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
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Filed by the
Registrant: x
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Filed by a party
other than the Registrant ¨
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Check the
appropriate box:
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¨ Preliminary Proxy
Statement
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¨ Confidential, for
Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
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x Definitive Proxy
Statement
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¨ Definitive
Additional Materials
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¨ Soliciting
Material Under Rule 14a-12
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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)
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Payment of Filing
Fee (Check the appropriate box):
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¨ Fee computed on
table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
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(1)
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Title of each class
of securities to which transaction applies:
N/A
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(2)
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Aggregate number of
securities to which transaction applies:
N/A
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(3)
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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): N/A
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(4)
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Proposed maximum
aggregate value of transaction: N/A
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¨ Fee paid
previously with preliminary materials.
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¨
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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.
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(1)
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Amount previously
paid: N/A
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(2)
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Form, Schedule or
Registration Statement No.: N/A
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[LOGO OF OGLEBAY
NORTON]
NOTICE OF ANNUAL
MEETING OF STOCKHOLDERS
TO BE HELD ON
APRIL 26, 2000
You are cordially invited to attend the Annual
Meeting of Stockholders of Oglebay Norton Company. The Annual Meeting will
be held at The Forum Conference and Education Center, 1375 East Ninth
Street, Cleveland, Ohio, on Wednesday, April 26, 2000, at 10:00 a.m.,
Cleveland, Ohio time. At the Annual Meeting, we will ask you to:
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elect three
directors to the class whose term in office will expire in
2003;
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approve the Oglebay
Norton Company 1999 Long-Term Incentive Plan; and
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hear reports and
transact any other business that may properly come before the Annual
Meeting.
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The Board of Directors fixed the close of
business on March 13, 2000 as the record date for determining the
stockholders entitled to notice of and to vote at the Annual Meeting, or 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, 1999 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
March 14,
2000
[LOGO OF OGLEBAY
NORTON]
PROXY
STATEMENT
ANNUAL MEETING OF
STOCKHOLDERS
TO BE HELD ON
APRIL 26, 2000
Oglebay Norton 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 26, 2000, 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 14,
2000. The date of this Proxy Statement is March 14, 2000.
Purposes of the
Annual Meeting
At the Annual Meeting, we will ask you
to:
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elect three
directors to the class whose term in office will expire in
2003;
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approve the Oglebay
Norton Company 1999 Long-Term Incentive Plan; and
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hear reports and
transact any other business that may properly come before the Annual
Meeting.
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The nominees for election as directors, with
information about each of them, are set forth below under the heading
“Proposal 1—Election of Directors—Nominees for Term Expiring
in 2003.”
A description of the proposal to approve the
Oglebay Norton Company 1999 Long-Term Incentive Plan is set forth below
under the heading “Proposal 2—Approval of the Oglebay Norton
Company 1999 Long-Term Incentive Plan.”
Voting Rights and
Proxy Information
Record Date; Required Vote.
The Board of Directors of Oglebay Norton fixed the close of
business on March 13, 2000 as the record date for determining the
stockholders entitled to notice of and to vote at the Annual Meeting, or any
postponement or adjournment of the Annual Meeting. As of March 13, 2000,
4,956,502 shares of Oglebay Norton’s common stock were 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 directors, 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 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 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.
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 as directors of the nominees listed under the heading
“Proposal 1—Election of Directors—Nominees for Term Expiring
in 2003.” If cumulative voting is in effect, shares represented by each
properly signed proxy card will be voted on a cumulative basis, with the
votes distributed among the nominees in accordance with the judgment of the
persons named in the proxy card. However, the persons named in the proxy
card will not vote any shares cumulatively for nominees for whom authority
to vote was withheld. Proxies without instructions will also be voted FOR
the approval of the Oglebay Norton Company 1999 Long-Term Incentive Plan.
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:
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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);
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properly executing
another proxy for the same shares and delivering it to the Secretary of
Oglebay Norton; or
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attending the
Annual Meeting and voting in person (although attendance at the Annual
Meeting will not by itself revoke your proxy).
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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
DIRECTORS
Oglebay Norton’s Board of Directors
currently has eight members. The directors are divided into three
classes:
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three directors are
in the class whose term in office expires at the Annual Meeting in
2000;
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three directors are
in the class whose term in office expires at the Annual Meeting in 2001;
and
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two directors are
in the class whose term in office expires at the Annual Meeting in
2002.
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Each director serves for three years and until
a successor is elected.
On October 27, 1999, in accordance with its
authority under Oglebay Norton’s By-laws, the Board of Directors voted
to increase the size of the Board from seven to eight directors, effective
immediately. The Board of Directors filled the vacancy created by the
increase by naming Madeleine W. Ludlow a director commencing January 26,
2000 with a term expiring in 2002. The biographies of Ms. Ludlow, each of
the directors who are standing for election, and each director whose term in
office will continue after the Annual Meeting are included below. The
Board of Directors of Oglebay Norton recommends a vote FOR each of James T.
Bartlett, Albert C. Bersticker and William G. Pryor as directors of the
class whose term in office will expire in 2003.
Nominees for Term
Expiring in 2003
Name
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Age
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Principal
Occupation, Business Experience and Other Directorships
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Director
Since
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| James T.
Bartlett |
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63 |
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Managing Director,
Primus Venture Partners, Inc., Cleveland, Ohio,
and 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. |
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1996 |
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| Albert C.
Bersticker |
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Retired since May
1, 1999, Chairman of the Board, from January 1,
1999 until May 1, 1999, Chairman and Chief 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. |
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1992 |
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| William G.
Pryor |
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President, since
April 1993, of Van Dorn Demag Corporation,
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. |
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Term Expire in 2002 |
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| John N.
Lauer |
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President, Chief
Executive Officer and Director of Oglebay Norton
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. |
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1998 |
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| Madeleine W.
Ludlow |
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Vice President
and Chief Financial Officer since February 2000 of
Cinergy Corporation, an electric and gas utility company, President,
Energy Commodities Business Unit since April 1998, and Vice President
and Chief Financial Officer, April 1997 until April 1998, of Cinergy
Corporation. Ms. Ludlow was Vice President of the Public Service
Enterprise Group from 1992 to 1997. |
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2000 |
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Whose Terms Expire in 2001 |
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| Malvin E.
Bank |
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General
Counsel, The Cleveland Foundation. Previously, Partner,
Thompson, Hine and Flory LLP. Mr. Bank also serves on the Board
of Directors of Metropolitan Financial Corp. |
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1977 |
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| William G.
Bares |
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Chairman,
President and Chief Executive Officer, since April 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. |
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1982 |
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| John D.
Weil |
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President of
Clayton Management Co., St. Louis, Missouri,
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. |
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1992 |
Board and
Committee Attendance
The Board met six times during 1999. Each
director attended at least 80% of all of the 1999 meetings of the Board
and of those committees on which such director 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.
On April 28, 1999, the Board designated a
non-employee “Lead Director” to act as the director liaison
between the Board and Oglebay Norton management. The Board named Mr.
Bersticker as initial Lead Director, effective immediately, to serve
until his successor is designated or appointed by the Compensation,
Organization and Governance Committee.
The Board has three committees. Each
committee is described below.
Executive Committee.
The current members of the Executive Committee are
Messrs. Weil (Chairman), Bares, Bartlett, Bersticker and Lauer. The
Executive Committee may exercise all of the authority of the Board of
Directors subject to specific resolutions of the Board and provisions of
Delaware law. The Executive Committee meets only if a meeting is called
by its Chairman. The Executive Committee did not meet during
1999.
Audit and Compliance Committee.
On April 28, 1999, the Board of Directors approved
a new committee structure under which the name of the Audit Committee
was changed to the Audit and Compliance Committee. The current members
of the Audit and Compliance Committee are Mr. Bartlett (Chairman), Ms.
