines an Eligible Employee has met the definition of Disability.
(l) 'Eligible Employee' shall mean the Company's corporate officers
(other than assistant corporate officers). A person shall cease to be an
Eligible Employee on the earlier of his or her Disability Date or the date
of his or her termination of employment (including termination due to
Retirement or death).
(m) 'Exchange Act' shall mean Securities Exchange Act of 1934, as
amended.
(n) 'Grant Letter' shall mean the written communication from the
Company to each Participant notifying him or her of his or her
participation in the Plan and of the factors relevant to the Participant's
Award, as described in Section 7(d).
(o) 'Maximum Award' shall mean the maximum number of shares that may
be awarded to any Participant with respect to any Performance Period, as
determined by the Committee at the beginning of each Performance Period.
Initially the Maximum Award shall be 50,000 shares, but the Maximum Award
may be increased thereafter provided shareholder approval is obtained. The
maximum number of shares for any Participant who does not participate for
the Performance Period on each day in the Performance Period shall be
determined by multiplying the maximum number of shares established by the
Committee for such Performance Period by a fraction, the numerator of which
shall be the number of full and partial months in which the Participant
participated during the applicable Performance Period and the denominator
of which shall be 36. In the event Section 11 applies, there shall be no
maximum number of shares that may be awarded with respect to a Performance
Period.
(p) 'Participant' shall mean an Eligible Employee who is selected by
the Committee to participate in this Plan for a Performance Period, as
provided in Section 7.
(q) 'Performance Measurement' shall mean the measurement or
measurements selected by the Committee to measure the performance of
Participants and the Company for a Performance Period. The Committee shall
select from one or more of the performance measurements listed on Appendix
A.
(r) 'Performance Period' shall mean the three-year period commencing
on January 1, 1996, and each three-year period commencing on January 1st
thereafter.
(s) 'Plan' shall mean this Witco Corporation Long Term Incentive Plan,
as amended from time to time.
(t) 'Restricted Shares' shall mean shares of Common Stock which are
awarded under this Plan and are subject to the restrictions set forth in
Section 9.
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(u) 'Retirement' shall mean the termination of the employment of a
Participant (other than due to death, Disability or termination for Cause)
on or after the Participant's attainment of fifty-five (55) years of age.
(v) 'Target' shall mean the attainment of a definite level or
percentage (as applicable) of one or more Performance Measurements, as
determined by the Committee in accordance with Section 7.
(w) 'Target Award' shall mean a number of shares of Common Stock to be
awarded (which number shall be determined by the Committee) to each
Participant for a Performance Period that represents the Award the
Participant would receive with respect to such Performance Period if, as of
the Determination Date, the Target is achieved.
(x) 'Transfer' shall mean with respect to any share of Common Stock
awarded under this Plan a gift, sale, assignment, transfer, pledge,
hypothecation, or other disposition.
SECTION 4. ADMINISTRATION OF THE PLAN
The Plan shall be administered by the Committee which shall have full
authority to administer the Plan, including the authority and the discretion to
interpret and construe any provision of the Plan (except to the extent that
discretion is expressly limited by this Plan) and to adopt such rules and
regulations for administering the Plan as it may deem necessary. Decisions of
the Committee shall be final and binding on all parties. No member of the
Committee shall be liable to any Participant for any action, omission, or
determination relating to the Plan. Whether an authorized leave of absence shall
constitute termination of employment shall be determined by the Committee in its
absolute discretion.
SECTION 5. SHARES AVAILABLE
The number of shares of Common Stock available for Awards under this Plan
shall be 600,000 shares, reduced by the aggregate amount of shares which are
issued upon Award or that become subject to an outstanding Award. To the extent
that shares of Common Stock related to outstanding Awards are not issued either
because Targets have not been met or because such Awards are (i) forfeited, (ii)
terminated, or (iii) delivered or withheld to satisfy withholding obligations,
such shares shall again immediately become available for Awards.
SECTION 6. EFFECTIVE DATE
This Plan shall be effective on January 1, 1996, subject to the approval of
the Plan prior to January 1, 1997 by the holders of a majority of the shares of
the Company actually voting at a regular or special meeting of the shareholders
of the Company. The last Performance Period under this Plan shall be the
Performance Period commencing on January 1, 2000, unless no later than the fifth
annual shareholders' meeting held after January 1, 1997, the shareholders have
again approved this Plan. The Committee may take the actions described in
Section 7 hereof prior to the date of shareholder approval of the Plan, provided
such actions are taken subject to such shareholder approval.
