<PAGE> 1
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] 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 Rule 14a-11(c) or Rule 14a-12
</TABLE>
OGLEBAY NORTON COMPANY
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
N/A
(NAME OF PERSON(S) FILING PROXY STATEMENT, IF OTHER THAN THE REGISTRANT)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies: .......
(2) Aggregate number of securities to which transaction applies: ..........
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined): ............
(4) Proposed maximum aggregate value of transaction: ......................
(5) Total fee paid: .......................................................
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid: ...............................................
(2) Form, Schedule or Registration Statement No.: .........................
(3) Filing Party: .........................................................
(4) Date Filed: ...........................................................
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 2
Oglebay Norton Logo
1100 Superior Avenue
Cleveland, Ohio 44114-2598
(216) 861-3300
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON APRIL 28, 1999
You are cordially invited to attend the Annual Meeting of Stockholders of
Oglebay Norton Company, the new company recently created to serve as the holding
company of the former "Oglebay Norton Company" and its subsidiaries. The Annual
Meeting will be held at Ciao Cucina, Playhouse Square, 1515 Euclid Avenue,
Cleveland, Ohio, on Wednesday, April 28, 1999, at 10:00 a.m., Cleveland, Ohio
time. At the Annual Meeting, we will ask you to:
- elect one director to the class whose term in office will expire in
2002; and
- hear reports and transact any other business that may properly come
before the Annual Meeting.
The Board of Directors fixed the close of business on March 10, 1999 as the
record date for determining the stockholders entitled to notice of and to vote
at the Annual Meeting, and at any postponement or adjournment of the Annual
Meeting.
Oglebay Norton's Proxy Statement is attached to this Notice. We are also
mailing our Report to Stockholders and our Annual Report on Form 10-K for the
year ended December 31, 1998 to you with this Notice.
YOUR VOTE IS IMPORTANT
Please sign, date and return your proxy card in the enclosed envelope.
By Order of the
Board of Directors
/s/ Rochelle F. Walk
ROCHELLE F. WALK
Secretary and Director,
Corporate Affairs
March 23, 1999
<PAGE> 3
Oglebay Norton Logo
1100 Superior Avenue
Cleveland, Ohio 44114-2598
(216) 861-3300
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON APRIL 28, 1999
Oglebay Norton Company is providing this Proxy Statement to you in
connection with the solicitation of proxies by the Board of Directors for use at
the Annual Meeting of Stockholders to be held on April 28, 1999, and at any
postponement or adjournment of the Annual Meeting. We anticipate that the
mailing of this Proxy Statement and accompanying form of proxy to stockholders
will begin on or about March 23, 1999. The date of this Proxy Statement is March
23, 1999.
PURPOSES OF THE ANNUAL MEETING
At the Annual Meeting, we will ask you to:
- elect one director to the class whose term in office will expire in
2002; and
- hear reports and transact any other business that may properly come
before the Annual Meeting.
The biography of the nominee for election as a director, Mr. John N. Lauer,
is included below under the heading "Proposal 1 -- Election of
Director -- Nominee for Term Expiring in 2002."
VOTING RIGHTS AND PROXY INFORMATION
Record Date; Required Vote. The Board of Directors of Oglebay Norton fixed
the close of business on March 10, 1999 as the record date for determining the
stockholders entitled to notice of the Annual Meeting and to vote at the Annual
Meeting, and at any postponement or adjournment of the Annual Meeting. As of
March 10, 1999, 4,769,557 shares of Oglebay Norton's common stock were issued
and outstanding. Each share of Oglebay Norton's common stock is entitled to one
vote.
All matters that may properly come before the Annual Meeting, including the
election of the director, require the favorable vote of a majority of the
outstanding shares of Oglebay Norton's common stock present in person or by
proxy at the meeting. This majority must also constitute at least a majority of
the required quorum. The percentage of outstanding shares of Oglebay Norton's
common stock held by its directors and executive officers and entitled to vote
at the Annual Meeting is included below under the heading "Beneficial Ownership
of Oglebay Norton Common Stock." Abstentions and broker non-votes are counted in
determining votes present at the meeting. An abstention or broker non-vote has
the same effect as a vote against a proposal or a director nominee because each
abstention or broker non-vote is one less vote in favor of a proposal or for a
director nominee.
In the election of Oglebay Norton's directors, you generally may cumulate
your votes. Cumulative voting allows you to cast a number of votes equal to the
number of directors to be elected multiplied by the number of votes to which
your shares are entitled. You may cast all of your votes for one nominee or
distribute your votes among two or more nominees. Cumulative voting is permitted
only if a stockholder gives notice in writing to the President or the Secretary
of Oglebay Norton at least 48 hours in advance of an annual meeting and an
announcement is made at the beginning of the meeting by the President, Secretary
or the stockholder who gave the notice. No stockholder has advised Oglebay
Norton that the stockholder intends to cumulate votes at the Annual Meeting.
However, since only one director will be elected at the Annual Meeting,
cumulative voting will not be applicable.
1
<PAGE> 4
Proxies. All shares of Oglebay Norton's common stock represented at the
Annual Meeting by properly executed proxies will be voted in accordance with the
instructions on the proxies. If no instructions are given, proxies will be voted
FOR the election of Mr. John N. Lauer as a director to the class whose term in
office will expire in 2002. Oglebay Norton has no knowledge of any other matters
to be presented at the Annual Meeting. If other matters properly come before the
Annual Meeting, the persons named on the proxies will vote on these matters in
accordance with their best judgment.
If you give a proxy pursuant to this solicitation, you may revoke the proxy
at any time before it is voted. You may revoke your proxy by:
- delivering a written notice of revocation dated later than the proxy
to the Secretary of Oglebay Norton (at the address included on the
cover page of this Proxy Statement);
- properly executing another proxy for the same shares and delivering
it to the Secretary of Oglebay Norton; or
- attending the Annual Meeting and voting in person (although
attendance at the Annual Meeting will not by itself revoke your
proxy).
Oglebay Norton will pay the cost of preparing and mailing its proxy
materials to the stockholders of Oglebay Norton in connection with the Annual
Meeting. Oglebay Norton will also pay for the cost of soliciting proxies,
including a fee of $7,500 payable to Georgeson & Company Inc.
PROPOSAL 1
ELECTION OF DIRECTOR
Oglebay Norton's Board of Directors currently has ten members. The
directors are divided into three classes:
- three directors are in the class whose term in office expires at the
Annual Meeting in 1999;
- four directors are in the class whose term in office expires at the
Annual Meeting in 2000; and
- three directors are in the class whose term in office expires at the
Annual Meeting in 2001.
Each of the directors serves for three years and until a successor is elected.
Brent D. Baird, Ralph D. Ketchum and R. Thomas Green, Jr. have advised
Oglebay Norton that they will retire from the Board effective as of the Annual
Meeting. On March 8, 1999, in accordance with its authority under Oglebay
Norton's By-laws, the Board of Directors voted to reduce the size of the Board
to seven directors, effective as of the Annual Meeting. The Board voted to
reduce the size of the class whose term in office expires in 2002 to one
director, and the size of the class whose term in office expires in 2000 to
three directors.
