<PAGE> 1
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement [ ] CONFIDENTIAL, FOR USE OF THE COMMISSION
ONLY (AS PERMITTED BY RULE 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
</TABLE>
OMNOVA SOLUTIONS INC.
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
(NAME OF PERSON(S) FILING PROXY STATEMENT, IF OTHER THAN THE REGISTRANT)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is
calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
- --------------------------------------------------------------------------------
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<PAGE> 2
[OMNOVA SOLUTIONS INC. LOGO]
OMNOVA SOLUTIONS INC.
175 GHENT ROAD, FAIRLAWN, OHIO 44333
------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
------------------
To the Shareholders of February 18, 2000
OMNOVA Solutions Inc.: Fairlawn, Ohio
The Annual Meeting of Shareholders of OMNOVA SOLUTIONS INC. ("OMNOVA
Solutions" or the "Company") will be held at the Akron West Hilton Inn, 3180
West Market Street, Fairlawn, Ohio, on March 29, 2000 at 9 o'clock a.m. to
consider and act on the following matters:
1. Election of three Directors to serve a term of three years. (page
2)
2. Ratification of the Board of Directors' selection of Ernst &
Young LLP as independent auditors to audit the books of account and other
corporate records of the Company for 2000. (page 26)
3. Such other matters as may properly come before the meeting or any
adjournments thereof.
The Board of Directors has fixed the close of business on February 14, 2000
as the record date for the determination of shareholders entitled to notice of
and to vote at the meeting.
This is the solicitation by the Company of proxies for its first Annual
Meeting of Shareholders. In June 1999, the Company was organized as a wholly
owned subsidiary of GenCorp Inc. as part of a plan to spin-off GenCorp's
Performance Chemicals and Decorative & Building Products businesses. On October
1, 1999, OMNOVA Solutions became an independent, publicly-held company when
GenCorp Inc. distributed to its shareholders a dividend payable in one share of
OMNOVA Solutions common stock (the "Common Stock") for each share of GenCorp
common stock held on the September 27, 1999 record date (the "Spin-off").
THE COMPANY HAS A GREAT NUMBER OF SHAREHOLDERS ENTITLED TO VOTE AT THE
ANNUAL MEETING WHO OWN FEWER THAN 100 SHARES. WHETHER YOU OWN ONE SHARE OR
HUNDREDS OF SHARES, YOUR VOTE IS IMPORTANT. THEREFORE, WHETHER OR NOT YOU EXPECT
TO ATTEND THE MEETING IN PERSON, YOU ARE URGED TO PROMPTLY VOTE, SIGN, DATE AND
RETURN THE ENCLOSED PROXY. YOUR COOPERATION WILL ENABLE THE COMPANY TO AVOID
ADDITIONAL EXPENSE AND DELAY. A RETURN ENVELOPE, REQUIRING NO POSTAGE IF MAILED
IN THE UNITED STATES, IS ENCLOSED FOR YOUR CONVENIENCE.
By Order of the Board of Directors,
CYNTHIA A. SLACK, Secretary
<PAGE> 3
ANNUAL MEETING
OF
OMNOVA SOLUTIONS INC.
175 GHENT ROAD, FAIRLAWN, OHIO 44333
------------------
PROXY STATEMENT
February 18, 2000
This Proxy Statement is being mailed to shareholders beginning on or about
February 18, 2000 in connection with the solicitation by the Company, on behalf
of its Board of Directors, of proxies to be used at the first Annual Meeting of
Shareholders of the Company which is to be held on March 29, 2000 at the Akron
West Hilton Inn, 3180 West Market Street, Fairlawn, Ohio, for the purposes set
forth in the accompanying Notice of Annual Meeting of Shareholders.
If the accompanying form of proxy is signed, dated and returned to the
Company's transfer agent, The Bank of New York, it will be voted, but it may be
revoked at any time before it is voted. Shares in respect of which a proxy or
other written instruction is not received by the Bank will not be voted. The
presence of a shareholder at the meeting does not automatically revoke any proxy
previously given. A shareholder, without affecting any vote previously taken,
may revoke his or her proxy by giving notice to the Company in writing or in
person at the meeting.
Any shares held for the account of a shareholder participating in the OMNOVA
Solutions dividend reinvestment program will be voted in accordance with the
participant's instructions set forth in the proxy returned to the Bank in
respect of the shares which the shareholder holds of record. If a proxy in
respect of the shares which the shareholder holds of record is not returned to
the Bank, the shareholder's dividend reinvestment program shares will not be
voted.
The Trustees for the Company's and GenCorp's savings and profit sharing plans,
Mellon Bank N.A. and Royal Trust Corporation of Canada, will each vote any
shares held in any OMNOVA Solutions' Stock Funds for participants' accounts in
accordance with the confidential voting instructions returned by the
participants to the Trustees, c/o The Bank of New York. If such confidential
voting instructions are not returned, the participants' shares will be voted by
the Trustees in accordance with the instructions of the Benefits Management
Committee for the plans.
A copy of the Company's 1999 Annual Report, including financial statements, is
enclosed in the envelope with this Proxy Statement.
At the close of business on February 14, 2000, there were 41,194,851
outstanding shares of Common Stock. Holders of outstanding shares of Common
Stock are entitled to one vote for each full share held on the February 14, 2000
record date.
1
<PAGE> 4
NOMINATION AND ELECTION OF DIRECTORS
The Company's Code of Regulations provides that the number of directors of the
Company will not be less than seven nor more than seventeen as may be determined
from time to time only (i) by a vote of a majority of the whole Board or (ii) by
the affirmative vote of the holders of at least 80% of the voting power of the
Company, voting together as a single class. The directors are classified into
three classes, designated as Class I, Class II and Class III. The directors
first appointed to Class I hold office for a term expiring at this Annual
Meeting; the directors first appointed to Class II hold office for a term
expiring at the 2001 annual meeting; and the directors first appointed to Class
III hold office for a term expiring at the 2002 annual meeting. Directors
elected at this Annual Meeting will hold office for a three-year term expiring
at the 2003 annual meeting.
The Board has set the number of directors at nine, three of which are to be
elected at this Annual Meeting, and recommends the election of its three
nominees named below.
Abstentions and non-votes are counted as present for purposes of determining
whether a quorum is present at the meeting. Directors are elected by a plurality
of the votes cast (i.e. the nominees receiving the greatest number of votes will
be elected). Votes cast for a nominee will be counted in favor of election.
Withheld votes and broker non-votes will not count either in favor of, or
against, election of a nominee. It is the intention of the persons named in the
accompanying form of proxy, unless authorization to do so is withheld, to vote
for the election of the Board's three nominees. Proxies cannot be voted for more
than three persons. If, prior to the meeting, a nominee becomes unable to serve
as a director for any reason, the proxyholders reserve the right to substitute
another person of their choice in such nominee's place and stead. It is not
anticipated that any nominee will be unavailable for election.
The Company has no provision for cumulative voting in the election of
directors. Holders of Common Stock are, therefore, entitled to cast one vote for
each share held on the February 14, 2000 record date for each nominee for
director.
The information set forth below is given as of December 31, 1999 unless stated
otherwise. Each nominee for election and each director continuing in office has
had the same principal occupation or employment during the past five years
unless otherwise indicated.
NOMINEES FOR ELECTION AT THIS MEETING TO THREE-YEAR TERMS EXPIRING IN MARCH 2003
(CLASS I):
DR. R. BYRON PIPES
Director of OMNOVA Solutions effective October 1, 1999
Distinguished Visiting Scientist, College of William and Mary, Williamsburg, VA
since 1998. Seventeenth President of Rensselaer Polytechnic Institute, Troy, NY
from 1993 until 1998. Provost of the University of Delaware from 1991 until 1993
and Dean of the College of Engineering from 1985 until 1993. Director of GenCorp
from 1993 until the Spin-off. Chairman of the Nominating & Corporate Governance
Committee and member of the Executive and Finance Committees of the OMNOVA
Solutions Board. Age 58.
2
<PAGE> 5
JOHN B. YASINSKY
Director of OMNOVA Solutions effective June 30, 1999
Chairman of the Board and Chief Executive Officer of the Company since January
4, 2000. Chairman, Chief Executive Officer and President of the Company from its
formation until January 4, 2000. Previously, Chairman of the Board of GenCorp
from March 1995 until the Spin-off and Chief Executive Officer and President of
GenCorp from July 1994 until the Spin-off. A Director of GenCorp from November
1993 until the Spin-off (and President and Chief Operating Officer of GenCorp
from November 1993 until July 1994). Previously Group President, Westinghouse
Electric Corporation, Pittsburgh, PA (power generation and electrical equipment
manufacturing company) from February 1993 until November 1993; President,
Westinghouse Power Systems from 1990 to 1993. Director of CMS Energy
Corporation, Dearborn, MI and Consumers Power Company, Jackson, MI. Chairman of
the Executive Committee of the OMNOVA Solutions Board. Age 60.
KEVIN M. MCMULLEN
New nominee
President and Chief Operating Officer of the Company since January 4, 2000. Vice
President of the Company and President, Decorative & Building Products from
September 1999 until January 2000. Previously, Vice President of GenCorp and
President of GenCorp's Decorative & Building Products business unit from
September 1996 until the Spin-off. Also previously, General Manager of General
Electric Corporation's Commercial & Industrial Lighting business from 1993 to
1996 and General Manager of General Electric Lighting's Business Development and
Strategic Planning activities from 1991 to 1993; Senior Engagement Manager at
McKinsey and Company, a business consulting firm, from 1985 to 1991. Age 39.
DIRECTORS WHOSE TERMS CONTINUE UNTIL MARCH 2001 (CLASS II):
BOB G. GOWER
Director of OMNOVA Solutions effective November 10, 1999
Chairman of Specified Fuels & Chemicals, L.L.C., Houston, TX (a specialized
reference fuels producer and custom chemicals manufacturer) since 1996;
previously, Chief Executive Officer of Lyondell Petrochemical Company from 1985
until retirement in 1996. Director of Kirby Corporation, Houston, TX. Member of
the Audit, Finance and Nominating & Corporate Governance Committees of the
OMNOVA Solutions Board. Age 62.
DIANE E. MCGARRY
Director of OMNOVA Solutions effective October 1, 1999
President, North American General Markets Operations, Xerox Corporation,
Stamford, CT (a manufacturer of copiers and electronic office equipment) since
January 2000; previously, Senior Vice President, Eastern Operations, North
American Solutions Group of Xerox Corporation, Rochester, NY from January 1999
until January 2000; Vice President/General Manager, Color Solutions Business
Unit of Xerox from March 1998 until January 1999; Chairman, President and Chief
Executive Officer of Xerox Canada Inc., North York, Ontario, Canada, from 1993
until March 1998. Director of GenCorp from 1995 until the Spin-off. Member of
the Audit, Organization & Compensation and Nominating & Corporate Governance
Committees of the OMNOVA Solutions Board. Age 50.
