<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 [ ] Confidential, For Use
[X] Definitive proxy statement of the Commission Only (as
[ ] Definitive additional materials permitted by Rule 14a-6(e)(2))
[ ] Soliciting material pursuant to
Rule 14a-11(c) or Rule 14a-12
RPM, INC.
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
(NAME OF PERSON(S) FILING PROXY STATEMENT, IF OTHER THAN THE REGISTRANT)
Payment of filing fee (Check the appropriate box):
[X] No Fee Required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed pursuant to
Exchange Act Rule 0-11
(set forth the amount on which the Filing Fee is calculated and state how
it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials:
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the form or schedule and the date of its filing.
(1) Amount previously paid:
(2) Form, Schedule or Registration Statement no.:
(3) Filing Party:
(4) Date Filed:
<PAGE> 2
[RPM LOGO]
RPM, INC. - 2628 Pearl Road - P.O. Box 777 - Medina, Ohio 44258 - 330-273-5090
THOMAS C. SULLIVAN
Chairman
August 28, 1997
TO RPM SHAREHOLDERS:
This year's Annual Meeting of RPM Shareholders will be held at 2:30 p.m. Eastern
Daylight Time, Friday, October 17, 1997, at Severance Hall, located on the
northeast corner of Euclid Avenue and East Boulevard in Cleveland's University
Circle area.
In recognition of the Company's 50th consecutive year of record sales and record
earnings and in particular appreciation of RPM's many long-term shareholders, a
concert by the world-renowned Cleveland Orchestra will be held following the
Annual Meeting. The concert will be in lieu of our traditional distribution of
product samples at the Meeting.
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.
There will be no parking available at Severance Hall. In order to obtain a
parking space and admittance to the Meeting, you must have a ticket. Seating is
limited for the Meeting/concert and tickets will be provided on a first-come,
first-served basis. Please see details concerning the Annual Meeting on the
following page.
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
INSTRUCTIONS FOR RECEIVING TICKETS
TO THE ANNUAL MEETING
To be admitted to the Meeting/concert, you must complete the enclosed ticket
request form. Due to the absence of parking at Severance Hall on Friday
afternoon, all attendees will need to park at one of several nearby parking
facilities and will be transported by bus to Severance Hall. When you submit
your ticket request form, you will receive:
- One ticket to the Annual Meeting; provided, however, that if your shares
are held jointly, or if you wish to bring your spouse, you may request
up to two tickets; tickets will be mailed on October 3, 1997;
- A designated area within Severance Hall where you will be seated;
- A designated parking location, from which you will be transported to and
from the Meeting; and
- A map directing you to your designated parking area.
In the event we fill all seats in the main auditorium, we will have two
satellite facilities in Severance Hall that will carry live broadcasts of the
Annual Meeting and concert.
<PAGE> 4
[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 Severance Hall, located on the northeast corner of Euclid Avenue
and East Boulevard in the University Circle area of Cleveland, Ohio, on Friday,
October 17, 1997, at 2:30 P.M., Eastern Daylight Time, for the following
purposes:
(1) To elect four Directors in Class II for a three-year term ending in
2000;
(2) To approve and adopt the RPM, Inc. 1997 Restricted Stock Plan; and
(3) 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 20,
1997 are entitled to receive notice of and to vote at the Annual Meeting.
By Order of the Board of Directors.
PAUL A. GRANZIER
Secretary
August 28, 1997
Please fill in and sign the enclosed Proxy and return the Proxy
in the envelope enclosed herewith.
<PAGE> 5
[RPM LOGO]
2628 PEARL ROAD - P.O. BOX 777
MEDINA, OHIO 44258
PROXY STATEMENT
MAILED ON OR ABOUT AUGUST 28, 1997
ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON OCTOBER 17, 1997
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 17, 1997,
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. To be admitted to the Meeting/concert, you
must complete the enclosed ticket request form. Due to the absence of parking at
Severance Hall on Friday afternoon, all attendees will need to park at one of
several nearby parking facilites and will be transported by bus to Severance
Hall.
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 and FOR the proposal to approve and adopt the RPM,
Inc. 1997 Restricted Stock Plan.
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 20, 1997. On that date, the
Company had 78,472,777 Common Shares, without par value ("Common Shares"),
outstanding and entitled to vote at the Annual Meeting. Each Common Share is
entitled to one vote.