The Board has nominated Mr. John N. Lauer, currently a director, to stand
for election to a new term expiring in 2002. The biographies of Mr. Lauer and
each of the directors whose term in office will continue after the Annual
Meeting are included below. THE BOARD OF DIRECTORS OF OGLEBAY NORTON RECOMMENDS
A VOTE FOR MR. JOHN N. LAUER AS A DIRECTOR OF THE CLASS WHOSE TERM IN OFFICE
WILL EXPIRE IN 2002.
2
<PAGE> 5
NOMINEE FOR TERM EXPIRING IN 2002
<TABLE>
<CAPTION>
DIRECTOR
NAME AGE PRINCIPAL OCCUPATION, BUSINESS EXPERIENCE AND OTHER DIRECTORSHIPS SINCE
---- --- ----------------------------------------------------------------- --------
<S> <C> <C> <C>
John N. Lauer........... 60 President, Chief Executive Officer and Director of Oglebay Norton 1998
since January 1, 1998 and Chairman of the Board since July, 1998;
retired private investor and Ph.D. student, 1994 to December
1997; President and Chief Operating Officer, The B.F. Goodrich
Company, a chemical and aerospace company, from 1990 to 1994. Mr.
Lauer also serves on the Boards of Directors of Diebold,
Incorporated, Menasha Corporation and BorsodChem, Rt.
DIRECTORS WHOSE TERMS EXPIRE IN 2001
Malvin E. Bank.......... 68 Partner, Thompson Hine & Flory LLP, Cleveland, Ohio, attorneys at 1977
law, for more than five years. Mr. Bank also serves on the Board
of Directors of Metropolitan Financial Corp.
William G. Bares........ 57 Chairman, President and Chief Executive Officer, since April 1982
1996, President and Chief Executive Officer, from January 1996 to
April 1996, and President and Chief Operating Officer, from 1987
to 1995, of The Lubrizol Corporation, Cleveland, Ohio, a supplier
of chemical additives for use in lubricants and fuels. Mr. Bares
also serves on the Boards of Directors of The Lubrizol
Corporation, Applied Industrial Technologies, Inc. and KeyCorp.
John D. Weil............ 58 President of Clayton Management Co., St. Louis, Missouri, 1992
investments, for more than five years. Mr. Weil also serves on
the Boards of Directors of PICO Holdings Inc., Todd Shipyards
Corporation, Southern Investors Service Co. Inc., Allied
Healthcare Products, Inc. and Baldwin & Lyons, Inc.
DIRECTORS WHOSE TERMS EXPIRE IN 2000
James T. Bartlett....... 62 Managing Director, Primus Venture Partners, Cleveland, Ohio, the 1996
fund manager for Primus Capital Fund and Primus Capital Funds II,
III and IV, venture capital limited partnerships, for more than
five years. Mr. Bartlett is also a director of Keithley
Instruments, Inc. and Lamson & Sessions and a trustee of the
Cleveland Museum of Art and Berea College.
Albert C. Bersticker.... 64 Chairman of the Board, since January 1, 1999, Chairman and Chief 1992
Executive Officer, from January 1, 1996 to December 31, 1998, and
President and Chief Executive Officer, from May 1991 to December
1995, of Ferro Corporation, producer of specialty coatings,
plastics, chemicals and ceramics. Mr. Bersticker also serves on
the Boards of Directors of Brush Wellman Corporation, Ferro
Corporation and KeyCorp.
William G. Pryor........ 59 President, since April 1993, of Van Dorn Demag Corporation, 1997
manufacturer of plastic injection molding equipment; President
and Chief Executive Officer, Van Dorn Corporation (predecessor to
Van Dorn Demag Corporation), January 1, 1992 to April 20, 1993.
</TABLE>
3
<PAGE> 6
BOARD AND COMMITTEE ATTENDANCE
The Board met seven times during 1998. Each of the directors attended at
least 80% of the total of all 1998 meetings of the Board and those committees on
which he served.
STRUCTURE/COMMITTEES OF THE BOARD
The Board of Directors establishes broad corporate policies and oversees
the overall performance of Oglebay Norton. However, it is not involved in
day-to-day operations. Directors are kept informed of Oglebay Norton's business
through discussions with the President and Chief Executive Officer and other
officers, by reviewing quarterly analyses and reports, and by participating in
Board and committee meetings.
The Board has four committees. Each committee is described below.
Executive Committee. The current members of the Executive Committee are
Messrs. Bares (Chairman), Baird, Bank, Bersticker and Green. The Executive
Committee may exercise all of the authority of the Board of Directors subject to
specific resolutions of the Board and Delaware law. The Executive Committee
meets only if a meeting is called by its Chairman. The Executive Committee did
not meet during 1998.
Audit Committee. The current members of the Audit Committee are Messrs.
Bersticker (Chairman), Baird, Bartlett and Pryor. The Audit Committee:
- reviews the proposed audit plans (both independent and internal) for
each fiscal year, the results of these audits and the adequacy of
Oglebay Norton's internal systems and controls;
- recommends to the Board the appointment of independent auditors for
each fiscal year; and
- reviews activities conducted under Oglebay Norton's Legal and
Ethical Compliance Program.
The Audit Committee met twice during 1998.
Compensation and Organization Committee. The current members of the
Compensation and Organization Committee are Messrs. Weil (Chairman), Bartlett,
Bersticker and Ketchum. The Compensation and Organization Committee fixes
compensation for the executive officers of Oglebay Norton and considers
corporate organizational matters and employee benefit programs generally. The
Board has also established a Compensation Subcommittee whose current members are
Messrs. Weil (Chairman), Bartlett and Ketchum. The Compensation Subcommittee
reviews and approves compensation matters that include, or are calculated based
upon the value of, Oglebay Norton's common stock. The Compensation and
Organization Committee met six times and the Compensation Subcommittee met three
times during 1998.
Director Search and Governance Committee. The current members of the
Director Search and Governance Committee are Messrs. Ketchum (Chairman), Bank,
Pryor and Weil. The Director Search and Governance Committee:
- considers and nominates candidates for election to the Board;
- reviews the contributions of current directors; and
- reviews and makes recommendations on corporate governance issues
affecting the Board.
The Director Search and Governance Committee will consider nominees for the
Board of Directors submitted by stockholders. Recommendations by stockholders
should include the following information:
- the nominee's name, age and business and residence addresses;
- the nominee's principal occupation and qualifications to serve as a
director;
- a list of companies of which the nominee is an officer or director;
- a statement on whether the nominee is a United States citizen;
- the number of shares of Oglebay Norton's common stock owned by the
nominee;
- the name of the recommending stockholder; and
- the nominee's written consent to be nominated.
4
<PAGE> 7
Nominations should be mailed to: Chairman, Director Search and Governance
Committee, c/o Rochelle F. Walk, Secretary and Director of Corporate Affairs,
Oglebay Norton Company, 1100 Superior Avenue, Cleveland, Ohio 44114-2598. The
Director Search and Governance Committee met once during 1998.
COMPENSATION OF DIRECTORS
Directors who are not employees of Oglebay Norton receive a fee of $12,000
per year, an annual award of 200 shares of Oglebay Norton's common stock under
the Director Stock Plan, and $900 for each Board and committee meeting attended.
Directors are also reimbursed for expenses they incur in attending Board and
committee meetings.
In 1998, the stockholders approved the Oglebay Norton Company Director Fee
Deferral Plan, which permits directors to defer all or part of the cash portion
of their compensation into:
- share units based upon the market price of Oglebay Norton's common
stock at the date on which the cash compensation otherwise would
have been paid; or
- an account as deferred cash which is credited with a market rate of
interest.