3
<PAGE> 6
STEVEN W. PERCY
Director of OMNOVA Solutions effective October 1, 1999
Former Chairman and Chief Executive Officer of BP America Inc., Cleveland, OH (a
petroleum extraction, refining and distribution company) from 1996 until March
1999 and the BP/Amoco merger; Executive Vice President of BP America and
President of BP Oil in the United States from 1992 to 1996. Director of GenCorp
from 1997 until the Spin-off. Chairman of the Audit Committee and member of the
Organization & Compensation and Nominating & Corporate Governance Committees of
the OMNOVA Solutions Board. Age 53.
DIRECTORS WHOSE TERMS CONTINUE UNTIL MARCH 2002 (CLASS III):
EDWARD P. CAMPBELL
Director of OMNOVA Solutions effective October 1, 1999
President and Chief Executive Officer and Director of Nordson Corporation,
Westlake, OH (an international manufacturer of industrial application equipment)
since 1997. Prior to that time, Chief Operating Officer of Nordson from 1994 to
1997 and Vice President of Nordson from 1988 to 1994. Director of KeyCorp,
Cleveland, OH. Director of GenCorp from May 1999 until the Spin-off. Chairman of
the Finance Committee and member of the Audit and Organization & Compensation
Committees of the OMNOVA Solutions Board. Age 50.
CHARLES A. CORRY
Director of OMNOVA Solutions effective October 1, 1999
Former Chairman of the Executive Committee of USX Corporation, Pittsburgh, PA
(producer of energy and metal products) until May 1999 and Chairman and Chief
Executive Officer of USX from 1989 until retirement in 1995 (President and a
Director since February 1988). Director of USX Corporation, Pittsburgh, PA;
Mellon Financial Corporation and Mellon Bank, N.A., Pittsburgh, PA. Director of
GenCorp from 1995 until the Spin-off. Chairman of the Organization &
Compensation Committee and member of the Finance, Nominating & Corporate
Governance and Executive Committees of the OMNOVA Solutions Board. Age 67.
DAVID A. DABERKO
Director of OMNOVA Solutions effective November 10, 1999
Chairman and Chief Executive Officer of National City Corporation, Cleveland, OH
(a diversified financial services company) since 1995; also previously President
and Chief Operating Officer from 1993 until 1995 and Deputy Chairman of the
Corporation and President, National City Bank, Cleveland, from 1987 until 1993.
Director of National City Corporation, Cleveland, OH. Member of the Audit,
Finance and Organization & Compensation Committees of the OMNOVA Solutions
Board. Age 54.
4
<PAGE> 7
HOLDINGS OF SHARES OF THE COMPANY'S CAPITAL STOCK
SECURITY OWNERSHIP OF MANAGEMENT
The following table lists share ownership of the Company's Common Stock by
directors, nominees and executive officers of the Company as of February 1,
2000. Unless otherwise indicated, share ownership is direct.
<TABLE>
<CAPTION>
PERCENT OF
NUMBER OF SHARES OUTSTANDING SHARES
OF COMMON STOCK OF COMMON
NAME BENEFICIALLY OWNED(1) STOCK(2)
- -------------------------------------------------------------------------------------------------------
<S> <C> <C>
Edward P. Campbell 1,252 *
Charles A. Corry 3,150 *
David A. Daberko 1,750 *
Bob G. Gower 20,250 *
Diane E. McGarry 1,837 *
Steven W. Percy 1,093 *
R. Byron Pipes 2,048 *
John B. Yasinsky 1,017,053(3)(4) 2.46%
Kevin M. McMullen 154,590(3)(4) *
Nathaniel J. Mass 170,310(3)(4) *
Michael E. Hicks 74,347(3)(4) *
Marvin W. Zima 95,958(3)(4) *
All directors and executive officers as a group 1,664,506 4.04%
(16 persons)
</TABLE>
- ---------------
* Less than one percent.
(1) Except as otherwise indicated below, beneficial ownership means the sole
power to vote and dispose of shares.
(2) Calculated using 41,273,251 shares as the number of outstanding shares.
(3) Includes shares subject to stock options which may be exercised within 60
days of February 1, 2000 as follows: Mr. Yasinsky, 912,496 shares; Mr.
McMullen, 147,045 shares; Mr. Mass, 159,454 shares; Mr. Hicks, 49,656
shares; Mr. Zima, 61,501 shares, and all executive officers as a group,
1,419,987 shares.
(4) Includes the approximate number of shares credited to the individual's
account as of February 1, 2000 under the GenCorp/OMNOVA Solutions Joint
Retirement Savings Plan, and where applicable, under the GenCorp Profit
Sharing Retirement and Savings Plan, a savings plan for salaried employees
sponsored by GenCorp prior to September 1989.
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
Based solely upon a review of reports of ownership, reports of changes of
ownership and written representations under Section 16(a) of the Securities
Exchange Act of 1934 which were furnished to the Company during or with respect
to 1999 by persons who were, at any time during 1999, directors or officers of
the Company or beneficial owners of more than 10% of the outstanding shares of
Common Stock, no such person failed to file on a timely basis any report
required by such section during 1999.
5
<PAGE> 8
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table lists the only persons believed by the Company to be the
beneficial owners of more than five percent of the 41,459,951 shares of the
Company's Common Stock outstanding as of December 31, 1999. The dates applicable
to the beneficial ownership indicated are set forth in the footnotes below.
<TABLE>
<CAPTION>
NUMBER OF SHARES PERCENT OF
OF COMMON STOCK OUTSTANDING SHARES
NAME BENEFICIALLY OWNED OF COMMON STOCK
- -----------------------------------------------------------------------------------------------
<S> <C> <C>
GenCorp/OMNOVA Solutions joint 5,588,347 13.48%(1)
employee savings plans
175 Ghent Road
Fairlawn, OH 44333
FMR Corp. 4,671,200 11.18%(2)
82 Devonshire Street
Boston, MA 02109
Mario J. Gabelli/Gabelli Funds Inc. 3,256,287 7.79%(3)
One Corporate Center
Rye, NY 10580
Franklin Mutual Advisers, LLC 2,982,200 7.1%(4)
51 John F. Kennedy Parkway
Short Hills, NJ 07078
</TABLE>
- ---------------
(1) Shares held at December 31, 1999 by the Trustee for the plans, Mellon Bank,
included 5,176,311 shares held for the GenCorp/OMNOVA Solutions Joint
Retirement Savings Plan and 412,036 shares held for the GenCorp Profit
Sharing Retirement and Savings Plan. Shares are voted by the Trustee in
accordance with instructions of the participating employees to whose
accounts such shares are allocated, except that shares for which no employee
instructions are received and shares held for the plans which have not been
allocated to participants' accounts are voted by the Trustee in accordance
with instructions of the Benefits Management Committee ("Committee") for the
plans. The Committee presently consists of four persons, two of whom are
officers of the Company and two of whom are officers of GenCorp.
(2) FMR Corp. reported sole dispositive power, but no voting power, over
4,671,200 shares held by it (which includes 3,064,000 shares held by
Fidelity Value Fund) in a Schedule 13G dated February 9, 2000 and filed with
the Securities and Exchange Commission.
(3) Gabelli Funds Inc., et al., according to Schedule 13D filed with the
Securities and Exchange Commission on October 14, 1999, reported that, based
on 41,797,551 shares outstanding (as reported in OMNOVA Solutions' Form 10-Q
for the quarter ended August 31, 1999), Gabelli Funds, LLC, as agent had
sole dispositive and voting power over 978,000 shares; GAMCO Investors Inc.,
as agent, had sole dispositive power over 2,275,662 shares and voting power
over 2,260,662 shares; and Gabelli Foundation, Inc. had sole voting and
dispositive power over 2,625 shares.
(4) Franklin Mutual Advisers, LLC reported sole voting and dispositive authority
with respect to 2,982,200 shares held by it in Schedule 13G dated January
13, 2000 and filed with the Securities and Exchange Commission.
6
<PAGE> 9
BOARD OF DIRECTORS MEETINGS AND COMMITTEES
MEETINGS OF THE BOARD
During fiscal 1999, following the October 1, 1999 Spin-off from GenCorp the
Company's Board of Directors held one meeting and the various Committees of the
Board met a total of three times. Each director attended 75% or more of the
total meetings of the Board of Directors and the Board Committees on which the
director served since the Spin-off except Dr. R. Byron Pipes who was absent from
one Committee meeting and therefore attended 66% of the total meetings of the
Board and the Committees on which he served. However, for fiscal 1999, Dr. Pipes
attended 96% of the total meetings of the OMNOVA Solutions and GenCorp Boards
and Committees on which he served during his tenure.
ORGANIZATION & COMPENSATION COMMITTEE
The Organization & Compensation Committee reviews periodically the
organization of the Company and its management, including major changes in the
organization of the Company and the responsibility of management as proposed by
the Chief Executive Officer; monitors executive development and succession
planning; reviews the effectiveness and performance of senior management and
makes recommendations to the Board concerning the appointment and removal of
officers; periodically reviews the compensation philosophy, policies and
practices of the Company and makes recommendations to the Board concerning major
changes, as appropriate; annually reviews changes in the Company's employee
benefit, savings and retirement plans and reports thereon to the Board;
administers the Company's incentive and deferred compensation plans; and
approves, and in some cases recommends to the Board of Directors for approval,
the compensation of employee-directors, officers, and principal executives of
the Company. No meetings were held since the Spin-off during fiscal 1999.
Additional information regarding the Organization & Compensation Committee
begins on page 17.
AUDIT COMMITTEE
The Audit Committee reviews and evaluates the scope of the audits to be
performed, the adequacy of services performed by, and the fees and compensation
of the independent auditors and receives and reviews a report from the
independent auditors prior to the publication of the audited financial
statements; considers and recommends to the Board of Directors the selection of
the independent auditors to examine the consolidated financial statements of the
Company for the next year; reviews and evaluates the scope and appropriateness
of the Company's internal audit programs and plans and its system of internal
control; reviews and evaluates the appropriateness of the Company's accounting
principles and practices and financial reporting and receives periodic reports
from the Internal Audit and Law Departments on a number of matters, including
compliance with the Company's Policy on Legal and Ethical Conduct; periodically
reviews and advises the Board regarding the status of the Company's
environmental policies and performance under its environmental compliance
programs; and periodically reviews and reports to the Board regarding the status
of, and estimated liabilities for, environmental remediation. One meeting was
held since the Spin-off during fiscal 1999. Members of the Audit Committee are:
Steven W. Percy, Chairman, Edward P. Campbell, David A. Daberko, Bob G. Gower
and Diane E. McGarry.
EXECUTIVE COMMITTEE
During the intervals between meetings of the Board of Directors, the Executive
Committee, unless restricted by resolution of the Board, may exercise, under the
control and direction of the Board, all of the powers of the Board of Directors
in the management and control of the business of the Company. No meetings were
held since the Spin-off
7
<PAGE> 10
during fiscal 1999. Members of the Executive Committee are: John B. Yasinsky,
Chairman, Charles A. Corry and R. Byron Pipes.
