<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:
/ / Preliminary proxy statement
/X/ Definitive proxy statement
/ / Definitive additional materials
/ / Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
RPM, INC.
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
PAUL A. GRANZIER, VICE PRESIDENT, GENERAL COUNSEL AND SECRETARY
(NAME OF PERSON(S) FILING PROXY STATEMENT)
Payment of filing fee (Check the appropriate box):
/X/ $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
Not Applicable
(2) Aggregate number of securities to which transaction applies:
Not Applicable
(3) Per unit price or other underlying value of transaction computed pursuant to
Exchange Act Rule 0-11:
Not Applicable
(4) Proposed maximum aggregate value of transaction:
Not Applicable
/X/ 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:
$125.00
(2) Form, schedule or registration statement no.:
Schedule 14A
(3) Filing party:
RPM, Inc.
(4) Date filed:
August 15, 1996
<PAGE> 2
RPM LOGO
RPM, INC. - 2628 Pearl Road - P.O. Box 777 - Medina, Ohio 44258 - 330-273-5090
THOMAS C. SULLIVAN
Chairman
September 3, 1996
TO RPM SHAREHOLDERS:
This year's Annual Meeting of RPM Shareholders will be held at 2:00 P.M.,
Eastern Daylight Time, Friday, October 18, 1996, at the Holiday Inn located at
Interstate 71 and Route 82 East, Strongsville, Ohio.
In addition to discussing the items of business outlined in this Proxy
Statement, we look forward to giving you a progress report on the first quarter
of our current fiscal year, which will end on August 31. As in the past, there
will be an informal discussion of the Company's activities, during which time
your questions and comments will be welcomed.
We hope that you are planning to attend the Annual Meeting personally, and
we look forward to seeing you. Whether or not you expect to attend in person,
the return of the enclosed Proxy as soon as possible would be greatly
appreciated and will ensure that your shares will be represented at the Annual
Meeting. If you do attend the Annual Meeting, you may, of course, withdraw your
Proxy should you wish to vote in person.
On behalf of the Directors and management of RPM, I would like to thank you
for your continued support and confidence.
Sincerely yours,
/s/ Thomas C. Sullivan
THOMAS C. SULLIVAN
<PAGE> 3
RPM LOGO
2628 PEARL ROAD - P.O. BOX 777
MEDINA, OHIO 44258
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of RPM, Inc.
will be held at the Holiday Inn Strongsville, 15471 Royalton Road, Strongsville,
Ohio, located at Interstate 71 and Route 82 East, on Friday, October 18, 1996,
at 2:00 P.M., Eastern Daylight Time, for the following purposes:
(1) To elect four Directors in Class III for a three-year term ending in
1999;
(2) To approve and adopt the RPM, Inc. 1996 Key Employees Stock Option
Plan;
(3) To amend the Company's Amended Articles of Incorporation to increase
the number of authorized Common Shares of the Company from 100,000,000
to 200,000,000 Common Shares; and
(4) To transact such other business as may properly come before the Annual
Meeting or any adjournment or postponement thereof.
Holders of Common Shares of record at the close of business on August 23,
1996 are entitled to receive notice of and to vote at the Annual Meeting.
By Order of the Board of Directors.
PAUL A. GRANZIER
Secretary
September 3, 1996
Please fill in and sign the enclosed Proxy and return the Proxy
in the envelope enclosed herewith.
<PAGE> 4
RPM LOGO
2628 PEARL ROAD - P.O. BOX 777
MEDINA, OHIO 44258
PROXY STATEMENT
MAILED ON OR ABOUT SEPTEMBER 3, 1996
ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON OCTOBER 18, 1996
This Proxy Statement is furnished in connection with the solicitation of
Proxies by the Board of Directors of RPM, Inc. (the "Company") to be used at the
Annual Meeting of Shareholders of the Company to be held on October 18, 1996,
and any adjournment or postponement thereof. The time, place and purposes of the
Annual Meeting are stated in the Notice of Annual Meeting of Shareholders which
accompanies this Proxy Statement.
The accompanying Proxy is solicited by the Board of Directors of the
Company. All validly executed Proxies received by the Board of Directors of the
Company pursuant to this solicitation will be voted at the Annual Meeting, and
the directions contained in such Proxies will be followed in each instance. If
no directions are given, the Proxy will be voted FOR the election of the four
nominees listed on the Proxy, FOR the proposal to approve and adopt the
Company's 1996 Key Employees Stock Option Plan, and FOR the proposal to amend
the Company's Amended Articles of Incorporation to increase the number of
authorized Common Shares of the Company from 100,000,000 to 200,000,000 Common
Shares.
Any person giving a Proxy pursuant to this solicitation may revoke it. A
shareholder, without affecting any vote previously taken, may revoke a Proxy by
giving notice to the Company in writing, in open meeting or by a duly executed
Proxy bearing a later date.
The expense of soliciting Proxies, including the cost of preparing,
assembling and mailing the Notice, Proxy Statement and Proxy, will be borne by
the Company. The Company may pay persons holding shares for others their
expenses for sending proxy materials to their principals. In addition to
solicitation of Proxies by mail, the Company's Directors, officers and
employees, without additional compensation, may solicit Proxies by telephone,
telegraph, and personal interview. The Company also may retain a third party to
aid in the solicitation of proxies.
VOTING RIGHTS
The record date for determination of shareholders entitled to vote at the
Annual Meeting was the close of business on August 23, 1996. On that date, the
Company had 77,471,058 Common
1
<PAGE> 5
Shares, without par value ("Common Shares"), outstanding and entitled to vote at
the Annual Meeting. Each Common Share is entitled to one vote.
At the Annual Meeting, in accordance with the General Corporation Law of
Ohio and the Company's Code of Regulations, the inspectors of election appointed
by the Board of Directors for the Annual Meeting will determine the presence of
a quorum and will tabulate the results of shareholder voting. As provided by the
General Corporation Law of Ohio and the Company's Code of Regulations, holders
of shares entitling them to exercise a majority of the voting power of the
Company, present in person or by proxy at the Annual Meeting, will constitute a
quorum for such meeting. The inspectors of election intend to treat properly
executed proxies marked "abstain" as "present" for these purposes. Such
inspectors also will treat as "present" shares held in "street name" by brokers
that are voted on at least one proposal to come before the Annual Meeting.
Nominees for election as Directors receiving the greatest number of votes
will be elected Directors. Votes that are withheld or broker non-votes in
respect of the election of Directors will not be counted in determining the
outcome of the election. The General Corporation Law of Ohio provides that if
notice in writing is given by any shareholder to the President, a Vice President
or the Secretary of the Company not less than 48 hours before the time fixed for
holding the meeting that the shareholder desires the voting at the election to
be cumulative, each shareholder shall have cumulative voting rights in the
election of Directors. Cumulative voting enables shareholders to give one
nominee for Director as many votes as is equal to the number of Directors to be
elected multiplied by the number of shares in respect of which a shareholder is
voting, or to distribute votes on the same principle among two or more nominees,
as the shareholder sees fit.
Pursuant to the Company's Code of Regulations, all other questions and
matters brought before the Annual Meeting will be, unless otherwise provided by
law or by the Articles of Incorporation of the Company, decided by the vote of
the holders of a majority of the shares entitled to vote thereon present in
person or by proxy at the Annual Meeting. In voting for such other proposals,
votes may be cast in favor, against or abstained. Abstentions will count as
present for purposes of the item on which the abstention is noted and will have
the effect of a vote against. Broker non-votes, however, are not counted as
present for purposes of determining whether a proposal has been approved and
will have no effect on the outcome of any such proposal.
SHARE OWNERSHIP OF PRINCIPAL HOLDERS AND MANAGEMENT
The following table sets forth the beneficial ownership of Common Shares as
of August 23, 1996 by (i) each person or group known by the Company to own
beneficially more than 5% of the outstanding Common Shares, (ii) each Director
and nominee for election as a Director of the Company, (iii) each executive
officer named in the Executive Compensation tables below and (iv) all Directors
and executive officers as a group. All information with respect to beneficial
ownership has been furnished by the respective Director, nominee for election as
a Director, or executive officer, as the case may be. Unless otherwise indicated
below, each person named below has sole voting and investment power with respect
to the number of shares set forth opposite his or her respective name.
2
<PAGE> 6
<TABLE>
<CAPTION>
NUMBER OF
COMMON SHARES
BENEFICIALLY PERCENTAGE OF
NAME OF BENEFICIAL OWNER OWNED(1) COMMON SHARES(1)
- ------------------------------------- ------------- ---------------------
<S> <C> <C>
The Fifth Third Bancorp(2)........... 3,853,008 5.0%
Max D. Amstutz(3).................... 6,875 *
Edward B. Brandon(4)................. 11,000 *
Lorrie Gustin(5)..................... 1,201 *
Roy H. Holdt(6)...................... 3,818 *
E. Bradley Jones(7).................. 5,515 *
James A. Karman(8)................... 495,718 0.6
Richard E. Klar(9)................... 159,267 0.2
Donald K. Miller(10)................. 26,361 *
John H. Morris, Jr.(11).............. 166,915 0.2
Kevin O'Donnell(12).................. 10,824 *
William A. Papenbrock(13)............ 11,466 *
Albert B. Ratner(14)................. -- --
Frank C. Sullivan(15)................ 96,002 0.1
Thomas C. Sullivan(16)............... 1,864,208 2.4
All Directors and executive officers
as a
group (seventeen persons including
the directors and executive
officers named above)(17).......... 2,974,700 3.8
</TABLE>
- ---------------
* Less than .1%.
(1) In accordance with Securities and Exchange Commission ("Commission") rules,
each beneficial owner's holdings have been calculated assuming full
exercise of outstanding options covering Common Shares, if any, exercisable
by such owner within 60 days after August 23, 1996, but no exercise of
outstanding options covering Common Shares held by any other person.
(2) The Fifth Third Bancorp ("Fifth Third") has sole voting power over
3,752,457 Common Shares, shared voting power over 100,551 Common Shares and
no voting power over 908,357 Common Shares shown in the table above. Fifth
Third has sole dispositive power over 3,492,962 Common Shares, shared
dispositive power over 258,539 Common Shares and no dispositive power over
1,009,864 Common Shares shown in the table above. This information is as of
December 31, 1995 and was obtained by the Company from Fifth Third's
Schedule 13G as filed with the Commission on February 15, 1996. The address
of Fifth Third is 38 Fountain Square Plaza, Cincinnati, Ohio 45263.
(3) Dr. Amstutz is a Director of the Company.
(4) Mr. Brandon is a Director of the Company.
(5) Ms. Gustin is a Director of the Company.
(6) Mr. Holdt is a Director of the Company.
(7) Mr. Jones is a Director of the Company.
(8) Mr. Karman is a Director and an executive officer of the Company. Mr.
Karman's ownership is comprised of 146,958 Common Shares which he owns
directly, 37,922 Common Shares which are owned by his wife, 181,898 Common
Shares which are held by a family-owned corporation, of which Mr. Karman is
an officer and director, and 128,940 Common Shares which he has the right
to acquire within 60 days after August 23, 1996 through the exercise of
stock options. The ownership of the shares held by his wife and by the
family-owned corporation is attributed to Mr. Karman pursuant to Commission
rules.
3
<PAGE> 7
(9) Mr. Klar is an executive officer of the Company. Mr. Klar's ownership is
comprised of 44,730 Common Shares which he owns directly, 3,332 Common
Shares which are owned by his wife and 111,205 Common Shares which he has
the right to acquire within 60 days after August 23, 1996 through the
exercise of stock options. The ownership of the shares held by his wife is
attributed to Mr. Klar pursuant to Commission rules.
(10) Mr. Miller is a Director of the Company. Mr. Miller's share ownership is
comprised of 8,787 Common Shares which he owns directly and 17,574 Common
Shares held by his sons. The ownership of the shares held by his sons is
attributed to Mr. Miller pursuant to Commission rules.
(11) Mr. Morris is a Director and an executive officer of the Company. Mr.
Morris' ownership is comprised of 48,472 Common Shares which he owns
directly and 118,443 Common Shares which he has the right to acquire within
60 days after August 23, 1996 through the exercise of stock options.
(12) Mr. O'Donnell is a Director of the Company. Mr. O'Donnell's ownership is
comprised of 7,274 Common Shares which he owns through his retirement
plans, 2,550 Common Shares which are owned by his wife through her
retirement plans and 1,000 Common Shares owned jointly with his wife. The
ownership of the shares held by his wife is attributed to Mr. O'Donnell
pursuant to Commission rules.
(13) Mr. Papenbrock is a Director of the Company. All of Mr. Papenbrock's Common
Shares are owned through his retirement plan.
(14) Mr. Ratner is a Director nominee of the Company.
(15) Mr. Frank C. Sullivan is a Director and an executive officer of the
Company. Mr. Sullivan's ownership is comprised of 48,098 Common Shares
which he owns directly, 5,401 Common Shares which he holds as Custodian for
his sons and 42,503 Common Shares which he has the right to acquire within
60 days after August 23, 1996 through the exercise of stock options. The
ownership of the shares held as Custodian for his sons is attributed to Mr.