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<PAGE> 6
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, including the proposal to approve and
adopt the RPM, Inc. 1997 Restricted Stock Plan, 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 June 30, 1997, unless otherwise indicated, 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> 7
<TABLE>
<CAPTION>
NUMBER OF
COMMON SHARES
BENEFICIALLY PERCENTAGE OF
NAME OF BENEFICIAL OWNER OWNED(1) COMMON SHARES(1)
- ---------------------------------------------------------- ------------- ----------------
<S> <C> <C>
Max D. Amstutz(2)......................................... 11,875 *
Edward B. Brandon(3)...................................... 12,500 *
Lorrie Gustin(4).......................................... 1,238 *
E. Bradley Jones(5)....................................... 5,515 *
James A. Karman(6)........................................ 522,600 0.7
Richard E. Klar(7)........................................ 143,481 0.2
Donald K. Miller(8)....................................... 26,361 *
John H. Morris, Jr.(9).................................... 167,187 0.2
Kevin O'Donnell(10)....................................... 12,824 *
William A. Papenbrock(11)................................. 11,821 *
Albert B. Ratner(12)...................................... 5,000 *
Frank C. Sullivan(13)..................................... 119,566 0.2
Thomas C. Sullivan(14).................................... 1,909,024 2.4
All Directors and executive officers as a group (seventeen
persons including the directors and executive officers
named above)(15)........................................ 3,108,945 3.9
</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 June 30, 1997, but no exercise of
outstanding options covering Common Shares held by any other person.
(2) Dr. Amstutz is a Director of the Company.
(3) Mr. Brandon is a Director of the Company.
(4) Ms. Gustin is a Director of the Company.
(5) Mr. Jones is a Director of the Company. Mr. Jones purchased an additional
2,000 shares on July 23, 1997.
(6) Mr. Karman is a Director and an executive officer of the Company. Mr.
Karman's ownership is comprised of 154,606 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, 147,939 Common Shares which he has the right to
acquire within 60 days after June 30, 1997 through the exercise of stock
options, and approximately 235 Common Shares held by Key Trust Company of
Ohio, N.A., as trustee of the RPM, Inc. 401(k) Plan, which represents Mr.
Karman's approximate percentage ownership of the total Common Shares held
in the RPM, Inc. 401(k) Plan as of August 1, 1997. The ownership of the
shares held by his wife and by the family-owned corporation is attributed
to Mr. Karman pursuant to Commission rules.
(7) Mr. Klar is an executive officer of the Company. Mr. Klar's ownership is
comprised of 38,844 Common Shares which he owns directly, 3,332 Common
Shares which are owned by his wife, 101,126 Common Shares which he has the
right to acquire within 60 days after June 30, 1997 through the exercise of
stock options, and approximately 179 Common Shares held by Key Trust
Company of Ohio, N.A., as trustee of the RPM, Inc. 401(k) Plan, which
represents Mr. Klar's approximate percentage ownership of the total Common
Shares held in the RPM, Inc. 401(k) Plan as of August 1, 1997. The
ownership of the shares held by his wife is attributed to Mr. Klar pursuant
to Commission rules.
(8) 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
3
<PAGE> 8
ownership of the shares held by his sons is attributed to Mr. Miller
pursuant to Commission rules.
(9) Mr. Morris is a Director and an executive officer of the Company. Mr.
Morris' ownership is comprised of 61,014 Common Shares which he owns
directly, 105,971 Common Shares which he has the right to acquire within 60
days after June 30, 1997 through the exercise of stock options, and
approximately 202 Common Shares held by Key Trust Company of Ohio, N.A., as
trustee of the RPM, Inc. 401(k) Plan, which represents Mr. Morris'
approximate percentage ownership of the total Common Shares held in the
RPM, Inc. 401(k) Plan as of August 1, 1997.
(10) Mr. O'Donnell is a Director of the Company. Mr. O'Donnell's ownership is
comprised of 8,274 Common Shares which he owns through his retirement
plans, 2,550 Common Shares which are owned by his wife through her
retirement plans and 2,000 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.
(11) Mr. Papenbrock is a Director of the Company. All of Mr. Papenbrock's Common
Shares are owned through his retirement plan for which National City Bank
is Trustee.