Ludlow, and Messrs. Bank, Bersticker and Pryor. The purpose of the Audit
and Compliance Committee is to investigate matters, make recommendations
and take such actions as may be necessary or appropriate regarding the
audit of financial results, good business practices and procedures,
legal compliance and other matters concerning the financial health of
Oglebay Norton. The Audit and Compliance Committee met three times
during 1999.
Compensation, Organization and
Governance Committee. As part of the
committee restructuring approved by the Board of Directors on April 28,
1999, the Board combined the Director Search and Governance Committee
with the Compensation and Organization Committee, creating the
Compensation, Organization and Governance Committee. The Compensation,
Organization and Governance Committee is comprised solely of independent
directors, and no member of Oglebay Norton management is a member of the
committee. The current members of the Compensation, Organization and
Governance Committee are Mr. Bersticker (Chairman), Ms. Ludlow, and
Messrs. Bank, Bares, Bartlett, Pryor and Weil. The purpose of the
Compensation, Organization and Governance Committee is to investigate
and evaluate matters, make recommendations and take such actions as may
be necessary or appropriate regarding Oglebay Norton management
succession, the performance of the chief executive officer, Board
effectiveness and governance, executive compensation and organizational
structure.
The Compensation, Organization and
Governance Committee will consider nominees for the Board of Directors
submitted by stockholders. Recommendations by stockholders should
include the following information:
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the nominee
’s name, age and business and residence addresses;
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the nominee
’s principal occupation and qualifications to serve as a
director;
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a list of
companies of which the nominee is an officer or director;
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a statement on
whether the nominee is a United States citizen;
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the number of
shares of Oglebay Norton’s common stock owned by the
nominee;
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the name of the
recommending stockholder; and
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the nominee
’s written consent to be nominated.
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Nominations should be mailed to:
Chairman, Compensation, Organization and Governance Committee, c/o
Rochelle F. Walk, Vice President and Secretary, Oglebay Norton Company,
1100 Superior Avenue, Cleveland, Ohio 44114-2598.
Before the committees were combined, the
Director Search and Governance Committee and the Compensation and
Organization Committee each met one time in 1999. After the combination
of the committees, the Compensation, Organization and Governance
Committee met five times.
Compensation
of Directors
Directors who are not employees of Oglebay
Norton receive a fee of $12,000 per year, and $900 for each Board and
committee meeting attended, except for committee chairs who receive
$1,200 for each committee meeting they chair. Non-employee directors
also receive an annual award of 200 shares of Oglebay Norton’s
common stock under the Director Stock Plan, except for the Lead Director
who receives 500 shares annually. Directors are 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:
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share units
based upon the market price of Oglebay Norton’s common stock at
the date on which the cash computation otherwise would have been paid;
or
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an account as
deferred cash which is credited with a market rate of
interest.
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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 a
standstill agreement with John D. Weil. The agreement limits to 15% the
percentage of Oglebay Norton’s common stock which Mr. Weil and his
affiliates may own. Mr. Weil is not required to dispose of any shares if
his ownership percentage increases due solely to repurchases by Oglebay
Norton of its common stock. If Mr. Weil desires to increase his holdings
beyond 15%, he must first obtain the consent of a majority of Oglebay
Norton’s Board.
The standstill agreement also limits the
rights of Mr. Weil and his affiliates to sell shares of Oglebay Norton
’s common stock, and prohibits him from voting shares or
participating in a proxy contest against the recommendations of Oglebay
Norton’s Board. Pursuant to the standstill agreement, the Board
nominated Mr. Weil for election as a director at the 1992, 1995 and 1998
Annual Meetings.
PROPOSAL
2
APPROVAL OF
THE OGLEBAY NORTON COMPANY 1999 LONG-TERM INCENTIVE PLAN
On October 3, 1998, the Board of Directors
approved the Oglebay Norton Company 1999 Long-Term Incentive Plan (the
“1999 LTIP”). The primary purposes of the 1999 LTIP are to
enable Oglebay Norton to attract and retain key employees and to provide
incentives for, and to reward, performance. To achieve these purposes,
the 1999 LTIP provides the authority to grant awards payable in shares,
in cash, or in a combination of shares and cash over a four year
period.
Section 162(m) of the Code precludes a
deduction, for federal income tax purposes, for compensation paid to a
“covered employee” to the extent that the compensation exceeds
$1,000,000 in any taxable year. “Covered employees” consist of
the Chief Executive Officer and the other four highest compensated
employees of Oglebay Norton and its subsidiaries. This deduction
limitation does not, however, apply to certain performance-based
compensation, including stock options granted under a plan approved by
stockholders. It is possible that the
payout after four years to one or more of the covered employees will
exceed $1,000,000. A secondary purpose of the 1999 LTIP is, therefore,
to enable Oglebay Norton to grant stock options and provide other
performance-based compensation that is not subject to the $1,000,000
deduction limitation. In addition to stock options, cash incentive
payment awards are permitted under the 1999 LTIP, thereby eliminating
the risk that Oglebay Norton may be subject to the $1,000,000 deduction
limitation for incentive bonuses paid to covered employees.
The complete text of the 1999 LTIP is
attached as Appendix A to the Proxy Statement. The following summary of
the 1999 LTIP does not purport to be complete and is qualified in its
entirety by reference to Appendix A.
Eligible Persons.
All key employees of Oglebay Norton or any of its subsidiaries
will be eligible to receive awards.
Administration.
The 1999 LTIP will be administered by the Compensation,
Organization and Governance Committee, unless the Board of Directors
designates another committee to administer the 1999 LTIP (the
“Committee”). The Committee will have the authority to: (1)
select the eligible employees who will receive awards, (2) determine the
number and types of awards to be granted, (3) determine the terms,
conditions, vesting periods, and restrictions applicable to the awards,
(4) establish performance goals for performance-based awards, (5) grant
the awards, and (6) adopt, alter, and repeal rules governing the 1999
LTIP. If any member of the Committee does not qualify as a
“non-employee director” within the meaning of Rule 16b-3 under
the Securities Exchange Act of 1934, as amended (the “Exchange Act
”), that member will not be deemed to be a member of the Committee
for purposes of granting an award if the inclusion of that member on the
Committee would subject the recipient of the award to the risk of
short-swing profit recovery under Section 16(b) of the Exchange Act.
Similarly, if any member of the Committee does not qualify as an
“outside” director within the meaning of Section 162(m) of the
Code, that member will not be deemed to be a member of the Committee for
purposes of performance-based awards to covered employees.
Number and Types of Shares Available
under the Plan. The shares to be issued under
the 1999 LTIP will be Common Shares. The total number of shares subject
to awards granted in any fiscal year of Oglebay Norton may not exceed
one and one half percent (1-1/2%) of the number of shares outstanding at
the beginning of the fiscal year. Shares issued or delivered under the
1999 LTIP may consist of authorized and unissued shares, treasury
shares, or shares to be purchased by Oglebay Norton, as determined by
the Committee. With respect to stock options, the number of shares
subject to stock options granted to the eligible person in any fiscal
year of Oglebay Norton may not exceed 300,000.