SECTION 7. PARTICIPATION
(a) Generally. Not later than ninety (90) days after the commencement of
each Performance Period, the Committee shall determine (i) the Eligible
Employees who shall participate in the Plan for
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such Performance Period, and (ii) for each Participant or group of Participants,
the Performance Measurements, the Target, the Target Award, and the Award Range.
(b) Mid-Year Participants. An individual who becomes an Eligible Employee
after a Performance Period has commenced but within the first year of such
Performance Period may become a Participant for such Performance Period if, no
later than ninety (90) days after such individual becomes an Eligible Employee,
the Committee (i) designates such individual as a Participant for such
Performance Period, (ii) establishes the Performance Measurements and Target to
be met for such Performance Period, and (iii) establishes the Participant's
Target Award and Award Range.
(c) Attainment of Target Must Not Be Substantially Certain. The Committee
may not establish a Target for any Performance Period, if attainment of any of
the Performance Measurements upon which the Target is based is, at the time such
Target is established for a Participant or group of Participants, substantially
certain.
(d) Grant Letter. The Committee shall cause the Company to communicate to
each Participant, in writing, the Maximum Award and the applicable Target,
Target Award, and Award Range.
SECTION 8. DETERMINATION OF AWARD
(a) Measurement of Performance Measurements. As soon as practicable
following the Determination Date, but in any event no later than ninety (90)
days following such date, the Company shall measure the Performance Measurements
applicable to the Participants' Target for such Performance Period.
(b) Determination of Award. Except as otherwise provided in Section 10 or
Section 11, each Participant's Award shall be a percentage of the Participant's
Target Award corresponding to the percentage of the Target achieved for the
Performance Period. The Award shall be determined by interpolating a percentage
based on the Target achieved for such Performance Period; provided, however,
that the Participant's Award may not exceed the Maximum Award; and provided,
further, the Committee shall have discretion to reduce any Participant's Award.
Awards shall be determined as soon as practicable following the applicable
Performance Measurements are measured.
(c) Receipt of Awards. Participants shall receive their Awards no later
than thirty (30) days after their Awards are determined; provided, however, that
no Awards shall be provided prior to the time that the Committee certifies in
writing that the Performance Measurements applicable to each such Award have
been satisfied.
SECTION 9. RESTRICTED SHARES
(a) Which Shares Restricted. Except as otherwise provided in Sections 10
and 11, one-third of each Award shall be made in shares of Common Stock and the
remaining two-thirds of each Award shall be made in Restricted Shares which are
subject to the restrictions described in this Section 9. Restrictions on
one-half of the remaining Award (which will be the portion awarded as Restricted
Shares) shall lapse on the first anniversary of the day following the
Determination Date on which the shares were awarded; restrictions on the
remainder shall lapse on the second anniversary thereof.
(b) Transfer Restrictions. Restricted Shares may not be Transferred unless
the Transfer complies with the provisions of this Section 9.
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(c) Permitted Transfers. Except as otherwise provided in a Participant's
Grant Letter, the following Transfers of Restricted Shares are deemed to be in
compliance with this Plan:
(i) a Transfer made to the Company (or its assignee);
(ii) a Transfer upon the death of the Participant or any Permitted
Transferee (as hereinafter defined) to their respective executors,
administrators, testamentary trustees, legatees or beneficiaries (an
'Estate');
(iii) a Transfer made in compliance with all applicable federal and
state securities laws to a Participant's immediate family (which term shall
mean the Participant's spouse, children (including adopted children and
step children), their direct lineal descendants and the Participant's
parents, brothers and sisters), or a trust, the beneficiaries of which, or
to a corporation or partnership, the stockholders or limited or general
partners of which, include only the Participant's and the Participant's
immediate family (a 'Participant Entity'), or a Transfer made by such a
Participant Entity back to the Participant, or a Transfer made to such a
trust, corporation or partnership by a person who has become a holder of
the shares of Common Stock in accordance with the provisions of this Plan;
provided, however, that a Transfer pursuant to this Section shall not be given
effect on the books of the Company unless and until the transferee shall agree
in writing, in form and substance satisfactory to the Company, to become bound
by all the terms of this Plan.
(d) No Other Restrictions. Except as otherwise provided in this Section 9
or in a Participant's Grant Letter, Participants shall enjoy all of the other
rights of ownership associated with the Restricted Shares, including, without
limitation, the right to vote such shares and the right to receive dividends on
these shares.