(12) Mr. Ratner is a Director of the Company.
(13) Mr. Frank C. Sullivan is a Director and an executive officer of the
Company. Mr. Sullivan's ownership is comprised of 47,685 Common Shares
which he owns directly, 5,814 Common Shares which he holds as Custodian for
his sons, 65,877 Common Shares which he has the right to acquire within 60
days after June 30, 1997 through the exercise of stock options, and
approximately 190 Common Shares held by Key Trust Company of Ohio, N.A., as
trustee of the RPM, Inc. 401(k) Plan, which represents Mr. Sullivan's
approximate percentage ownership of the total Common Shares held in the
RPM, Inc. 401(k) Plan as of August 1, 1997. The ownership of the shares
held as Custodian for his sons is attributed to Mr. Sullivan pursuant to
Commission rules.
(14) 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
541,315 Common Shares which he owns directly, 94,700 Common Shares which
are owned by his wife, 123,933 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, 221,220 Common Shares
which he has the right to acquire within 60 days after June 30, 1997
through the exercise of stock options, and approximately 256 Common Shares
held by Key Trust Company of Ohio, N.A., as trustee of the RPM, Inc. 401(k)
Plan, which represents Mr. Sullivan's approximate percentage ownership of
the total Common Shares held in the RPM, Inc. 401(k) Plan as of August 1,
1997. 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.
(15) The number of Common Shares shown as beneficially owned by the Company's
Directors and executive officers as a group on June 30, 1997 includes
773,792 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, and approximately 2,363 Common Shares held by Key Trust
Company of Ohio, N.A., as trustee of the RPM, Inc. 401(k) Plan, which
represents the group's approximate percentage ownership of the total Common
Shares held in the RPM, Inc. 401(k) Plan as of August 1, 1997.
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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 II 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 II at this year's Annual Meeting will expire at the time of
the Annual Meeting held in 2000. Each Director in Class II will serve until the
expiration of that term or until his or her successor shall have been duly
elected. The Board of Directors' nominees for election as Directors in Class II
are Ms. Lorrie Gustin and Messrs. James A. Karman, Donald K. Miller and Kevin
O'Donnell, all of whom currently serve as Directors in Class II.
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 or her
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
<TABLE>
<S> <C> <C>
Lorrie Gustin photo
LORRIE GUSTIN, age 72 -- 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: 1,238 NOMINEE FOR CLASS II
(TERM EXPIRING IN 2000)
</TABLE>
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<TABLE>
<S> <C> <C>
James A. Karman photo
JAMES A. KARMAN, age 60 -- 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., and Shiloh Industries, Inc.
COMMON SHARES BENEFICIALLY OWNED: 522,600 NOMINEE FOR CLASS II
(TERM EXPIRING IN 2000)
Donald K. Miller photo
DONALD K. MILLER, age 65 -- Director since 1972.
Chairman since January 1992 of Greylock Financial Inc., a venture
capital firm. Mr. Miller served as Managing Partner of Greylock Finan-
cial 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 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 is also a Director of Huffy Corporation.
COMMON SHARES BENEFICIALLY OWNED: 26,361 NOMINEE FOR CLASS II
(TERM EXPIRING IN 2000)
</TABLE>
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<PAGE> 11
<TABLE>
<S> <C> <C>
Kevin O'Donnell photo
KEVIN O'DONNELL, age 72 -- 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: 12,824 NOMINEE FOR CLASS II
(TERM EXPIRING IN 2000)
</TABLE>
DIRECTORS WHOSE TERMS OF OFFICE WILL CONTINUE AFTER ANNUAL MEETING
<TABLE>
<S> <C> <C>
Edward B. Brandon photo
EDWARD B. BRANDON, age 65 -- 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: 12,500 DIRECTOR IN CLASS I
(TERM EXPIRES IN 1998)
</TABLE>
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<PAGE> 12
<TABLE>
<S> <C> <C>
William A. Papenbrock photo
WILLIAM A. PAPENBROCK, age 58 -- Director since 1972.
Partner, Calfee, Halter & Griswold LLP, Attorneys-at-law. Mr. Papen-
brock 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 Chief Justice Taft
of the Ohio Supreme Court, Mr. Papenbrock joined Calfee, Halter &
Griswold LLP 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 LLP serves as counsel to the Company.