FINANCE COMMITTEE
The Finance Committee makes recommendations to the Board in regard to planning
with respect to the Company's capital structure and raising of its long-term
capital and with regard to dividend action of the Company; reviews the
performance and management of the Company's employee benefit funds; and makes
recommendations to the Board in regard to contributions to any pension plan,
profit sharing, retirement or savings plan of the Company, or any proposed
changes in the funding method or interest assumption or in amortization of
liabilities in connection with funding any such plan. One meeting was held since
the Spin-off during fiscal 1999. Members of the Finance Committee are: Edward P.
Campbell, Chairman, Charles A. Corry, David A. Daberko, Bob G. Gower and R.
Byron Pipes.
NOMINATING & CORPORATE GOVERNANCE COMMITTEE
The Nominating & Corporate Governance Committee periodically reviews and makes
recommendations to the Board concerning the criteria for selection and retention
of directors, the composition of the Board, structure and function of Board
committees, retirement policies and compensation and benefits of directors;
recommends to the Board qualified candidates to serve as directors of the
Company and aids in attracting qualified candidates to the Board; and considers
and makes recommendations to the Board concerning director nominations submitted
by shareholders. One meeting was held since the Spin-off during fiscal 1999.
Members of the Nominating & Corporate Governance Committee are: R. Byron Pipes,
Chairman, Charles A. Corry, Bob G. Gower, Diane E. McGarry and Steven W. Percy.
8
<PAGE> 11
SUMMARY COMPENSATION TABLE
The following table sets forth compensation information for the Chief
Executive Officer of the Company and for each of the Company's four most highly
compensated executive officers who were serving as such at the end of fiscal
1999.
<TABLE>
<CAPTION>
ANNUAL COMPENSATION(1) LONG TERM COMPENSATION
--------------------------------- ------------------------------
AWARDS(2) PAYOUTS
------------------------------ ------------
OTHER ANNUAL RESTRICTED SECURITIES LTIP PAYOUTS ALL OTHER
NAME AND CURRENT SALARY BONUS COMPENSATION STOCK AWARDS UNDERLYING COMPENSATION COMPENSATION
PRINCIPAL POSITION YEAR ($) ($) ($) ($) OPTIONS/SARS ($)(3) ($)(4)(5)
------------------ ---- ------- ------- ------------- ------------ --------------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
John B. Yasinsky....... 1999 725,000 675,000(6) 16,000(9) -- 110,000 1,226,970(11) 68,625
Chairman and Chief 1998 695,833 800,000(7) 16,000(9) -- 85,000 420,000(12) 69,563
Executive Officer 1997 666,667 850,000(8) 16,000(9) -- 100,000 698,200(13) 54,466
Kevin M. McMullen...... 1999 285,000 175,000(6) -- -- 25,000 115,000(11) 22,951
President and Chief 1998 275,000 225,000(7) -- -- 20,000 125,441(13) 20,063
Operating Officer 1997 270,833 175,000(8) -- -- 25,000 -- 16,405
Nathaniel J. Mass...... 1999 353,500 199,750(6) -- -- 30,000 344,558(11) 28,693
Senior Vice President, 1998 338,333 283,000(7) 6,643(10) -- 24,000 98,539(12) 28,050
Strategic Growth 1997 320,833 285,000(8) 156,696(10) -- 30,000 -- 18,324
Marvin W. Zima......... 1999 240,708 150,000(6) 10,000(9) -- 25,000 100,000(11) 21,488
Vice President; 1998 211,667 208,000(7) 10,000(9) -- 15,000 23,143(12) 15,266
President, 1997 202,500 87,000(8) 10,000(9) -- 20,000 74,456(13) 16,782
Performance Chemicals
Michael E. Hicks....... 1999 194,773 175,000(6) -- -- 20,000 161,536(11) 16,628
Senior Vice President 1998 160,000 66,900(7) -- -- 5,000 42,175(12) 14,002
and Chief Financial 1997 150,883 75,200(8) -- -- 13,000 70,271(13) 11,930
Officer; Treasurer
</TABLE>
- ---------------
(1) For fiscal years 1997 and 1998 amounts shown represent compensation
provided by GenCorp. For fiscal year 1999 amounts shown represent
compensation provided by GenCorp until October 1, 1999 and compensation
provided by the Company after that time.
(2) For fiscal years 1997, 1998 and 1999 amounts shown represent stock options
granted by GenCorp. See the table entitled Option/SAR Grants in Last
Fiscal Year below.
(3) For fiscal years 1997 and 1998 amounts shown represent compensation
provided by GenCorp. For fiscal year 1999 amounts shown represent
compensation paid by the Company. Amounts shown for 1999 include amounts
attributable to the 1997-1999 performance period and special payments
attributable to the 1998-2000 and 1999-2001 performance periods. See
footnote (11).
(4) Amounts accrued as dividend and interest earnings on prior years' awards
under GenCorp's Stock Incentive Compensation Plan. Dividends declared on
GenCorp common stock credited to the executive's account in the trust fund
were credited to the executive's account as an additional number of shares
determined by dividing the aggregate amount of the dividend by the market
value of common stock on the dividend date. The actual value of the shares
of GenCorp common stock distributed was based upon the market value of
GenCorp common stock at the payment date. Amounts accrued during 1999, and
the number of shares of GenCorp common stock attributable thereto were:
Mr. Zima, $1,296 or 64.810 shares and Mr. Hicks, $4,854 or 242.700 shares.
The actual value and number of shares of GenCorp common stock distributed
on September 17, 1999 were: Mr. Zima, $35,080 or 1,754 shares and Mr.
Hicks, $61,420 or 3,071 shares. Messrs. Yasinsky, McMullen and Mass did
not participate in the Plan.
9
<PAGE> 12
(5) Company contributions to the executive's account in the GenCorp Retirement
Savings Plan and the GenCorp/OMNOVA Solutions Joint Retirement Savings
Plan and, where applicable, the amount credited to the executive's account
in OMNOVA Solutions Benefits Restoration Plan, a nonfunded plan which
restores to the individual's account amounts otherwise excluded due to
limitations imposed by the Internal Revenue Code on contributions and
includable compensation under qualified plans. Amounts credited during
1999 were: Mr. Yasinsky $68,625; Mr. McMullen $22,951; Mr. Mass $28,643;
Mr. Zima $20,192; and Mr. Hicks $11,774.
(6) For fiscal 1999, annual bonuses were calculated based on actual
performance up to the date of the Spin-off and budgeted performance from
the date of the Spin-off through November 30, 1999.
(7) Elected officers received 20% of their net 1998 incentive bonuses in
shares of GenCorp common stock (based upon the closing price on January
29, 1999 as reported on the NYSE) as follows: Mr. Yasinsky, 4,163 shares;
Mr. McMullen, 1,146 shares; Mr. Mass, 1,416 shares; Mr. Zima, 991 shares;
and Mr. Hicks, 307 shares.
(8) Elected officers received 20% of their net 1997 incentive bonuses in
shares of GenCorp common stock (based upon the closing price on January
30, 1998 as reported in the NYSE) as follows: Mr. Yasinsky, 4,179 shares;
Mr. McMullen, 837 shares; Mr. Mass, 1,349 shares; Mr. Zima, 2,344 shares;
and Mr. Hicks, 2,178 shares.
(9) Cash allowance in lieu of a company provided automobile. Perquisites and
other personal benefits provided to the other OMNOVA Solutions officers
listed in the table during 1999, 1998 and 1997 did not exceed disclosure
thresholds established by the Securities and Exchange Commission.
(10) Reimbursement for taxes payable in connection with relocation.
(11) Amounts paid for the 1997-1999, 1998-2000 and 1999-2001 performance periods
under GenCorp's Long-Term Incentive Program. Amounts paid for the 1997-1999
performance period were determined as of the Spin-off based on actual
performance up to the date of the Spin-off and planned or budgeted
performance from the date of the Spin-off through November 30,1999. Amounts
earned for this period were: Mr. Yasinsky, $651,244; Mr. Mass, $181,208;
Mr. McMullen, $50,000; Mr. Zima, $50,000; and Mr. Hicks, $78,813. Amounts
paid for the 1998-2000 and 1999-2001 performance periods were paid on a
pro-rated basis. Amounts earned for these respective periods were: Mr.
Yasinsky, $361,556 and $214,170; Mr. McMullen, $40,000 and $25,000; Mr.
Mass, $102,360 and $60,990; Mr. Zima, $40,000 and $10,000; and Mr. Hicks,
$47,600 and $35,123.
(12) Amounts paid for the 1996-1998 performance period under GenCorp's Long-Term
Incentive Program. The net amount, after tax withholding, was paid in
shares of GenCorp common stock based upon the January 29, 1999 closing
price on the NYSE.
(13) Amounts paid for the 1995-1997 performance period under GenCorp's Long-Term
Incentive Program. The net amount, after tax withholding, was paid in
shares of GenCorp common stock based upon the January 30, 1998 closing
price on the NYSE. Messrs. McMullen and Mass did not participate during the
1995-1997 performance period.
10
<PAGE> 13
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
-------------------------------
NUMBER OF POTENTIAL REALIZABLE VALUE AT
SECURITIES PERCENT OF TOTAL ASSUMED ANNUAL RATE OF STOCK PRICE
UNDERLYING OPTIONS/SARS APPRECIATION FOR OPTION TERM
OPTIONS/SARS GRANTED TO EXERCISE OR (TEN YEARS) (3)(4)
GRANTED EMPLOYEES IN BASE PRICE EXPIRATION ------------------------------------
NAME (#)(1) FISCAL YEAR ($/SHARE)(2) DATE 0% ($) 5% ($) 10% ($)
---- ------------ ---------------- ------------- ---------- ------ ----------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
John B. Yasinsky(5)..... 110,000 11.39 $17.8125 3-30-09 0 1,232,240 3,122,739
Kevin M. McMullen(6).... 25,000 2.59 17.8125 3-30-09 0 280,055 709,713
Nathaniel J. Mass(7).... 30,000 3.11 17.8125 3-30-09 0 336,066 851,656
Marvin W. Zima(8)....... 25,000 2.59 17.8125 3-30-09 0 280,055 709,713
Michael E. Hicks(9)..... 20,000 2.07 17.8125 3-30-09 0 224,044 567,771
All Shareholders(10).... N/A N/A N/A N/A 0 468,324,741 1,186,826,843
</TABLE>
- ---------------
(1) Non-qualified stock options granted pursuant to the GenCorp Inc. 1997 Stock
Option Plan ("Plan") for the number of shares of GenCorp common stock
indicated. No stock appreciation rights were granted in 1999. Options
become exercisable in 25% increments on September 27, 1999 and March 30,
2000, 2001 and 2002, respectively.
(2) Exercise price equals the closing market price of GenCorp common stock on
the date of grant on the NYSE.
(3) The 0%, 5% and 10% appreciation over 10 years' option valuation methods
assumes a stock price of $17.8125, $29.0147 and $46.2010, respectively, at
March 30, 2009.
(4) The potential realizable values are shown in the table in conformity with
Securities and Exchange Commission regulations, and are not intended to
forecast possible future appreciation. The Company is not aware of any
formula which will predict with reasonable accuracy the future appreciation
of equity securities. No benefit can be realized by optionees without an
appreciation in stock price, which will benefit all shareholders
commensurately.