Sullivan pursuant to Commission rules.
(16) Mr. Thomas C. Sullivan is Chairman of the Board of Directors and Chief
Executive Officer of the Company. Mr. Sullivan's ownership is comprised of
568,579 Common Shares which he owns directly, 94,700 Common Shares which
are owned by his wife, 89,530 Common Shares owned by the Thomas C. Sullivan
Family Foundation, Inc., of which Mr. Sullivan serves as Co-Trustee,
927,600 Common Shares held by National City Bank, Cleveland, Ohio, as
Trustee under a Trust Agreement, dated April 30, 1971 (the "Sullivan
Trust"), between it and the late Frank C. Sullivan and 183,799 Common
Shares which he has the right to acquire within 60 days after August 23,
1996 through the exercise of stock options. Mr. Sullivan is a Trust Advisor
to the Sullivan Trust, having the right to vote the Common Shares held by
said Trust and to approve the sale thereof. The ownership of the shares
held by his wife, by the Thomas C. Sullivan Family Foundation, Inc. and
pursuant to the Sullivan Trust is attributed to Mr. Sullivan pursuant to
Commission rules.
(17) The number of Common Shares shown as beneficially owned by the Company's
Directors and executive officers as a group on August 23, 1996 includes
675,315 Common Shares which the Company's Directors and executive officers
as a group have the right to acquire within 60 days after said date through
the exercise of stock options granted to them under the Company's stock
option plans.
4
<PAGE> 8
ELECTION OF DIRECTORS
The authorized number of Directors of the Company presently is fixed at
twelve, with the Board of Directors divided into three Classes of four Directors
each. The term of office of one Class of Directors expires each year, and at
each Annual Meeting of Shareholders the successors to the Directors of the Class
whose term is expiring at that time are elected to hold office for a term of
three years.
The term of office of Class III of the Board of Directors expires at this
year's Annual Meeting of Shareholders. The term of office of the persons elected
Directors in Class III at this year's Annual Meeting will expire at the time of
the Annual Meeting held in 1999. Each Director in Class III will serve until the
expiration of that term or until his successor shall have been duly elected. The
Board of Directors' nominees for election as Directors in Class III are Messrs.
Max D. Amstutz, E. Bradley Jones, John H. Morris, Jr. and Albert B. Ratner.
Messrs. Amstutz, Jones and Morris currently serve as Directors in Class III. Mr.
Roy H. Holdt, who currently serves as a Director in Class III, is retiring from
the Board of Directors as of the date of this year's Annual Meeting. Mr. Ratner
is nominated for the directorship in Class III currently held by Mr. Holdt.
The Proxy holders named in the accompanying Proxy or their substitutes will
vote such Proxy at the Annual Meeting or any adjournment or postponement thereof
for the election as Directors of the four nominees unless the shareholder
instructs, by marking the appropriate space on the Proxy, that authority to vote
is withheld. If cumulative voting is in effect, the Proxy holders shall have
full discretion and authority to vote for any one or more of the nominees. In
the event of cumulative voting, the Proxy holders will vote the shares
represented by each Proxy so as to maximize the number of Board of Directors'
nominees elected to the Board. Each of the nominees has indicated his
willingness to serve as a Director, if elected. If any nominee should become
unavailable for election (which contingency is not now contemplated or
foreseen), it is intended that the shares represented by the Proxy will be voted
for such substitute nominee as may be named by the Board of Directors. In no
event will the accompanying Proxy be voted for more than four nominees or for
persons other than those named below and any such substitute nominee for any of
them.
NOMINEES FOR ELECTION
DR. MAX D. AMSTUTZ, age 67 -- Director since February
1995.
Chairman and Chief Executive Officer since 1994 of Von
[Photo] Roll Holding Ltd., a designer and manufacturer of
environmental technology products, electrotechnical and
industrial insulation systems and industrial metal
specialities, and Vice Chairman of Alusuisse--Lonza
Holding Ltd. since 1988. Dr. Amstutz received his
degree in Business Administration and a Doctorate of
Economics from the University of Berne, Switzerland.
Dr. Amstutz is a Director of Holderbank Financier
Glaris Ltd., a world leader in cement, concrete and
aggregates and RPM, Inc.'s 50-50 joint venture partner
in The Euclid Chemical Company.
COMMON SHARES BENEFICIALLY OWNED: 6,875 NOMINEE FOR CLASS III
(TERM EXPIRING IN 1999)
5
<PAGE> 9
[PHOTO] E. BRADLEY JONES, age 68 -- Director since 1990.
Retired Chairman and Chief Executive Officer of
Republic Steel Corporation, LTV Steel Company and Group
Vice President of The LTV Corporation. Mr. Jones
received his B.A. degree from Yale University. He began
his career with Republic Steel Corporation in 1954 in
sales and became President in 1979 and Chairman and
Chief Executive Officer in 1982. Following the merger
of Republic Steel Corporation and The LTV Corporation
in June 1984, Mr. Jones served as Chairman and Chief
Executive Officer of The LTV Steel Company and Group
Vice President of The LTV Corporation until his
retirement in December 1984. Mr. Jones also serves as a
director of TRW Inc., Cleveland-Cliffs Inc.,
Consolidated Rail Corporation, and Birmingham Steel
Corporation, and is a Trustee of First Union Real
Estate Investments and Fidelity Funds.
COMMON SHARES BENEFICIALLY OWNED: 5,515 NOMINEE FOR CLASS III
(TERM EXPIRING IN 1999)
[PHOTO] JOHN H. MORRIS, JR., age 54 -- Director since 1981.
Executive Vice President, RPM, Inc. Mr. Morris holds a
B.S. degree from the University of West Virginia and an
M.B.A. degree from Case Western Reserve University. Mr.
Morris held management positions with the Armstrong
Cork Company and the General Tire & Rubber Company
prior to joining RPM, Inc. as Director of Corporate
Marketing in 1977. He became Corporate Vice President
that same year and was elected Executive Vice President
of RPM, Inc. in 1981.
COMMON SHARES BENEFICIALLY OWNED: 166,915 NOMINEE FOR CLASS III
(TERM EXPIRING IN 1999)
[PHOTO] ALBERT B. RATNER, age 68 -- Director nominee.
Co-Chairman of the Board of Forest City Enterprises,
Inc., a conglomerate corporation engaged in real estate
development, sales, investment, construction and lumber
wholesale. Mr. Ratner received his B.S. degree from
Michigan State University. Mr. Ratner is also a
director of American Greetings Corporation.
COMMON SHARES BENEFICIALLY OWNED: 0 NOMINEE FOR CLASS III
(TERM EXPIRING IN 1999)
6
<PAGE> 10
DIRECTORS WHOSE TERMS OF OFFICE WILL CONTINUE AFTER ANNUAL MEETING
[PHOTO] EDWARD B. BRANDON, age 64 -- Director since 1989.
Retired Chairman, National City Corporation. Mr.
Brandon received his B.S. degree in economics from
Northwestern University and his M.B.A. degree from
Wharton School of Banking and Finance. He joined
National City Bank in 1956. Mr. Brandon served as
President of National City Corporation and President
and Chief Executive Officer of National City Bank prior
to his election as Chairman in September 1987, and
served as Chief Executive Officer of National City Bank
until April 1989. Mr. Brandon also served as Chief
Executive Officer of National City Corporation from
September 1987 until July 1995. Mr. Brandon retired
from National City Corporation in October 1995,
however, he remains on the corporation's board of
directors. Mr. Brandon is also a director of The
Standard Products Company.
COMMON SHARES BENEFICIALLY OWNED: 11,000 DIRECTOR IN CLASS I
(TERM EXPIRES IN 1998)
[PHOTO] WILLIAM A. PAPENBROCK, age 57 -- Director since 1972.
Partner, Calfee, Halter & Griswold, Attorneys-at-law.
Mr. Papenbrock received his B.S. degree in Business
Administration from Miami University (Ohio) and his
LL.B. degree from Case Western Reserve Law School.
After serving one year as the law clerk to the Chief
Justice of the Ohio Supreme Court, Mr. Papenbrock
joined Calfee, Halter & Griswold as an attorney in
1964. He became a partner of the firm in 1969 and is
Vice Chairman of the firm's Executive Committee.
Calfee, Halter & Griswold serves as counsel to the
Company.
COMMON SHARES BENEFICIALLY OWNED: 11,466 DIRECTOR IN CLASS I
(TERM EXPIRES IN 1998)
[PHOTO] THOMAS C. SULLIVAN, age 59 -- Director since 1963.
Chairman and Chief Executive Officer, RPM, Inc. Mr.
Thomas C. Sullivan received his B.S. degree in Business
Administration from Miami University (Ohio). He joined
RPM, Inc. as a Divisional Sales Manager in 1961 and was
elected Vice President in 1967. He became Executive
Vice President in 1969, and in 1971 Mr. Sullivan was
elected Chairman of the Board, President and Chief
Executive Officer of RPM, Inc. Mr. Sullivan is a
director of Pioneer-Standard Electronics, Inc.,
National City Bank, and Huffy Corporation.
COMMON SHARES BENEFICIALLY OWNED: 1,864,208 DIRECTOR IN CLASS I
(TERM EXPIRES IN 1998)
7
<PAGE> 11
[PHOTO] FRANK C. SULLIVAN, age 35 -- Director since 1995.
Executive Vice President and Chief Financial Officer,
RPM, Inc. Mr. Frank C. Sullivan entered the University
of North Carolina as a Morehead Scholar and received
his B.A. degree in 1983. From 1983 to 1987, Mr.
Sullivan held various commercial lending and corporate
finance positions at Harris Bank and First Union
National Bank prior to joining RPM as a Regional Sales
Manager at its AGR Company joint venture. In 1989, he
became the Company's Director of Corporate Development.
He became a Vice President of the Company in 1991 and
was elected Chief Financial Officer in 1993.
COMMON SHARES BENEFICIALLY OWNED: 96,002 DIRECTOR IN CLASS I
(TERM EXPIRES IN 1998)
[PHOTO] LORRIE GUSTIN, age 71 -- Director since 1992.
Director of the National Association of Investors Clubs
Trust since 1982, and Secretary of the World Federation
of Investment Clubs since 1978. Ms. Gustin attended
Pasadena State College. She served as an officer and
director of the N.A.I.C. Corporation (investment
education) from 1966 to 1983, and as President thereof
from 1980 to 1983.
COMMON SHARES BENEFICIALLY OWNED: 1,201 DIRECTOR IN CLASS II
(TERM EXPIRES IN 1997)
[PHOTO] JAMES A. KARMAN, age 59 -- Director since 1963.
President and Chief Operating Officer, RPM, Inc. Mr.
Karman holds a B.S. degree from Miami University (Ohio)
and an M.B.A. degree from the University of Wisconsin.
Mr. Karman taught corporate finance at the University
of Wisconsin and was an Investment Manager, The Union
Bank & Trust Company, Grand Rapids, Michigan, prior to
joining RPM, Inc. as Treasurer in 1963. Mr. Karman
became Vice President and Treasurer in 1969, Vice
President, Secretary and Treasurer in 1972, and was
elected Executive Vice President in 1973. In 1978, Mr.
Karman was elected President and Chief Operating
Officer of RPM, Inc. Mr. Karman also was Chief
Financial Officer of RPM, Inc. from
1982 until 1993. Mr. Karman is a director of A.
Schulman, Inc., McDonald & Company Investments, Inc.,
Metropolitan Financial Corp., Shiloh Industries, Inc.,
and Sudbury, Inc.
COMMON SHARES BENEFICIALLY OWNED: 495,718 DIRECTOR IN CLASS II
(TERM EXPIRES IN 1997)
8
<PAGE> 12
[PHOTO] DONALD K. MILLER, age 64 -- Director since 1972.
Chairman since January 1992 of Greylock Financial Inc.,
a venture capital firm. Mr. Miller served as Managing
Partner of Greylock Financial Partnership from December
1986 through December 1991 when Greylock became
incorporated. Formerly, Mr. Miller served as Chairman
and CEO of Thomson Advisory Group L.P. ("Thomson"), a
money management firm, from November 1990 to March 1993
and Vice Chairman from April 1993 to November 1994 when
Thomson became PIMCO Advisors L.P. Mr. Miller serves as
Chairman and Chief Executive Officer of PIMCO Inc., a
holding company, and as a Director of PIMCO Advisors,
L.P. Mr. Miller is a Director of Layne Christensen
Company, a successor corporation to Christensen Boyles
Corporation, a supplier of mining products and
services, where Mr. Miller served as Chairman from
January 1987 through December 1995. Mr. Miller received
his B.S. degree from Cornell University and his M.B.A.
degree from Harvard University Graduate School of
Business Administration. Mr. Miller became Senior Vice
President, Blyth Eastman Dillon & Co., Incorporated,
investment bankers, in 1978 and from 1980 through 1986
served as a Managing Director of Blyth Eastman Paine
Webber, Inc. (BEPWI). He served as the Managing Partner
of 1221 Associates, a private investment partnership
for Managing Directors of BEPWI. Mr. Miller is also a
Director of Fibreboard Corporation and Huffy
Corporation.