Shares subject to an award that is
forfeited, terminated, canceled, or surrendered without having been
exercised (other than shares subject to an award that is surrendered in
payment of the exercise price of a stock option and shares subject to an
award that is surrendered in payment of taxes associated with an award)
will again be available for grant under the 1999 LTIP, without reducing
the number of shares that may be subject to awards or that are available
for the grant of awards in any fiscal year. The assumption of awards
granted by an organization acquired by Oglebay Norton, or the grant of
awards under the 1999 LTIP in substitution for any such awards, will not
reduce the number of shares available for the grant of awards under the
1999 LTIP.
In the event of any change in the shares
by reason of a merger, consolidation, reorganization, recapitalization,
or similar transaction, or in the event of a stock dividend, stock
split, distribution to stockholders (other than normal cash dividends),
or rights offering or similar sale of shares for less than their fair
market value at the time of sale, the Committee will adjust the number
and class of shares that may be issued under the 1999 LTIP, the number
and class of shares that may be issued to any eligible person in any
fiscal year, the number and class of shares subject to outstanding
awards, the exercise price applicable to outstanding awards, and any
value determinations applicable to outstanding awards.
Types of Awards.
The 1999 LTIP provides for the grant of two types of awards,
including the following:
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Stock
Option—A right to purchase a specified number of shares,
during a specified period, and at a specified exercise price, all as
determined by the Committee.
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Cash
Incentive Payment Award—An award that is payable in cash and
is contingent upon the achievement of performance goals established by
the Committee.
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The amount of the cash incentive payment
award to an eligible person is determined according to the following
formula. Each named executive officer, except Mr. Lauer, is paid a base
salary designed to be competitive in the marketplace, with the salary
level determined based on published market survey data. In addition,
named executive officers, except Mr. Lauer, are eligible for cash and
stock-based awards under the 1999 LTIP, with the amount of those awards
determined based on Oglebay Norton’s performance in relation to
targeted cumulative earnings before interest, taxes, depreciation and
amortization (“EBITDA”) and earnings per share (“EPS
”) performance measures for the four-year period from 1999 through
2002. As more fully explained in the section entitled “Officer
Agreements,” Mr. Lauer receives no salary and was granted a one
time performance option at the time of his employment. The Board has
made him eligible to participate only in the cash portion of the 1999
LTIP; he is not eligible to receive any options for additional shares
under the plan.
The EBITDA performance measure begins to
generate a payout when EBITDA growth exceeds 5% annually, and the EPS
performance measure begins to generate a payout when eighty percent of
targeted cumulative EPS is achieved for the four-year period. Together,
these measures generate a “pool” from which distributions
would be paid to the named executive officers. Payouts are determined
from a table created in 1998 reflecting the then competitive long-term
incentive compensation at each individual’s base salary level. The
table was created by a third party executive compensation expert engaged
by the Board. There is no maximum amount that may be paid under the 1999
LTIP. If the target EBITDA and EPS amounts are met, the total cash
payout made by Oglebay Norton to all participants would be $3,976,000,
of which $2,134,000 in cash would be paid to the named executive
officers (including the CEO) and $1,842,000 to the other participants in
the 1999 LTIP.
Deferral of Payment.
The Committee may, in its discretion, permit eligible
persons to defer the payment of some or all of the shares or cash
subject to awards, as well as other compensation or fees, in accordance
with procedures established by the Committee to assure that the
recognition of taxable income is deferred in accordance with the
Code.
Change in Control.
In the event of a change in control of Oglebay Norton, unless
otherwise determined the Committee, (1) all stock options then
outstanding will become fully exercisable as of the date of the change
in control and (2) all cash incentive payment awards will be deemed to
have been fully earned to the extent determined by the Committee. The
Committee has determined that, provided interim targets have been
achieved, a partial payout based on completed years plus one half of the
remaining period, will be payable.
Amendment or Suspension of the 1999
LTIP. The Board of Directors may amend or
suspend the 1999 LTIP at any time. Stockholder approval for any such
amendment will be required only to the extent necessary to preserve the
deductibility of compensation associated with any award for federal
income tax purposes under Section 162(m) of the Code or to the extent
required by the applicable rules of any stock exchange.
Effective Date; Termination.
The 1999 LTIP will become effective on the date it
is approved by the holders of a majority of the shares then outstanding,
but with effect from January 1, 1999. The 1999 LTIP will continue in
effect until it is terminated by the Board of Directors.
Certain Federal Income Tax
Consequences. The 1999 LTIP provides for two
types of awards. A brief description of the tax consequences of certain
common types of awards follows. This description is based on federal
income tax laws currently in effect and does not purport to be
complete.
On the exercise of a non-qualified
stock option, the excess of the fair market value of the shares on the
date of exercise over the exercise price will generally be taxable to
the eligible person as ordinary income and deductible by Oglebay Norton,
provided Oglebay Norton properly files IRS Form W-2 or Form 1099 in
respect of the exercise. This disposition of shares acquired upon the
exercise of a non-qualified stock option will generally result in a
capital gain or loss for the eligible person, but will have no tax
consequences for Oglebay Norton.
Cash incentive payment awards will
generally be taxable to the eligible person as ordinary income and
deductible by Oglebay Norton.
On October 27, 1999, Oglebay Norton made
the following awards under the 1999 LTIP.
NEW PLAN
BENEFITS
1999 Long-Term
Incentive Plan
Name And
Position
|
|
Number
Of Units
|
| John N. Lauer,
President and Chief Executive Officer |
|
0 |
| Danny Shepherd,
Vice President, Lime and Limestone |
|
7,000 |
| David H.
Kelsey, Vice President and Chief Financial Officer |
|
7,000 |
| Stuart H.
Theis, Vice President, Marine Services |
|
5,500 |
| Jeffrey S.
Gray, Vice President, Industrial Sands |
|
4,500 |
| Total Executive
Group, including named executives |
|
35,000 |
| Non-Executive
Director Group |
|
0 |
| Non-Executive
Officer Employee Group |
|
28,725 |
Vote Required.
Approval of the 1999 LTIP will require the favorable vote of a
majority of the outstanding shares of Oglebay Norton Common Stock
represented in person or by proxy at the meeting. The Board of Directors
recommends a vote FOR the approval of the 1999
LTIP.
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 February 29, 2000 by each director of Oglebay
Norton, each executive officer named in the Summary Compensation Table
included below, and all directors and executive officers as a
group.
Name
|
|
Amount and
Nature of
Beneficial Ownership
|
|
Percent of
Outstanding
Shares
|
|
|
|
Malvin E. Bank
3900 Key Center
127 Public Square
Cleveland, Ohio 44114 |
|
316,273 |
(1)(2) |
|
6.4 |
% |
|
|
|
John D. Weil
200 North Broadway, Suite 825
St. Louis, Missouri 63102-2573 |
|
582,395 |
(2)(3) |
|
11.8 |
% |
|
|
|
| William G.
Bares |
|
3,542 |
(2) |
|
* |
|
|
|
|
| James T.
Bartlett |
|
28,683 |
(2) |
|
* |
|
|
|
|
| Albert C.
Bersticker |
|
4,981 |
(2) |
|
* |
|
|
|
|
| John N.
Lauer |
|
75,042 |
|
|
1.5 |
% |
|
|
|
| Madeleine W.
Ludlow |
|
510 |
(2) |
|
* |
|
|
|
|
| William G.
Pryor |
|
3,136 |
(2) |
|
* |
|
|
|
|
| Jeffrey S.
Gray |
|
2,398 |
|
|
* |
|
|
|
|
| David H.
Kelsey |
|
30,193 |
(4)(5) |
|
* |
|
|
|
|
| Stuart H.
Theis |
|
9,217 |
(5)(6) |
|
* |
|
|
|
|
| Danny R.
Shepherd |
|
4,023 |
(5) |
|
* |
|
|
|
|
Directors,
nominees and executive officers as a group, including those
listed above (16 persons) |
|
1,106,599 |
(2)(5) |
|
22.3 |
% |
*
|
Represents less
than 1% of the outstanding shares of Oglebay Norton’s common
stock on March 13, 2000.
|
(1)
|
Mr. Bank’s
shares include 311,323 shares held in various trusts, for which he and
Key Trust Company of Ohio, N.A. are co-trustees. As a trustee, Mr.