Amounts deferred into share units receive a 25% matching credit by Oglebay
Norton, but amounts deferred as cash do not receive any matching credit.
DIRECTOR AGREEMENTS
Oglebay Norton has entered into separate standstill agreements with John D.
Weil and Brent D. Baird. The agreements limit to 11% the percentage of Oglebay
Norton's common stock which Messrs. Weil and Baird and their respective
affiliates may own. Messrs. Weil and Baird are not required to dispose of any
shares if their ownership percentages increase due solely to repurchases by
Oglebay Norton of its common stock. If Messrs. Weil or Baird desire to increase
their holdings beyond 11%, they must first obtain the consent of a majority of
Oglebay Norton's Board. Mr. Weil has obtained the necessary consent to acquire
up to 15% of Oglebay Norton's outstanding common stock. Mr. Weil's standstill
agreement will be amended to incorporate this change.
The standstill agreements also limit the rights of Messrs. Weil and Baird
and their respective affiliates to sell shares of Oglebay Norton's common stock,
and prohibit them from voting shares or participating in a proxy contest against
the recommendations of Oglebay Norton's Board. Pursuant to the standstill
agreements, the Board nominated Mr. Weil for election as a director at the 1992,
1995 and 1998 Annual Meetings and Mr. Baird for election as a director at the
1991, 1994 and 1997 Annual Meetings.
After Mr. Baird's retirement from the Board at the Annual Meeting, his
standstill agreement will terminate but he will continue to have certain
obligations under the agreement and pursuant to law.
5
<PAGE> 8
BENEFICIAL OWNERSHIP OF OGLEBAY NORTON COMMON STOCK
The table below shows the number and percent of the outstanding shares of
Oglebay Norton's common stock beneficially owned on March 10, 1999 by each
director of Oglebay Norton, each of the executive officers named in the Summary
Compensation Table included below, and by all directors and executive officers
as a group.
<TABLE>
<CAPTION>
AMOUNT AND PERCENT OF
NATURE OF OUTSTANDING
NAME BENEFICIAL OWNERSHIP SHARES
---- -------------------- -----------
<S> <C> <C>
Brent D. Baird.............................................. 426,747 (1)(4 8.95%
1350 One M&T Plaza
Buffalo, New York 14203
Malvin E. Bank.............................................. 314,938(2) 6.60%
3900 Key Center
127 Public Square
Cleveland, Ohio 44114
John D. Weil................................................ 579,800 (3)(4 12.16%
200 North Broadway, Suite 825
St. Louis, Missouri 63102-2573
William G. Bares............................................ 1,878(4) *
James T. Bartlett........................................... 6,443(4) *
Albert C. Bersticker........................................ 2,141(4) *
R. Thomas Green, Jr......................................... 25,230 (5)(6 *
Ralph D. Ketchum............................................ 7,130(4) *
John N. Lauer............................................... 59,744 1.25%
William G. Pryor............................................ 1,049(4) *
David H. Kelsey............................................. 17,666(7) *
Mark P. Juszli.............................................. 2,813 (5)(6)(7 *
Stuart H. Theis............................................. 4,760 (5)(6)(7 *
Danny R. Shepherd........................................... 1,700 *
Directors, nominees and executive officers as a group,
including those listed above (18 persons)................. 1,411,178 (4)(5 29.61%
</TABLE>
- ---------------
* Represents less than 1% of the outstanding shares of Oglebay Norton's common
stock on March 10, 1999.
(1) Mr. Baird has sole voting power as to 24,347 shares and sole dispositive
power as to 23,600 shares, of which Mr. Baird holds 17,600 shares
individually and 6,000 shares as a trustee. In addition, Mr. Baird shares
voting and dispositive power as to 402,400 shares.
(2) Mr. Bank's shares include 311,323 shares held in various trusts, for which
he and KeyCorp are co-trustees. As a trustee, Mr. Bank has sole voting and
dispositive power as to 209,318 shares and shared voting and dispositive
power (with KeyCorp) as to 103,555 shares. In addition, Mr. Bank has sole
voting and dispositive power as to 1,550 shares held individually.
(3) Mr. Weil has sole voting power as to 1,480 shares, sole investment power as
to 600 shares and shared voting and dispositive power as to 577,720 shares.
(4) Includes share units calculated as of December 31, 1998 which each
individual is entitled to pursuant to Oglebay Norton's Director Fee Deferral
Plan: Baird -- 747 shares; Bares -- 678 shares; Bartlett -- 843 shares;
Bersticker -- 841 shares; Ketchum -- 829 shares; Pryor -- 649 shares; and
Weil -- 880 shares. Also includes, with respect to each individual, 200
shares to be issued at the Annual Meeting pursuant to Oglebay Norton's
Director Stock Plan.
6
<PAGE> 9
(5) Includes the following numbers of shares, rounded to the nearest whole
share, beneficially owned as of December 31, 1998 under Oglebay Norton's
Employee Stock Ownership Plan by the following directors and executive
officers: Green -- 10,148 shares; Juszli -- 1,038 shares; Theis -- 2,109
shares; and directors and executive officers as a group -- 18,417 shares.
(6) Additional stock rights held by directors and executive officers but not
included in the table above: Messrs. Green, Juszli and Theis are
participants in Oglebay Norton's Long-Term Incentive Plan (the "LTIP"),
under which they elected to forego a portion of their annual compensation
and invest it in share units, the value of which are tied to the value of
Oglebay Norton's common stock. The share units are payable in shares of
Oglebay Norton's common stock upon the individual's retirement, death or
termination of employment or a change in control of Oglebay Norton (each as
defined under the LTIP). Under the LTIP, as further described below under
the heading "Officer Agreements--Long-Term Incentive Plan," the total number
of share units attributable to these individuals as of December 31, 1998,
including Oglebay Norton matches and dividends under the LTIP, is as
follows:
<TABLE>
<CAPTION>
TOTAL NUMBER
NAME OF SHARE UNITS
---- --------------
<S> <C>
R. Thomas Green, Jr......................................... 17,908
Mark P. Juszli.............................................. 8,196
Stuart H. Theis............................................. 1,470
</TABLE>
(7) Includes options which are or within 60 days will become exercisable.
The table below shows information with respect to all persons who, as of
March 10, 1999, were known by Oglebay Norton to beneficially own more than five
percent of the outstanding shares of Oglebay Norton's common stock, other than
Mr. Baird, Mr. Bank and Mr. Weil whose beneficial ownership of shares of Oglebay
Norton's common stock is shown above.
<TABLE>
<CAPTION>
PERCENT OF
AMOUNT AND NATURE OF OUTSTANDING
NAME OF OWNER BENEFICIAL OWNERSHIP SHARES
------------- -------------------- -----------
<S> <C> <C>
KeyCorp............................................. 1,012,269(1) 21.2%
127 Public Square
Cleveland, Ohio 44114
A. Alex Porter and Paul Orlin....................... 254,800(2) 5.3%
100 Park Avenue
New York, New York 10017
Douglas N. Barr..................................... 289,040(3) 6.1%
3900 Key Center
127 Public Square
Cleveland, Ohio 44114-1216
Robert I. Gale III.................................. 285,260(4) 6.0%
17301 St. Clair Avenue
Cleveland, Ohio 44110
Dimensional Fund Advisors Inc....................... 265,056(5) 5.6%
1299 Ocean Avenue, 11th Floor
Santa Monica, California 90401
</TABLE>
- ---------------
(1) As of February 13, 1999, based upon information contained in a Schedule 13G
filed with the Securities and Exchange Commission, KeyCorp has sole voting
power as to 696,496 shares and shared voting power as to 315,773 shares.