(5) At the time of the Spin-off these options were converted into 37,370
exercisable OMNOVA Solutions options with an exercise price of $8.41;
18,685 exercisable GenCorp options with an exercise price of $9.40; and
174,706 unexercisable OMNOVA Solutions options with an exercise price of
$8.41.
(6) At the time of the Spin-off these options were converted into 6,250
exercisable OMNOVA Solutions options at an exercise price of $8.41; 6,250
exercisable GenCorp options at an exercise price of $9.40; and 39,706
unexercisable OMNOVA Solutions options at an exercise price of $8.41.
(7) At the time of the Spin-off these options were converted into 7,500
exercisable OMNOVA Solutions options at an exercise price of $8.41; 7,500
exercisable GenCorp options at an exercise price of $9.40; and 47,647
unexercisable OMNOVA Solutions options at an exercise price of $8.41.
(8) At the time of the Spin-off these options were converted into 6,250
exercisable OMNOVA Solutions options at an exercise price of $8.41; 6,250
exercisable GenCorp options at an exercise price of $9.40; and 39,706
unexercisable OMNOVA Solutions options at an exercise price of $8.41.
(9) At the time of the Spin-off these options were covered into 5,000
exercisable OMNOVA Solutions options at an exercise price of $8.41; 5,000
exercisable GenCorp options at an exercise price of $9.40; and 31,765
unexercisable OMNOVA Solutions options at an exercise price of $8.41.
(10) Assumes 41,806,551 shares of GenCorp common stock outstanding on November
30, 1999.
11
<PAGE> 14
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS/SARS AT IN-THE-MONEY OPTIONS/SARS AT
FISCAL YEAR END (#)(1) FISCAL YEAR END ($)(2)
------------------------------- -----------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
John B. Yasinsky....................................... 756,378 317,647 191,669 0
Kevin M. McMullen...................................... 110,000 74,117 0 0
Nathaniel J. Mass...................................... 115,000 88,941 0 0
Marvin W. Zima......................................... 29,750 66,176 5,625 0
Michael E. Hicks....................................... 29,550 43,941 6,563 0
</TABLE>
- ---------------
(1) No SARS have been issued under the Plan. No stock options were exercised by
the executive officers listed in the table during fiscal 1999.
(2) In addition, at fiscal year end, the named executive officers held
exercisable GenCorp options covering the following number of shares with the
indicated value: Mr. Yasinsky, 351,719 options valued at $996,065; Mr.
McMullen, 110,000 options valued at $292,805; Mr. Mass, 115,000 options
valued at $252,510; Mr. Zima, 29,750 options valued at $48,700; and Mr.
Hicks, 29,550 options valued at $67,569.
LONG-TERM INCENTIVE PLANS -- AWARDS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
ESTIMATED FUTURE
PAYOUTS UNDER NON-
STOCK PRICE-BASED
PLANS (2) (3)
NUMBER OF SHARES, PERFORMANCE OR --------------------
UNITS OR OTHER PERIOD UNTIL THRESHOLD TARGET MAXIMUM
NAMES OTHER RIGHTS MATURATION OR PAYOUT ($) ($) ($)
----- ----------------- -------------------- --------- -------- --------
<S> <C> <C> <C> <C> <C>
John B. Yasinsky.................. (1) 3 Years 224,375 448,750 897,500
Kevin M. McMullen................. (1) 3 Years 49,583 99,167 198,333
Nathaniel J. Mass................. (1) 3 Years 63,333 126,667 253,333
Marvin W. Zima.................... (1) 3 Years 30,617 61,233 122,467
Michael E. Hicks.................. (1) 3 Years 23,520 47,040 94,080
</TABLE>
- ---------------
(1) Indicates awards under the GenCorp Inc. Long-Term Incentive Program
("Program") pursuant to which key employees designated by the Organization &
Compensation Committee of the GenCorp Board could receive incentive payments
equal to specified percentages of average annual compensation (salary and
bonus paid under GenCorp's Executive Incentive Compensation Program) upon
attainment of specified threshold, target or maximum levels of financial
performance ("performance goals") over a three-year performance period. For
the 1999-2001 performance period, threshold, target and maximum performance
goals for corporate officers were designated percentages of corporate return
on assets employed and earnings per share growth, and for business unit
presidents, designated percentages of corporate and business unit return on
assets employed and operating profit growth for their respective business
units. No payments were to be made under the Program if financial
performance for the performance period fell below threshold levels. In
connection with the Spin-off, payments for the 1999-2001 performance period
were paid on a pro-rated basis. See footnote 11 to the table entitled
Summary Compensation Table above.
12
<PAGE> 15
(2) Percentages of average annual compensation (determined for the three-year
performance period) payable to participants upon attainment of performance
goals for the 1999-2001 performance period were as follows:
<TABLE>
<CAPTION>
THRESHOLD TARGET MAXIMUM
--------- -------- --------
<S> <C> <C> <C>
Chairman and CEO.......................................... 15% 30% 60%
Senior Vice Presidents/Other Corporate Officers........... 10% 20% 40%
Business Unit Presidents.................................. 10% 20% 40%
</TABLE>
- ---------------
(3) For purposes of the table above, estimated future payouts were calculated on
the basis of the participant's 1999 fiscal year salary and bonus shown in
the Summary Compensation Table above.
13
<PAGE> 16
PENSION BENEFITS
OMNOVA Solutions' salaried pension plan includes several formulas for the
determination of benefits and requires that the formula providing the highest
benefit be utilized to determine an individual employee's actual benefit.
Benefits for Messrs. McMullen, Mass, Zima and Hicks have been determined
pursuant to a formula which utilizes 60 month average compensation for the 60
months of service prior to December 1, 2000 and a career average formula for
service from December 1, 2000 to normal retirement. The benefit for Mr. Yasinsky
has been determined pursuant to the terms of his employment agreement. The
Company's pension plan provides credit for years of service with GenCorp.
Estimated benefits are shown below because the required calculations do not lend
themselves to a typical pension plan table where benefits can be determined by
the reader solely upon the basis of years of service and final compensation.
<TABLE>
<CAPTION>
APPROXIMATE ESTIMATED
YEARS OF CREDITED ANNUAL BENEFITS
SERVICE AT PAYABLE AT
NAME NORMAL RETIREMENT NORMAL RETIREMENT(1)
---- ----------------- --------------------
<S> <C> <C>
John B. Yasinsky(2)................................... 41 $871,194
Kevin M. McMullen..................................... 29 278,483
Nathaniel J. Mass..................................... 19 228,117
Marvin W. Zima(3)..................................... 16 79,532
Michael E. Hicks...................................... 45 183,035
</TABLE>
- ---------------
(1) Retirement benefits shown in the table for Messrs. McMullen, Mass, Zima and
Hicks were calculated pursuant to the terms of the Pension Plan for Salaried
Employees of OMNOVA Solutions Inc. (the "OMNOVA Pension Plan"). There is no
offset for Social Security payments. Mr. Yasinsky's retirement benefit has
been determined pursuant to the supplemental pension provisions of his
employment agreement described under " -- Employment Contracts and
Termination of Employment and Change in Control Arrangements."
The benefits shown are estimated and have not been adjusted for any survivor
option. Each estimated benefit is based upon the assumption that the
executive will remain an employee until age 65 at a rate of compensation
equivalent to that in effect on December 1, 1999 and that the pension plan
under which the estimated benefit is calculated will remain unchanged.
Benefits for Messrs. McMullen, Mass, Zima and Hicks have been determined by
a formula which provides for a benefit (A) for years of service prior to
December 1, 2000 of (1) 1.125% of 60 month average compensation ("average
compensation") up to the average Social Security wage base ("ASSWB") plus
1.5% of average compensation in excess of the ASSWB multiplied by the total
of such years of service up to 35 years and (2) 1.5% of average compensation
multiplied by the total years of service in excess of 35 years, and (B) for
each year of service after December 1, 2000 (1) prior to attainment of 35
years of service, 1.625% of annual compensation up to the ASSWB plus 2.0% of
annual compensation in excess of the ASSWB, and (2) after attainment of 35
years of service, 2.0% of annual compensation.
The benefits shown in the table have not been reduced to reflect either (1)
the limitation on includable compensation or the overall benefit limitation
imposed on pension plans qualified under Section 401(a) of the Code, or (2)
a plan's own exclusions from includable compensation, since the amount of
any of those reductions will be restored to the individual
14
<PAGE> 17
pursuant to the terms of OMNOVA Solutions' Benefits Restoration Plan, a
nonfunded plan with benefits payable out of the general assets of OMNOVA
Solutions.
(2) Mr. Yasinsky's benefit is the product of (1) total years of service
(including 30 years credited upon Mr. Yasinsky's employment with GenCorp,
plus additional years accrued as an employee with OMNOVA Solutions until age
65), (2) 1.47%, and (3) the average of his highest 60 consecutive months of
compensation (salary and incentive bonus only) during the ten years
preceding retirement. Under the terms of Mr. Yasinsky's employment
agreement, amounts determined pursuant to the foregoing formula will be paid
out of OMNOVA Solutions' funds and will be offset by any payments made from
the OMNOVA Pension Plan and the pension plan of his prior employers.
(3) Mr. Zima's projected service and pension benefit at normal retirement age
reflects his election to participate in the 1999 Voluntary Enhanced
Retirement Program under the Pension Plan for Salaried Employees of GenCorp
Inc. and thereafter incorporated into the OMNOVA Plan.
------------------------
COMPENSATION OF DIRECTORS
Each nonemployee director receives a retainer of $24,000 per year and an
attendance fee of $1,000 for each Board and Committee meeting attended.
Nonemployee directors who serve as Chairman of a Committee of the Board receive
an annual fee of $2,000 in consideration of such service.
Nonemployee directors may elect annually to defer all or a percentage of their
retainer, any committee Chairman's fee and meeting attendance fees pursuant to a
deferred compensation plan for nonemployee directors. The plan is unfunded, and
deferred amounts are credited, at the election of the director, with phantom
shares in the OMNOVA Solutions stock fund, an S&P 500 index fund, or a cash
deposit program. Deferred amounts and earnings are payable after termination of
OMNOVA Solutions Board service in either a lump sum or installments as elected
by the director.
During fiscal 1999, each nonemployee director received 250 restricted shares
of common stock. Dividends on restricted shares are automatically reinvested
through the Company's dividend reinvestment program unless a director chooses
otherwise. All shares may be voted, but ownership may not be transferred until
service on the OMNOVA Solutions Board terminates. Restricted shares generally
vest two years after the date of grant. Unvested shares will be forfeited in the
event of a voluntary resignation or refusal to stand for reelection, but vesting
will be accelerated in the event of death, disability or retirement pursuant to
the Company's retirement plan for nonemployee directors described below or upon
the occurrence of a change in control or announcement of a tender or exchange
offer which would result in a person holding beneficial ownership of 30% or more
of the outstanding OMNOVA Solutions common stock.
Nonemployee directors are eligible for stock option grants and restricted
stock awards under the OMNOVA Solutions 1999 Equity and Performance Incentive
Plan.