Bank has sole voting and dispositive power as to 212,718 shares and
shared voting and dispositive power (with Key Trust) as to 103,555
shares. In addition, Mr. Bank has sole voting and dispositive power as
to 4,950 shares held individually.
|
(2)
|
Includes share
units calculated as of February 29, 2000 which each individual is
entitled to pursuant to Oglebay Norton’s Director Fee Deferral
Plan: Bares — 1,942 shares; Bartlett —
2,356 shares; Bersticker —2,354 shares; Ludlow
— 310 shares; Pryor — 2,026 shares; and Weil
— 2,195 shares. Also includes 500 shares to be issued
to Mr. Bersticker as Lead Director, and, with respect to each other
individual, 200 shares to be issued, at the Annual Meeting pursuant to
Oglebay Norton’s Director Stock Plan.
|
(3)
|
Mr. Weil has
sole voting power as to 2,195 shares, sole investment power as to 800
shares and shared voting and dispositive power as to 579,400
shares.
|
(4)
|
Includes
options which are or within 60 days will become
exercisable.
|
(5)
|
Includes the
following numbers of shares, rounded to the nearest whole share,
beneficially owned as of December 31, 1999 under Oglebay Norton’s
Incentive Savings and Stock Ownership Plan by the following executive
officers: Shepherd — 1,406 shares; Kelsey —
2,118 shares; Theis — 6,942 shares; Gray
— 1,390 shares; and executive officers as a group
—18,417 shares.
|
(6)
|
Includes 1,525
share units attributable to Mr. Theis as of March 6, 2000, under the
former Oglebay Norton long-term incentive plan which share units are
payable in shares of Oglebay Norton’s common stock upon Mr. Theis
’ retirement, death or termination of employment or a change in
control of Oglebay Norton (each as defined under the former long-term
incentive plan).
|
The table below shows information with
respect to all persons who, as of March 13, 2000, 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. Bank and
Mr. Weil whose beneficial ownership of shares of Oglebay Norton’s
common stock is shown above.
Name of
Owner
|
|
Amount and
Nature of
Beneficial Ownership
|
|
Percent of
Outstanding
Shares
|
|
|
|
Key Trust
Company of Ohio, N.A., as Trustee
127 Public Square
Cleveland, Ohio 44114 |
|
1,012,269
(1 |
) |
|
21.2 |
% |
|
|
|
A. Alex Porter
and Paul Orlin
100 Park Avenue
New York, New York 10017 |
|
338,500
(2 |
) |
|
7.0 |
% |
|
|
|
Douglas N. Barr
3900 Key Center
127 Public Square
Cleveland, Ohio 44114-1216 |
|
289,040
(3 |
) |
|
6.1 |
% |
|
|
|
Robert I. Gale,
III
17301 St. Clair Avenue
Cleveland, Ohio 44110 |
|
285,260
(4 |
) |
|
6.0 |
% |
|
|
|
Dimensional
Fund Advisors Inc.
1299 Ocean Avenue, 11th Floor
Santa Monica, California 90401 |
|
280,856
(5 |
) |
|
5.8 |
% |
(1)
|
As of February
17, 2000, based upon information contained in a Schedule 13G filed
with the Securities and Exchange Commission, Key Trust Company of
Ohio, N.A. has sole voting power as to 696,496 shares and shared
voting power as to 315,773 shares. Key Trust 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, Key Trust
Company of Ohio, N.A.’s 1,012,269 total shares include 293,010
shares held as trustee for Oglebay Norton’s employee pension plan
and more than 311,323 shares held as co-trustee with Mr.
Bank.
|
(2)
|
As of June 18,
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 beneficially own these 338,500 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
3, 2000, 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 it
holds.
|
PERFORMANCE
GRAPH
The graph below compares the five year
cumulative return from investing $100 on December 31, 1994 in each of
Oglebay Norton common stock, the S&P 500 Index, the Russell 2000
Value Index, the Value Line Composite Index, and the Value Line Cement
and Aggregates Index. The Russell 2000 Value Index has replaced the S
&P 500 Index, the broad based equity market index used in previous
performance graphs, because it is more representative of companies with
market capitalization comparable to Oglebay Norton. The Value Line
Cement and Aggregates Index has replaced the Value Line Composite Index,
the peer group used in previous performance graphs. As Oglebay Norton
’s business has evolved, the Value Line Composite Index has become
less representative of the primary industries in which Oglebay Norton
participates. After careful review, Oglebay Norton management determined
the Value Line Cement and Aggregates Index to be a more appropriate
comparative performance measure than the index used previously. All
indices were calculated by Value Line, an independent third-party in the
business of publishing information for investors.
COMPENSATION
OF EXECUTIVE OFFICERS
Report of the
Compensation, Organization and Governance Committee on Executive
Compensation
Oglebay Norton’s Board of Directors
has delegated to its Compensation, Organization and Governance Committee
general responsibility for executive compensation matters, including
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 “nonemployee directors,” as defined in Rule 16b-3
promulgated under the Securities Exchange Act of 1934. None of the
Compensation, Organization and Compensation Committee members is a
former or current officer or employee of Oglebay Norton or any of its
subsidiaries.
On December 17, 1997, Oglebay Norton
entered into an Employment Agreement with Mr. John N. Lauer pursuant to
which Mr. Lauer became President and Chief Executive Officer of Oglebay
Norton effective January 1, 1998. The Compensation, Organization and
Governance Committee negotiated the terms of the agreement on behalf of
Oglebay Norton. 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:
|
Ÿ
|
a grant of
25,744 restricted shares of Oglebay Norton’s common
stock;
|
|
Ÿ
|
a grant of a
“performance option” to purchase 380,174 additional shares
of Oglebay Norton’s common stock; and
|
|
Ÿ
|
an annual bonus
of up to $200,000 per year based upon the performance of Oglebay
Norton during the year. For the calendar year 1999, the Board
determined to increase the annual bonus cap to $250,000.
|
The Compensation, Organization and
Governance 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 Compensation, Organization
and Compensation 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 describes the
compensation of executive officers other than Mr. Lauer.
The Compensation, Organization and
Governance 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 1999, the annual
compensation packages of executive officers were comprised of an annual
salary, an annual bonus and options to acquire common stock.
Annual Salary.
The annual salaries of executive officers for 1999 were set by
the Compensation, Organization and Governance Committee after
consideration of Oglebay Norton’s financial performance and
prospects, each executive officer’s contribution to Oglebay Norton
’s performance in 1998, and the level of 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 1999 under Oglebay Norton’s Performance Management Plan
(the “Plan”) pursuant to which the Compensation, Organization
and Governance Committee established corporate, business unit and
individual performance goals for the year. The corporate performance
measure for 1999 under the Plan was a combination of EBITDA (earnings
before interest,
taxes, depreciation and amortization) and debt to EBITDA ratio. The amount
of the incentive award under the Plan, if any, to each participant is
based on the participant’s target award level and achievement of
financial measures.
Target awards are determined with
reference to the participant’s base salary and range from 20% to
35% of base salary. Nominal awards in 1999 were uncapped and ranged from
0% to 206%, depending upon whether performance goals were met or
exceeded. Based upon the extent to which the relevant goals were met
during 1999, actual awards for the year under the Plan ranged from 40%
to 72% of base salary.