SECTION 10. EFFECT OF CHANGES; MID-PERFORMANCE PERIOD
(a) Termination of Employment. Except as otherwise provided in this Section
10 or in Section 11, no Participant shall be entitled to an Award with respect
to any Performance Period unless he or she is employed by the Company on the
last day of such Performance Period. In addition, except as otherwise provided
in this Section 10 or in Section 11, upon a Participant's termination of
employment, a Participant shall forfeit all shares of Restricted Stock for which
the restrictions have not yet lapsed.
(b) Death, Disability, Retirement, or Termination of Employment Without
Cause. In the event of the death, Disability, Retirement or termination of
employment without Cause of a Participant, restrictions on any Restricted Shares
held by the Participant shall lapse, and, if such death, Disability, Retirement
or termination of employment without Cause occurs in the middle of a Performance
Period, any Award for such Performance Period which the Participant (or, if
applicable, the Participant's estate) may become entitled to shall be determined
in accordance with Section 10(d)(i). Awards provided pursuant to this Section
10(b) shall not be subject to the provisions of Section 9.
(c) Effect of Job Change. If, in the middle of a Performance Period, a
Participant is transferred to a position for which the Committee has previously
established a Target and/or Award Range which differs from the Target and/or
Award Range applicable to the Participant immediately prior to the transfer,
then:
(i) Attainment of Previously Established Target for New Position Not
Substantially Certain. If, at the time of the transfer, the attainment of
the Target which the Committee established for
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employees previously holding the position to which the Participant was
transferred is not substantially certain, such Target and the Award Range
for such position shall apply to the Participant for the portion of the
Performance Period beginning on the date of the transfer and the
Participant's Award shall be determined in accordance with Section
10(d)(ii) below. Notwithstanding the foregoing, at any time prior to the
90th day following the date of such transfer the Committee may determine
either (A) that the Participant shall no longer be eligible to participate
in the Plan as of the date of such transfer (in which case the
Participant's Award for such Performance Period shall be determined in
accordance with Section 10(d)(i) below), or (B) that the Target and/or
Award Range applicable to the Participant immediately prior to the transfer
shall continue to apply (in which case the Participant's Award for such
Performance Period shall be calculated as if the Participant had not been
transferred).
(ii) Attainment of New Position's Previously Established Target
Substantially Certain. If, at the time of the transfer, the attainment of
the Target which the Committee established for employees holding the
position to which the Participant was transferred is substantially certain,
the Target and/or Award Range applicable to the Participant immediately
prior to the transfer shall continue to apply (in which case the
Participant's Award for such Performance Period shall be calculated as if
the Participant had not been transferred) unless prior to the 90th day
following the date of such transfer the Committee determines that the
Participant shall no longer be eligible to participate in the Plan as of
the date of such transfer (in which case the Participant's Award for such
Performance Period shall be determined in accordance with Section
10(d)(i)).
(iii) No Targets Previously Established. If a Participant is
transferred to a position for which a Target and an Award Range have not
previously been established, the Target and Award Range applicable to the
Participant immediately prior to the transfer shall continue to apply (in
which case the Participant's Award for such Performance Period shall be
calculated as if the Participant had not been transferred) unless prior to
the 90th day following the date of such transfer the Committee determines
(A) that the Participant shall no longer be eligible to participate in the
Plan as of the date of such transfer (in which case the Participant's Award
for such Performance Period shall be determined in accordance with Section
10(d)(i)) or (B) establishes in writing the Target (the attainment of which
must not be substantially certain) and Award Range that shall apply to the
Participant on and after the date of transfer (in which case the
Participant's Award shall be determined in accordance with Section
10(d)(ii)).
(d) Mid-Performance Period Changes: Determination of Awards.
(i) Participation for Less Than Full Performance Period. If a
Participant did not participate in the Plan for the entire Performance
Period, the Participant's Award shall be the number of shares determined in
accordance with Section 8(b) (or, if the Participant has had a job change
resulting in a mid-Performance Period change in Target and/or Award Range,
the number of shares determined in accordance with Section 10(d)(ii))
multiplied by a fraction, the numerator of which shall be the number of
full and partial months in which the Participant participated during the
applicable Performance Period and the denominator of which shall be 36.
(ii) Mid-Performance Period Changes. If a Participant's Target and/or
Award Range changed in the middle of a Performance Period, the
Participant's Award shall be calculated by adding (A) and (B) below;
provided, however, that the Participant's Award may not exceed the Maximum
Award; and provided, further, the Committee shall have discretion to reduce
any Participant's Award.