Each nonemployee director who terminates his or her service on the Board after
at least
sixty months of service (including service on the GenCorp Board) will receive an
annual retirement benefit equal to the retainer in effect on the date the
director's service terminates, payable in monthly installments, until the number
of monthly payments made equals the lesser of (a) the individual's months of
service as a director, or (b) 120 monthly payments. In the event of death prior
to payment of the applicable number of installments, the aggregate amount of
unpaid
15
<PAGE> 18
monthly installments will be paid, in a lump sum, to the retired director's
surviving spouse or other designated beneficiary, if any, or to the retired
director's estate.
Under the Board's retirement policy, a director's term of office normally
expires at the annual meeting following his or her seventieth birthday
regardless of the term of the class for which such director was last elected.
Under special circumstances, however, the Board may waive immediate compliance
and request that a director postpone his or her retirement until a later date.
Directors who are also employees of the Company are not compensated separately
for serving on the Board and are not paid a retainer or additional compensation
for attendance at Board or committee meetings.
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT AND CHANGE IN CONTROL
ARRANGEMENTS
At the time of the Spin-off, OMNOVA Solutions assumed or replaced, with
appropriate modification, the employment contracts, termination of employment
and change-in-control arrangements discussed below.
If the directors remove Mr. Yasinsky from the position of Chairman and CEO
prior to age 65 for any reason other than for "cause" as defined in his October
18, 1993 employment agreement, Mr. Yasinsky may elect to terminate his
employment and receive (a) a termination payment equal to two times the sum of
(i) his annual base salary at the time of termination and (ii) his incentive
bonus for the last completed fiscal year preceding termination, and (b) a
supplemental pension determined as described in footnote (2) on page 15. The
agreement also provides that Mr. Yasinsky will participate in the Company's
Pension Plan, and that his supplemental pension will be offset by the amount of
any pension payment made from the Company's Pension Plan and any pension payment
received from his former employers. The normal form of payment of the
supplemental pension will be a 50% or 100% joint and survivor annuity, unless
Mr. Yasinsky elects a lump-sum payment. If elected, the amount of any lump-sum
payment will be calculated using the then-current interest rate for 30-year
Treasury securities, as approved by the Company's Board for the calculation of
lump-sum payments under all Company benefit plans and deferred compensation
arrangements. In the event of death prior to electing a payment option, the
supplemental pension will be paid to Mr. Yasinsky's surviving spouse for her
life, calculated as if he had attained age 62, retired, and elected a joint and
100% survivor annuity. In the event of disability prior to age 62, the Company
will pay Mr. Yasinsky an amount equal to 60% of his base monthly salary (offset
for payments received under Social Security) until eligible for supplemental
pension benefits at age 62.
Mr. Nathaniel J. Mass' May 13, 1996 employment agreement provides that if Mr.
Mass' employment is terminated by the Company, for reasons other than for cause
or due to disability or mandatory retirement, he will be eligible to receive
separation pay in the form of (a) continuing base salary at the rate in effect
on the date of termination and (b) continuing bonus payments, each in the
annualized amount of his last bonus payment preceding the date of termination,
for a period not to exceed the shortest of (i) two years from the date of
termination, or (ii) until he obtains comparable employment.
Mr. Kevin McMullen's July 16, 1996 employment agreement provides that if Mr.
McMullen's employment is terminated by the Company other than for cause,
disability or retirement, he will be eligible for continuation of his base
salary in effect at termination for a period not to exceed the shorter of (i)
eighteen months or (ii) until he obtains comparable employment.
The 1999 GenCorp Key Employee Retention Plan provided for payment of up to two
16
<PAGE> 19
annual cash retention payments to eligible employees who satisfactorily continue
their employment with GenCorp or OMNOVA Solutions, attain specific performance
objectives (including completion of the Spin-off) and meet all plan
requirements. Five key OMNOVA employees received Key Employee Retention Letter
Agreements pursuant to the plan, providing for individual total retention
payments ranging from $75,000 to $800,000. Pursuant to the plan, the following
payments may be made to the following named executive officers at the end of the
first and second years, respectively: Mr. Yasinsky, $200,000 and $600,000; Mr.
McMullen, $150,000 and $150,000; Mr. Mass, $150,000 and $150,000; Mr. Zima,
$150,000 and $150,000; and Mr. Hicks, $75,000 and $75,000.
At the time of the Spin-off, the Company also replaced then-current severance
agreements with appropriate modifications and entered into severance agreements
with elected OMNOVA officers who were not then parties to such agreements. Eight
agreements are in place, including agreements with each of the executive
officers listed in the Summary Compensation Table on page 9. The severance
agreements provide for a severance payment in an amount equal to the officer's
base salary plus bonus (as defined in the agreement) multiplied by a factor of 3
in the case of the Chief Executive Officer or a Senior Vice President, or by a
factor of 2 for other covered officers, if within three years after a
change-in-control (as such term is defined in the agreements), the officer's
employment is terminated (i) by the Company for any reason other than death,
disability or cause, or (ii) by the officer following the occurrence of one or
more adverse events enumerated in the agreement. The agreements provide for
payment of performance awards under the Long-Term Incentive Program,
continuation of health and life benefits for 24 or 36 months, as appropriate,
vesting of accrued retirement benefits, payment of the amount required to cover
excise taxes, if any, financial counseling, outplacement and accounting fees and
costs of legal representation if required to enforce the agreement. Agreements
for Messrs. Yasinsky and Mass each include a requirement that any amount which
may become payable under the severance agreement be offset by any amount which
may be paid under the individual executive's employment agreement as a result of
termination of employment due to a change-in-control. Mr. Yasinsky's agreement
also provides that he may terminate his employment for any reason, or without
reason, during the 30-day period immediately following the date six months after
the occurrence of a change-in-control, with the right to severance compensation
under his agreement. The severance agreements renew annually unless terminated
pursuant to their provisions.
ORGANIZATION & COMPENSATION COMMITTEE FUNCTION
The Organization & Compensation Committee ("Committee") advises and recommends
to the Board of Directors the total compensation of the Chairman of the Board
and Chief Executive Officer. In addition, the Committee, with the counsel of the
Chief Executive Officer, considers and establishes base pay and incentive
bonuses for the executive officers of the Company elected by the Board (other
than the Chairman of the Board and Chief Executive Officer). The base pay and
incentive bonuses of the principal executives of the Company are subject to
ratification by the Committee.
The Committee also administers the Company's long-term incentive and deferred
compensation programs and makes recommendations to the directors concerning such
programs. Further information regarding the functions of the Organization &
Compensation Committee appears on page 7.
17
<PAGE> 20
ORGANIZATION & COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Committee is composed entirely of nonemployee directors. Current Committee
members are Charles A. Corry, Committee Chairman, Edward P. Campbell, David A.
Daberko, Diane E. McGarry and Steven W. Percy. All nonemployee directors
participate in decisions regarding the compensation of the Chairman and Chief
Executive Officer. Due to the unique situation presented by the Spin-off, the
Organization & Compensation Committee of the GenCorp Board of Directors, the
nonemployee directors of the GenCorp Board of Directors and the Organization &
Compensation Committee of the OMNOVA Board of Directors (post Spin-off) each
participated in decisions regarding Mr. Yasinsky's 1999 compensation.
Participating nonemployee GenCorp Directors included: Edward P. Campbell, J.
Gary Cooper, Charles A. Corry, William K. Hall, Diane E. McGarry, James M.
Osterhoff, Steven W. Percy and R. Byron Pipes. Participating OMNOVA Organization
& Compensation Committee members included: Charles A. Corry, Edward P. Campbell,
Diane E. McGarry and Steven W. Percy.
18
<PAGE> 21
BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
EXECUTIVE COMPENSATION PHILOSOPHY
The Committee desires to provide an executive compensation program which
allows for the effective recruitment, retention and motivation of highly
qualified individuals who are key to the Company's current and future success.
The Committee believes the Company's executive compensation program is designed
to: create and reinforce a strategic alignment among the vision, goals and
priorities of the Company; promote the interests of OMNOVA Solutions'
shareholders; respond to, and differentiate, both individual responsibilities
and performance; properly balance the focus on both short and long-term Company
performance; allow the Company to respond to changes for similar positions in
the competitive marketplace; and prudently administer the fiscal resources of
the organization. In the application of this philosophy, the Committee
recognizes the need to attract and retain individuals who, by their actions,
will add to shareholder value and will become personally accountable for the
overall success of the business.
EXECUTIVE COMPENSATION STRUCTURE
Executive compensation at OMNOVA Solutions consists of four components--base
pay, an annual incentive bonus, stock options and an opportunity to participate
in the Long-Term Incentive Program. Each of these components is intended to meet
a different objective. They are combined to focus the individual executive on
high levels of sustained performance directed at key organizational objectives.
A degree of risk/reward potential has been built into the compensation program
to provide adequate motivation to achieve superior results.
Compensation levels for executives vary depending on the scope of their
individual responsibilities, as well as on the degree of individual performance
and achievement.
ANNUAL COMPENSATION
Annual compensation consists of two components: base pay and incentive bonus.
Each year the Committee reviews historical information and analyses of current
executive compensation trends and practices. Information for these analyses is
derived from several national executive compensation surveys.
The data selected from these surveys is representative of organizations which
are similar to the Company in sales volume and business focus. The 50th
percentile of compensation survey data is used as a reference point in
combination with actual performance in establishing competitive compensation
levels within the Company.
BASE PAY
The level of base pay for the reported executives is established relative to
the 50th percentile of competitive pay levels for comparable positions at
similar organizations. Each executive position is reviewed against this
standard, with consideration given to performance and experience. These factors
are incorporated into a determination regarding the level at which to set, and
the amount by which to change, any executive's base pay. No specific weighting
is applied to these factors. Rather, the collective judgment of the Committee
members is utilized in establishing the appropriate level of base pay for the
following year.
ANNUAL INCENTIVE BONUSES
The primary purpose of the Company's Executive Incentive Compensation Program
is to reward executives for achievement of specific objectives in three primary
areas of responsibility: financial performance, continuous improvement
(operational objectives applicable to the Company's business units) and special
objectives (specific to the individual). Incentive bonus amounts are intended to
19
<PAGE> 22
vary in a consistent and predictable manner with the financial and operational
performance of the Company and its various business units, as well as with the
performance of the individual executive.
Executives in positions which have significant scope, authority and impact on
the Company's performance may be considered for participation. The executive
officers listed in the Summary Compensation Table on page 9 all participate in
the program.
Annually, financial performance objectives for the consolidated Company and
each business unit are derived from stretch target goals established in the
annual operating plan (AOP). Continuous improvement objectives for operations
executives of the business units are derived from the AOP, and are based upon a
comparison to the results of the prior year.
Special objectives are activities that should be accomplished during the year
to achieve results which may be outside of the direct measurements associated
with financial performance and continuous improvement, yet are of significant
value to overall Company performance. Typically special objectives relate to
projects which will impact other measures or strategic actions that will benefit
the Company over an extended period of time. Two or more individuals may share a
special objective where mutual effort is required for its accomplishment.