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 is the only
compensation element that provides a sufficiently large dollar amount of
compensation to bring the Section 162(m) limit into play.
|
COMPENSATION,
ORGANIZATION AND GOVERNANCE COMMITTEE
|
|
Albert C. Bersticker,
Chair
|
January 26,
2000
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, 1999 exceeded $100,000.
|
|
|
|
|
Annual
Compensation
|
|
Long-Term
Compensation
|
Name and
Principal Position
|
|
Year
|
|
Salary($)
|
|
Bonus
($)(1)
|
|
Other Annual
Compensation($)(2)
|
|
Restricted
Stock
Awards($)(3)
|
|
Shares
Underlying
Options(#)
|
|
All other
Compensation($)(4)
|
|
|
|
John N. Lauer*
President and
Chief Executive Officer |
|
1999
1998
1997 |
|
—
—
— |
|
250,000
200,000
— |
|
—
—
— |
|
|
—
—
965,400 |
|
—
—
380,174 |
|
—
1,350
— |
|
|
|
| Danny R.
Shepherd** |
|
1999 |
|
242,897 |
|
175,000 |
|
25,024 |
(5) |
|
— |
|
— |
|
9,608 |
|
Vice President, |
|
1998 |
|
115,668 |
|
— |
|
9,333 |
|
|
— |
|
8,500 |
|
245,240 |
|
Lime and Limestone |
|
1997 |
|
— |
|
— |
|
— |
|
|
— |
|
— |
|
— |
|
|
|
David H.
Kelsey***
Vice President and
Chief Financial Officer |
|
1999
1998
1997 |
|
207,308
170,512
— |
|
151,500
140,000
— |
|
15,589
127,860
— |
|
|
—
—
— |
|
—
28,000
— |
|
5,323
1,626
— |
|
|
|
Stuart H. Theis
Vice President,
Marine Services |
|
1999
1998
1997 |
|
172,756
167,500
153,167 |
|
126,000
123,000
80,000 |
|
19,776
16,760
16,760 |
|
|
—
—
— |
|
—
4,300
3,700 |
|
27,485
47,410
44,195 |
|
|
|
Jeffrey S.
Gray****
Vice President,
Industrial Sands |
|
1999
1998
1997 |
|
148,971
135,333
99,359 |
|
100,500
84,000
45,000 |
|
7,025
—
— |
|
|
—
—
— |
|
—
—
— |
|
72,710
—
— |
*
|
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. Shepherd
joined Oglebay Norton on May 22, 1998 and has served as Vice
President, Lime and Limestone since October 28, 1998.
|
***
|
Mr. Kelsey has
served as Vice President and Chief Financial Officer since February
23, 1998.
|
****
|
Mr. Gray joined
Oglebay Norton on March 17, 1997 as Vice President, Corporate
Development and General Counsel. He was promoted to the position of
Vice President, Industrial Sands on August 4, 1999.
|
(1)
|
The Performance
Management Plan bonus deferral feature of Oglebay Norton’s former
long-term incentive plan was discontinued effective for bonus payments
earned in 1998. Bonus amounts for 1999 include amounts deferred under
the Oglebay Norton Capital Accumulation Plan and Stock Purchase and
Savings Plan.
|
(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. Also includes non-cash
compensation for imputed income on personal use of company owned
vehicles, company provided life insurance, and the amount of vested
accruals in certain non-qualified plans.
|
(3)
|
For Mr. Lauer,
represents 25,744 restricted shares granted on January 19, 1998. The
restricted shares are valued at $37.5 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 of each of 1999 and 2000. Subject to
certain conditions, another 20% of the total number of restricted
shares will vest and become nonforfeitable on January 1 of each of
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 1999 and 1998 for the named
executives under Oglebay Norton’s Incentive Savings and Stock
Ownership Plan (Shepherd—$7,246 and $7,616; Kelsey —
$5,068 and $1,191; Theis — $5,146 and $4,195; Gray
— $4,294 and $3,400). Also includes payments by
Oglebay Norton for life insurance premiums for 1999 and 1998 (Theis
— $22,085 and $23,435; Gray — $2,977
and $0).
|
(5)
|
Includes
$13,475 paid to Mr. Shepherd in lieu of his participation in the
Oglebay Norton defined benefit plan.
|
Stock Option
Grants In 1999
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 1999 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%
or 10% in value per year, 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 $20.00 on October 27,
1999 (the grant date) would be worth $32.58, assuming the hypothetical
5% compounded growth rate, or $51.87, assuming the hypothetical 10%
compounded growth rate.
Option Grants
in Last Fiscal Year
|
|
|
Individual
Grants
|
|
Potential
Realizable Value at
Assumed Annual Rates of
Stock Price Appreciation for
Option Term(1)
|
Name
|
|
Number
of
Shares
Underlying
Options
Granted(#)(2)
|
|
% of
Total
Options
Granted to
Employees
in 1999(3)
|
|
Exercise
Price
($/sh.)
|
|
Expiration
Date
|
|
5%($)
|
|
10%($)
|
|
|
|
| J.N.
Lauer |
|
— |
|
— |
|
|
— |
|
— |
|
— |
|
— |
| D.R.
Shepherd |
|
7,000 |
|
11 |
% |
|
20.00 |
|
10/27/2009 |
|
228,060 |
|
363,090 |
| D.H.
Kelsey |
|
7,000 |
|
11 |
% |
|
20.00 |
|
10/27/2009 |
|
228,060 |
|
363,090 |
| S. H.
Theis |
|
5,500 |
|
9 |
% |
|
20.00 |
|
10/27/2009 |
|
179,190 |
|
285,285 |
| J.S.
Gray |
|
4,500 |
|
7 |
% |
|
20.00 |
|
10/27/2009 |
|
146,610 |
|
233,415 |
|
|
| Increase in
value to all common stockholders(4) |
|
$160.5
million |
|
$255.6
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 (63,725) to employees
under and outside of the 1999 LTIP.
|
(4)
|
Calculated
using a price of $20.00 per share of Oglebay Norton’s common
stock, the closing price on October 27, 1999, and the total number of
shares of Oglebay Norton’s common stock outstanding on December
31, 1999 (4,927,357 shares).
|
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:
|
|
|
Estimated
Annual Benefit
(Assuming Retirement on January 1, 2000)
|
Final
Annual Average
Compensation
|
|
Years of
Service
|
| |
15
Years
|
|
20
Years
|
|
25
Years
|
|
30
Years
|
|
35
Years
|
|
$ 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 |
|
700,000 |
|
157,500 |
|
210,000 |
|
262,500 |
|
315,000 |
|
367,500 |
|
750,000 |
|
168,750 |
|
225,000 |
|
281,250 |
|
337,500 |
|
393,750 |
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 certain incentive compensation (including
amounts deferred under the former 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 — 2.0
year; Mr. Kelsey — 1.8 years; Mr. Theis —
7.0 years; and Mr. Gray — 2.8 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:
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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
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Ÿ
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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.
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If Mr. Lauer remains employed by Oglebay
Norton through January 2, 2003 and receives maximum annual bonuses
(i.e., $250,000), 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 $44,250 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 and Stock Ownership Plan (the
“Savings Plan”). 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 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 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, Organization and Governance
Committee of the Board of Directors may select from those available
under the Savings Plan. 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 made
contributions under the Supplemental Plan during 1999 to the accounts of
the following named executives: Mr. Gray — $958.85; Mr.
Kelsey —$3,388.03; and Mr. Theis —
$1,910.26.
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:
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a grant of
25,744 restricted shares of Oglebay Norton’s common
stock;
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a grant of a
“performance option” to purchase 380,174 additional shares
of Oglebay Norton’s common stock; and
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an annual bonus
of up to $200,000 per year based upon the performance of Oglebay
Norton during the year. For the calendar year 1999, the Board
determined to increase the annual bonus cap to $250,000.
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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 of each of 1999 and
2000. Another 20% of the total number of Restricted Shares vest and
become nonforfeitable on January 1 of each of 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.
Performance Option.