COMMON SHARES BENEFICIALLY OWNED: 26,361 DIRECTOR IN CLASS II
(TERM EXPIRES IN 1997)
[PHOTO] KEVIN O'DONNELL, age 71 -- Director since 1979.
Managing Director since August 1994 of O'Donnell &
Associates, a management consulting company. Mr.
O'Donnell graduated from Kenyon College and received
his M.B.A. degree from Harvard University Graduate
School of Business Administration. He joined the Steel
Improvement & Forge Company, the predecessor of SIFCO
Industries, Inc., a diversified metalworking company,
in 1947 and served in numerous capacities until 1960.
From 1960 to 1972, he served as a management
consultant, as a General Manager of a specialty steel
distributor and with the Peace Corps in various
capacities. In 1971, he was named Associate Director
for international operations of ACTION (Head of the
Peace Corps). He rejoined SIFCO Industries, Inc. in
1972 as Executive Vice President and was named
President and Chief Operating Officer in 1976 and Chief
Executive Officer in 1983. Mr. O'Donnell served as
President and Chief Executive Officer until his
retirement in June 1990 and then became Chairman of the
Executive Committee of the Board until July 1994. Mr.
O'Donnell is a Director of National Machinery Company.
COMMON SHARES BENEFICIALLY OWNED: 10,824 DIRECTOR IN CLASS II
(TERM EXPIRES IN 1997)
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<PAGE> 13
INFORMATION REGARDING MEETINGS AND COMMITTEES
OF THE BOARD OF DIRECTORS
The Board of Directors has an Executive Committee, a Compensation Committee
and an Audit Committee. The Executive Committee exercises the power and
authority of the Board in the interim period between Board meetings. The
Compensation Committee approves the grant of stock options and reviews and
determines the compensation of certain key executives. The Audit Committee
reviews the activities of the Company's independent auditors and various Company
policies and practices. The Board of Directors does not have a nominating
committee.
Set forth below is the current membership of each of the above-described
Committees, with the number of meetings held during the fiscal year ended May
31, 1996 in parentheses:
<TABLE>
<CAPTION>
EXECUTIVE COMPENSATION AUDIT
COMMITTEE(1) COMMITTEE(5) COMMITTEE(2)
- --------------------- ------------------ ---------------------
<S> <C> <C>
Thomas C. Sullivan Roy H. Holdt Donald K. Miller
(Chairman) (Chairman) (Chairman)
James A. Karman Edward B. Brandon E. Bradley Jones
Kevin O'Donnell Kevin O'Donnell Lorrie Gustin
Edward B. Brandon Max D. Amstutz
E. Bradley Jones
</TABLE>
The Board of Directors held four meetings during the fiscal year ended May
31, 1996. During that fiscal year, no Director attended fewer than 75% of the
aggregate of (i) the total number of meetings of the Board of Directors held
during the period he or she served as a Director and (ii) the total number of
meetings held by Committees of the Board on which the Director served, during
the periods that the Director served.
Directors who are not also employees of the Company, with the exception of
William A. Papenbrock, received a quarterly fee of $6,500 and an additional
$1,000 for each Board and Committee meeting attended, except for the Chairman of
each Committee who received $1,500 for each Committee meeting attended. In April
1986, the Board of Directors adopted a Deferred Compensation Plan providing for
the deferred payment of Directors' fees in either cash or stock equivalents and
the payment of such deferred fees in cash commencing six months following the
date of the participating Director's retirement, resignation or death, or
termination of such participating Director's Deferred Compensation Agreement.
Participation in the Deferred Compensation Plan is at the election of each
Director entitled to receive compensation for serving on the Board.
10
<PAGE> 14
EXECUTIVE COMPENSATION
Set forth below is information concerning the annual and long-term
compensation for services in all capacities to the Company for the fiscal years
ended May 31, 1996, 1995 and 1994, of those persons who were, at May 31, 1996:
(i) the Chief Executive Officer; and (ii) the other four most highly compensated
executive officers of the Company.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
AWARDS
ANNUAL ------------
COMPENSATION(1) SECURITIES
NAME AND ------------------------------ UNDERLYING ALL OTHER
PRINCIPAL POSITION YEAR SALARY BONUS OPTIONS COMPENSATION(2)(3)
- -------------------------- ----- -------- -------- ------------ ------------------
<S> <C> <C> <C> <C> <C>
Thomas C. Sullivan 1996 $710,000 $420,000 62,500 $ 12,419
Chairman of the Board 1995 $675,000 $380,000 50,000 $ 56,131
and Chief Executive 1994 $600,000 $345,000 50,000 $ 43,659
Officer
James A. Karman 1996 $560,000 $347,000 50,000 $ 29,302
President and Chief 1995 $530,000 $315,000 37,500 $ 40,091
Operating Officer 1994 $500,000 $285,000 37,500 $ 28,149
John H. Morris, Jr. 1996 $335,000 $240,000 31,250 $ 6,237
Executive Vice 1995 $320,000 $217,000 25,000 $ 18,541
President 1994 $300,000 $197,000 25,000 $ 14,237
Frank C. Sullivan 1996 $250,000 $140,000 31,250 $ 1,112
Executive Vice President 1995 $160,000 $120,000 18,750 $ 2,141
and Chief Financial 1994 $125,000 $ 60,000 12,500 $ 2,085
Officer
Richard E. Klar 1996 $225,000 $160,000 25,000 $ 8,884
Vice President and 1995 $215,000 $145,000 25,000 $ 26,289
Treasurer 1994 $200,000 $130,000 25,000 $ 20,773
</TABLE>
- ------------------
(1) In February 1994, the Board of Directors adopted a Deferred Compensation
Plan providing for the deferred payment of salary and/or bonuses in either
cash or stock equivalents and the payment of such deferred compensation in
cash commencing three months following the date of the participating
officer's retirement, resignation or death, or voluntary termination by
such participating officer. Any such deferred compensation is not taxed
until received by any such officer, at which time the Company is entitled
to a tax deduction, subject to the limitations of Section 162(m) of the
Internal Revenue Code.
(2) All Other Compensation consists of insurance premiums paid by the Company
in connection with split dollar and other executive life insurance
policies.
(3) All Other Compensation includes the following amounts equal to the full
dollar economic value of the premiums paid by the Company in connection
with life insurance policies issued pursuant to the Split Dollar Life
Insurance Agreements between the Company and the following named Executive
Officers during 1996, respectively: Mr. Thomas C. Sullivan $8,280; Mr.
Morris $2,926; Mr. Frank C. Sullivan $667; and Mr. Klar $3,462. The
premiums paid by the Company in connection with the life insurance policies
issued pursuant to such Split Dollar Life Insurance Agreements set forth in
the preceding sentence will be recovered in full by the Company upon the
payment of any death benefits under any such life insurance policy.
11
<PAGE> 15
OPTION GRANTS
Shown below is information on grants of stock options pursuant to the
Company's 1989 Stock Option Plan during the fiscal year ended May 31, 1996 to
the executive officers who are named in the Summary Compensation Table.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
- ----------------------------------------------------------------------------------------------------
PERCENTAGE POTENTIAL REALIZABLE
OF TOTAL VALUE AT ASSUMED
OPTIONS ANNUAL RATES OF
GRANTED TO EXERCISE OR STOCK PRICE APPRECIATION
NUMBER OF EMPLOYEES BASE PRICE FOR OPTION TERMS(4)(5)
SECURITIES IN FISCAL (PER EXPIRATION -------------------------
NAME UNDERLYING OPTIONS(1)(2) YEAR SHARE)(3) DATE 5% 10%
- -------------------------- ------------------------ ---------- ----------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Thomas C. Sullivan 62,500 10.2% $ 15.80 7/18/2005 $ 621,029 $1,573,817
Chairman of the Board
and Chief Executive
Officer
James A. Karman 50,000 8.2% $ 15.80 7/18/2005 $ 496,823 $1,259,054
President and Chief
Operating Officer
John H. Morris, Jr. 31,250 5.1% $ 15.80 7/18/2005 $ 310,514 $ 786,909
Executive Vice President
Frank C. Sullivan 31,250 5.1% $ 15.80 7/18/2005 $ 310,514 $ 786,909
Executive Vice President
and Chief Financial
Officer
Richard E. Klar 25,000 4.1% $ 15.80 7/18/2005 $ 248,411 $ 629,527
Vice President and
Treasurer
</TABLE>
- ---------------
(1) These options were granted on July 18, 1995 pursuant to the Company's 1989
Stock Option Plan. Twenty-five percent of the shares subject to the option
become exercisable on each anniversary date thereof.
(2) The option agreements relating to the options granted under the Company's
1989 Stock Option Plan provide that such options become fully vested upon
certain "changes in control" of the Company described in such option
agreements.
(3) This price represents the fair market value at the date of grant pursuant to
the terms of the Company's 1989 Stock Option Plan.
(4) The dollar amounts under these columns are the result of calculations at the
5% and 10% appreciation rates dictated by the Commission and are not
intended to be forecasts of the Company's stock price.
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES OF STOCK
PRICE APPRECIATION
FOR OPTION TERMS
------------------------------
5% 10%
------------- --------------
<S> <C> <C> <C>
(5) Value created for all shareholders: $ 809,757,577 $2,052,084,689
Gain of named executive officers as a percent of value created for all 0.25% 0.25%
shareholders:
</TABLE>
12
<PAGE> 16
OPTION EXERCISES AND FISCAL YEAR-END VALUES
Shown below is information with respect to the exercise of stock options
during the fiscal year ended May 31, 1996 to purchase the Company's Common
Shares by the executive officers named in the Summary Compensation Table and
with respect to the unexercised stock options at May 31, 1996 to purchase the
Company's Common Shares for the executive officers named in the Summary
Compensation Table.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND MAY 31, 1996 OPTION VALUE
<TABLE>
<CAPTION>
NUMBER OF NUMBER OF SECURITIES VALUE OF UNEXERCISED
SHARES UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
ACQUIRED OPTIONS AT MAY 31, 1996 AT MAY 31, 1996 (2)
ON VALUE ----------------------------- -----------------------------
NAME EXERCISE REALIZED (1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- --------------------- ---------- ------------ ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Thomas C. Sullivan 8,000 $ 63,840 133,797 134,375 $ 693,256 $ 278,356
Chairman of the
Board and Chief
Executive Officer
James A. Karman -- -- 90,188 104,376 $ 425,318 $ 213,612
President and Chief
Operating Officer
John H. Morris, Jr. -- -- 93,441 67,186 $ 557,104 $ 139,171
Executive Vice
President
Frank C. Sullivan 4,688 $ 40,036 25,001 53,437 $ 110,465 $ 95,331
Executive Vice
President and Chief
Financial Officer
Richard E. Klar 5,282 $ 33,443 87,767 60,936 $ 553,952 $ 134,013
Vice President and
Treasurer
</TABLE>
- ---------------
(1) Represents the difference between the option exercise price and the last
sales price of a Common Share on the Nasdaq National Market on the date of
exercise.
(2) Based on the last sales price of the Common Shares of $16.625 on the Nasdaq
National Market on May 31, 1996. The ultimate realization of profit on the
sale of the Common Shares underlying such options is dependent upon the
market price of such shares on the date of sale.
13
<PAGE> 17
EMPLOYMENT AGREEMENTS
Under an Amended Employment Agreement, dated as of July 17, 1996, Thomas C.
Sullivan is employed as Chairman of the Board and Chief Executive Officer of the
Company for a five-year period ending June 1, 2001. Pursuant to the terms of the
Agreement, Mr. Sullivan's annual base salary, effective as of June 1, 1996, is
$745,000. Mr. Sullivan's annual base salary is subject to review on an annual
basis by the Compensation Committee of the Board of Directors, and such base
salary may be increased (but not decreased) based upon his performance, then
generally prevailing industry salary scales, the Company's results of operations
and other relevant factors. In addition to his base salary, Mr. Sullivan is
entitled to such annual incentive compensation or bonuses as the Compensation
Committee determines and the Board of Directors approves, and to participate in
the other benefit plans provided by the Company. Under the provisions of the
Agreement, the Company may terminate the employment of Mr. Sullivan for
Disability or Cause (as defined). Mr. Sullivan may terminate employment under
the Agreement for Good Reason (as defined, including removal or failure to
re-elect him Chairman of the Board and Chief Executive Officer) or in the event
of a Change of Control of the Company (as defined, including any offer to
purchase a controlling block of Common Shares of the Company pursuant to a
tender offer or otherwise). If Mr. Sullivan should elect to terminate his
employment for Good Reason, Change of Control or for other specified reasons, he
is entitled to receive an amount equal to the product of his annual base salary
then in effect multiplied by the number of years remaining in the term of
employment under the Agreement, a portion of which may not be deductible to the
Company as an ordinary and necessary business expense and may be subject to a
20% excise tax to Mr. Sullivan pursuant to the provisions of the Tax Reform Act
of 1984. In the event that Mr. Sullivan were to terminate his employment under
such circumstances, he would be entitled to receive payment of approximately
$3,600,833 as of July 31, 1996. The Agreement also provides for the payment by
the Company of legal fees incurred by Mr. Sullivan in the event that, following
a Change of Control, Mr. Sullivan may be caused to institute or defend legal
proceedings to enforce his rights under the Agreement.