KeyCorp also has sole dispositive power as to 390,671 shares and shared
dispositive power as to 277,534 shares. Based upon information available to
Oglebay Norton, KeyCorp's 1,012,269 reported shares include 293,010 shares
held as trustee for Oglebay Norton's employee pension plan and more than
7
<PAGE> 10
300,000 shares held as co-trustee with Mr. Bank. KeyCorp is the holding
company for Key Trust Company of Ohio, N.A., Key Asset Management, Inc. and
Spears, Benzak, Solomon & Farrell, Inc.
(2) As of March 3, 1999, based upon information contained in a Schedule 13D
filed with the Securities and Exchange Commission, Mr. A. Alex Porter and
Mr. Paul Orlin are each deemed to be the beneficial owner of these 254,800
shares. These shares are owned by Amici Associates and The Collectors' Fund,
New York limited partnerships, and Porter, Felleman Inc., a corporation.
Messrs. Porter and Orlin are the general partners and stockholders of these
entities. Each of these entities has the sole power to vote and dispose of
the respective shares held by them.
(3) As of May 2, 1997, based upon information contained in a Schedule 13D filed
with the Securities and Exchange Commission, Mr. Barr has sole voting and
dispositive power as to 400 of these shares. Mr. Barr, as a trustee, has
shared voting and dispositive power as to 57,200 of these shares and,
together with Mr. Robert I. Gale III, shared voting and dispositive power as
to 230,440 of these shares.
(4) As of May 2, 1997, based upon information contained in a Schedule 13D filed
with the Securities and Exchange Commission, Mr. Gale has sole voting and
dispositive power as to 54,820 shares, 4,198 shares of which he owns
individually and 50,622 shares of which he holds as trustee. Together with
Mr. Douglas N. Barr, Mr. Gale shares voting and dispositive power as to
230,440 of these shares.
(5) As of February 11, 1999, based upon information contained in a Schedule 13D
filed with the Securities and Exchange Commission, Dimensional Fund Advisors
Inc. has sole voting and dispositive power as to all of the shares held by
it.
PERFORMANCE GRAPH
The graph below compares the five-year cumulative return from investing
$100 on January 1, 1994 in each of Oglebay Norton common stock, the S&P 500
Index of companies and the Valueline Composite Index of companies, with
dividends assumed to be reinvested when received.
<TABLE>
<CAPTION>
OGLEBAY NORTON S&P 500 VALUELINE COMPOSITE INDEX
-------------- ------- -------------------------
<S> <C> <C> <C>
'1994' 100 100 100
'1995' 142 101 101
'1996' 179 139 127
'1997' 217 171 152
'1998' 419 228 195
'1999' 259 293 206
</TABLE>
8
<PAGE> 11
COMPENSATION OF EXECUTIVE OFFICERS
REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
Oglebay Norton's Board of Directors has delegated to its Compensation and
Organization Committee (the "C&O Committee"), none of whose members is a former
or current officer or employee of Oglebay Norton or any of its subsidiaries,
general responsibility for executive compensation matters. Oglebay Norton has
further delegated to the Compensation Subcommittee, which is comprised of all of
the members of the C&O Committee other than Mr. Bersticker, responsibility for
executive compensation actions to be taken by a committee of "outside
directors," as defined in the Treasury Regulations promulgated under Section
162(m) of the Internal Revenue Code, and "non-employee directors," as defined in
Rule 16b-3 promulgated under the Securities Exchange Act of 1934.
On December 17, 1997, Oglebay Norton entered into an Employment Agreement
with Mr. John N. Lauer, the terms of which had been negotiated on behalf of
Oglebay Norton by the C&O Committee, pursuant to which Mr. Lauer became
President and Chief Executive Officer of Oglebay Norton effective January 1,
1998. The compensation arrangements in the Employment Agreement tie Mr. Lauer's
compensation directly to the performance of Oglebay Norton over the term of Mr.
Lauer's employment. In particular, his compensation is tied to the price of
shares of Oglebay Norton's common stock. Oglebay Norton will not pay Mr. Lauer a
salary during his tenure with Oglebay Norton. Instead, the primary elements of
his compensation under the Employment Agreement are:
- a grant of 25,744 restricted shares of Oglebay Norton's common
stock;
- a grant of a "performance option" to purchase 380,174 additional
shares of Oglebay Norton's common stock; and
- an annual bonus of up to $200,000 per year depending upon the
performance of Oglebay Norton during the year.
The C&O Committee determined that these compensation arrangements are
appropriate because the ultimate compensation package provided to Mr. Lauer
depends in large part upon the ultimate value achieved by Oglebay Norton under
Mr. Lauer's management. The C&O Committee believes that the direct, largely
stock-based relationship between performance and reward is in the best interests
of Oglebay Norton and its stockholders. The terms of Mr. Lauer's Employment
Agreement are discussed more fully below under the heading "Officer
Agreements -- Employment Agreement with Mr. John N. Lauer." The remainder of
this report deals with the compensation of executives other than Mr. Lauer.
The C&O Committee seeks to compensate executive officers based upon their
contributions to Oglebay Norton's success, and specifically to reward officers
who make significant contributions to Oglebay Norton's short-term and long-term
profitability. In 1998, the annual compensation packages of executive officers
were comprised of an annual salary, an annual bonus and equity-based
compensation.
Annual Salary. The annual salaries of executive officers for 1998 were set
by the C&O Committee after consideration of Oglebay Norton's financial
performance and prospects, each executive officer's contribution to Oglebay
Norton's performance in 1997, and the level of competitive salaries paid to
executives in comparable positions with companies whose sales and revenues are
similar to those of Oglebay Norton.
Bonuses. Executive officers were eligible to receive cash bonuses with
respect to 1998 under Oglebay Norton's Annual Incentive Plan (the "Incentive
Plan") pursuant to which the C&O Committee established corporate, business unit
and individual performance goals for the year. The corporate performance measure
for 1998 under the Incentive Plan was corporate income from operations, and the
business unit performance measure was business unit operating profit. The amount
of the incentive award under the Incentive Plan, if any, to each participant is
based on the participant's target award level, the weightings assigned to each
company, business unit and individual performance goal applicable to the
participant and achievement of those goals.
9
<PAGE> 12
Target awards are determined with reference to the participant's base
salary and range from 15% to 35% of base salary. Nominal awards may range from
0% to 200% of target awards, depending on the extent to which corporate,
business unit and individual performance goals were met or exceeded. In
addition, the C&O Committee has the discretion to increase or decrease the
amount of any particular nominal award by a maximum of 25%. Based upon the
extent to which the relevant goals were met during 1998, actual awards for the
year under the Incentive Plan ranged from 17% to 70% of base salary.