As provided by the Employment Agreement, Mr. Lauer was
granted, 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 stockholders of Oglebay Norton approved the Performance
Option 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 (as defined in the Officer Agreements) 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 30month
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 not to disclose any of
Oglebay Norton’s trade secrets. If and to the extent payments made
to the officer, including Mr. Lauer, on account of a change in control
are treated as excess parachute payments under the Internal Revenue
Code, the Officer Agreement provides for an additional payment to make
the officer whole with respect to additional excise tax
payments.
“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.
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 Plans
Oglebay Norton established a long-term
incentive plan on December 18, 1995 (the “former LTIP”), which
was approved by the stockholders of Oglebay Norton at the 1996 Annual
Meeting. The Compensation, Organization and Governance Committee
administers the former LTIP and selects those officers and other key
employees to participate in the plan. Under the former LTIP,
participants are eligible to be granted awards, as determined by the
Compensation, Organization and Governance Committee and, up to 1998,
were eligible to defer a portion of their annual incentive awards. Each
executive officer listed in the Summary Compensation Table shown above,
except for Mr. Lauer, holds options granted under the former LTIP. In
addition, Mr. Theis holds share units granted under the former LTIP that
are payable in shares of Oglebay Norton common stock upon Mr. Theis
’ retirement, death or termination of employment or a change in
control. During 1999, no compensation or stock-based awards were made
under the former LTIP.
The former LTIP provides for awards by the
Compensation, Organization and Governance Committee including a grant of
options (which may be “incentive stock options” within the
meaning of Section 422 of the Internal Revenue Code, or nonqualified
options), stock appreciation rights, restricted stock and performance
awards (collectively, the “Incentive Awards”). The
Compensation, Organization and Governance Committee 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,
Organization and Governance Committee may deem appropriate. The
Compensation, Organization and Governance Committee may in its
discretion, at the time of grant of any award under the former 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.”
On October 3, 1998, the Board approved the
1999 LTIP which is discussed more fully above under the heading
“Proposal 2 — Approval of the Oglebay Norton Company
1999 Long-Term Incentive Plan.”
COMPENSATION
COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Malvin E. Bank has been a member of the
Compensation, Organization and Governance Committee and the Audit and
Compliance Committee since April 29, 1999 and during 1999 was a partner
of the law firm Thompson Hine & Flory LLP, Cleveland, Ohio, which
provided legal services to Oglebay Norton in 1999.
Mr. Bersticker serves on Oglebay
Norton’s Compensation, Organization and Governance Committee, its
Audit and Compliance Committee, and its Executive Committee, and is the
retired 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.
RELATED PARTY
TRANSACTIONS
Oglebay Norton Industrial Sands, Inc., a
whollyowned subsidiary of Oglebay Norton, sells ground silica to, and
purchases heavy density grinding media and ceramic mill lining from,
Ferro Corporation. Mr. Bersticker is the retired Chairman of the Board
of Ferro Corporation. During the year ended December 31, 1999, sales to
Ferro Corporation totaled $800,968 and purchases from Ferro Corporation
totaled $290,754. Oglebay Norton 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 1999.
INDEPENDENT
AUDITORS
Oglebay Norton expects a representative of
Ernst & Young LLP, the independent auditor of Oglebay Norton for the
year ended December 31, 1999, 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,
1999.
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, 1999 are being delivered to
you with this Proxy Statement.
You may obtain
additional copies of Oglebay Norton’s Annual Report on Form 10K, as
filed with the SEC, free of charge upon oral or written request to the
Secretary, Oglebay Norton Company, 1100 Superior Avenue, Cleveland, Ohio
441142598 (telephone number: (216) 861-3300).
2001 ANNUAL
MEETING
The 2001 Annual Meeting of Stockholders of
Oglebay Norton is currently scheduled to be held on April 25, 2001. The
deadline for stockholders to submit proposals to be considered for
inclusion in the proxy statement for that meeting is November 30,
2000.
Oglebay Norton’s proxies for its 2001
Annual Meeting of Stockholders will confer discretionary authority on
persons named in the proxies 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 2001 Annual Meeting, 60 days prior to the meeting would be February
24, 2001 and 90 days prior to the meeting would be January 25,
2001.
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
March 14,
2000
Appendix
A
OGLEBAY NORTON
COMPANY
1999 LONG-TERM
INCENTIVE PLAN
1.
Purpose
The purpose of the Oglebay Norton Company
1999 Long-Term Incentive Plan is to provide certain employees of Oglebay
Norton Company and its subsidiaries with incentive compensation based on
the achievement of financial, business and other performance criteria.
To achieve this purpose, the Plan provides for the authority to grant
Awards payable in Shares, in cash, or in a combination of Shares and
cash.
2.
Definitions
As used in the Plan, the following terms
shall have the meanings set forth below:
(a)
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“Award
”—A grant of Stock Options or a Cash Incentive Payment
Award under this Plan.
|
(b)
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“Board
of Directors”—The Board of Directors of the
Company.
|
(c)
|
“Cash
Incentive Payment Award”—This term has the meaning given
to it in Section 6(a)(iv).
|
(d) “Change in Control”
—A “Change of Control” will be deemed to occur if at any
time after the date of the adoption of this Plan:
|
(i) A report is filed with the
Securities and Exchange Commission (the “SEC”) on Schedule
13D or Schedule 14D-1 (or any successor schedule, form or report),
each as promulgated pursuant to the Exchange Act, disclosing that any
“person” (as the term “person” is defined in
Section 13(d) or Section 14(d)(2) of the Exchange Act) is or has
become a beneficial owner, directly or indirectly, of securities of
the Company representing twenty-five percent (25%) or more of the
combined voting power of the Company’s then outstanding
securities;
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(ii) The Company files a report or
proxy statement with the SEC pursuant to the Exchange Act disclosing
in response to Item 1 of Form 8-K thereunder or Item 6(e) of Schedule
14A thereunder that a Change in Control of the Company has or may have
occurred or will or may occur in the future pursuant to any
then-existing contract or transaction;
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(iii) The Company is merged or
consolidated with another corporation and, as a result thereof,
securities representing less than fifty percent (50%) of the combined
voting power of the surviving or resulting corporation’s
securities (or of the securities of a parent corporation in case of a
merger in which the surviving or resulting corporation becomes a
wholly-owned subsidiary of the parent corporation) are owned in the
aggregate by holders of the Company’s securities immediately
prior to such merger or consolidation;
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(iv) All or substantially all of
the assets of the Company are sold in a single transaction or a series
of related transactions to a single purchaser or a group of affiliated
purchasers; or
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(v) During any period of
twenty-four (24) consecutive months, individuals who were Directors of
the Company at the beginning of such period cease to constitute at
least a majority of the Company’s Board unless the election, or
nomination for election by the Company’s shareholders, of more
than one-half of any new Directors of the Company was approved by a
vote of at least two-thirds of the Directors of the Company then still
in office who were Directors of the Company at the beginning of such
twenty-four (24) month period.
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(e) “Code”—The
Internal Revenue Code of 1986, or any law that supersedes or replaces
it, as amended from time to time.
(f) “Committee”—The
Compensation, Organization and Governance Committee of the Board of
Directors, or any other committee of the Board of Directors that the
Board of Directors authorizes to administer this Plan.
(g) “Company”
—Oglebay Norton Company, an Ohio corporation.
(h) “Covered Employees”
—An officer of the Company or a Subsidiary whose compensation is
subject to the $1,000,000 limit on deductibility under Section 162(m) of
the Code, or any provision that supersedes or replaces Section 162(m) of
the Code, as amended from time to time.
(i) “Exchange Act”
—Securities Exchange Act of 1934, and any law that supersedes or
replaces it, as amended from time to time.
(j) “Participant”
—Any person to whom an Award has been granted under this
Plan.
(k) “Performance Criteria”
—This term has the meaning given to it in Section 7(b).