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(A) Pre-Change Award. The Award (determined in accordance with Section
8(b)) using the Target(s) and Award Range(s) prior to the effective date of
such change multiplied by a fraction the numerator of which shall be the
number of full and partial months in the Performance Period during which
the Participant was covered by such Target Award and the denominator of
which shall be 36.
(B) Post-Change Award. The Award (determined in accordance with
Section 8(b)) using the Target and Award Range in effect on and after the
date of the change multiplied by a fraction the numerator of which shall be
the number of full and partial months in the Performance Period during
which the Participant was covered by such Target and Award Range and the
denominator of which shall be 36.
(e) Timing. Awards shall be determined under this Section 10, and Common
Stock awarded, at the same time that Awards are determined and awarded for all
other Participants, as prescribed in Section 8.
SECTION 11. CHANGE IN CONTROL
(a) Determination of Awards. Notwithstanding any provision in this Plan to
the contrary, in the event of a Change in Control, all Performance Periods under
the Plan shall end, and all Participants shall receive a cash amount equal to
the product of (i) 150% of the Target Award, multiplied by a fraction, the
numerator of which shall be the number of full and partial months in which the
Participant participated in the Performance Period and the denominator of which
shall be the total number of full and partial months in the Performance Period,
and (ii) the highest of (A) the highest price per share of Common Stock paid on
or during the 60-day period immediately preceding either the first public
disclosure of an event which could, and which in fact does, result in a Change
in Control, (B) the highest price per share paid during the 60-day period
immediately preceding a Change in Control, or (C) the price per share of Common
Stock paid in a tender offer subsequent to a Change in Control; provided,
however, that if, following a Change in Control (but prior to the time that a
'person' (as defined in Section 11(d)(ii)(A)) has acquired, by purchase, merger
or otherwise, 100% of the 'Voting Stock' (as defined in Section 11(d)(ii)(A)) of
the Company (other than an acquisition by the Company, an Affiliate or any
employee benefit plan sponsored by the Company or an Affiliate, as such terms
are defined on the date of the Change in Control)), there is a subsequent event
which would itself be a Change in Control or a subsequent tender offer (such
event, a 'Subsequent Change in Control'), each Participant shall be entitled to
an additional payment (the 'Additional Payment') equal to the excess, if any, of
the amount the Participant would have received under this Section 11 had the
Subsequent Change in Control been the Change in Control, over the amount
actually paid to the Participant in respect of the previous Change in Control.
For purposes of this Section 11, if the consideration paid for the Company's
Common Stock includes amounts other than cash, the 'price' per share shall be
determined by valuing at fair market value the stock or other property provided
as consideration. In determining the Award under this Section, the Committee
shall have no discretion to reduce this Award.
(b) Restrictions on Common Stock Awarded. Notwithstanding any provision in
this Plan to the contrary, in the event of a Change in Control all restrictions
on Restricted Shares shall immediately lapse.
(c) Payment of Award. No later than fifteen (15) days following a Change in
Control, the Company shall pay the Award described in this Section 11 to each
individual who was a Participant on the
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business day immediately preceding the Change in Control, regardless of whether
such individual is an Eligible Employee on or after the Change in Control. If
the Company is required to make an Additional Payment under Section 11(a), such
Additional Payment shall be made no later than fifteen (15) days following the
date of the Subsequent Change in Control.
(d) Definitions. For purposes of this Section 11, the terms below shall
have the following meanings:
(i) 'Affiliate' shall mean (A) any corporation that is a member of the
'controlled group of corporations' that includes the Company, determined in
accordance with Code Section 1563(a) without regard to Code Sections
1563(a)(4) and (e)(3)(C), and (B) any organization that is part of a group
of trades or businesses under common control pursuant to Code Section
414(b) that includes the Company.