Each participating executive has a maximum incentive opportunity expressed as
a percentage of annual base pay. The level of this incentive opportunity has
been set after a review of prevailing incentive opportunities for similar
executive positions at similar organizations. These opportunities vary depending
on the anticipated level of potential contribution for a particular position.
The three performance categories, financial performance, continuous
improvement, and special objectives, will be taken into account, as appropriate,
in determining an incentive bonus award. The three performance categories will
be weighted in importance, and will total 100% of the incentive opportunity.
This weighting may be adjusted in any year to allow management flexibility in
focusing the executive on critical achievement areas.
At the end of each fiscal year, management will evaluate each executive for
each of the applicable performance categories, and will recommend to the
Committee a bonus commensurate with the performance achieved. The financial
performance category will yield no bonus if the threshold level of return on
assets employed (ROAE) for the fiscal year has not been achieved. For continuous
improvement in operations, no credit will be given for any item which has
results that show no improvement from the prior year's performance. Bonus
payments for fiscal 1999 were calculated as described in note (6) to the section
entitled Summary Compensation Table.
These performance evaluations, with appropriate discretionary adjustments,
form the basis for management's recommendations to the Committee. Incentive
bonuses for fiscal 1999 were paid in cash.
LONG-TERM INCENTIVE PROGRAM
The Long-Term Incentive Program has limited executive participation that
includes the executive officers listed in the Summary Compensation Table on page
9. The purpose of the program is to motivate executives to achieve sustained
improvement in predetermined performance objectives over a three-year period.
The nonemployee directors set specific threshold, target, and maximum
achievement levels for each three-year performance period after reviewing the
strategic business plans of the Company. In light of the Spin-off, "close-out"
calculations were performed for the previous GenCorp programs (1997-1999;
1998-2000 and 1999-2001) based on September 1999 year-to-date actual
20
<PAGE> 23
results and October/November budgeted performance and the payments were made in
cash. To commence OMNOVA Long-Term Incentive Programs, one-year, two-year and
three-year performance periods have been established for the 2000, 2000-2001 and
2000-2002 simultaneous performance periods. Upon recommendation of the
Committee, the nonemployee directors have adopted earnings per share (EPS)
growth as the performance measure for corporate participants. Potential earnings
for a full three-year performance period for the executives listed in the
Summary Compensation Table on page 9 range from 10% to 60% of average annual
cash compensation. For the one-year and two-year performance periods discussed
above, payments will be adjusted accordingly. The net value (after tax
withholding) of any performance awards earned by participants are expected to be
paid in shares of OMNOVA Common Stock. Additional data concerning the previous
GenCorp Program and the percentages of compensation payable upon attainment of
performance goals which will continue in effect for the OMNOVA Program can be
found in the footnotes to the Long-Term Incentive Plans--Awards Table beginning
on page 12.
STOCK OPTIONS
The Company's philosophy is to consider the interests of shareholders in the
payment of executive compensation, and specifically, to link the interests of
executives to the interests of shareholders. Stock options help accomplish this
goal and are an important component of overall compensation. In 1999 stock
options were granted to executives in positions that have the ability to
significantly impact the Company's performance. The size of these grants was
determined by following competitive norms based on the current practice of a
broad base of companies with comparable revenues.
ORGANIZATION & COMPENSATION COMMITTEE POLICY WITH REGARD TO DEDUCTIBILITY OF
EXECUTIVE COMPENSATION
Section 162(m) of the Internal Revenue Code imposes limits on the
deductibility of certain compensation in excess of $1 million paid to the Chief
Executive Officer and other named executive officers of public companies. The
Committee has reviewed the regulations and believes that the current
compensation program and policies are appropriate. The Company's executive
compensation program contains several elements, each of which are intended to
support organizational goals and priorities. Factors taken into consideration in
setting compensation targets and determining actual distribution of awards
include: prevailing pay practices for comparable organizations, performance of
individuals as well as business units and the Company, expansion of
responsibilities, and potential for future contributions.
In those years when performance is exceptional, it is possible under the
current compensation program for one or more officers to surpass the $1 million
threshold. At this time the Committee does not believe that accommodating the
IRS regulations will produce material benefits or increases in shareholder
value. However, the Committee intends to review this issue regularly and may
change its position in future years.
By: The Organization & Compensation Committee of the Board of Directors:
Charles A. Corry, Chairman
Edward P. Campbell
David A. Daberko
Diane E. McGarry
Steven W. Percy
21
<PAGE> 24
CEO COMPENSATION
As with others who participated in the former GenCorp Executive Incentive
Compensation Program for the majority of 1999 and now participate in the OMNOVA
Solutions Executive Incentive Compensation Program, Mr. Yasinsky's compensation
for the past year is based on performance against stated objectives, considering
actual GenCorp performance through September 1999 and, following the October 1,
1999 Spin-off, budgeted performance for October and November.
At its meeting on January 28, 1999, the GenCorp Organization & Compensation
Committee (the "GenCorp Committee") reviewed Mr. Yasinsky's compensation history
and comparable CEO annual cash compensation data available from several national
executive compensation survey sources, including the Towers Perrin Executive
Compensation Data Base and Hewitt Associates Project 777, Management
Compensation Services study. Based on the foregoing information and the
recognition that Mr. Yasinsky's performance was meeting expectations by
providing effective operational and strategic leadership and driving initiatives
intended to position GenCorp for long-term growth and increased shareholder
value, the Committee recommended to the nonemployee directors that base pay for
Mr. Yasinsky be increased 4.3% to $730,000 for 1999.
At its March 1999 meeting, the GenCorp Board granted Mr. Yasinsky an option to
purchase 110,000 shares of GenCorp Common Stock. This grant was based on
consideration of his continued strong performance, including strategic
initiatives put in place to achieve operational excellence and value creating
growth, including the planned Spin-off, and the competitive status of his total
long-term compensation compared with CEOs of comparable companies.
The incentive bonus for Mr. Yasinsky was determined as discussed above
pursuant to the Executive Incentive Compensation program discussed beginning on
page 19. For 1999, CEO performance was evaluated in three categories: financial
performance versus stretch objectives for sales, operating profit, ROAE and cash
flow; a special objective focused on successfully completing the Spin-off; and
CEO leadership in six specific categories. At its last meeting before the
Spin-off in September 1999, the GenCorp Committee considered management's
written evaluation regarding year-to-date performance against corporate
financial objectives and Mr. Yasinsky's special objective to successfully
achieve the planned Spin-off. The Committee also evaluated Mr. Yasinsky's
leadership performance in the six key areas. Following completion of the
Spin-off and considering actual GenCorp financial performance up to the date of
the Spin-off, and budgeted performance for the two months remaining in the
fiscal year, the OMNOVA Solutions Organization & Compensation Committee
Chairman, in consultation with the new GenCorp Organization & Compensation
Committee Chairman, adjusted evaluations as necessary and approved Mr.
Yasinsky's incentive bonus.
The Committees concluded that Mr. Yasinsky's performance against specific
leadership criteria was excellent, his performance against specific success
criteria in achieving the Spin-off was also excellent, and they continue to be
very pleased with his overall performance. Utilizing the specific formula and
considering other terms of the Program, the Committee recommended to the
nonemployee directors that Mr. Yasinsky receive a 1999 incentive bonus of
$675,000.
In addition to stock options as described above, Mr. Yasinsky's long-term
compensation included an opportunity for payment under the GenCorp Long-Term
Incentive Program. As described earlier and necessitated by the Spin-off, the
1998-2000 and 1999-2001 GenCorp plans were terminated at the time of
22
<PAGE> 25
the Spin-off, and actual performance against
ROAE targets was evaluated and used to calculate pro rata awards for these two
plan periods, which totaled $575,726. This award was paid by OMNOVA Solutions in
November 1999. Similarly, performance against the ROAE targets for the 1997-1999
plan resulted in an award of $651,200 for Mr. Yasinsky, which was paid by OMNOVA
Solutions in January 2000 pursuant to the terms of the Spin-off. As with the
annual incentive awards, these awards were approved by the GenCorp Committee on
September 9, 1999, for recommendation to the nonemployee GenCorp directors who
approved the awards on September 10, 1999. Following the Spin-off, the Chairmen
of both the GenCorp and OMNOVA Solutions Organization & Compensation Committees,
as directed by the GenCorp Board of Directors prior to the Spin-off, again
reviewed the basis of the awards and granted final approval.
The foregoing recommendations for Mr. Yasinsky were approved by the
nonemployee directors then constituting the Board of GenCorp and, following the
Spin-off, OMNOVA Solutions, including:
Charles A. Corry
Edward P. Campbell
Diane E. McGarry
Steven W. Percy
23
<PAGE> 26
PERFORMANCE GRAPH
The following graph compares the cumulative total shareholder return,
assuming reinvestment of dividends, of the Company's Common Stock beginning on
October 1, 1999 (the date "regular way" trading of the Company's Common Stock
began) with the cumulative total return, assuming reinvestment of dividends, of
Standard & Poor's 500 Composite Stock Price Index and the Standard & Poor's
Manufacturing (Diversified) Index. Prior to that date, the Company's Common
Stock was not publicly traded.
COMPARISON OF CUMULATIVE TOTAL RETURN
AMONG OMNOVA SOLUTIONS, S&P 500 INDEX, AND S&P MANUFACTURING (DIVERSIFIED) INDEX
[GRAPH]
<TABLE>
<CAPTION>
CUMULATIVE TOTAL RETURN
--------------------------------
10/1/99 10/31/99 11/30/99
------- -------- --------
<S> <C> <C> <C>
OMNOVA SOLUTIONS INC. $100.00 $ 82.35 $ 74.43
S&P 500 $100.00 $106.33 $108.49
S&P MANUFACTURING (DIVERSIFIED) $100.00 $ 92.27 $ 92.71
</TABLE>
SOURCE: STANDARD & POOR'S COMPUSTAT
24
<PAGE> 27
CERTAIN TRANSACTIONS
In connection with the Spin-off, GenCorp and the Company entered into a number
of agreements. These agreements have been filed by the Company as exhibits to
its Form 10-K.
DISTRIBUTION AGREEMENT
GenCorp and OMNOVA Solutions entered into a distribution agreement providing
for, among other things, corporate transactions required to effect the Spin-off
and other arrangements between GenCorp and OMNOVA Solutions with respect to or
in consequence of the Spin-off. The distribution agreement provided for, with
certain exceptions, (1) the contribution of assets to OMNOVA Solutions by
GenCorp, and (2) assumptions of liabilities and cross-indemnities designed
principally to place financial responsibility for the liabilities of GenCorp and
its subsidiaries other than OMNOVA Solutions with GenCorp and financial
responsibilities for the liabilities to be assumed by OMNOVA Solutions with
OMNOVA Solutions. Each of GenCorp and OMNOVA Solutions has sole responsibility
for claims arising out of its respective activities after the Spin-off. Further,
the distribution agreement provides that GenCorp and OMNOVA Solutions will not
take any action to cause the Spin-off to be taxable to GenCorp or its
shareholders, and that GenCorp and OMNOVA Solutions will indemnify each other
for any adverse consequences incurred as a result of their breach of that
obligation to the other and certain other events that cause the Spin-off to be
taxable.