(l)
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“Performance Goal”—This term has the meaning given
to it in Section 7(a).
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(m) “Rule 16b-3”
—Rule 16b-3 under the Exchange Act, or any rule that supersedes or
replaces it, as amended from time to time.
(n) “Shares”—Common
Shares of the Company or any equity securities or securities of the
Company that are issued in substitution or exchange therefor in a
recapitalization of the Company.
(o) “Stock Option”
—This term has the meaning given to it in Section
6(a)(i).
(p) “Subsidiary”—A
corporation, limited liability company, business trust, partnership,
joint venture, or other organization of which securities having a
majority of the voting power are owned, directly or indirectly, by the
Company.
3.
Eligibility
All key employees of the Company and its
Subsidiaries shall be eligible to receive Awards.
4.
Administration
(a) Committee. Subject to Sections
4(b) and 4(c), this Plan will be administered by the Committee. The
Committee will, subject to the terms of this Plan, have the authority
to: (i) select the eligible employees who will receive Awards, (ii)
determine the number and types of Awards to be granted, (iii) determine
the terms, conditions, vesting periods, and restrictions applicable to
the Awards, (iv) establish Performance Goals for performance-based
Awards, (v) prescribe the forms of any notices, agreements, or other
instruments relating to the Awards, (vi) grant the Awards, (vii) adopt,
alter, and repeal rules governing this Plan, (viii) interpret the terms
and provisions of the Plan and any Awards granted under this Plan, and
(ix) otherwise supervise the administration of this Plan. All decisions
by the Committee will be made with the approval of not less than a
majority of its members.
(b) Awards Subject to Section 16(b) of
the Exchange Act. Notwithstanding the provisions of Section 4(a), if
any member of the Committee does not qualify as a “Non-Employee
Director” within the meaning of Rule 16b-3, the “Committee
” will, for purposes of making any Award that (i) constitutes a
“purchase of securities within the meaning of Section 16(b) of the
Exchange Act and (ii) does not otherwise qualify for an exemption under
Rule 16b-3, be deemed to consist only of those members of the Committee
who qualify as such Non-Employee Directors.
(c) Awards Subject to Section 162(m) of
the Code. Notwithstanding the provisions of Section 4(b), if any
member of the Committee does not qualify as an “outside director
” within the meaning of Section 162(m) of the Code, the
“Committee” will, for purposes of making and performance-based
Awards to Covered Employees, be deemed to consist only of those members
who qualify as such outside directors.
(d) Delegation. The Committee may
delegate any of its authority to any other person or persons that it
deems appropriate, provided the delegation does not (i) cause this Plan,
or any Awards granted under this Plan, to fail to qualify for the
exemption provided by Rule 16b-3 or (ii) result in a reduction in the
amount of compensation associated with any Award that is deductible for
federal income tax purposes under Section 162(m) of the
Code..
(e) Decisions Final. All
decisions by the Committee, and by any other person or persons to whom
the Committee has delegated authority, will be final and binding on all
persons.
(f) Expenses. The expenses of the
administration of the Plan shall be borne by the Company.
5.
Shares Available Under Plan; Limitations.
(a) Maximum Aggregate Number of
Shares. Subject to Sections 5(c) and 5(d), the total number of
Shares subject to Awards granted in any fiscal year of the Company may
not exceed one and one half percent (1-1/2%) of the number of Shares
outstanding at the beginning of the fiscal year. Shares delivered under
this Plan may consist of authorized and unissued shares, treasury
shares, or shares to be purchased by the Company, as determined by the
Committee. The maximum number of Shares authorized with respect to
Awards under the Plan, subject to adjustment in accordance with Section
5(d), shall be three hundred thousand (300,000).
(b) Maximum Number of Shares for Each
Participant. Subject to Sections 5(c) and 5(d), the number of Shares
subject to Awards granted to any Participant may not exceed three
hundred thousand (300,000) Shares in any fiscal year of the
Company.
(c) Charging of Shares. Shares
subject to an Award that is forfeited, terminated, canceled, or
surrendered without having been exercised (other than Shares subject to
an Award that is surrendered in payment of the exercise price of a Stock
Option or in payment of taxes associated with an Award) will again be
available for grant under this Plan, without reducing the number of
Shares that may be subject to Awards or that are available for the grant
of Awards in any fiscal year. The assumption of awards granted by an
organization acquired by the Company, or the grant of Awards under this
Plan in substitution for any such awards, will not reduce the number of
Shares available for the grant of Awards under this Plan.
(d) Adjustment Relating to Stock
Options. In the event of any change in the Shares by reason of a
merger, consolidation, reorganization, recapitalization, or similar
transaction, or in the event of a stock dividend, stock split,
distribution to shareholders (other than normal cash dividends), or
rights offering or similar sale of Shares for less than their fair
market value at the time of sale, the Committee will adjust the number
and class of shares that may be issued under this Plan, the number and
class of shares that may be issued to any Participant in any fiscal
year, the number and class of shares subject to outstanding Awards, the
exercise price applicable to outstanding Awards, and any value
determinations applicable to outstanding Awards.
(e) Adjustment of Cash Incentive
Payment Awards. In its sole discretion, the Committee may, but is
not required to, make an adjustment in a Participant’s Cash
Incentive Payment Award to take into account: (i) aggregate
out-of-pocket purchase price amounts which were paid for all
acquisitions and investments closed in the applicable performance period
and were not already taken into account in the Participant’s
Performance Criteria for such period; (ii) the effect of any major
change in U.S. accounting principles in the applicable performance
period; and/or (iii) the effect of any major reorganization within the
Company during the applicable performance period; provided, however,
that in no event shall any such revision result in the increase in a
Cash Incentive Payment Award if such Award is intended to qualify as
performance-based compensation under Section 162(m) of the
Code.
6.
Types of Awards. Awards may include the
following:
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(a) Stock Option—A
right to purchase a specified number of Shares, during a specified
period, and at a specified exercise price, all as determined by the
Committee.
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(b) Cash Incentive Payment
Award—An Award consisting of a Cash Incentive Payment that is
payable in cash and is contingent upon the achievement of Performance
Goals established by the Committee. Cash Incentive Payment Awards are
determined in accordance with the following formula approved by the
Committee: Each Participant to whom a Cash Incentive Payment Award is
granted is paid a base salary designed to be competitive in the
marketplace, with the salary level determined by the Committee. The
amount of the Cash Incentive Payment Award is then determined based on
the performance
of the Company and its business units in relation to targeted cumulative
earnings before interest, taxes, depreciation and amortization (
“EBITDA”) and earnings per share (“EPS”)
performance measures for the four-year period from 1999 through 2002,
as determined in advance by the Committee. The EBITDA performance
measure begins to generate a payout when EBITDA growth exceeds 5%
annually, and the EPS performance measure begins to generate a payout
when eighty percent of targeted cumulative EPS is achieved for the
four-year period. A “pool” is generated by these measures
from which distributions are to be paid to the Participants granted
such Awards. Payouts are determined from a table created in 1998 by
the Committee reflecting the then competitive long-term incentive
compensation at each such Participant’s base salary level. No
amounts are payable if the target EBITDA and EPS amounts are not met.
The Committee shall not have discretion to increase the amount
otherwise payable pursuant to a Cash Incentive Payment Award upon
attainment of Performance Goals.
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7.
Performance-Based Awards under Section 162(m) of the
Code
(a) Selection of Participants and
Establishment of Performance Goals. The Committee will determine the
period of time during which any Award that is performance-based for
purposes of Section 162(m) of the Code may be earned. The Committee will
also establish, not later than 90 days after the commencement of the
award period (or such earlier or later date as may be the applicable
deadline for the Award to be performance-based for purposes of Section
162(m) of the Code), one or more performance objectives (
“Performance Goals”) to be met by the Company, or by one or
more of its Subsidiaries or other business units, as a condition to the
payment of the Award. The Performance Goals may, in the discretion of
the Committee, include a range of performance objectives (such as
minimum, middle, and maximum objectives) the achievement of which will
entitle Participants to receive different amounts of
compensation.