Under an Amended Employment Agreement, dated as of July 17, 1996, James A.
Karman is employed as President and Chief Operating Officer of the Company for a
five-year period ending June 1, 2001. Pursuant to the terms of the Agreement,
Mr. Karman's annual base salary, effective as of June 1, 1996, is $590,000. Mr.
Karman's Agreement also contains the same provisions which are described above
in connection with Mr. Sullivan's Agreement. In the event that Mr. Karman were
to terminate his employment under such circumstances, he would be entitled to
receive payment of approximately $2,851,667 as of July 31, 1996.
Effective July 17, 1996, the Company amended Employment Agreements
previously entered into with each of John H. Morris, Jr., Frank C. Sullivan and
Richard E. Klar. Pursuant to these Employment Agreements, Messrs. Morris,
Sullivan and Klar are employed in their current positions as Executive Vice
President, Executive Vice President and Chief Financial Officer, and Vice
President and Treasurer, respectively, for a one-year period ending July 31,
1997. The Employment Agreements provide for the following base salaries,
effective June 1, 1996: Mr. Morris -- $350,000; Mr. Sullivan -- $265,000; and
Mr. Klar -- $240,000. The Employment Agreements also provide for severance
payments in the amount of one year's base salary in the event of termination of
the officer's employment and three years' base salary in the event of
termination of employment due to a Change of Control of the Company not approved
by the Company's Board of Directors. The Employment Agreements contain the same
provision for the recovery of legal fees incurred to
14
<PAGE> 18
enforce the provisions of the Agreements following a Change of Control as
described above in connection with Mr. Sullivan's Agreement.
DEFINED BENEFIT PENSION PLAN
The table below sets forth the normal annual retirement benefits payable
upon retirement at age 65 (as of June 1, 1996) under the Company's tax qualified
defined benefit retirement plan (the "Retirement Plan") for employees in the
compensation ranges specified, under various assumptions with respect to average
annual compensation and years of benefit service, assuming that the employee
elected to receive his or her pension on a normal life annuity basis:
<TABLE>
<CAPTION>
ESTIMATED ANNUAL BENEFITS UPON RETIREMENT
AVERAGE (AS OF JUNE 1, 1996) WITH YEARS OF SERVICE INDICATED (1)
ANNUAL ----------------------------------------------------------------------------------------------------
COMPENSATION (2) 5 YEARS 10 YEARS 20 YEARS 30 YEARS 35 YEARS
---------------- ---------------- ---------------- ---------------- ---------------- ----------------
<S><C> <C> <C> <C> <C> <C>
$ 100,000 $ 6,078 $ 12,156 $ 24,312 $ 36,467 $ 38,795
$ 150,000 9,560 19,120 38,240 57,360 61,295
$ 200,000 13,042 26,084 52,169 78,253 83,795
$ 250,000 16,524 33,049 66,097 99,146 106,295
$ 300,000 20,006 40,013 80,026 120,039 128,795
$ 350,000 23,489 46,977 93,955 140,932 151,295
$ 400,000 26,971 53,942 107,883 161,825 173,795
$ 450,000 30,453 60,906 121,812 182,717 196,295
$ 500,000 33,935 67,870 135,740 203,610 218,795
$ 550,000 37,417 74,834 149,669 224,503 241,295
$ 600,000 40,899 81,799 163,597 245,396 263,795
$ 650,000 44,381 88,763 177,526 266,289 286,295
$ 700,000 47,864 95,727 191,455 287,182 308,795
$ 750,000 51,346 102,692 205,383 308,075 331,295
$ 800,000 54,828 109,656 219,312 328,967 353,795
$ 850,000 58,310 116,620 233,240 349,860 376,295
$ 900,000 61,792 123,584 247,169 370,753 398,795
$ 950,000 65,274 130,549 261,097 391,646 421,295
$1,000,000 68,756 137,513 275,026 412,539 443,795
$1,050,000 72,239 144,477 288,955 433,432 466,295
$1,100,000 75,721 151,442 302,883 454,325 488,795
$1,150,000 79,203 158,406 316,812 475,217 511,295
$1,200,000 82,685 165,370 330,740 496,110 533,795
$1,250,000 86,167 172,334 344,669 517,003 556,295
</TABLE>
- ---------------
(1) The amounts listed may be reduced in accordance with certain provisions of
the Internal Revenue Code of 1986 which limit the maximum amount of
compensation that may be taken into account under the Retirement Plan to
$150,000 and the maximum annual benefit payable under the Retirement Plan to
$120,000. The Company maintains a Benefit Restoration Plan for its executive
officers providing for the payment of supplemental retirement benefits
because of such Internal Revenue Code limits. See "Benefit Restoration Plan"
below.
(2) Includes base compensation as in effect on June 1, 1996, overtime paid and
bonuses paid or accrued. The compensation covered by the Retirement Plan for
the executive officers named in the Summary Compensation Table is the salary
and bonus listed in such table.
With respect to the executive officers listed in the Summary Compensation
Table: Mr. Thomas C. Sullivan has 34.4 years of service; Mr. Karman, 33.4 years
of service; Mr. Morris, 19.4 years of service; Mr. Frank C. Sullivan, 7.3 years
of service; and Mr. Klar, 27.6 years of service.
15
<PAGE> 19
BENEFIT RESTORATION PLAN
Effective January 1, 1991, the Company established the RPM, Inc. Benefit
Restoration Plan (the "Benefit Restoration Plan") for the purpose of providing
for the payment of supplemental retirement and death benefits to officers of the
Company designated by the Board of Directors whose Retirement Plan benefits may
be limited under the provisions of the Employee Retirement Income Security Act
of 1974 ("ERISA") and the Internal Revenue Code. In April 1991, the Board of
Directors designated Messrs. Thomas C. Sullivan, Karman and Morris as
participants in the Benefit Restoration Plan. In July 1993, the Board of
Directors also designated Messrs. Frank C. Sullivan, Klar and certain other
officers as participants in the Benefit Restoration Plan. The Benefit
Restoration Plan replaced the prior Supplemental Executive Retirement Plan which
provided similar supplemental retirement benefits. The Benefit Restoration Plan
is an unfunded excess benefit plan which is administered by the Company. The
Benefit Restoration Plan provides that any payment under the Plan is to be made
in an amount equal to the amount by which a participant's benefits otherwise
payable under the Company's Retirement Plan are reduced as a result of
limitations under ERISA and the Internal Revenue Code. The supplemental
retirement benefits are forfeited if the officer terminates employment before
attaining five years of vesting service and age 55. Supplemental death benefits
are paid to the surviving spouse or designated beneficiary of the officer. The
Company is entitled to a federal tax deduction in an amount and at the time that
benefits are paid to a participant. The Company is not entitled to any tax
deduction prior to payment of benefits to a participant.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors administers the cash
salary, bonus, and other compensation and stock option programs for the
executive officers of the Company pursuant to (i) the Code of Regulations of the
Company, which was adopted by the shareholders on October 14, 1987, and (ii) a
Compensation Committee Charter, which was first adopted by the Board of
Directors on January 24, 1992. The Compensation Committee Charter, as amended,
provides for the Compensation Committee (i) to review and recommend to the Board
of Directors the amount of compensation for services rendered to the Company to
be paid to the executive officers of the Company, (ii) to review and approve the
terms and conditions of written Employment Agreements for executive officers of
the Company, (iii) to administer the Company's Stock Option Plans, (iv) to
review and recommend to the Board of Directors the amount of reasonable
compensation and payment of expenses and other benefits to be paid to members of
the Board of Directors for serving as a Director of the Company, (v) to review
and approve the Compensation Committee Report to be included in the Company's
Proxy Statement for its Annual Shareholders Meeting, and (vi) to review,
approve, and administer any other matters or plans specifically delegated to the
Committee by the Board of Directors. The Compensation Committee presently
consists of three independent Directors who are appointed to the Committee by
and report to the entire Board of Directors. The members of the Compensation
Committee qualify as "disinterested" Directors within the definition of Rule
16b-3 under the Securities Exchange Act of 1934.
The Compensation Committee reviews and recommends the cash salaries and
bonuses to be awarded to Thomas C. Sullivan, Chairman of the Board and Chief
Executive Officer, and certain other executive officers, annually in July of
each year based upon a number of factors, but the Committee does not utilize
pre-established, specific performance goals in making cash salary
16
<PAGE> 20
compensation decisions. Historically, Mr. Sullivan has prepared a recommendation
to the Compensation Committee for cash salary and bonus increases and stock
option awards for himself and the other executive officers which the Committee
then reviews and considers in light of a number of factors, including (i)
increases in sales, net income, and earnings per share, (ii) performance of the
Company's Common Shares in the open market, (iii) increases in cash dividends
paid to shareholders, (iv) return on shareholders' equity, and (v) acquisitions,
corporate financings, and other general corporate objectives which were achieved
during the May 31 fiscal year. Any increases in cash salaries for Mr. Sullivan
and the other executive officers are made retroactive to June 1 of each fiscal
year and are included in an Amendment to the officer's Employment Agreement.
Once awarded, an increase in salary cannot be reduced without the officer's
consent.
In 1995, the Company retained a professional compensation consulting firm
to review the Company's executive compensation programs in light of Section
162(m) of the Internal Revenue Code which disallows a tax deduction for certain
compensation paid in excess of $1,000,000 to certain key executives. The
regulations under Section 162(m), however, except from this $1,000,000 limit
various forms of compensation, including "performance-based" compensation. The
consulting firm eventually recommended to the Compensation Committee a
performance-based compensation plan (the "Plan") which would satisfy the
requirements of Section 162(m). The Plan was approved by the Committee and was
submitted to the Company's shareholders for approval and was approved at the
October 1995 Annual Meeting.
The Plan provides for the granting of annual cash bonus awards (the "Bonus
Awards") to those employees of the Company who in any respective fiscal year are
the Chief Executive Officer and the other four most highly compensated officers
of the Company (the "Covered Employees").
The Plan is designed to promote the interests of the Company and its
shareholders by attracting and retaining officers who are key employees of the
Company; motivating such officers by reason of performance-related incentives to
achieve the Company's performance goals; enabling such officers to participate
in the growth and financial success of the Company; and, by qualifying the Bonus
Awards as "performance-based" compensation under Section 162(m) of the Internal
Revenue Code, assuring that the Company will continue to be able to deduct cash
bonuses paid to the Covered Employees. The Plan is intended to be utilized as
the primary annual cash bonus program for the Company's Covered Employees.
The Plan calls for providing an aggregate Bonus Award pool of 1.3% of the
Company's Income Before Income Taxes ("pre-tax income") in each applicable
fiscal year for the Covered Employees. Within the first three months of each
fiscal year the Compensation Committee, which administers the Plan, is required
to determine in writing the portion of such aggregate Bonus Award pool that each
Covered Employee may receive in respect of such fiscal year. At the end of each
fiscal year, the Compensation Committee shall calculate the aggregate Bonus
Award pool based on the Company's audited pre-tax income and each individual's
Bonus Award payout amount.
The Compensation Committee may reduce or eliminate a Covered Employee's
Bonus Award, at the Compensation Committee's sole discretion, based solely on
individual performance. The total of all Bonus Award payments made under the
Plan in any given fiscal year shall not exceed 1.3% of the Company's pre-tax
income. Furthermore, the total of all payments to any one individual Covered
Employee under the Plan in any fiscal year shall not exceed $1,500,000. Payments
under the Plan, pursuant to the terms herein described, are intended to satisfy
the requirements of Section 162(m)
17
<PAGE> 21
of the Internal Revenue Code as "performance-based" compensation and therefore
be fully tax deductible to the Company.
In late August 1995, the Compensation Committee determined on a percentage
basis the portion of the aggregate Bonus Award pool to be awarded to each
Covered Employee in respect of the Company's performance for the fiscal year
ending May 31, 1996 as follows: Thomas C. Sullivan, 30%; James A. Karman, 25%;
John H. Morris, Jr., 18%; Richard E. Klar, 15%; and Frank C. Sullivan, 12%.
These same five individuals shall participate in the Incentive Plan for fiscal
1997, and the Compensation Committee will follow the same procedure in 1997 as
in 1996.
For fiscal year May 31, 1996, the Company's pre-tax income was $119.9
million, and consequently the Bonus Award pool for the five highest paid
executive officers totaled $1,558,000. However, upon the recommendation of Mr.
Thomas C. Sullivan, the Compensation Committee awarded bonuses totaling
$1,307,000 to such officers, and in each case the bonus awarded to each officer
was less than the bonus which would have been obtained by multiplying each
officer's percentage times the total allowable Bonus Award pool provided for
under the Plan. See "Executive Compensation, Summary Compensation Table."