The distribution agreement also provides that, except as otherwise set forth
therein or in any other agreement, all costs or expenses incurred on or prior to
the Spin-off in connection with the Spin-off will be charged to and paid by the
party incurring the costs or expenses. Except as set forth in the distribution
agreement or any related agreement, each party will bear its own costs and
expenses incurred after the Spin-off.
TAX MATTERS AGREEMENT
GenCorp and OMNOVA Solutions also entered into a tax matters agreement that
provides, among other things, for the allocation of federal, state, local and
foreign tax liabilities for periods prior to and including the Spin-off date. In
general, the tax matters agreement provides that GenCorp is liable for taxes
related to GenCorp and OMNOVA Solutions for all periods prior to the Spin-off.
In addition, GenCorp is entitled to all refunds related to GenCorp and OMNOVA
Solutions for all periods prior to the Spin-off. Though valid as between GenCorp
and OMNOVA Solutions, the tax matters agreement is not binding on the IRS and
does not affect the several liability of GenCorp and OMNOVA Solutions for all
federal income taxes of the consolidated group of which they were a part prior
to the Spin-off.
ALTERNATIVE DISPUTE RESOLUTION AGREEMENT
GenCorp and OMNOVA Solutions entered into an alternative dispute resolution
agreement establishing procedures for resolving disputes that may arise between
them after the Spin-off. The alternative dispute resolution agreement provides
for both mediation and arbitration, which would be the exclusive methods for
resolution of most disputes between the parties that arise in connection with
the Spin-off.
AGREEMENT ON EMPLOYEE MATTERS
GenCorp and OMNOVA Solutions entered into an agreement on employee matters
providing for the treatment of employee benefit matters and other compensation
arrangements for former and current employees of OMNOVA Solutions and its
subsidiaries. The agreement provided for the establishment of various OMNOVA
Solutions benefit plans and
25
<PAGE> 28
the transfer of certain GenCorp plan assets to OMNOVA Solutions. The agreement
also provided for the assumption by OMNOVA Solutions of health care and life
insurance benefits for certain retired employees and obligations from certain
unfunded deferred compensation obligations. Further, the agreement provided for
the method of calculation or conversion and allocation of payment or performance
responsibility for certain other benefits, such as outstanding stock options,
annual bonuses, performance awards under GenCorp's Long-Term Incentive
Compensation Plan and separation payments. Additional information with respect
to the effects of this agreement on executive compensation for fiscal 1999 are
set forth above starting with the section entitled Summary Compensation Table on
page 9.
For a transition period not to exceed two years after the Spin-off, certain
benefit programs applicable to GenCorp employees and retirees will be
administered under a transition services arrangement between GenCorp and OMNOVA
Solutions. The purpose of this arrangement is to allow for an orderly transition
of administrative responsibility for ongoing GenCorp benefit programs to
administrative staffs of GenCorp and OMNOVA Solutions. In accordance with the
transition services agreement, OMNOVA Solutions will reimburse GenCorp, and
GenCorp will reimburse OMNOVA Solutions, for all direct and indirect costs
incurred by each to provide these services on terms believed by OMNOVA Solutions
to be commercially reasonable.
INTELLECTUAL PROPERTY
In connection with the Spin-off, intellectual property, including patents,
trademarks, copyrights, trade secrets and inventions used primarily by, or being
developed primarily for, OMNOVA Solutions' businesses were transferred by
GenCorp to OMNOVA Solutions. In addition, a license agreement was established,
subject to the rights of the U.S. government, allowing OMNOVA Solutions to
pursue commercialization of fluorinated oxetane technology and associated
oxetane technology originally conceived by Aerojet (one of GenCorp's
subsidiaries), in OMNOVA Solutions' areas of interest and allowing GenCorp to
pursue the technology in its areas of interest.
TRANSITION SERVICES AGREEMENT
GenCorp and OMNOVA Solutions also entered into a transition services agreement
which provides for OMNOVA Solutions to continue to supply to GenCorp, for
periods generally not to exceed two years and subject to conditions,
transitional administrative services for certain GenCorp operations, including
accounts receivable collections, payroll, real estate, shareholder services and
data communications. OMNOVA Solutions is entitled to reimbursement for all
direct and indirect costs of providing these transitional services on terms
believed by OMNOVA Solutions to be commercially reasonable.
APPOINTMENT OF INDEPENDENT AUDITORS
Upon recommendation of the Audit Committee, and subject to ratification by the
shareholders at the March 29, 2000 Annual Meeting, the Board of Directors has
appointed Ernst & Young LLP as independent auditors to examine the consolidated
financial statements of the Company for the fiscal year ending November 30,
2000.
If the Board's appointment is not ratified, or if Ernst & Young LLP declines
to act or becomes incapable of action, or if their appointment is discontinued,
the Board will appoint other independent auditors whose continued appointment
after the next annual meeting of shareholders shall be subject to ratification
by the shareholders.
26
<PAGE> 29
Ernst & Young LLP representatives are expected to be present at the Annual
Meeting. They will have an opportunity to make a statement if they so desire,
and it is expected that they will respond to appropriate questions raised at the
meeting.
The persons named in the accompanying form of proxy intend to vote such
proxies to ratify the appointment of Ernst & Young LLP unless a contrary choice
is indicated.
The Board of Directors recommends a vote FOR ratification of the appointment
of Ernst & Young LLP as the company's independent auditors.
OTHER BUSINESS
The Company did not receive notice by December 14, 1999 that any shareholder
intended to present a proposal at the meeting. Therefore, if any other matters
do properly come before the meeting, it is the intention of the persons named in
the accompanying form of proxy pursuant to discretionary authority conferred
thereby, to vote the proxy in accordance with their best judgment on such
matters.
GENERAL INFORMATION
SUBMISSION OF SHAREHOLDER PROPOSALS
Shareholders who intend to have their proposals considered for inclusion in
the Company's proxy materials for presentation at the 2001 annual shareholders
meeting must submit their proposals to the Company no later than October 21,
2000. The Company's Nominating & Corporate Governance Committee will consider
shareholder suggestions for nominees for election to the Company's Board if such
suggestions are in writing and are accompanied by the written consent of each
such nominee and are mailed to the Nominating & Corporate Governance Committee,
OMNOVA Solutions, Attention: Secretary, and received by the Secretary no later
than December 20, 2000. Shareholders who intend to present a proposal at the
2001 annual meeting without inclusion of that proposal in the Company's proxy
materials are required to provide notice of their proposal to the Company no
later than December 20, 2000. The Company's proxy for the 2001 annual meeting
will grant authority to the persons named to exercise their voting discretion
with respect to any such proposal of which the Company does not receive notice
by December 20, 2000. The Company's charter documents contain additional
requirements for all shareholder proposals. All proposals for inclusion in the
Company's proxy materials, notices of proposals, suggestions for nominees for
election to the Company's Board and requests for copies of charter documents
should be sent to OMNOVA Solutions, Attn: Secretary, 175 Ghent Road, Fairlawn,
Ohio 44333.
SOLICITATION EXPENSE
The Company will bear the cost of solicitation of proxies. In addition to the
use of the mails, the Company may solicit proxies by personal interview and
telephone. The Company will reimburse brokers and other persons holding shares
for others for their reasonable expenses in sending soliciting material to their
principals. The Company has also made arrangements with Georgeson Shareholder
Communications Inc., New York, NY, to assist in the solicitation of proxies for
a fee of $8,500 plus reimbursement of normal expenses.
27
<PAGE> 30
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. THEREFORE, SHAREHOLDERS WHO
DO NOT EXPECT TO ATTEND IN PERSON ARE URGED TO VOTE, SIGN, DATE AND RETURN THE
ACCOMPANYING PROXY IN THE ENCLOSED ENVELOPE, WHICH REQUIRES NO POSTAGE IF MAILED
IN THE UNITED STATES.
By Order of the Board of Directors,
CYNTHIA A. SLACK, Secretary
February 18, 2000
28
<PAGE> 31
OMNOVA SOLUTIONS INC.
John B. Yasinsky
Chairman and Chief Executive Officer
February 18, 2000
Dear Shareholder:
Enclosed are OMNOVA Solutions' 1999 Annual Report and 2000 Proxy Statement.
This is the first Annual Report for our new Company. As you know, GenCorp
announced its intent to spin-off its Decorative & Building Products and
Performance Chemicals businesses on December 17, 1998, as a separate, publicly
traded company. After much hard work by our employees, the tax-free spin-off was
completed October 1, 1999, and OMNOVA Solutions was born.
As our Annual Report reflects, 1999 was a year of good progress in responding
to marketplace challenges and opportunities and positioning our businesses for
sustained shareholder value creation.
The regular 2000 Annual Meeting will be held on March 29, 2000 at the Akron West
Hilton Inn in Fairlawn, Ohio. Details are provided in the enclosed Proxy
Statement.
Your vote is important to us. Whether or not you plan to attend the Annual
Meeting, please take time to complete and return the attached proxy card.
Sincerely,
/s/ John Yasinsky
John Yasinsky
<TABLE>
PLEASE DETACH PROXY CARD HERE
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
----
----
1. ELECTION OF DIRECTORS TO A FOR all nominees [ ] WITHHOLD AUTHORITY [ ] *EXCEPTIONS [ ]
THREE-YEAR TERM EXPIRING AT listed below to vote for all
THE MARCH 2003 ANNUAL nominees listed below.
MEETING.
Nominees: Kevin M. McMullen, Dr. R. Byron Pipes and John B. Yasinsky
(INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEES, MARK THE "EXCEPTIONS"
BOX AND WRITE THAT NOMINEE'S NAME IN THE SPACE PROVIDED BELOW).
* EXCEPTIONS
------------------------------------------------------------------------------------------------------------------
2. TO RATIFY THE BOARD OF DIRECTORS' selection of 3. Upon matters incident to the conduct of
Ernst & Young LLP as the independent auditors the meeting and such other business
of the Company. as may properly come before the meeting
or any adjournments thereof.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
Change of Address and
or Comments Mark Here [ ]
PLEASE DETACH HERE
YOU MUST DETACH
Please sign exactly as name appears at THIS PORTION OF
left. When shares are held by joint THE PROXY CARD
tenants, both should sign. When signing BEFORE RETURNING
as attorney, executor, administrator, IT IN THE
trustee or guardian, give full title as such. ENCLOSED ENVELOPE
If a corporation, sign in full corporate name
by President or other authorized officer. If
a partnership, sign in partnership name by
authorized person.
DATE , 2000
-------------------------------
-------------------------------------------
Signature
-------------------------------------------
Signature if held jointly
PLEASE SPECIFY CHOICES, SIGN, DATE AND RETURN IN VOTES MUST BE INDICATED
THE ENCLOSED POSTAGE PAID ENVELOPE. (X) IN BLACK OR BLUE INK.
</TABLE>
<PAGE> 32
- -------------------------------------------------------------------------------
OMNOVA SOLUTIONS INC.