(ii) 'Change in Control' shall be deemed to have occurred if:
(A) any 'person', as such term is used in Sections 3(a)(9) and
13(d)(3) of the Exchange Act other than an Affiliate or any employee
benefit plan sponsored by the Company or an Affiliate becomes a 'beneficial
owner', as such term is used in Rule 13d-3 promulgated under the Exchange
Act, of 20% or more of the 'Voting Stock' (which means the capital stock of
any class or classes of the Company having general voting power under
ordinary circumstances, in the absence of contingencies, to elect the
directors of such corporation) of the Company;
(B) 33 1/3% of the Board consists of individuals other than the
members of the Board on January 1, 1996 (the 'Incumbent Directors');
provided, however, that any person becoming a director subsequent to such
date whose election or nomination for election was approved by two-thirds
(but in no event less than two) of the directors who at the time of such
election or nomination comprise the Incumbent Directors (other than an
election or nomination of an individual whose initial assumption of office
is in connection with an actual or threatened election contest relating to
the election of the Directors of the Company, which is or would be subject
to Rule 14a-11 of Regulation 14A promulgated under the Exchange Act) shall,
for purposes of this Plan, be considered an Incumbent Director;
(C) the Company adopts any plan of liquidation providing for the
distribution of all or substantially all of its assets;
(D) the Company combines with another company (whether or not the
Company is the surviving corporation) and, immediately after the
combination, the shareholders of the Company immediately prior to the
combination (other than shareholders who, immediately prior to the
combination, were 'affiliates' of such other company, as such term is
defined in the rules of the Securities and Exchange Commission) do not
beneficially own, directly or indirectly, more than 20% of the Voting Stock
of the combined company (or any company owning 100% of the stock of the
combined company); or (E) any sale, lease, exchange or other transfer (in
one transaction or a series of related transactions) of all, or
substantially all, the assets of the Company occurs.
SECTION 12. MISCELLANEOUS
(a) Calculations/Rounding. In calculating the number of shares of Common
Stock to be awarded and the number of shares of Common Stock for which
restrictions will lapse, partial shares equal to or in excess of .5000 shall be
rounded up and partial shares below .5000 shall be rounded down.
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(b) Withholding. All awards hereunder shall be subject to any required
federal, state, local and other applicable withholdings or deductions as
determined by the Company. The Committee may permit a Participant to elect to
pay a portion or all of such withholding by (i) delivery of shares of Common
Stock, or (ii) having shares of Common Stock withheld by the Company from the
shares otherwise to be received. The number of shares so delivered or withheld
shall have an aggregate fair market value sufficient to satisfy the applicable
withholding taxes. In the case of a Participant subject to Section 16 of the
Exchange Act, the Company may require that the method of making such payment be
in compliance with Section 16 and the rules and regulations thereunder.
(c) Not a Contract of Employment. Nothing contained in this Plan shall
confer upon any Participant any right with respect to the continuation of his or
her employment by the Company or interfere in any way with the right of the
Company at any time to terminate such employment or to increase or decrease the
base salary or other compensation of the Participant from the rate in effect at
the commencement of a Performance Period.
(d) Certain Adjustments. In the event of a corporate event that affects
Common Stock (i.e., recapitalization, stock split, stock combination, stock
reclassification, merger, or similar event), the Committee may make appropriate
adjustments to (i) the number of shares of Common Stock subject to this Plan,
and (b) the number of shares of Common Stock available for, or covered by,
Awards; provided, however, that, except for adjustments made in connection with
a Change in Control (as defined in Section 11), no such adjustment shall be
effected with respect to any Participant if such adjustment would cause any
portion of the Participant's Award to constitute other than 'performance-based
compensation' within the meaning of Code Section 162(m)(4)(C).
(e) Amendment/Termination. The Committee may at any time amend this Plan
with respect to any Performance Period which has not yet commenced; provided,
however, that no amendment for which shareholder approval would be required to
satisfy either the requirements of Rule 16b-3 or the requirements necessary for
amounts payable hereunder to be 'performance-based compensation', within the
meaning of Code Section 162(m)(4)(C), shall be effective until such shareholder
approval has been obtained. The Committee may at any time terminate or suspend
this Plan; provided, however, that, if the Committee terminates or suspends this
Plan prior to the end of a Performance Period, each Participant shall receive
the greater of (i) the Award he or she would have received had such termination
or suspension not been effected, and (ii) the award the Participant is entitled
to receive under any replacement plan covering the same time period. Subject to
the foregoing requirement, upon termination of the Plan, all other rights of
each Participant with respect to any Performance Period that has not ended on or
prior to the date of termination shall become null and void.
(f) Funding. This Plan shall be unfunded. Awards hereunder shall be
furnished using the general assets of the Company and Participants shall be
general unsecured creditors of the Company. No Participant shall have any right,
title, claim or interest in or with respect to any specific assets of the
Company in connection with his or her participation in this Plan.