The Company's 1989 Stock Option Plan for its executive officers and other
key employees is intended to provide long-term equity incentive to the officers
and employees and, in the long-term, relates to shareholder value. Options to
executive officers are awarded by the Committee based upon the recommendation of
Mr. Sullivan, and the various presidents of the Company's operating subsidiaries
submit recommendations with respect to option grants to subsidiary employees.
Options are granted at the last Nasdaq sales price on the date of grant, have a
term of ten years, and generally vest at the rate of 25% per year.
As of May 31, 1996, 1,177,000 shares were available for future grant under
the 1989 Stock Option Plan. The Compensation Committee at its July 1996 meeting
granted options totaling 278,000 shares to executive officers and other key
employees of the Company and, in addition, it is contemplated that approximately
an additional 250,000 shares will be granted in October 1996 to subsidiary
presidents and key subsidiary employees. Thus, the Compensation Committee and
the Board of Directors adopted, subject to shareholder approval at the 1996
Annual Meeting, a new 1996 Key Employees Stock Option Plan covering 3,600,000
Common Shares to be granted over a ten-year period through 2006. The balance of
any shares available under the 1989 Plan also are available for grant in 1997.
See "Adoption of RPM, Inc. 1996 Key Employees Stock Option Plan" hereinafter.
The Company does not have any restricted or other "cheap stock" plans.
In February 1994, the Company adopted a deferred compensation plan for
executive officers pursuant to which officers can defer receipt of a portion of
their salary and/or cash bonus until a future date during which period of time
the deferred compensation will receive tax deferred interest or appreciation
based upon the value of Company Common Shares and dividends paid thereon. Any
compensation deferred under the plan would not be included in the $1,000,000
limit provided for under Section 162(m) until the year in which the compensation
actually is received.
Roy H. Holdt, Chairman
Kevin O'Donnell
Edward B. Brandon
18
<PAGE> 22
PERFORMANCE GRAPHS
Set forth below are line graphs comparing the yearly cumulative total
shareholders' return on the Company's Common Shares against the yearly
cumulative total return of the S&P Composite -- 500 Stock Index and an index of
certain companies selected by the Company as comparative to the Company (the
"Peer Group Index"). The companies selected to form the Peer Group Index are:
Detrex Corporation, Ferro Corporation, H. B. Fuller Company, Lawter
International, Inc., Lilly Industries, Inc., NL Industries, Inc., PPG Industries
Inc., Rohm and Haas Company, Standard Brands Paint Company, The Sherwin-Williams
Company and Valspar Corporation. The Company has eliminated Guardsman Products,
Pratt & Lambert and Grow Group from its Peer Group Index since these companies
have been acquired during the last year and are no longer publicly traded
entities.
The graphs assume that the value of the investment in the Company's Common
Shares, the S&P Composite -- 500 Stock Index and the Peer Group Index was $100
on May 31, 1991 and May 31, 1986, respectively, and that all dividends, if any,
were reinvested.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN*
AMONG RPM, INC., THE S&P 500 INDEX AND A PEER GROUP
<TABLE>
<CAPTION>
MEASUREMENT PERIOD
(FISCAL YEAR COVERED) RPM,INC. PEER GROUP S&P 500
<S> <C> <C> <C>
5/91 100 100 100
5/92 105 125 110
5/93 131 135 123
5/94 133 143 128
5/95 151 160 154
5/96 162 192 197
</TABLE>
* $100 INVESTED ON 05/31/91 IN STOCK OR INDEX --
INCLUDING REINVESTMENT OF DIVIDENDS.
FISCAL YEAR ENDING MAY 31.
19
<PAGE> 23
COMPARISON OF TEN YEAR CUMULATIVE TOTAL RETURN*
AMONG RPM, INC., THE S&P 500 INDEX AND A PEER GROUP
<TABLE>
<CAPTION>
MEASUREMENT PERIOD
(FISCAL YEAR COVERED) RPM,INC. PEER GROUP S&P 500
<S> <C> <C> <C>
5/86 100 100 100
5/87 111 195 121
5/88 119 163 113
5/89 149 145 144
5/90 190 147 168
5/91 248 171 187
5/92 261 208 208
5/93 326 225 230
5/94 328 239 239
5/95 374 267 288
5/96 402 319 370
</TABLE>
* $100 INVESTED ON 05/31/86 IN STOCK OR INDEX --
INCLUDING REINVESTMENT OF DIVIDENDS.
FISCAL YEAR ENDING MAY 31.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 (the "Exchange Act")
requires the Company's officers and Directors and persons who own 10% or more of
a registered class of the Company's equity securities, to file reports of
ownership and changes in ownership on Forms 3, 4 and 5 with the Commission and
the Nasdaq National Market. Officers, Directors and 10% or greater shareholders
are required by Commission regulations to furnish the Company with copies of all
Forms 3, 4 and 5 they file.
Based solely on the Company's review of the copies of such forms it has
received, the Company believes that all of its officers and Directors complied
with all filing requirements applicable to them with respect to transactions
during the fiscal year ended May 31, 1996, except for the inadvertent omission
to report on a Form 4 one transaction involving a purchase of 2,000 Common
Shares by E. Bradley Jones, which was promptly reported on a Form 5.
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<PAGE> 24
ADOPTION OF RPM, INC. 1996 KEY EMPLOYEES STOCK OPTION PLAN
BACKGROUND
The shareholders will be asked at the meeting to vote on a proposal to
approve the adoption of the RPM, Inc. 1996 Key Employees Stock Option Plan (the
"1996 Plan"). The 1996 Plan was adopted by the Board of Directors on July 19,
1996, effective as of August 15, 1996, subject to shareholder approval.
As of August 30, 1996, only 899,000 shares were available for future grant
under the Company's existing 1989 Stock Option Plan for its executive officers
and other key employees, and, in addition, it is contemplated that approximately
an additional 250,000 shares will be granted in October 1996 to subsidiary
presidents and key subsidiary employees. Therefore, the Compensation Committee
and the Board of Directors approved the 1996 Plan in order to continue to have
access to a sufficient pool of shares to be covered by stock options to provide
incentives to executive management and other key employees of the Company.
The following is a summary of the material features of the 1996 Plan and is
qualified in its entirety by reference to it. A copy of the 1996 Plan is
attached hereto as Appendix A to this Proxy Statement.
PURPOSE
The purpose of the 1996 Plan is to provide key employees of the Company and
its subsidiaries with greater incentive to serve and promote the interests of
the Company and its shareholders. The premise of the 1996 Plan is that, if such
persons acquire a proprietary interest in the business of the Company or
increase such proprietary interest as they may already hold, then the incentive
of such persons to work toward the Company's continued success will be
commensurately increased.
GENERAL
The 1996 Plan provides for the issuance to key employees of "incentive
stock options," within the meaning of Section 422A of the Internal Revenue Code,
and nonqualified (for federal income tax purposes) stock options to purchase a
maximum of 3,600,000 Common Shares of the Company. Options under the 1996 Plan
may be issued to executive officers and other valuable managerial or other
employees of the Company and its subsidiaries who, in the judgment of the
Compensation Committee, are in a position to contribute to the success of the
Company.
DURATION AND ADMINISTRATION
The 1996 Plan will expire by its terms on August 15, 2006. All options
outstanding at the time of termination of the 1996 Plan will continue in full
force and effect in accordance with and subject to their terms. The 1996 Plan is
administered by the Compensation Committee of the Board of Directors. Each
member of the Compensation Committee is a "disinterested person" within the
meaning of Rule 16b-3 promulgated under the Securities Exchange Act of 1934 and
an "outside director" within the meaning of Section 162(m) of the Internal
Revenue Code.
SECURITIES SUBJECT TO THE 1996 PLAN
Not more than 3,600,000 Common Shares of the Company in the aggregate may
be issued pursuant to the 1996 Plan, and not more than 500,000 Common Shares may
be issued to any one eligible employee, except that in the event of stock
splits, stock dividends, combinations, exchanges
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<PAGE> 25
of shares or similar capital adjustments, the Compensation Committee must make
an appropriate adjustment in the Common Shares subject to the 1996 Plan.
GRANT AND EXERCISE OF OPTIONS
Incentive stock options are exercisable for up to ten years at an option
price of not less than the fair market value of the Common Shares at the close
of business on the date the option is granted. In the case of a participant
owning more than 10% of the combined voting power of all classes of stock of the
Company, the option price may not be less than 110% of the fair market value of
the Common Shares on the date the option is granted. Nonqualified stock options
may be issued at such exercise price and on such other terms and conditions as
the Compensation Committee may determine. Options may be exercised by giving
written notice to the Company of the exercise of the option accompanied by full
payment of the purchase price either in cash or, with the consent of the
Compensation Committee, in Common Shares having a fair market value on the date
the option is exercised equal to that portion of the purchase price for which
payment in cash is not made. The Compensation Committee has broad discretion to
prescribe conditions (such as the completion of a period of employment with the
Company following the grant of an option to an employee) to be satisfied before
an option becomes exercisable or to accelerate the vesting of previously granted
options.
The Compensation Committee may, in its discretion, grant stock appreciation
rights that give the employee the right to elect an alternative payment equal to
the appreciation of the stock value in lieu of exercising the option. Payment of
the stock appreciation right may be made in cash, Common Shares of the Company,
or a combination thereof.
INCOME TAX TREATMENT
Generally, there are no federal income tax consequences to the recipient of
incentive stock options or the Company either at the time of grant or at the
time of exercise of such options, except that the excess of the fair market
value of shares acquired on exercise of incentive stock options over the option
price is an item of tax preference that may be subject to the alternative
minimum tax. Nonqualified options issued under the 1996 Plan do not result in
any taxable income to the optionee or deduction to the Company at the time it is
granted. Unlike an incentive stock option, the holder of a nonqualified option
is deemed to have received compensation, taxable as ordinary income, at the time
of exercise of the option equal to the difference between the fair market value
of the shares at the time of exercise and the option price, and the Company is
at the same time entitled to a tax deduction of a like amount. The grant of a
stock appreciation right does not produce taxable income to the recipient or
deduction to the Company; however, upon the exercise of the stock appreciation
right the amount of any cash received or the fair market value on the exercise
date of any shares received in lieu of cash will be taxable to the optionee as
ordinary income and deductible by the Company. As of August 30, 1996, the
Company had no outstanding stock appreciation rights.
The affirmative vote of the holders of a majority of the Common Shares
present, either in person or by proxy, at the meeting is required for the
approval and adoption of the 1996 Plan. Thus, shareholders who vote to abstain
will in effect be voting against the proposal. Broker non-votes, however, are
not counted as present for determining whether this proposal has been approved
and have no effect on its outcome.
THE BOARD RECOMMENDS A VOTE FOR THE ADOPTION OF THE RPM, INC. 1996 KEY
EMPLOYEES STOCK OPTION PLAN.
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<PAGE> 26
AMENDMENT TO AMENDED ARTICLES OF INCORPORATION
The total authorized capital of the Company, as set forth in Article Fourth
of the Company's Amended Articles of Incorporation, consists of 100,000,000
shares, all of which are Common Shares, without par value. Under the proposed
amendment to the Amended Articles of Incorporation, the total authorized capital
will be increased to 200,000,000 shares, all of which shall be Common Shares,
without par value. The Board of Directors approved the proposal on July 19,
1996. The Board of Directors does not presently contemplate proposing any other
changes to the Company's Amended Articles of Incorporation or Amended Code of
Regulations. In addition to the 77,471,058 Common Shares which were issued and
outstanding as of August 23, 1996, the Company has reserved 2,501,848 Common
Shares for issuance upon the exercise of outstanding options granted pursuant to
its existing stock option plans. The Company has also reserved 9,767,000 Common
Shares for the possible conversion of $400,000,000 aggregate principal amount at
maturity of Liquid Yield Option Notes ("LYONS"), due 2012.
The principal purpose for the proposal is to make available additional
Common Shares for possible stock splits or dividends, employee benefit plans,
acquisitions, public or private stock offerings and other corporate purposes.
The Company does not presently have any agreements or understandings with
respect to transactions which would call for the issuance of any of the
additional 100,000,000 Common Shares, although management is continuously
investigating various acquisition possibilities. Shareholders have no
pre-emptive rights with respect to the issuance of additional Common Shares,
and, except under certain circumstances provided for in the NASD By-Laws, the
General Corporation Law of Ohio, and the Company's Amended Articles of
Incorporation, the issuance of additional Common Shares would not require any
further shareholder approval.
The affirmative vote of the holders of a majority of the outstanding Common
Shares is required for the adoption of the proposed amendment. Thus, abstentions
and broker non-votes will have the effect of voting against the proposed
amendment. The full text of the proposed amendment is attached hereto as
Appendix B to this Proxy Statement.
THE BOARD RECOMMENDS A VOTE FOR THE PROPOSAL.