175 GHENT ROAD - FAIRLAWN, OHIO 44333
PROXY FOR HOLDERS OF COMMON STOCK SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints JAMES C. LEMAY, CYNTHIA A. SLACK and
MICHAEL E. HICKS, and each of them, his proxy, with power of substitution, to
vote all shares of Common Stock of OMNOVA Solutions Inc. which the undersigned
is entitled to vote at the Annual Meeting of Shareholders to be held at the
Akron West Hilton Inn, 3180 West Market Street, Fairlawn, Ohio 44333 on March
29, 2000, and at any adjournments thereof, and appoints the proxyholders to vote
as directed below and in accordance with their judgement on matters incident to
the conduct of the meeting and any matters of other business referred to in Item
3:
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS DIRECTED BY THE
SHAREHOLDER. IF NO DIRECTION IS GIVEN WHEN THE DULY EXECUTED PROXY IS RETURNED,
SUCH SHARES WILL BE VOTED FOR ALL NOMINEES IN ITEM 1, FOR ITEM 2, AND IN
ACCORDANCE WITH THE PROXYHOLDERS' JUDGMENT ON MATTERS INCIDENT TO THE CONDUCT OF
THE MEETING AND ANY MATTERS OF OTHER BUSINESS REFERRED TO IN ITEM 3. THE BOARD
OF DIRECTORS RECOMMENDS A VOTE FOR ITEMS 1 AND 2.
OMNOVA SOLUTIONS INC.
P.O. BOX 11104
NEW YORK, N.Y. 10203-0104
(CONTINUED, AND TO BE SIGNED AND DATED ON THE OTHER SIDE.)
<PAGE> 33
OMNOVA SOLUTIONS INC.
John B. Yasinsky
Chairman and Chief Executive Officer
February 18, 2000
Dear Shareholder:
Enclosed are OMNOVA Solutions' 1999 Annual Report and 2000 Proxy Statement.
This is the first Annual Report for our new Company. As you know, GenCorp
announced its intent to spin-off its Decorative & Building Products and
Performance Chemicals businesses on December 17, 1998, as a separate, publicly
traded company. After much hard work by our employees, the tax-free spin-off was
completed October 1, 1999, and OMNOVA Solutions was born.
As our Annual Report reflects, 1999 was a year of good progress in responding
to marketplace challenges and opportunities and positioning our businesses for
sustained shareholder value creation.
The regular 2000 Annual Meeting will be held on March 29, 2000 at the Akron West
Hilton Inn in Fairlawn, Ohio. Details are provided in the enclosed Proxy
Statement.
Your vote is important to us. Whether or not you plan to attend the Annual
Meeting, please take time to complete and return the attached proxy card.
Sincerely,
/s/ John Yasinsky
John Yasinsky
<TABLE>
PLEASE DETACH PROXY CARD HERE
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
----
----
1. ELECTION OF DIRECTORS TO A FOR all nominees [ ] WITHHOLD AUTHORITY [ ] *EXCEPTIONS [ ]
THREE-YEAR TERM EXPIRING AT listed below to vote for all
THE MARCH 2003 ANNUAL nominees listed below.
MEETING.
Nominees: Kevin M. McMullen, Dr. R. Byron Pipes and John B. Yasinsky
(INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEES, MARK THE "EXCEPTIONS"
BOX AND WRITE THAT NOMINEE'S NAME IN THE SPACE PROVIDED BELOW).
* EXCEPTIONS
------------------------------------------------------------------------------------------------------------------
2. TO RATIFY THE BOARD OF DIRECTORS' selection of 3. Upon matters incident to the conduct of
Ernst & Young LLP as the independent auditors the meeting and such other business
of the Company. as may properly come before the meeting
or any adjournments thereof.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
Change of Address and
or Comments Mark Here [ ]
PLEASE DETACH HERE
YOU MUST DETACH
Please sign exactly as name appears at THIS PORTION OF
left. When shares are held by joint THE PROXY CARD
tenants, both should sign. When signing BEFORE RETURNING
as attorney, executor, administrator, IT IN THE
trustee or guardian, give full title as such. ENCLOSED ENVELOPE
If a corporation, sign in full corporate name
by President or other authorized officer. If
a partnership, sign in partnership name by
authorized person.
DATE , 2000
-------------------------------
-------------------------------------------
Signature
-------------------------------------------
Signature if held jointly
PLEASE SPECIFY CHOICES, SIGN, DATE AND RETURN IN VOTES MUST BE INDICATED
THE ENCLOSED POSTAGE PAID ENVELOPE. (X) IN BLACK OR BLUE INK.
</TABLE>
<PAGE> 34
- -------------------------------------------------------------------------------
CONFIDENTIAL VOTING INSTRUCTIONS
TO: ROYAL TRUST CORPORATION OF CANADA, TRUSTEE FOR THE GENCORP CANADA INC.
SAVINGS PLAN
I hereby authorize the Trustee to vote (or cause to be voted) all
shares of Common Stock of OMNOVA solutions Inc. which may be allocated to my
account in the OMNOVA Solutions Stock Fund of the GenCorp Canada Inc. Savings
Plan at the Annual Meeting of Shareholders to be held at the Akron West Hilton
Inn, 3180 West Market Street, Fairlawn, Ohio 44333 on March 29, 2000, and at any
adjournments thereof, and direct the Trustee to vote as instructed below and in
accordance with its judgment on matters incident to the conduct of the meeting
and any matters of other business referred to in item 3:
(THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE COMPANY)
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS DIRECTED BY THE
PLAN PARTICIPANT. IF NO DIRECTION IS GIVEN WHEN THE DULY EXECUTED PROXY IS
RETURNED, SUCH SHARES WILL BE VOTED FOR ALL NOMINEES IN ITEM 1, FOR ITEM 2, AND
IN ACCORDANCE WITH THE TRUSTEES' JUDGMENT ON MATTERS INCIDENT TO THE CONDUCT OF
THE MEETING AND ANY MATTERS OF OTHER BUSINESS REFERRED TO IN ITEM 3. THE BOARD
OF DIRECTORS RECOMMENDS A VOTE FOR ITEMS 1 AND 2.
OMNOVA SOLUTIONS INC.
P.O. BOX 11104
NEW YORK, N.Y. 10203-0104
(CONTINUED, AND TO BE SIGNED AND DATED ON THE OTHER SIDE.)
<PAGE> 35
OMNOVA SOLUTIONS INC.
John B. Yasinsky
Chairman and Chief Executive Officer
February 18, 2000
Dear Shareholder:
Enclosed are OMNOVA Solutions' 1999 Annual Report and 2000 Proxy Statement.
This is the first Annual Report for our new Company. As you know, GenCorp
announced its intent to spin-off its Decorative & Building Products and
Performance Chemicals businesses on December 17, 1998, as a separate, publicly
traded company. After much hard work by our employees, the tax-free spin-off was
completed October 1, 1999, and OMNOVA Solutions was born.
As our Annual Report reflects, 1999 was a year of good progress in responding
to marketplace challenges and opportunities and positioning our businesses for
sustained shareholder value creation.
The regular 2000 Annual Meeting will be held on March 29, 2000 at the Akron West
Hilton Inn in Fairlawn, Ohio. Details are provided in the enclosed Proxy
Statement.
Your vote is important to us. Whether or not you plan to attend the Annual
Meeting, please take time to complete and return the attached proxy card.
Sincerely,
/s/ John Yasinsky
John Yasinsky
<TABLE>
PLEASE DETACH PROXY CARD HERE
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
----
----
1. ELECTION OF DIRECTORS TO A FOR all nominees [ ] WITHHOLD AUTHORITY [ ] *EXCEPTIONS [ ]
THREE-YEAR TERM EXPIRING AT listed below to vote for all
THE MARCH 2003 ANNUAL nominees listed below.
MEETING.
Nominees: Kevin M. McMullen, Dr. R. Byron Pipes and John B. Yasinsky
(INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, MARK THE "EXCEPTIONS"
BOX AND WRITE THAT NOMINEE'S NAME IN THE SPACE PROVIDED BELOW).
* EXCEPTIONS
------------------------------------------------------------------------------------------------------------------
2. TO RATIFY THE BOARD OF DIRECTORS' selection of 3. Upon matters incident to the conduct of
Ernst & Young LLP as the independent auditors the meeting and such other business
of the Company. as may properly come before the meeting
or any adjournments thereof.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
Change of Address and
or Comments Mark Here [ ]
PLEASE DETACH HERE
YOU MUST DETACH
Please sign exactly as name appears at THIS PORTION OF
left. When shares are held by joint THE PROXY CARD
tenants, both should sign. When signing BEFORE RETURNING
as attorney, executor, administrator, IT IN THE
trustee or guardian, give full title as such. ENCLOSED ENVELOPE
If a corporation, sign in full corporate name
by President or other authorized officer. If
a partnership, sign in partnership name by
authorized person.
DATE , 2000
-------------------------------
-------------------------------------------
Signature
-------------------------------------------
Signature if held jointly
PLEASE SPECIFY CHOICES, SIGN, DATE AND RETURN IN VOTES MUST BE INDICATED
THE ENCLOSED POSTAGE PAID ENVELOPE. (X) IN BLACK OR BLUE INK.
</TABLE>
<PAGE> 36
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CONFIDENTIAL VOTING INSTRUCTIONS
TO: MELLON BANK, N.A. TRUSTEE FOR THE GENCORP/OMNOVA SOLUTIONS INC.
JOINT RETIREMENT SAVINGS AND PROFIT SHARING PLANS
I hereby authorize the Trustee to vote (or cause to be voted) all
shares of Common Stock of OMNOVA Solutions Inc. which may be allocated to my
account in the OMNOVA Solutions Stock Fund of the GenCorp/OMNOVA Solutions Joint
Retirement Savings Plan and/or the GenCorp Profit Sharing Plan at the Annual
Meeting of Shareholders to be held at the Akron West Hilton Inn, 3180 West
Market Street, Fairlawn, Ohio 44333 on March 29, 2000, and at any adjournments
thereof, and direct the Trustee to vote as instructed below and in accordance
with its judgment on matters incident to the conduct of the meeting and any
matters of other business referred to in Item 3:
(THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE COMPANY)
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS DIRECTED BY THE
PLAN PARTICIPANT. IF NO DIRECTION IS GIVEN WHEN THE DULY EXECUTED PROXY IS
RETURNED, SUCH SHARES WILL BE VOTED FOR ALL NOMINEES IN ITEM 1, FOR ITEM 2, AND
IN ACCORDANCE WITH THE TRUSTEES' JUDGMENT ON MATTERS INCIDENT TO THE CONDUCT OF
THE MEETING AND ANY MATTERS OF OTHER BUSINESS REFERRED TO IN ITEM 3. THE BOARD
OF DIRECTORS RECOMMENDS A VOTE FOR ITEMS 1 AND 2.
OMNOVA SOLUTIONS INC.
P.O. BOX 11104
NEW YORK, N.Y. 10203-0104
(CONTINUED, AND TO BE SIGNED ON THE OTHER SIDE.)