(g) Governing Law; Interpretation. This Plan shall be governed by laws of
the State of Delaware, to the extent not preempted by federal law. This Plan is
intended to be administered in accordance with Rule 16b-3 and all rights
hereunder shall be construed in accordance with such provision. This Plan is
also intended to provide Participants with 'performance-based compensation',
within the meaning of Code Section 162(m)(4)(C), and all rights of the
Participants hereunder (except for those rights the Participants may obtain
under Section 11 hereof) shall be construed in accordance with such provision.
(h) Construction. For purpose of this Plan, the word 'days' shall mean
calendar days.
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APPENDIX A
WITCO CORPORATION
LONG TERM INCENTIVE PLAN
PERFORMANCE MEASUREMENTS
1. 'Return on Equity' shall mean, as of any date, a percentage obtained by
dividing Net Earnings by Average Equity and multiplying the result by 100. For
this purpose 'Average Equity' is defined as the number obtained by adding total
shareholders' equity as of the Determination Date and the December 31st
preceding the Determination Date (as reported on the Company's financial
statements) and dividing by 2.
2. 'Earnings Per Share' shall mean, as of the end of any year, Net Earnings
divided by the weighted average number of issued and outstanding shares of
Common Stock.
3. 'Return on Investment' shall mean, as of the end of the year, the amount
determined by dividing Net Earnings less dividends paid during the year by total
shareholders' equity.
4. 'Shareholder Value' shall mean, as of the end of any year, the number
determined by applying the following formula:
Multiply Adjusted Operating Earnings by (1.00 minus the Effective
Tax Rate).
Subtract the result by the sum of the incremental amount of Fixed
Capital Investment and Working Capital Investment during the year.
Divide the result by the Weighted Average Cost of Capital.
For this purpose,
'Adjusted Operating Earnings' shall mean the Company's operating
income excluding interest income, interest expense, and all
non-recurring items, as reported on the Company's financial statements.
'Effective Tax Rate' shall mean the Company's current tax expense
divided by earnings before tax expense, as reported on the Company's
financial statements.
'Fixed Capital Investment' shall mean the Company's capital
expenditures less depreciation expense, as reported on the Company's
financial statements.
'Weighted Average Cost of Capital' shall mean the rate determined
by adding the Weighted Average Cost of Equity and the Weighted Average
Cost of Debt. 'Weighted Average Cost of Equity' shall be determined
using the following formula: (Rf + (Rm -Rf)) x (1.00 - Total Debt to
Capital Ratio). 'Weighted Average Cost of Debt' shall be determined
using the following formula: Total Debt to Capital Ratio x Total Cost of
Debt. For purpose of these calculations:
Rf (risk free rate) = the rate on 30 Year Treasury bills
Rm (market risk premium) = 6%
'b' (risk premium) = the 'b' for the Company as reported by Bloomberg.
'Total Cost of Debt' = weighted average cost of long-term and
short-term debt.
'Working Capital Investment' shall mean current assets minus
current liabilities (other than short-term debt), as reported on the
Company's financial statements.
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5. 'Return on Assets' shall mean, as of the end of any year, a percentage
obtained by dividing Net Earnings by the Company's total assets (as reported on
the Company's balance sheet) and multiplying the result by 100.
6. 'Cost of Goods Sold' shall mean, as of the end of any year the cost of
goods sold plus applicable depreciation and amortization as reported on the
Company's financial statements.
7. 'Average Delinquent Days' shall mean the excess (if any) of Days Sales
Outstanding over Best Possible Days Sales Outstanding. For this purpose,
'Best Possible Days Sales Outstanding' shall mean as of the first day
of any month the amount of credit sales which are current (i.e., not
delinquent under the terms of a contract or purchase order) for the
immediately preceding three month period multiplied by 90, divided by the
total sales for the immediately preceding three month period.
'Days Sales Outstanding' shall mean as of the first day of any month
the average amount of credit sales for the immediately preceding three
month period multiplied by 90, divided by the total sales for the
immediately preceding three month period.
8. 'Cash Flow from Operations' shall mean, as of the end of any year, Net
Earnings before depreciation and other non-cash charges, adjusted by the change
from the last day of the previous year in the Company's aggregate current assets
and current liabilities.
9. 'Current Ratio' shall mean, as of the end of any year, the Company's
current assets divided by its current liabilities (each of which is reported on
the Company's financial statements).
10. 'Dividend Yield' shall mean, as of the end of any year, the percentage
of Net Earnings paid to shareholders in cash or stock in that year.
11. 'EBIT' shall mean, as of the end of any year, Net Earnings before
interest and tax expenses.