INDEPENDENT AUDITORS
The Board of Directors of the Company has selected the firm of Ciulla,
Smith & Dale, LLP, independent certified public accountants, to examine and
audit the financial statements of the Company and its subsidiaries for the
fiscal year ending May 31, 1997. This firm has served as independent auditors
for the Company since 1964. A representative of Ciulla, Smith & Dale, LLP will
be present at the Annual Meeting and will have an opportunity to make a
statement should he so desire. The representative also will be available to
respond to appropriate questions from shareholders.
OTHER MATTERS
The Board of Directors of the Company is not aware of any matter to come
before the meeting other than those mentioned in the accompanying Notice.
However, if other matters shall properly come before the meeting, it is the
intention of the persons named in the accompanying Proxy to vote in accordance
with their best judgment on such matters.
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<PAGE> 27
Any shareholder proposal intended to be presented at the 1997 Annual
Meeting of Shareholders must be received by the Company's Secretary at its
principal executive offices not later than May 6, 1997 for inclusion in the
Board of Directors' Proxy Statement and form of Proxy relating to that meeting.
Each proposal submitted should be accompanied by the name and address of the
shareholder submitting the proposal and the number of Common Shares owned. If
the proponent is not a shareholder of record, proof of beneficial ownership also
should be submitted. All proposals must be a proper subject for action and
comply with the Proxy Rules of the Commission.
Upon the receipt of a written request from any shareholder entitled to vote
at the forthcoming Annual Meeting, the Company will mail, at no charge to the
shareholder, a copy of the Company's Annual Report on Form 10-K, including the
financial statements and schedules required to be filed with the Commission
pursuant to Rule 13a-1 under the Securities Exchange Act of 1934, as amended,
for the Company's most recent fiscal year. Requests from beneficial owners of
the Company's voting securities must set forth a good-faith representation that
as of the record date for the Annual Meeting, the person making the request was
the beneficial owner of securities entitled to vote at such Annual Meeting.
Written requests for the Annual Report on Form 10-K should be directed to:
Paul A. Granzier, Secretary
RPM, Inc.
P.O. Box 777
Medina, Ohio 44258
You are urged to sign and return your Proxy promptly in order to make
certain your shares will be voted at the Annual Meeting. For your convenience a
return envelope is enclosed requiring no additional postage if mailed in the
United States.
By Order of the Board of Directors.
PAUL A. GRANZIER
Secretary
September 3, 1996
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<PAGE> 28
APPENDIX A
RPM, INC.
1996 KEY EMPLOYEES STOCK OPTION PLAN
RPM, Inc. hereby adopts a stock option plan for the benefit of certain
persons and subject to the terms and provisions set forth below.
1. DEFINITIONS. The following terms shall have the meanings set forth below
whenever used in this instrument:
<TABLE>
<C> <S>
(a) The word "Board" shall mean the Board of Directors of the Company.
(b) The word "Code" shall mean the United States Internal Revenue Code of 1986, as
amended, or successor provisions of future United States revenue laws (Title 26 of
the United States Code).
(c) The word "Committee" shall mean the Compensation Committee appointed by the Board.
(d) The words "Common Shares" shall mean the Common Shares, without par value, of the
Company.
(e) The word "Company" shall mean RPM, Inc., an Ohio corporation, and any successor
thereto which shall maintain this Plan.
(f) The word "Disability" shall mean the Optionee's inability to engage in substantial
gainful activity for the Company by reason of any medically determinable physical
or mental impairment which can be expected to result in death or which has lasted
or can be expected to last for a continuous period of not less than 12 months, as
determined by the Committee pursuant to written certification of such Disability
from a physician acceptable to the Committee.
(g) The words "Incentive Stock Option" shall mean any option which qualifies as an
Incentive Stock Option under terms of Section 422 of the Code.
(h) The words "Key Employee" shall mean any person who is an executive officer or other
valuable managerial or other employee of either the Company or any Subsidiary.
(i) The word "Optionee" shall mean any Key Employee to whom a stock option has been
granted pursuant to this Plan.
(j) The word "Plan" shall mean this instrument, the RPM, Inc. 1996 Key Employees Stock
Option Plan, as it is originally adopted and as it may be amended hereafter.
(k) The word "Subsidiary" shall mean any domestic or foreign corporation at least 50%
of the common stock of which is owned directly or indirectly by the Company.
(l) The words "Substantial Shareholder" shall mean any employee who owns directly and
through attribution more than 10% of the total combined voting power of all classes
of stock of either the Company or any Subsidiary. Ownership shall be determined in
accordance with Section 424(d) of the Code and lawful applicable regulations.
</TABLE>
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<PAGE> 29
2. PURPOSE OF THE PLAN. The purpose of the Plan is to provide Key Employees
of the Company and its Subsidiaries with greater incentive to serve and promote
the interests of the Company and its shareholders. The premise of the Plan is
that, if such persons acquire a proprietary interest in the business of the
Company or increase such proprietary interest as they may already hold, then the
incentive of such persons to work toward the Company's continued success will be
commensurately increased. Accordingly, the Company will, from time to time
during the effective period of the Plan, grant to such Key Employees as may be
selected to participate in the Plan options to purchase Common Shares on the
terms and subject to the conditions set forth in the Plan. Key Employees may be
granted either Incentive Stock Options or nonqualified stock options.
3. EFFECTIVE DATE OF THE PLAN. The Plan shall become effective on August
15, 1996 subject to approval by holders of a majority of the outstanding shares
of voting capital stock of the Company entitled to vote thereon represented in
person or by proxy at a meeting of shareholders. In the event that such
shareholder approval has not occurred on or before August 15, 1997, the Plan and
any options granted hereunder shall be null and void. If, however, the Plan is
so approved, subject to the provisions of Section 8, no further shareholder
approval shall be required with respect to the granting of any options pursuant
to the Plan.
4. ADMINISTRATION OF THE PLAN. The Plan shall be administered by the
Committee. The Committee shall consist of no fewer than three (3) members, who
shall be designated by and be members of the Board. Each member of the Committee
shall be a "disinterested person" within the meaning of Rule 16b-3 promulgated
under the Securities Exchange Act of 1934 or any amendment of or successor to
such Rule as may be in effect from time to time and an "outside director" within
the meaning of Section 162(m) of the Code or any amendment of or successor to
such provision as may be in effect from time to time. A majority of the
Committee shall constitute a quorum, and the acts of a majority of the members
present at any meeting at which a quorum is present, or acts approved in writing
by all of the members, shall be acts of the Committee. Subject to the terms and
conditions of the Plan, the Committee shall have full and final authority in its
absolute discretion:
<TABLE>
<C> <S>
(a) To select the Key Employees to whom options will be granted;
(b) To determine the number of Common Shares subject to any option;
(c) To determine the time or times when options will be granted;
(d) To determine the option price of Common Shares subject to an option;
(e) To determine the time or times when each option may be exercised and the duration
of the exercise period;
(f) To determine at the time of grant of an option whether and to what extent such
option is an Incentive Stock Option under Section 422 of the Code and regulations
thereunder as the same or any successor statute or regulations may at the time be
in effect;
(g) To determine whether stock appreciation rights shall be made part of any option
grant pursuant to Section 9 hereof, the method of valuing the stock appreciation
rights and whether the stock appreciation rights may be exercised in lieu of or in
addition to the related option;
</TABLE>
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<TABLE>
<C> <S>
(h) To prescribe the form of the option agreements governing the options which are
granted under the Plan and to set the provisions of such option agreements as the
Committee may deem necessary or desirable provided such provisions are not contrary
to the terms and conditions of either the Plan or, where the option is an Incentive
Stock Option, Section 422 of the Code and regulations thereunder as the same or any
successor statute or regulations may at the time be in effect;
(i) To adopt, amend and rescind such rules and regulations as, in the Committee's
opinion, may be advisable in the administration of the Plan; and
(j) To construe and interpret the Plan, the rules and regulations and the instruments
evidencing options granted under the Plan and to make all other determinations
deemed necessary or advisable for the administration of the Plan.
</TABLE>
Any decision made or action taken by the Committee in connection with the
administration, interpretation, and implementation of the Plan and of its rules
and regulations, shall, to the extent permitted by law, be conclusive and
binding upon all Optionees under the Plan and upon any person claiming under or
through such an Optionee. Neither the Committee nor any of its members shall be
liable for any act taken by the Committee pursuant to the Plan. No member of the
Committee shall be liable for the act of any other member.
5. PERSONS ELIGIBLE FOR OPTIONS. Subject to the restrictions herein
contained, options may be granted from time to time in the discretion of the
Committee only to such Key Employees, as designated by the Committee, whose
initiative and efforts contribute or may be expected to contribute to the
continued growth and future success of the Company and/or its Subsidiaries.
Notwithstanding the preceding sentence, a Key Employee who renounces in writing
any right he or she may have to receive stock options under the Plan shall not
be eligible to receive any stock options under the Plan. No option shall be
granted to any Key Employee during any period of time when he or she is on leave
of absence. The Committee may grant more than one option, with or without stock
appreciation rights, to the same Key Employee.
6. SHARES SUBJECT TO THE PLAN. Subject to the provisions of Section 9
concerning payment for stock appreciation rights in Common Shares and subject to
the provisions of the next succeeding paragraph of this Section 6, the aggregate
number of Common Shares for which options may be granted under the Plan shall be
Three Million Six Hundred Thousand (3,600,000) Common Shares. The maximum number
of Common Shares for which options may be granted under the Plan to any one
person shall be Five Hundred Thousand (500,000) Common Shares. Either treasury
or authorized and unissued Common Shares, or both, in such amounts, within the
maximum limits of the Plan, as the Committee shall from time to time determine,
may be so issued. All Common Shares which are the subject of any lapsed, expired
or terminated options shall not thereafter be available for reoffering under the
Plan. If an option granted under this Plan is exercised pursuant to the terms
and conditions determined by the Committee under Subsection 7(d), any Common
Shares which are the subject thereof shall not thereafter be available for
reoffering under the Plan to any Key Employee. If a stock appreciation right is
granted in conjunction with an option pursuant to Section 9, and if the option
agreement with the Optionee provides that exercise of the stock appreciation
right shall be in lieu of exercise of the options, and the stock appreciation
right is thereafter exercised in whole or in part, then the option or the
portion thereof with respect to which the stock
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<PAGE> 31
appreciation right was exercised shall be deemed to have been exercised and
shall not thereafter be available for reoffering under the Plan.
In the event that subsequent to the date of effectiveness of the Plan, the
outstanding Common Shares are, as a result of a stock split, stock dividend,
combination or exchange of shares, exchange for other securities,
reclassification, reorganization, redesignation, merger, consolidation,
recapitalization, spin-off, split-off, split-up or other such change (including,
without limitation, any transaction described in Section 424(a) of the Code) or
a special dividend or other distribution to the Company's shareholders,
increased or decreased or changed into or exchanged for a different number or
kind of shares of stock or other securities of the Company, then (i) there shall
automatically be substituted for each Common Share subject to an unexercised
option granted under the Plan and each Common Share available for additional
grants of options under the Plan the number and kind of shares of stock or other
securities into which each outstanding Common Share shall be exchanged, (ii) the
option price per Common Share or unit of securities shall be increased or
decreased proportionately so that the aggregate purchase price for the
securities subject to the option shall remain the same as immediately prior to
such event, and (iii) the Committee shall make such other adjustments to the
securities subject to options, the provisions of the Plan, and option agreements
as may be appropriate or equitable, in order to prevent dilution or enlargement
of option rights and in compliance with the provisions of Section 424(a) of the
Code to the extent applicable and any such adjustment shall be final, binding
and conclusive as to each Optionee. Any such adjustment may, in the discretion
of the Committee, provide for the elimination of fractional shares.
7. OPTION PROVISIONS.
(a) Option Price. The option price per Common Share which is the subject of
an Incentive Stock Option under the Plan shall be determined by the Committee at
the time of grant but shall not be less than one hundred percent (100%) of the
fair market value of a Common Share at the close of business on the date the
Incentive Stock Option is granted; provided, however, that if a Key Employee to
whom an Incentive Stock Option is granted is at the time of the grant a
Substantial Shareholder, the option price per Common Share shall be determined
by the Committee but shall never be less than one hundred ten percent (110%) of
the fair market value of a Common Share on the date the option is granted. The
option price per Common Share under each option granted pursuant to the Plan
which is not an Incentive Stock Option shall be determined by the Committee at
the time of grant, and may be above or below the fair market value of a Common
Share on the date the option is granted. Such fair market value shall be
determined in accordance with procedures to be established by the Committee. The
date on which the Committee approves the granting of an option shall be deemed
for all purposes hereunder the date on which the option is granted.
(b) Period of Option. The Committee shall determine when each option is to
expire but no option shall be exercisable after ten (10) years have elapsed from
the date upon which the option is granted. Each option shall be subject to
earlier termination as provided in Subsection 7(e) hereunder.