On October 27, 1998, the C&O Committee approved a bonus pool, over which
Mr. Lauer has discretionary authority, of 15% of the target bonuses for the
executive group of 15 excluding Mr. Lauer (about $60,000 in 1999). Mr. Lauer was
also granted another discretionary pool of 15% of the current target bonus for
other bonus eligible employees (about $90,000 in 1999). The current
discretionary increases for the executive and employee bonus pools are replaced
with the above funds. The new discretionary bonus pool becomes effective in
1999.
Equity-Based Compensation. On October 27, 1998, the C&O Committee approved
a new long-term incentive program. The new program provides for the issuance of
stock options and cash bonuses over a four-year period. The new program is
designed to further align management compensation with the interests of Oglebay
Norton's stockholders.
The C&O Committee expanded eligibility under the new program to include key
managers who contribute substantially to Oglebay Norton's success. Stock options
may be awarded on a yearly basis depending upon corporate performance. Cash
incentives are based upon "line of sight" performance measures which are
compared against target objectives in earnings before interest, taxes,
depreciation and amortization (EBITDA) and earnings per share (EPS). Payments
can be earned at two points over the life of the plan.
On October 28, 1998, the Compensation Subcommittee granted non-qualified
stock options under the new program to 35 executives and key employees covering
an aggregate of 69,200 shares of Oglebay Norton's common stock, each at an
exercise price of $26 (the fair market value of the shares on the grant date).
Compliance with Section 162(m) of the Internal Revenue Code. Section 162(m)
of the Internal Revenue Code generally disallows a tax deduction to a publicly
held corporation for compensation over $1 million paid in any year to any
individual who is either the Chief Executive Officer or one of the four other
most highly compensated executive officers of the corporation. Qualifying
"performance-based compensation" will not be subject to the deduction limit if
certain requirements are met. At present, the performance option granted to Mr.
Lauer by the Compensation Subcommittee is the only compensation element that
provides a sufficiently large dollar amount of compensation to bring the Section
162(m) limit into play. However, since Mr. Lauer's performance option was
approved by Oglebay Norton's stockholders at the 1998 Annual Meeting, the
Compensation Subcommittee believes that compensation under the performance
option will qualify as performance-based compensation and that Oglebay Norton's
deduction with respect to that compensation will not be limited by Section
162(m).
COMPENSATION AND
ORGANIZATION COMMITTEE
John D. Weil, Chairman
James T. Bartlett
Albert C. Bersticker
Ralph D. Ketchum
January 27, 1999
10
<PAGE> 13
SUMMARY COMPENSATION TABLE
The table below shows individual compensation information for Oglebay
Norton's Chief Executive Officer and the four other most highly compensated
executive officers whose total annual salary and bonus for the fiscal year ended
December 31, 1998 exceeded $100,000.
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG-TERM COMPENSATION
---------------------------------------- -------------------------
RESTRICTED SHARES
NAME AND BONUS OTHER ANNUAL STOCK UNDERLYING ALL OTHER
PRINCIPAL POSITION YEAR SALARY($) ($)(1) COMPENSATION($)(2) AWARDS($)(3) OPTIONS(#) COMPENSATION($)(4)
------------------ ---- --------- ------- ------------------ ------------ ---------- ------------------
<S> <C> <C> <C> <C> <C> <C> <C>
John N. Lauer*............... 1998 -- 200,000 -- -- -- 1,350
President and 1997 -- -- -- 965,400 380,174 --
Chief Executive Officer 1996 -- -- -- -- -- --
David H. Kelsey**............ 1998 170,512 140,000 127,860 -- 28,000 1,626
Vice President and 1997 -- -- -- -- -- --
Chief Financial Officer 1996 -- -- -- -- -- --
Mark P. Juszli............... 1998 151,667 56,000 38,383 -- 3,400 27,060
Vice President, 1997 137,667 20,000 5,621 -- 3,700 24,853
Industrial Sands 1996 125,333 23,200 -- -- -- 10,913
Stuart H. Theis.............. 1998 167,500 123,000 16,760 -- 4,300 47,410
Vice President, 1997 153,167 80,000 16,760 -- 3,700 44,195
Marine Transportation 1996 142,767 24,300 -- -- -- 12,430
Danny R. Shepherd***......... 1998 115,668 -- 9,333 -- 8,500 245,240
Vice President, 1997 -- -- -- -- -- --
Lime and Limestone 1996 -- -- -- -- -- --
</TABLE>
- ---------------
* Mr. Lauer has served as President and Chief Executive Officer since January
1, 1998 and Chairman of the Board since July 29, 1998. Mr. Lauer's
Employment Agreement is summarized below under the heading "Officer
Agreements -- Employment Agreement with Mr. John N. Lauer."
** Mr. Kelsey has served as Vice President and Chief Financial Officer since
February 23, 1998.
*** Mr. Shepherd joined Oglebay Norton on May 22, 1998 and has served as Vice
President, Lime and Limestone since October 28, 1998.
(1) The Annual Incentive Plan bonus deferral feature of Oglebay Norton's
Long-Term Incentive Plan was discontinued effective for bonus payments
earned in 1998.
(2) Represents non-cash moving expense benefits and "gross-up" for taxes in
respect of payments by Oglebay Norton to the named executives for moving
expenses and life insurance premiums.
(3) For Mr. Lauer, represents 25,744 restricted shares granted on January 19,
1998. The restricted shares are valued at $37.50 per share, the closing
price of Oglebay Norton's common stock on the last business day prior to the
grant date. Of the 25,744 restricted shares, 20% (5,148 shares) were fully
vested and nonforfeitable on the grant date and another 20% of the total
number of restricted shares vested and became nonforfeitable on January 1,
1999. Subject to certain conditions, another 20% of the total number of
restricted shares will vest and become nonforfeitable on January 1 of each
of 2000, 2001 and 2003. Mr. Lauer is entitled to receive any dividends paid
by Oglebay Norton on the restricted shares.
(4) Includes contributions by Oglebay Norton during 1998 for the named
executives under Oglebay Norton's Incentive Savings Plan and/or Oglebay
Norton's Employee Stock Ownership Plan (Kelsey -- $1,191;
Juszli -- $3,800 and $17,758; and Theis -- $4,195 and $19,290). Also
includes payments by Oglebay Norton for life insurance premiums
(Lauer -- $1,350; Kelsey -- $435; Juszli -- $5,502; Theis -- $23,435).
In the case of Mr. Shepherd, also includes contributions by Oglebay Norton
during 1998 under the Global Stone (U.S.A.), Inc. 401(k) Plan in the amount
of $3,664 and a one-time $241,576 commission associated with Oglebay
Norton's acquisition of Filler Products, Inc.
11
<PAGE> 14
STOCK OPTION GRANTS IN 1998
Options granted to executive officers expire on the tenth anniversary of
the grant dates. Option exercise prices were in all cases equal to the fair
market value of a share of Oglebay Norton's common stock on the grant date. The
options have no value unless Oglebay Norton's stock price appreciates and the
recipient satisfies the applicable vesting requirements.
The table below shows the stock options granted during 1998 to the
executive officers listed in the Summary Compensation Table shown above, and the
potential realizable value of those grants (on a pre-tax basis) determined in
accordance with Securities and Exchange Commission rules. The information in
this table shows how much the named executive officers may eventually realize in
future dollars under two hypothetical situations: if the stock gains 5% in value
per year or if the stock gains 10% in value per year, in each case compounded
over the ten-year life of the options. These are assumed rates of appreciation
and are not intended to forecast future appreciation of Oglebay Norton's common
stock. Also included in this table is the increase in value to all common
stockholders of Oglebay Norton using the same assumed rates of appreciation.