12. 'EBIT Margin' a percentage determined by dividing EBIT by Net Sales and
multiplying by 100.
13. 'EBITDA' shall mean, as of the end of any year, Net Earnings before
interest, tax, depreciation and amortization expenses.
14. 'EBITDA Margin' a percentage determined by dividing EBITDA by Net Sales
and multiplying by 100.
15. 'Firm Value' shall mean as of any date, the sum of total shareholders'
equity plus long and short-term debt (as reported on the Company's financial
statements).
16. 'Gross Profit' shall mean, as of the end of any year, Net Sales minus
Cost of Goods Sold.
17. 'Gross Profit Margin' shall mean, as of any date, a percentage
determined by dividing Gross Profit by Net Sales and multiplying by 100.
18. 'Inventory Turnover' shall mean, as of the end of any year, Cost of
Goods Sold divided by the average monthly inventory during that year.
19. 'Long-Term Debt to Total Capital Ratio' shall mean, as of any date, a
number determined by dividing the sum of the Company's outstanding long-term
debt by the sum of total shareholders' equity and the Company's outstanding
short-term and long-term debt.
20. 'Net Earnings' shall mean, as of the end of any year, the Company's net
income as reported on the Company's financial statements, determined before
taking into account any nonrecurring items.
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21. 'Net Earnings Margin' shall mean Net Earnings divided by Net Sales, and
multiplying by 100.
22. 'Net Sales' shall mean, as of any date, net sales as reported on the
Company's financial statements.
23. 'Operating Costs' shall mean, as of any year, the operating expenses
from any business or business unit, as reported on the Company's financial
statements, after being adjusted for the effects of foreign currency exchange
fluctuations at the exchange rates used by the Company for purposes of
forecasting financial results.
24. 'Operating Earnings' shall mean the operating income from any business
or business unit, as reported on the Company's financial statements, after being
adjusted for the effects of foreign currency exchange fluctuations at the
exchange rates used by the Company for purposes of forecasting financial results
but determined before taking into account any nonrecurring items.
25. 'Operating Earnings Margin' shall mean, as of any date, a percentage
determined by dividing Operating Earnings by Net Sales, and multiplying by 100.
26. 'Price/Book Ratio' shall mean, as of any date, a number determined by
dividing the Stock Price by 'book value', where book value is the amount of
total shareholder's equity divided by the total number of issued and outstanding
shares.
27. 'Price/Earnings Ratio' shall mean, as of any date, a number determined
by dividing the Stock Price by Earnings Per Share.
28. 'Productivity' shall mean Total Costs divided by total pounds of goods
sold to entities other than the Company and its subsidiaries and affiliates.
29. 'Return on Capital Employed' shall mean, as of the end of any year, a
percentage determined by dividing the sum of the Company's Operating Earnings of
the Company (determined without regard to interest income) and after-tax
interest expense by 'Net Assets' and multiplying the result by 100. For this
purpose, 'Net Assets' shall mean the Company's total assets (as reported on the
Company's balance sheet) less non-interest bearing current liabilities.
30. 'Stock Price' shall mean, as of any date, the closing price for the
Common Stock as listed on the New York Stock Exchange Composite Transactions
Tape on the applicable valuation date or, if no Common Stock has traded on such
day, the closing price on the next preceding day on which Common Stock has
traded.
31. 'Total Costs' shall mean the sum of the Company's Operating Costs
(excluding interest and tax expenses) and administrative expenses (after such
expenses have been adjusted for the effects of foreign currency exchange
fluctuations at the exchange rates used by Witco for purposes of forecasting
financial results).
32. 'Total Debt/Total Capital Ratio' shall mean, as of any date, a number
determined by dividing the sum of the Company's outstanding long-term and
short-term debt by the sum of total shareholders' equity and the Company's
outstanding long-term and short-term debt.
33. 'Total Shareholder Return' shall mean, for any period, the excess (if
any) of the Stock Price on the last day of the period and the amount of
dividends paid to investors by the Company during the period (valued as if such
dividends had been reinvested in the Company by all investors as of the date
paid) less the sum of the Stock Price on the first day of the period.