(c) Limitation on Exercise and Transfer of Option. Except as otherwise
provided in the event of an Optionee's death, only the Optionee may exercise an
option, provided that a guardian or other legal representative who has been duly
appointed for such Optionee may exercise an option on behalf of the Optionee. No
option granted hereunder shall be transferable other than (i) by the Last
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<PAGE> 32
Will and Testament of the Optionee or, if the Optionee dies intestate, by the
applicable laws of descent and distribution, or (ii) to the extent approved by
the Committee, pursuant to a qualified domestic relations order as defined by
the Code or the rules thereunder. No option granted hereunder may be pledged or
hypothecated, nor shall any such option be subject to execution, attachment or
similar process.
(d) Conditions Governing Exercise of Option. The Committee may, in its
absolute discretion, either require that, prior to the exercise of any option
granted hereunder, the Optionee shall have been an employee for a specified
period of time after the date such option was granted, or make any option
granted hereunder immediately exercisable. Each option shall be subject to such
additional restrictions or conditions with respect to the right to exercise and
the time and method of exercise as shall be prescribed by the Committee. Upon
satisfaction of any such conditions, the option may be exercised in whole or in
part at any time during the option period, but this right of exercise shall be
limited to whole shares, unless the Committee shall otherwise provide. Options
shall be exercised by the Optionee (i) giving written notice to the Secretary of
the Company at its principal office of the Optionee's exercise of the option and
the number of shares with respect to which the option is being exercised,
accompanied by full payment of the purchase price either in cash or, with the
consent of the Committee, in whole or in part in Common Shares having a fair
market value on the date the option is exercised equal to that portion of the
purchase price for which payment in cash is not made, and (ii) making
appropriate arrangements with the Company with respect to income tax
withholding, as required, which arrangements may include, in lieu of other
withholding arrangements, (a) the Company withholding from issuance to the
Optionee such number of Common Shares otherwise issuable upon exercise of the
option as the Company and the Optionee may agree; provided that such Optionee,
if subject to Section 16 of the Securities Exchange Act of 1934 or any successor
provision, has had on file with the Committee, for at least six (6) months prior
thereto, an effective standing election to satisfy said Optionee's tax
withholding obligations in such a fashion, which election form by its terms
shall not be revocable or amendable for at least six (6) months, or (b) with the
consent of the Committee, the Optionee's delivery to the Company of Common
Shares having a fair market value on the date the option is exercised equal to
that portion of the withholding obligation for which payment in cash is not
made. Such notice shall be deemed delivered when deposited in the mails.
Notwithstanding anything in the foregoing to the contrary, in the event of a
"change in control" the Committee shall have the authority and power: (i) to
cause all outstanding options to be immediately exercisable notwithstanding any
vesting limitation otherwise previously imposed on such options; and (ii) to
accelerate the termination date of all such options. Thereafter, upon such
determination, an Optionee may exercise any and all outstanding options (in
whole or in part), whether or not such options are by their terms fully
exercisable at such time, and the Committee may authorize the acceptance of the
surrender of the right to exercise such option or any portion thereof, but in no
event after the expiration of the term of the option. The term "change in
control" shall include, but not be limited to: (i) the first purchase of shares
pursuant to a tender offer or exchange (other than a tender offer or exchange by
the Company) for all or part of the Company's Common Shares or of any class or
any securities convertible into such Common Shares; (ii) the receipt by the
Company of a Schedule 13D or other advice indicating that a person is the
"beneficial owner" (as that term is defined in Rule 13d-3 under the Securities
Exchange Act of 1934) of twenty percent (20%) or more of the Company's Common
Shares calculated as provided in paragraph (d) of said Rule 13d-3; (iii) the
date of approval by shareholders of the Company of an agreement providing for
any consolidation or merger of the Company in which the Company will
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<PAGE> 33
not be the continuing or surviving corporation or pursuant to which capital
stock, or any class or any securities convertible into such capital stock, of
the Company would be converted into cash, securities, or other property, other
than a merger of the Company in which the holders of common stock of all classes
of the Company immediately prior to the merger would have the same proportion of
ownership of common stock of the surviving corporation immediately after the
merger; (iv) the date of the approval by shareholders of the Company of any
sale, lease, exchange, or other transfer (in one transaction or a series of
related transactions) of all or substantially all the assets of the Company; (v)
the adoption of any plan or proposal for the liquidation (but not a partial
liquidation) or dissolution of the Company; or (vi) such other event as the
Committee shall, in its sole and absolute discretion, deem to be a "change in
control." The manner of application and interpretation of the foregoing
provisions shall be determined by the Committee in its sole and absolute
discretion.
(e) Termination of Employment, Etc. If an Optionee ceases to be an employee
of the Company or its Subsidiaries, his or her option shall, unless otherwise
provided for by an action of the Committee or in the option agreement between
the Optionee and the Company, terminate on the date he or she ceases to be an
employee and neither he nor she nor any other person shall have any rights after
the date he or she ceases to be an employee to exercise all or any part of the
option. An Optionee's employment shall not be deemed to have terminated while he
or she is on a temporary military, sick or other bona fide leave of absence from
the Company or a Subsidiary approved in writing by the Company, such as a leave
of absence as is described in Section 1.421-7(h) of the Federal Income Tax
Regulations or any lawful successor regulations thereto; provided, however, that
the Committee may impose such terms and conditions with respect to such leaves
as it deems proper as are consistent with such regulations. If the stock option
is an Incentive Stock Option, no option agreement shall:
(i) permit any Optionee to exercise any Incentive Stock Option more
than three (3) months after the date the Optionee ceased to be an
employee of the Company and all Subsidiaries (but not beyond the
original term of the option) if the reason for the Optionee's
cessation as an employee was other than his or her death or his
or her Disability; or
(ii) permit any Optionee to exercise any Incentive Stock Option more
than one (1) year after the date the Optionee ceased to be an
employee of the Company and all Subsidiaries (but not beyond the
original term of the option) if the reason for the Optionee's
cessation as an employee was the Optionee's Disability; or
(iii) permit any person to exercise any Incentive Stock Option more
than one (1) year after the date the Optionee ceased to be an
employee of the Company and all Subsidiaries (but not beyond the
original term of the option) if either (A) the reason for the
Optionee's cessation as an employee was his or her death or (B)
the Optionee died within three (3) months after ceasing to be an
employee of the Company and all Subsidiaries.
If any option is by the terms of the option agreement exercisable following the
Optionee's death, then such option shall be exercisable by the Optionee's
estate, or the person designated in the Optionee's Last Will and Testament, or
the person to whom the option was transferred by the applicable laws of descent
and distribution.
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<PAGE> 34
(f) Limitations on Grant of Incentive Stock Options. During the calendar
year in which any Incentive Stock Options granted by the Company or any
Subsidiary first become exercisable by any Optionee, the aggregate fair market
value of the Common Shares which are subject to such Incentive Stock Options
(determined as of the date the Incentive Stock Options were granted) shall not
exceed the sum of One Hundred Thousand Dollars ($100,000.00). Options which are
not designated as Incentive Stock Options shall not be subject to the limitation
described in the preceding sentence and shall not be counted when applying such
limitation.
(g) Prohibition of Alternative Options. It is intended that Key Employees
may be granted, simultaneously or from time to time, Incentive Stock Options or
other stock options, but no Key Employees shall be granted alternative rights in
Incentive Stock Options and other stock options so as to prevent options granted
as Incentive Stock Options under the Plan from qualifying as such within the
meaning of Section 422 of the Code.
(h) Waiver by Committee of Conditions Governing Exercise of Option. The
Committee may, in its sole discretion, waive any restrictions or conditions set
forth in an option agreement concerning an Optionee's right to exercise any
option and/or the time and method of exercise.
8. AMENDMENTS TO THE PLAN. The Committee is authorized to interpret the
Plan and from time to time adopt any rules and regulations for carrying out the
Plan that it may deem advisable. Subject to the approval of the Board, the
Committee may at any time amend, modify, suspend or terminate the Plan. In no
event, however, without the approval of the Company's shareholders, shall any
action of the Committee or the Board result in:
<TABLE>
<C> <S>
(a) Amending, modifying or altering the eligibility requirements provided in Section 5
hereof;
(b) Increasing or decreasing, except as provided in Section 6 hereof, the maximum
number of shares for which options may be granted;
(c) Decreasing the minimum option price per share at which certain options may be
granted under the Plan, as provided in Section 7(a) hereof;
(d) Extending either the maximum period during which an option is exercisable as
provided in Section 7(b) hereof or the date on which the Plan shall terminate as
provided in Section 12 hereof;
(e) Changing the requirements relating to the Committee; or
(f) Making any other change, without the Optionee's consent, which would cause any
option granted under the Plan as an Incentive Stock Option not to qualify as an
Incentive Stock Option within the meaning of Section 422 of the Code;
</TABLE>
except as necessary to conform the Plan and the option agreements to changes in
the Code or other governing law. No option may be granted during any suspension
of this Plan or after this Plan has terminated and no amendment, suspension or
termination shall, without the Optionee's consent, alter or impair any of the
rights or obligations under an option theretofore granted to such Optionee under
this Plan.
9. STOCK APPRECIATION RIGHTS. The Committee may provide, at the time of the
grant of a stock option and upon such terms and conditions as it deems
appropriate, that an Optionee shall have the
A-7
<PAGE> 35
right with respect to all or a portion of the options granted to him or her to
elect to surrender such options in exchange for the consideration set forth in
this Section 9 in lieu of exercising such options. Alternatively, the Committee
may provide, at the time of the grant of a stock option and upon such terms and
conditions as it deems appropriate, that an Optionee shall have the right with
respect to all or a portion of the options granted to him or her to receive the
consideration set forth in this Section 9 upon exercising such options in
addition to any Common Shares purchased upon exercise thereof. Stock
appreciation rights must be specifically granted by the Committee; provided,
however, the Committee shall have no authority to grant stock appreciation
rights except in connection with the grant of a stock option pursuant to the
Plan, and no Optionee shall be entitled to such rights solely as a result of the
grant of an option to him or her. Stock appreciation rights, if granted, may be
exercised either with respect to all or a portion of the option to which they
relate. Stock appreciation rights shall not be transferable separate from the
option with respect to which they were granted and shall be subject to all of
the restrictions on transfer applicable to the said options. Stock appreciation
rights shall be exercisable only at such times and by such persons as are
specified in the option agreement governing the stock option with respect to
which the stock appreciation rights were granted. A stock appreciation right
shall provide that an Optionee shall have the right to receive a percentage, not
greater than One Hundred Percent (100%), of the excess over the option price, if
any, of the fair market value of the Common Shares covered by the option, as
determined by the Committee as of the date of exercise of the stock appreciation
right, in the manner provided for herein. Such amount shall be payable in one or
more of the following manners, as shall be determined by the Committee:
(a) in cash;
(b) in Common Shares having a fair market value equal to such amount;
or
(c) in a combination of cash and Common Shares.
Any payment made pursuant to this Section 9, whether in cash or in Common
Shares, shall thereby reduce the number of shares available for the grant of
options under this Plan.
In no event may any Optionee exercise any stock appreciation rights granted
hereunder unless such Optionee is then permitted to exercise the option or the
portion thereof with respect to which such stock appreciation rights relate. If
the option agreement with the Optionee provides that exercise of the stock
appreciation right shall be in lieu of exercise of the option, then (i) upon the
exercise of any stock appreciation rights, the option or that portion thereof to
which the stock appreciation rights relate shall be cancelled, and (ii) upon the
exercise of the option or that portion thereof to which the stock appreciation
rights relate, the stock appreciation rights shall be cancelled, and the option
agreement governing such option shall be deemed amended as appropriate without
any further action by the Committee or the Optionee. If the option agreement
with the Optionee provides that exercise of the stock appreciation right shall
be in addition to exercise of the option, then (i) upon the exercise of any
stock appreciation rights, the option or that portion thereof to which the stock
appreciation rights relate shall be deemed exercised, and (ii) upon the exercise
of the option, the stock appreciation rights corresponding thereto shall be
deemed exercised to the extent the option is exercised. The terms of any stock
appreciation rights granted hereunder shall be incorporated into the option
agreement which governs the option with respect to which the stock appreciation
rights are granted, and shall be on such terms as the Committee shall prescribe
which are not inconsistent with this Plan. The granting of an option or stock
appreciation right shall impose
A-8
<PAGE> 36
no obligation upon the Optionee to exercise such option or right. The Company's
obligation to satisfy stock appreciation rights shall not be funded or secured
in any manner.
10. INVESTMENT REPRESENTATION, APPROVALS AND LISTING. The Committee may
condition its grant of any option hereunder upon receipt of an investment
representation from the Optionee which shall be substantially similar to the
following:
"Optionee agrees that any Common Shares of RPM, Inc. which Optionee may
acquire by virtue of the exercise of this option shall be acquired for
investment purposes only and not with a view to distribution or resale;
provided, however, that this restriction shall become inoperative in the event
the Common Shares of RPM, Inc. which are subject to this option shall be
registered under the Securities Act of 1933, as amended, or in the event RPM,
Inc. is otherwise satisfied that the offer or sale of the Common Shares of RPM,
Inc. which are subject to this option may lawfully be made without registration
under the Securities Act of 1933, as amended."