For perspective, in ten years, one share of Oglebay Norton's common stock
valued at $26.00 on October 28, 1998 (the grant date) would be worth $42.35,
assuming the hypothetical 5% compounded growth rate, or $67.44, assuming the
hypothetical 10% compounded growth rate.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE VALUE AT
ASSUMED ANNUAL RATES OF
STOCK PRICE APPRECIATION FOR
INDIVIDUAL GRANTS OPTION TERM(1)
-------------------------------------------------- -----------------------------
NUMBER OF % OF TOTAL
SHARES OPTIONS
UNDERLYING GRANTED TO EXERCISE
OPTIONS EMPLOYEES PRICE EXPIRATION
NAME GRANTED(#)(2) IN 1998(3) ($/SH.) DATE 5%($) 10%($)
---- ------------- ---------- -------- ---------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
J. N. Lauer........... -- -- -- -- -- --
D. H. Kelsey.......... 20,000(4) 21.5% 37.00 2/23/08 465,382 1,179,369
8,000 8.6% 26.00 10/28/08 130,810 331,498
M. P. Juszli.......... 3,400 3.6% 26.00 10/28/08 55,594 140,887
S. H. Theis........... 4,300 4.6% 26.00 10/28/08 70,310 178,180
D. R. Shepherd........ 1,500(4) 1.6% 42.13 6/11/08 39,743 100,717
7,000 7.5% 26.00 10/28/08 114,459 290,061
</TABLE>
INCREASE IN VALUE TO ALL COMMON STOCKHOLDERS(5) $77.9 MILLION $197.4 MILLION
- ---------------
(1) Calculated over a ten-year period representing the life of the options.
(2) The options vest 25% each year commencing on the first anniversary of the
grant date. The options also vest if the employee retires and is otherwise
entitled to a normal, early or shutdown pension under Oglebay Norton's
Pension Plan. In that event, the retired employee may exercise the options
within two years from the date of retirement, but not beyond the option
expiration date.
(3) Percentage based on the total number of options granted (93,200) to
employees under and outside of Oglebay Norton's Long-Term Incentive Plan and
new long-term incentive program.
(4) Represents stock options granted outside of Oglebay Norton's Long-Term
Incentive Plan and new long-term incentive program upon commencement of his
employment.
(5) Calculated using a price of $26.00 per share of Oglebay Norton's common
stock, the closing price on October 28, 1998, and the total weighted average
number of shares of Oglebay Norton's common stock outstanding for 1998
(4,764,762 shares).
12
<PAGE> 15
RETIREMENT PLANS
EMPLOYEES PENSION PLAN
EXCESS AND TRA SUPPLEMENTAL BENEFIT RETIREMENT PLAN
SUPPLEMENTAL RETIREMENT BENEFIT PLAN OF JOHN N. LAUER
The table below shows the annual pension payable under the Oglebay Norton
Company Pension Plan (the "Pension Plan") and the Oglebay Norton Company Excess
and TRA Supplemental Benefit Retirement Plan (the "Excess Benefit Retirement
Plan") at normal retirement age:
<TABLE>
<CAPTION>
ESTIMATED ANNUAL BENEFIT
(ASSUMING RETIREMENT ON JANUARY 1, 1998)
----------------------------------------------------
FINAL YEARS OF SERVICE
ANNUAL AVERAGE ----------------------------------------------------
COMPENSATION 15 YEARS 20 YEARS 25 YEARS 30 YEARS 35 YEARS
- -------------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
$ 75,000 $ 16,875 $ 22,500 $ 28,125 $ 33,750 $ 39,375
100,000 22,500 30,000 37,500 45,000 52,500
150,000 33,750 45,000 56,250 67,500 78,750
200,000 45,000 60,000 75,000 90,000 105,000
250,000 56,250 75,000 93,750 112,500 131,250
300,000 67,500 90,000 112,500 135,000 157,500
350,000 78,750 105,000 131,250 157,500 183,750
400,000 90,000 120,000 150,000 180,000 210,000
450,000 101,250 135,000 168,750 202,500 236,250
500,000 112,500 150,000 187,500 225,000 262,500
550,000 123,750 165,000 206,250 247,500 288,750
600,000 135,000 180,000 225,000 270,000 315,000
650,000 146,250 195,000 243,750 292,500 341,250
</TABLE>
Benefits under the Pension Plan and the Excess Benefit Retirement Plan for
eligible salaried employees are based on average annual compensation for the
highest five years during the last 10 years of employment prior to retirement.
Covered compensation is equal to total base pay and incentive compensation
(including amounts deferred under Oglebay Norton's Long-Term Incentive Plan),
which is substantially the same as shown in the salary and bonus columns of the
Summary Compensation Table shown above. The annual benefit is calculated by
multiplying the participant's average compensation by a factor of 1.5% and the
participant's years of covered service (but not below a minimum benefit
unrelated to compensation). Benefits, which are paid in a straight life annuity
form, are not subject to reduction for Social Security or other offset. Certain
surviving spouse benefits are also available under the plans, as well as early
retirement and facility shutdown benefits. The benefits table shown above has
been prepared without regard to benefit limitations imposed by the Internal
Revenue Code. The years of benefit service credited for executive officers named
in the Summary Compensation Table are: Mr. Lauer -- 1.0 year; Mr. Kelsey -- 0.8
years; Mr. Juszli -- 4.7 years; and Mr. Theis -- 6.0 years. Mr. Shepherd is not
eligible to participate in the Pension Plan or the Excess Benefit Retirement
Plan.
The Internal Revenue Code limits the benefits provided under the Pension
Plan. The Excess Benefit Retirement Plan provides for the payment, out of
Oglebay Norton's general funds, of the amount that an eligible participant would
have received under the Pension Plan but for the Internal Revenue Code limits.
The above table, which does not reflect those limits, shows the total annual
pension benefits payable under both the Pension Plan and the Excess Benefit
Retirement Plan.
Oglebay Norton has agreed to provide Mr. Lauer a supplemental retirement
benefit plan providing him retirement benefits that, when added to any benefits
payable to him under the Pension Plan, will equal the benefits he would have
been entitled to under the Pension Plan if:
- in addition to any bonuses received by him, his covered compensation
included, throughout the period of his employment, salary of
$350,000 per year; and
13
<PAGE> 16
- there were no limits on the amount of covered compensation that
could be taken into account in determining the benefit payable to
him under the Pension Plan.
If Mr. Lauer remains employed by Oglebay Norton through January 2, 2003 and
receives maximum annual bonuses (i.e., $200,000), the aggregate retirement
benefit payable to him under the Pension Plan and the supplemental plan will be
the equivalent of an annual lifetime benefit of $41,250 per year.
SUPPLEMENTAL SAVINGS AND STOCK OWNERSHIP PLAN
As with the Pension Plan, the Internal Revenue Code limits the amount that
Oglebay Norton can contribute for an employee under its Incentive Savings Plan
(the "Savings Plan") and Employee Stock Ownership Plan ("ESOP"). The
Supplemental Savings and Stock Ownership Plan (the "Supplemental Plan") provides
for the payment, out of Oglebay Norton's general funds, of the amount by which
certain participants' benefits under the Savings Plan and ESOP would exceed the
limitations applicable to those plans. The terms of the Supplemental Plan
provide a benefit equal to that which the participants would have received under
the Savings Plan and ESOP but for the Internal Revenue Code limits.