(b) Performance Criteria. The
Performance Goals will be based on one or more of the following criteria
(“Performance Criteria”): sales, earnings, earnings per Share,
return on equity, completion of acquisitions or other projects, and
market price per Share. These Performance Criteria may be measured
before or after taxes, interest, depreciation, amortization,
discontinued operations, affect of accounting changes, acquisition
expenses, restructuring expenses, non-operating items, or usual charges,
as determined by the Committee at the time the Performance Goals are
established.
8. Deferral of
Payment
The Committee may, in its discretion,
permit Participants to defer the payment of some or all of the Shares or
cash subject to their Awards, as well as other compensation or fees, in
accordance with procedures established by the committee to assure that
the recognition of taxable income is deferred under the
Code.
9.
Manner of Payment of Exercise Price
The exercise price of a Stock Option may
be paid in cash, by the transfer of Shares, by the surrender of all or
part of an Award (including the Award being exercised), or by a
combination of these methods, as and to the extent permitted by the
Committee. The Committee may prescribe any other method of paying the
exercise price that it determines to be consistent with applicable law
and the purpose of this Plan, including loans by that
Company.
10.
Taxes Associated with Award
Prior to the payment of an Award, the
Company may withhold, or require a Participant to remit to the Company,
an amount sufficient to pay any federal, state, and local taxes
associated with the Award. The Committee may, in its discretion and
subject to such rules as the Committee may adopt, permit a Participant
to pay any or all taxes associated with the Award in cash, by the
transfer of Shares, by the surrender of all or part of an Award
(including the Award being exercised), or by a combination of these
methods.
11.
Termination of Employment
If the employment of a Participant
terminates for any reason, all unexercised, deferred, and unpaid Awards
may be exercisable or paid only in accordance with rules established by
the Committee.
12.
Termination of Awards under Certain Conditions
The Committee may cancel any unexpired,
unpaid, or deferred Award at any time if the Participant is not in
compliance with all applicable provisions of this Plan or with the terms
or conditions of the Award or if the Participant, without the prior
written consent of the Company, engages in any of the following
activities:
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(i) Renders services to an
organization, or engages in a business, that is, in the judgment of
the Committee, in competition with the Company.
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(ii) Discloses to anyone outside
of the Company, or uses for any purpose other than the Company’s
business, any confidential information or material relating to the
Company, whether acquired by the Participant during or after
employment with the Company.
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The Committee may, in its discretion and
as a condition to the exercise of an Award, require a Participant to
acknowledge in writing that he or she is in compliance with all
applicable provisions of this Plan and with the terms and conditions of
the Award and has not engaged in any activities referred to in clauses
(i) and (ii) above.
13.
Change in Control; Acquisition of the Company
(a) Change in Control. In the event
of a Change in Control of the Company, unless otherwise determined by
the Committee, (i) all Stock Options then outstanding will become fully
exercisable as of the date of the Change in Control and (ii) all Cash
Incentive Payment Awards will be deemed to have been earned to the
extent determined by the Committee.
(b) Acquisition of the Company.
With respect to Stock Options, in the event of an acquisition of the
Company in which the holders of Shares receive other securities or cash
in exchange for their Shares, the Committee may, in its discretion,
arrange for (1) the grant by the acquirer of substitute Stock Options
that entitle Participants to receive, in lieu of the Shares they
otherwise would be entitled to receive, the securities or cash for which
the Shares would have been exchanged in the acquisition or (2) the
cancellation of the Stock Options in consideration of the securities or
cash for which the Shares would have been exchanged in the acquisition,
net of any exercise price.
14.
Amendment or Suspension of this Plan; Amendment of Outstanding
Awards
(a) Amendment or Suspension of this
Plan. The Board of Directors may amend or suspend this Plan at any
time. Shareholder approval for any such amendment will be required only
to the extent necessary to preserve the deductibility of compensation
associated with any Award for federal income tax purposes under Section
162(m) of the Code or to the extent required by applicable rules of any
stock exchange.
(b) Amendment of Outstanding
Awards. The Committee may, in its discretion, amend the terms of any
Award, prospectively or retroactively, but no such amendment may, except
as provided in Section 13(b), impair the rights of any Participant
without his or her consent. The Committee may, in whole or in part,
waive any restriction or conditions applicable to, or accelerate the
vesting of, any Award.
15. No
Trust
Neither the Plan nor any Award shall
create or be construed to create a trust or separate fund of any kind or
a fiduciary relationship between the Company or any Participant. To the
extent that the Participant acquires a right to receive payments from
the Company in respect of any Award, such rights shall be no greater
than the right of any unsecured general creditor of the
Company.
16.
Nonassignability
Unless otherwise determined by the
Committee, (i) no Award granted under this Plan may be transferred or
assigned by the Participant to whom it is granted other than by will,
pursuant to the laws of descent and distribution, or pursuant to a
qualified domestic relates order and (ii) an Award granted under this
Plan may be exercised, during the Participant’s lifetime, only by
the Participant or by the Participant’s guardian or legal
representative.
17.
Governing Law
The interpretation, validity, and
enforcement of this Plan will, to the extent not otherwise governed by
the Code or the securities law of the United States, be governed by the
law of the State of Ohio.
18.
Rights of Employees
Nothing in this Plan will confer upon any
Participant the right to continued employment by the Company or any of
its Subsidiaries or limit in any way the Company’s or a Subsidiary
’s right to terminate any Participant’s employment at
will.
19.
Effective and Termination Dates
(a) Effective Date. This Plan will
become effective on the date it is approved by the holders of a majority
of the Shares then outstanding, but with effect from January 1,
1999.
(b) Termination Date. This Plan
will continue in effect until terminated by the Board of
Directors.
DETACH CARD
OGLEBAY NORTON COMPANY -
PROXY
PROXY SOLICITED ON BEHALF OF DIRECTORS
ANNUAL MEETING OF STOCKHOLDERS TO BE
HELD ON APRIL 26, 2000
At the Annual Meeting of Stockholders
of Oglebay Norton Company to be held at 10:00 a.m. on April 26, 2000, at
The Forum Conference and Education Center, 1375 East Ninth Street,
Cleveland, Ohio, and at any adjournment thereof. John N. Lauer,
Madeleine W. Ludlow, 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:
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Electing three directors of the class whose term will
expire in 2003. The nominees of the Board of Directors are: James T.
Bartlett, Albert C. Bersticker, and William G. Pryor, or in the event
of the unavailability of any nominee, such other person as the Board
of Directors may recommend. |
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FOR the nominees [_] |
WITHHOLD AUTHORITY [_] |
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James T. Bartlett, Albert C. Bersticker, and
William G. Pryor |
to vote for the following
nominee(s): |
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| 2. |
Approving the Oglebay Norton Company 1999
Long-Term
Incentive Plan |
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FOR [_] |
AGAINST [_] |
WITHHOLD AUTHORITY [_] |
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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)
DETACH CARD
( Continued from the other side)
This proxy, when property 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
nominees for the director listed on the reverse side of this proxy and
FOR the approval of the Oglebay Norton Company 1999 Long-Term Incentive
Plan.
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Dated ____________________, 2000
______________________________
Signature
______________________________
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.
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CHANGE OF ADDRESS
Please indicate change of address below:
_______________________________
________________________________
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PLEASE SIGN DATE AND RETURN THIS PROXY FORM PROMPTLY