The Company shall not be required to issue any certificates for Common Shares
upon the exercise of an option or a stock appreciation right granted under the
Plan prior to (i) obtaining any approval from any governmental agency which the
Committee shall, in its sole discretion, determine to be necessary or advisable,
(ii) the admission of such Common Shares to listing on any national securities
exchange on which the Common Shares may be listed, (iii) completion of any
registration or other qualification of the Common Shares under any state or
federal law or ruling or regulations of any governmental body which the
Committee shall, in its sole discretion, determine to be necessary or advisable,
or the determination by the Committee, in its sole discretion, that any
registration or other qualification of the Common Shares is not necessary or
advisable and (iv) obtaining an investment representation from the Optionee in
the form set forth above or in such other form as the Committee, in its sole
discretion, shall determine to be adequate.
11. GENERAL PROVISIONS.
(a) Option Agreements Need Not Be Identical. The form and substance of
option agreements and grants of stock appreciation rights, whether granted at
the same or different times, need not be identical.
(b) No Right To Be Employed, Etc. Nothing in the Plan or in any option
agreement shall confer upon any Optionee any right to continue as an employee of
the Company or a Subsidiary, or to serve as a member of the Board, or to be
entitled to receive any remuneration or benefits not set forth in the Plan or
such option agreement, or to interfere with or limit either the right of the
Company or a Subsidiary to terminate the Optionee's employment at any time or
the right of the shareholders of the Company to remove him or her as a member of
the Board, with or without cause.
(c) Optionee Does Not Have Rights Of Shareholder. Nothing contained in the
Plan or in any option agreement shall be construed as entitling any Optionee to
any rights of a shareholder as a result of the grant of an option until such
time as Common Shares are actually issued to such Optionee pursuant to the
exercise of an option or stock appreciation right.
A-9
<PAGE> 37
(d) Successors In Interest. The Plan shall be binding upon the successors
and assigns of the Company.
(e) No Liability Upon Distribution Of Shares. The liability of the Company
under the Plan and any distribution of Common Shares made hereunder is limited
to the obligations set forth herein with respect to such distribution and no
term or provision of the Plan shall be construed to impose any liability on the
Company or the Committee in favor of any person with respect to any loss, cost
or expense which the person may incur in connection with or arising out of any
transaction in connection with the Plan, including, but not limited to, any
liability to any Federal, state, or local tax authority and/or any securities
regulatory authority.
(f) Taxes. Appropriate provisions shall be made for all taxes required to
be withheld and/or paid in connection with the options or the exercise thereof,
and the transfer of Common Shares pursuant thereto, under the applicable laws or
other regulations of any governmental authority, whether Federal, state or local
and whether domestic or foreign.
(g) Use Of Proceeds. The cash proceeds received by the Company from the
issuance of Common Shares pursuant to the Plan will be used for general
corporate purposes, or in such other manner as the Board deems appropriate.
(h) Expenses. The expenses of administering the Plan shall be borne by the
Company.
(i) Captions. The captions and section numbers appearing in the Plan are
inserted only as a matter of convenience. They do not define, limit, construe or
describe the scope or intent of the provisions of the Plan.
(j) Number. The use of the singular or plural herein shall not be
restrictive as to number and shall be interpreted in all cases as the context
may require.
(k) Gender. The use of the feminine, masculine or neuter pronoun shall not
be restrictive as to gender and shall be interpreted in all cases as the context
may require.
12. TERMINATION OF THE PLAN. The Plan shall terminate on August 15, 2006,
and thereafter no options shall be granted under the Plan. All options
outstanding at the time of termination of the Plan shall continue in full force
and effect according to the terms of the option agreements governing such
options and the terms and conditions of the Plan.
13. GOVERNING LAW. The Plan shall be governed by and construed in
accordance with the laws of the State of Ohio and any applicable federal law.
14. VENUE. The venue of any claim brought hereunder by a Key Employee shall
be Cleveland, Ohio.
15. CHANGES IN GOVERNING RULES AND REGULATIONS. All references herein to
the Code or sections thereof, or to rules and regulations of the Department of
Treasury or of the Securities and Exchange Commission, shall mean and include
the Code sections thereof and such rules and regulations as are now in effect or
as they may be subsequently amended, modified, substituted or superseded.
A-10
<PAGE> 38
APPENDIX B
PROPOSED AMENDMENT TO ARTICLE FOURTH
OF THE AMENDED ARTICLES OF INCORPORATION
OF
RPM, INC.
Article Fourth of the Amended Articles of Incorporation be amended to read
in its entirety as follows:
"FOURTH: The maximum number of shares which the Corporation is authorized
to have outstanding is Two Hundred Million (200,000,000) shares, all of
which shall be Common Shares, without par value."
B-1
<PAGE> 39
RPM, INC.
ANNUAL MEETING OF SHAREHOLDERS -- OCTOBER 18, 1996
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby (i) appoints JAMES A. KARMAN and RICHARD E.
KLAR, and each of them, as Proxy holders and attorneys, with full
P power of substitution, to appear and vote all of the Common Shares of
RPM, Inc., which the undersigned shall be entitled to vote at the
R Annual Meeting of Shareholders of the Company to be held at the
Holiday Inn Strongsville, 15471 Royalton Road, Strongsville, Ohio, on
O Friday, October 18, 1996 at 2:00 P.M. Eastern Daylight Time, and at
any adjournment or postponement thereof, hereby revoking any and all
X proxies heretofore given, and (ii) authorizes and directs said Proxy
holders to vote all of the Common Shares of the Company represented by
Y this Proxy as follows, WITH THE UNDERSTANDING THAT IF NO DIRECTIONS
ARE GIVEN ON REVERSE SIDE, SAID SHARES WILL BE VOTED "FOR" THE
ELECTION OF THE FOUR DIRECTORS NOMINATED BY THE BOARD OF DIRECTORS,
"FOR" THE PROPOSAL TO APPROVE AND ADOPT THE COMPANY'S 1996 KEY
EMPLOYEES STOCK OPTION PLAN AND "FOR" THE PROPOSAL TO AMEND THE
COMPANY'S AMENDED ARTICLES OF INCORPORATION TO INCREASE THE NUMBER
OF AUTHORIZED COMMON SHARES OF THE COMPANY FROM 100,000,000 TO
200,000,000 COMMON SHARES.
Election of Directors, Nominees:
Dr. Max D. Amstutz,
E. Bradley Jones,
John H. Morris, Jr.,
Albert B. Ratner
YOU ARE ENCOURAGED TO SPECIFY YOUR CHOICES BY MARKING THE
APPROPRIATE BOXES, SEE REVERSE SIDE, BUT YOU NEED NOT MARK ANY BOXES
IF YOU WISH TO VOTE IN ACCORDANCE WITH THE BOARD OF DIRECTORS'
RECOMMENDATIONS. THE PROXIES CANNOT VOTE YOUR SHARES UNLESS YOU SIGN
AND RETURN THIS CARD.
SEE REVERSE
SIDE
- --------------------------------------------------------------------------------
DETACH CARD
DIRECTIONS TO THE HOLIDAY INN STRONGSVILLE
FROM CLEVELAND AND POINTS NORTH (INCLUDING HOPKINS AIRPORT)
I-71 South to the North Royalton exit (#231A). Cross over bridge and the
hotel is on the right hand side.
FROM THE OHIO TURNPIKE EAST AND WEST
Ohio Turnpike (I-80) to I-71 South (exit 10). Exit at the North Royalton
exit (#231A). Cross over bridge and the hotel is on the right hand side.
FROM THE EAST
I-480 West to I-71 South. Exit at the North Royalton exit (#231A).
Cross over bridge and the hotel is on the right hand side.
FROM THE SOUTH
I-71 North to the Strongsville exit (#231).
Turn right at end of exit ramp and hotel is on the right hand side.
[MAP]
<PAGE> 40
<TABLE>
<C> <S> <C> <C> <C> <C> <C> <C>
/X/ PLEASE MARK YOUR SHARES HELD SHARES IN DIVIDEND
VOTES AS IN THIS DIRECTLY BY YOU REINVESTMENT PLAN
EXAMPLE.
FOR WITHHELD FOR AGAINST ABSTAIN FOR AGAINST ABSTAIN
1. Election of / / / / 2. Approve and adopt / / / / / / 3. Amendment to / / / / / /
Directors RPM, Inc. 1996 Key Amended Articles of
(see reverse) Employees Stock Incorporation to in-
Option Plan. crease the number of
authorized Common Shares of the Company from
For, except vote withheld from the following nominee(s): 100,000,000 to 200,000,000.
4. In their discretion to act on any other
- ---------------------------------------------------------- matter or matters which may properly come
THE BOARD OF DIRECTORS RECOMMENDS YOU VOTE FOR THE ABOVE PROPOSALS. before the meeting.
PLEASE DATE, SIGN AND RETURN PROMPTLY
IN THE ACCOMPANYING ENVELOPE.
Change
of / /
Address
Will
Attend
Annual / /
Meeting
(Indicate change of address
in the space below and
mark the box to the left.)
SIGNATURE(S) DATE -------------------------
---------------------------------------------------- -------------------
-------------------------
SIGNATURE(S) DATE
---------------------------------------------------- ------------------- -------------------------
NOTE: Please sign exactly as name appears hereon. Joint owners should each sign.
When signing as attorney, executor, administrator, trustee or guardian,
please give full title as such.
- ------------------------------------------------------------------------------------------------------------------------------------
DETACH CARD
</TABLE>
<PAGE> 41
DIRECTION CARD
RPM, INC. 401(K) PLAN (FORMERLY RETIREMENT SAVINGS TRUST AND PLAN)
TO: KEY TRUST COMPANY OF OHIO, N.A., TRUSTEE
P The undersigned hereby directs Key Trust Company of Ohio, N.A.,
RPM, Inc. 401(k) Plan (formerly Retirement Savings Trust and Plan)
Trustee to vote Common Shares held for the undersigned's 401(k)
R Plan account at the Annual Meeting of Shareholders of the Company
to be held at the Holiday Inn Strongsville, 15471 Royalton Road,
Strongsville, Ohio, on Friday, October 18, 1996 at 2:00 P.M.
O Eastern Daylight Time, and at any adjournment or postponement
thereof, as specified, WITH THE UNDERSTANDING THAT IF A SIGNED
DIRECTION CARD IS RETURNED WITH NO DIRECTIONS GIVEN ON REVERSE
X SIDE, SAID SHARES WILL BE VOTED "FOR" THE ELECTION OF THE FOUR
DIRECTORS NOMINATED BY THE BOARD OF DIRECTORS, "FOR" THE PROPOSAL
TO APPROVE AND ADOPT THE COMPANY'S 1996 KEY EMPLOYEES STOCK OPTION
Y PLAN AND "FOR" THE PROPOSAL TO AMEND THE COMPANY'S AMENDED ARTICLES
OF INCORPORATION TO INCREASE THE NUMBER OF AUTHORIZED COMMON SHARES
OF THE COMPANY FROM 100,000,000 TO 200,000,000 COMMON SHARES AND TO
VOTE IN ACCORDANCE WITH ITS DISCRETION ON SUCH OTHER MATTERS AS MAY
PROPERLY COME BEFORE THE MEETING.
Election of Directors, Nominees:
Dr. Max D. Amstutz,
E. Bradley Jones,
John H. Morris, Jr.,
Albert B. Ratner
YOU ARE ENCOURAGED TO SPECIFY YOUR CHOICES BY MARKING THE
APPROPRIATE BOXES, SEE REVERSE SIDE, BUT YOU NEED NOT MARK ANY BOXES
IF YOU WISH TO VOTE IN ACCORDANCE WITH THE BOARD OF DIRECTORS'
RECOMMENDATIONS.
SEE REVERSE
SIDE
- --------------------------------------------------------------------------------
DETACH CARD
<PAGE> 42
<TABLE>
<CAPTION>
/ X / PLEASE MARK YOUR
VOTES AS IN THIS
EXAMPLE.
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
FOR WITHHELD FOR AGAINST ABSTAIN FOR AGAINST ABSTAIN
1. Election of / / / / 2. Approve and adopt / / / / / / 3. Amendment to / / / / / /
Directors RPM, Inc. 1996 Key Amended Articles of
(see reverse) Employees Stock Incorporation to in-
Option Plan. crease the number
of authorized Common Shares of the Company from
100,000,000 to 200,000,000.
For, except vote withheld from the following nominee(s):
4. In their discretion to act
on any other matter or
------------------------------------------------------- matters which may properly
THE BOARD OF DIRECTORS RECOMMENDS YOU VOTE FOR THE ABOVE PROPOSALS. come before the meeting.
PLEASE DATE, SIGN AND RETURN
PROMPTLY IN THE ACCOMPANYING
ENVELOPE.
SIGNATURE(S) _____________________________________________________________ DATE _________________________
SIGNATURE(S) _____________________________________________________________ DATE _________________________
NOTE: Your signature to this Direction Card form should be exactly the same as the name imprinted
hereon. Persons signing as executors, administrators, trustees, or in similar capacities should
so indicate.
- ------------------------------------------------------------------------------------------------------------------------------------
DETACH CARD
</TABLE>