APP-3
<PAGE>
<PAGE>
WITCO CORPORATION
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE COMPANY
FOR THE ANNUAL MEETING TO BE HELD APRIL 24, 1996
P
R The undersigned hereby appoints Michael D. Fullwood, William E. Mahoney,
O Dustan E. McCoy and William R. Toller, or any one of them, as Proxies,
X each with the power to appoint his substitute, and hereby authorizes them
Y to represent and to vote all the shares of WITCO CORPORATION held of
record by the undersigned on March 14, 1996, with all powers the
undersigned would possess if present upon the following matters and upon
any other business that may properly come before the ANNUAL MEETING OF
SHAREHOLDERS TO BE HELD ON WEDNESDAY, APRIL 24, 1996 at 2:00 P.M., at
Witco Corporation, One American Lane, Third Floor, Greenwich,
Connecticut, and at any adjournments thereof.
This proxy when properly executed will be voted as specified herein. If
no specification is made, it is the intention of the proxies to vote
FOR proposals 1, 2, 3 and 4 and AGAINST proposal 5.
Harry G. Hohn, Dan J. Samuel and Bruce F. Wesson
Please sign the reverse side of this proxy and return it promptly whether
or not you expect to attend the meeting. You may nevertheless vote in
person if you do attend.
SEE REVERSE
SIDE
------------------------------------------------------------------------------
FOLD AND DETACH HERE
[LOGO]
WITCO CORPORATION
One American Lane
Greenwich, CT 06831-2559
WILLIAM R. TOLLER
Chairman of the Board
Chief Executive Officer
March 25, 1996
To the Shareholders of Witco Corporation:
The 1996 Annual Meeting of Shareholders of Witco Corporation will take place on
Wednesday, April 24, 1996, beginning at 2:00 p.m. Eastern Daylight Savings Time
in the offices of Witco Corporation, One American Lane, Greenwich, Connecticut
on the 3rd floor. See the reverse side of this letter for a map to Witco's World
Headquarters in Greenwich, Connecticut. The matters to be taken up at the
meeting are described in the enclosed proxy statement.
Your vote and participation in the Annual Meeting of Shareholders is important.
Whether you plan attend the meeting or not, please review carefully the enclosed
proxy statement, complete the form of proxy on the reverse side, and return the
form promptly in the envelope provided.
If you do plan to attend the meeting, we look forward to seeing you at the
meeting.
Sincerely,
W.R. TOLLER
Chairman
<PAGE>
<PAGE>
- -------------------------------------------------------------------------------
[X] Please mark your 0581
votes as in this
example.
This proxy when properly executed will be voted in the manner directed herein.
If no direction is made, this proxy will be voted FOR the election of directors
and FOR proposals 2, 3, and 4 and AGAINST proposal 5.
- -------------------------------------------------------------------------------
The Board of Directors recommends a vote FOR proposals 1, 2, 3, and 4 and
AGAINST proposal 5.
- -------------------------------------------------------------------------------
- -----------------------------------
FOR WITHHELD
To vote for all items AS RECOMMENDED 1. Election of [ ] [ ]
BY THE BOARD OF DIRECTORS, [ ] Directors
mark this box, sign, date and return this (see reverse)
proxy. (NO ADDITIONAL VOTE IS
NECESSARY.) For all nominees, except those
- ----------------------------------- entered below.
------------------------------
- -------------------------------------------------------------------------------
FOR AGAINST ABSTAIN
2. To approve the adoption of the Witco Corporation [ ] [ ] [ ]
Long Term Incentive Plan.
3. To approve the amendment of the 1995 Stock Option [ ] [ ] [ ]
Plan for Employees of Witco Corporation and its
Subsidiaries.
4. To ratify the appointment of Ernst & Young LLP [ ] [ ] [ ]
as the Company's independent auditors for 1996; and
5. To consider and act upon a shareholder proposal [ ] [ ] [ ]
requesting diversity on the Board of Directors.
Please sign exactly as name appears hereon. Joint owners should each sign. When
signing as attorney, executor, administrator, trustee or guardian, please give
full title as such.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
SIGNATURE(S) DATE
- -------------------------------------------------------------------------------
FOLD AND DETACH HERE
[AREA MAP]
DIRECTIONS TO WITCO
I-684 to Exit 2
'Westchester Airport'
East to traffic light
Left onto Rte. 120 North
9/10ths of a mile to traffic light and Witco sign
Right at light onto American Lane
MAJOR THOROUGHFARES
I-287
I-87
Major Deegan Expressway (becomes I-87)
Hutchinson River Parkway
Merritt Parkway
Tappan Zee Bridge
FOR ADDITIONAL INSTRUCTIONS
Call - (203) 552-2000
STATEMENT OF DIFFERENCES
------------------------
The registered trademark symbol shall be expressed as 'r'
The Greek b (Beta) shall be expressed as 'b'