Benefits under the Supplemental Plan are payable in cash only. In addition,
the benefits are payable at such time and in such manner as the Compensation and
Organization Committee of the Board of Directors may select from those available
under the Savings Plan and ESOP. The terms of the Supplemental Plan also
prohibit a participant from competing with Oglebay Norton for 10 years and from
wrongfully disclosing any of its trade secrets. Oglebay Norton's contribution
under the Supplemental Plan during 1998 to the account of Mr. Theis, the only
participant, was $715.
OFFICER AGREEMENTS
EMPLOYMENT AGREEMENT WITH MR. JOHN N. LAUER
On December 17, 1997, Oglebay Norton entered into an Employment Agreement
with Mr. Lauer which provides for his employment as Chairman, President and
Chief Executive Officer of Oglebay Norton through January 2, 2003. The
compensation arrangements of Mr. Lauer in the Employment Agreement are tied
directly to the performance of Oglebay Norton over the employment term. In
particular, his compensation is tied to the price of shares of Oglebay Norton's
common stock. Oglebay Norton will not pay Mr. Lauer a salary during his tenure
with Oglebay Norton. Instead, the primary elements of his compensation under the
Employment Agreement are:
- a grant of 25,744 restricted shares of Oglebay Norton's common
stock;
- a grant of a "performance option" to purchase 380,174 additional
shares of Oglebay Norton's common stock; and
- an annual bonus of up to $200,000 per year depending upon the
performance of Oglebay Norton during the year.
Restricted Stock. On January 19, 1998, Oglebay Norton granted to Mr. Lauer
25,744 shares of Oglebay Norton's common stock (the "Restricted Shares"). This
grant was contingent upon Mr. Lauer's personal investment of at least $1,000,000
in shares of Oglebay Norton's common stock. As provided in the Employment
Agreement, the number of Restricted Shares granted equals the number of shares
acquired by Mr. Lauer for his $1,000,000 investment. Of the 25,744 Restricted
Shares granted, 20% (5,148 shares) were fully vested and nonforfeitable on the
grant date and another 20% of the total number of restricted shares vested and
became nonforfeitable on January 1, 1999. Another 20% of the total number of
Restricted Shares vest and become nonforfeitable on January 1 of each of 2000,
2001 and 2003, assuming Mr. Lauer remains in the employ of Oglebay Norton on
such dates. If Mr. Lauer reduces his personal investment by disposing of any of
the shares he acquired for his $1,000,000 investment at any time before January
1, 2003, any Restricted Shares that have not become fully vested and
nonforfeitable will be forfeited at the time of the reduction in Mr. Lauer's
personal investment.
14
<PAGE> 17
Performance Option. As provided by the Employment Agreement, the
Compensation Subcommittee granted to Mr. Lauer, on December 17, 1997, an option
to acquire up to 380,174 shares of Oglebay Norton's common stock at an exercise
price of $38.00 per share (the "Performance Option"). The 380,174 shares subject
to the Performance Option equals 8% of the entire number of shares outstanding
on both the grant date and January 1, 1998. The $38.00 per share exercise price
is $6.00 above the per share closing price as reported on the NASDAQ National
Market on December 16, 1997 (the last closing price available at the time the
Employment Agreement was executed). The Performance Option was approved by the
stockholders of Oglebay Norton at the 1998 Annual Meeting.
In the normal course, the Performance Option will first become exercisable
on January 1, 2001, after Mr. Lauer has been employed by Oglebay Norton for
three full years. If Mr. Lauer remains in the employ of Oglebay Norton
throughout the term contemplated by the Employment Agreement (i.e., through
January 2, 2003), the Performance Option, to the extent not previously exercised
by him, will remain exercisable through June 30, 2005. Any part of the
Performance Option not earlier exercised or terminated will terminate at the
close of business on June 30, 2005.
OFFICER AGREEMENTS EFFECTIVE UPON "CHANGE IN CONTROL" OF OGLEBAY NORTON
Oglebay Norton has entered into separate agreements (collectively, the
"Officer Agreements") with the executive officers listed in the Summary
Compensation Table shown above. The Officer Agreements are designed to retain
these individuals and provide for continuity of management in the event of any
actual or threatened "change in control" of Oglebay Norton. None of the Officer
Agreements will become effective unless there is a "change in control" of
Oglebay Norton.
There are two "triggers" which apply to the Officer Agreements. The first
"trigger" requires that a "change in control" occur. After a "change in
control," the officer is entitled to continued employment at a compensation rate
equal to the greatest of that in effect immediately before the "change in
control," two years before the "change in control," or such greater rate
determined by Oglebay Norton, plus continued participation in specified benefit
plans as an executive officer ("Contract Compensation"). The second "trigger" is
tripped if, after a "change in control," the officer is terminated without
"cause," or the officer terminates his employment for "good reason." If the
second "trigger" occurs, then the officer is entitled to receive Contract
Compensation instead of employment, but only for the longer of the time
remaining in the original 30-month contract term (after the "change in
control"), or six months.
After employment termination, the officer must attempt to mitigate damages
by seeking comparable employment elsewhere. If the officer is successful,
Contract Compensation is reduced, dollar-for-dollar, for compensation and
benefits received from the subsequent employer. In addition, for as long as
Contract Compensation is received, the officer agrees neither to compete against
Oglebay Norton nor to disclose any of its trade secrets. Finally, Contract
Compensation under the Officer Agreements will be reduced if and to the extent
necessary to prevent any portion from being treated as excess parachute payments
under the Internal Revenue Code.
"POUR-OVER" AND IRREVOCABLE TRUSTS
Oglebay Norton has made commitments under various plans and agreements for
supplemental pension benefits, deferred and executive compensation arrangements,
and obligations arising in the event of a "change in control," which it has not
been required to fund on a current basis. In order to provide assurances that
those commitments will be honored, Oglebay Norton has established three trusts
with an independent trustee to provide additional security for these commitments
in the event of a "change in control."
Irrevocable Trust Agreement I ("Trust I") provides additional assurances
for benefits due certain employees who have retired from Oglebay Norton under a
1974 Supplemental Retirement Plan. Irrevocable Trust Agreement II ("Trust II")
provides additional assurances for benefits and payments due under the Excess
Benefit Retirement Plan, the Supplemental Plan, the Officer Agreements, the 1991
Executive Life Program, certain deferred compensation agreements and the 1996
Executive Life Plan pursuant to which Oglebay Norton pays life insurance
premiums on behalf of its executive officers.
15
<PAGE> 18
The Oglebay Norton Company Pour-Over Trust provides that, in the event of a
threatened "change in control," Oglebay Norton will deposit in the pour-over
trust, on an irrevocable basis, 125% of the aggregate unfunded obligations of
the commitments subject to Trust I and Trust II. The pour-over trust becomes
revocable if, after the threat, no "change in control" occurs. If a "change in
control" does occur, the pour-over trust remains irrevocable, and the assets in
the pour-over trust are transferred to Trusts I and II. Although Oglebay Norton
has contributed certain company-owned life insurance policies to Trust I, it has
not contributed any other significant assets to the three trusts. However,
Oglebay Norton retains the right to make additional discretionary contributions
into the trusts at any time. Assets held in the trusts are subject at all times
to the claims of Oglebay Norton's general creditors. If funds in the trusts are
insufficient to pay amounts due under a plan or agreement, Oglebay Norton
remains obligated to pay those amounts. No employee has any right to assets in
the trusts until, and to the extent, benefits are paid from the trusts.
LONG-TERM INCENTIVE PLAN
Oglebay Norton established its Long-Term Incentive Plan (the "LTIP") on
December 18, 1995, which was approved by the stockholders of Oglebay Norton at
the 1996 Annual Meeting. The Compensation Subcommittee administers the LTIP and
selects those officers and other key employees to participate in the plan. Under
the LTIP, participants are eligible to be granted awards, as determined by the
Compensation Subcommittee, and, up to 1998, were eligible to defer a portion of
their annual incentive awards. Each of the executive officers listed in the
Summary Compensation Table shown above currently participates in the LTIP.
The LTIP provides for awards by the Compensation Subcommittee, including a
grant of options (which may be "incentive stock options" within the meaning of
Section 422 of the Internal Revenue Code, or non-qualified options), stock
appreciation rights, restricted stock and performance awards (collectively, the
"Incentive Awards"). The Compensation Subcommittee has the discretion to set
performance objectives as it deems appropriate respecting any performance awards
or restricted stock grants. The performance objectives may vary from participant
to participant and between groups of participants and will be based upon such
company, business unit and/or individual performance factors and criteria as the
Compensation Subcommittee may deem appropriate. As discussed above under the
heading "Compensation of Executive Officers--Stock Option Grants in 1998," on
October 28, 1998, Oglebay Norton granted stock options to certain of its
executive officers and key employees under the LTIP.
The Compensation Subcommittee may in its discretion, at the time of grant
of any award under the LTIP, provide that the terms of the grant or date on
which an award vests or becomes exercisable may be modified in the event of a
"change of control" (as defined in the LTIP).
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Malvin E. Bank, formerly a member of Oglebay Norton's Compensation and
Organization Committee, is a partner of the law firm Thompson Hine & Flory LLP,
Cleveland, Ohio. Thompson Hine & Flory LLP provided legal services to Oglebay
Norton in 1998 and continues to provide such services in 1999. Mr. Bank has not
served on the Compensation and Organization Committee since April 30, 1997.
Mr. Bersticker serves on Oglebay Norton's Compensation and Organization
Committee and is currently the Chairman of the Board of Ferro Corporation. As
discussed in the next section, a wholly owned subsidiary of Oglebay Norton sells
to, and purchases from, Ferro Corporation various items in the ordinary course
of business pursuant to arm's length negotiations. Mr. Bersticker is not a
member of the Compensation Subcommittee.
RELATED PARTY TRANSACTIONS
Oglebay Norton Industrial Sands, Inc., a wholly owned subsidiary of Oglebay
Norton, sells ground silica to, and purchases heavy density grinding media and
ceramic mill lining from, Ferro Corporation. Mr. Bersticker is currently the
Chairman of the Board of Ferro Corporation. During the year ended December 31,
1998, sales to Ferro Corporation totaled $727,120 and purchases from Ferro
Corporation totaled $530,141. Oglebay Norton
16
<PAGE> 19
Industrial Sands, Inc. entered into these transactions pursuant to arm's length
negotiations in the ordinary course of business and on terms that Oglebay Norton
believes to be fair.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Based on its records and information, Oglebay Norton believes that all SEC
filing requirements applicable to its directors and executive officers under
Section 16(a) of the Securities Exchange Act of 1934 were met for 1998.
INDEPENDENT AUDITORS
Oglebay Norton expects a representative of Ernst & Young LLP, the
independent auditor of Oglebay Norton for the year ended December 31, 1998, to
be present at the Annual Meeting. The representative will have the opportunity
to make a statement if he or she desires and to respond to appropriate questions
with respect to the firm's examination of the consolidated financial statements
and records of Oglebay Norton for the year ended December 31, 1998.
FINANCIAL STATEMENTS
Oglebay Norton's Report to Stockholders and Annual Report on Form 10-K
(which includes financial statements) for the year ended December 31, 1998 are
being delivered to you with this Proxy Statement. You may obtain additional
copies of Oglebay Norton's Annual Report on Form 10-K, as filed with the SEC,
free of charge upon oral or written request to the Secretary, Oglebay Norton
Company, 1100 Superior Avenue, Cleveland, Ohio 44114-2598 (telephone number:
(216) 861-3300).
2000 ANNUAL MEETING
The 2000 Annual Meeting of Stockholders of Oglebay Norton is currently
scheduled to be held on Wednesday, April 26, 2000. The deadline for stockholders
to submit proposals to be considered for inclusion in the proxy statement for
that meeting is November 24, 1999.
Oglebay Norton's proxies for its 2000 Annual Meeting of Stockholders will
confer discretionary authority to vote on any matter for which Oglebay Norton
does not receive timely written notice in accordance with Section 46 of its
By-laws. Section 46 provides generally that a stockholder's notice of business
to be brought before an annual meeting must be received at Oglebay Norton's
principal executive offices not less than 60 nor more than 90 days before the
date of the meeting. For the 2000 Annual Meeting, 60 days prior to the meeting
would be February 26, 2000 and 90 days prior to the meeting would be January 27,
2000.
OTHER MATTERS FOR THE ANNUAL MEETING
Oglebay Norton does not know of any business to be acted upon at the Annual
Meeting other than the matters described above. If any other matters properly
come before the Annual Meeting, the persons named on the enclosed proxy will
vote on such matters in accordance with their best judgment.
You are urged to sign, date and return your proxy without delay.
By Order of the
Board of Directors
ROCHELLE F. WALK,
Secretary and Director,
Corporate Affairs
March 23, 1999
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OGLEBAY NORTON COMPANY -- PROXY
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON APRIL 28, 1999
At the Annual Meeting of Stockholders of Oglebay Norton Company to be held at
10:00 a.m. on April 28, 1999, at Ciao Cucina Playhouse Square, 1515 Euclid Ave.,
Cleveland, Ohio, and at any adjournment thereof, Albert C. Bersticker, William
G. Pryor, John D. Weil, and each of them, with full power of substitution (the
"Proxy Committee"), are hereby authorized to represent me and to vote my shares
on the following:
<TABLE>
<C> <S> <C>
1. Electing one director of the class whose term will expire in 2002. The nominee of the Board of Directors is:
John N. Lauer, or in the event of the unavailability of the nominee, such other person as the Board of Directors
may recommend.
FOR the nominee John N. Lauer [ ] WITHHOLD AUTHORITY [ ]
to vote for the nominee
2. Any other business which may properly come before the Annual Meeting and all adjournments thereof, in accordance
with the judgment of the Proxy Committee on such business.
(CONTINUED, AND TO BE SIGNED ON OTHER SIDE)
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PROXY NO. SHARES
(Continued from the other side)
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<C> <S> <C>
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY THE STOCKHOLDERS SIGNING BELOW. IF
NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR THE ELECTION OF THE NOMINEE FOR DIRECTOR LISTED ABOVE.
</TABLE>
Dated , 1999
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Signature
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Signature
NOTE: 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.
CHANGE OF ADDRESS:
Please indicate change of
address below:
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PLEASE SIGN, DATE AND RETURN THIS PROXY FORM PROMPTLY