COMMON SHARES BENEFICIALLY OWNED: 11,821 DIRECTOR IN CLASS I
(TERM EXPIRES IN 1998)
Thomas C. Sullivan photo
THOMAS C. SULLIVAN, age 60 -- 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: 1,909,024 DIRECTOR IN CLASS I
(TERM EXPIRES IN 1998)
Frank C. Sullivan photo
FRANK C. SULLIVAN, age 36 -- 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: 119,566 DIRECTOR IN CLASS I
(TERM EXPIRES IN 1998)
</TABLE>
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<PAGE> 13
<TABLE>
<S> <C> <C>
Dr. Max D. Amstutz photo
DR. MAX D. AMSTUTZ, age 68 -- Director since February 1995.
Chairman and Chief Executive Officer since 1994 of Von Roll Holding
Ltd., a designer and manufacturer of environmental technology prod-
ucts, 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 Financiere 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: 11,875 DIRECTOR IN CLASS III
(TERM EXPIRES IN 1999)
E. Bradley Jones photo
E. BRADLEY JONES, age 69 -- Director since 1990.
Retired Chairman and Chief Executive Officer of Republic Steel Corpo-
ration, 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., Consolidated Rail Corporation,
and Birmingham Steel Corporation, and is a Trustee of Fidelity Funds.
COMMON SHARES BENEFICIALLY OWNED: 5,515 DIRECTOR IN CLASS III
(TERM EXPIRES IN 1999)
John H. Morris, Jr. photo
JOHN H. MORRIS, JR., age 55 -- 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. Mr. Morris is also a Director of Fifth
Third Bank of Northeastern Ohio.
COMMON SHARES BENEFICIALLY OWNED: 167,187 DIRECTOR IN CLASS III
(TERM EXPIRES IN 1999)
</TABLE>
9
<PAGE> 14
<TABLE>
<S> <C> <C>
Albert B. Ratner photo
ALBERT B. RATNER, age 69 -- Director since 1996.
Co-Chairman of the Board of Forest City Enterprises, Inc., a conglom-
erate corporation engaged in real estate development, sales, invest-
ment, 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: 5,000 DIRECTOR IN CLASS III
(TERM EXPIRES IN 1999)
</TABLE>
10
<PAGE> 15
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 administers the Company's Stock Option Plans, Incentive
Compensation Plan, and Restricted Stock Plan, and reviews and determines the
salary and bonus 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, 1997 in parentheses:
<TABLE>
<CAPTION>
EXECUTIVE COMPENSATION AUDIT
COMMITTEE(1) COMMITTEE(3) COMMITTEE(2)
- --------------------- ------------------ ---------------------
<S> <C> <C>
Thomas C. Sullivan Edward B. Brandon Donald K. Miller
(Chairman) (Chairman) (Chairman)
James A. Karman Kevin O'Donnell E. Bradley Jones
Kevin O'Donnell Albert B. Ratner 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, 1997. During that fiscal year, no Director, with the exception of Mr. Ratner
(for medical reasons), 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.
11
<PAGE> 16
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, 1997, 1996 and 1995, of those persons who were, at May 31, 1997:
(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 SECURITIES
NAME AND ------------------------------ UNDERLYING ALL OTHER
PRINCIPAL POSITION YEAR SALARY BONUS OPTIONS COMPENSATION(1)(2)
- -------------------------- ---- -------- -------- ------------ ------------------
<S> <C> <C> <C> <C> <C>
Thomas C. Sullivan 1997 $745,000 $462,000 63,000 $ 16,077
Chairman of the Board 1996 $710,000 $420,000 62,500 $ 12,419
and Chief Executive 1995 $675,000 $380,000 50,000 $ 56,131
Officer
James A. Karman 1997 $590,000 $382,000 50,000 $ 28,862
President and Chief 1996 $560,000 $347,000 50,000 $ 29,302
Operating Officer 1995 $530,000 $315,000 37,500 $ 40,091
John H. Morris, Jr. 1997 $350,000 $264,000 31,000 $ 8,259
Executive Vice 1996 $335,000 $240,000 31,250 $ 6,237
President 1995 $320,000 $217,000 25,000 $ 18,541
Frank C. Sullivan 1997 $265,000 $200,000 31,000 $ 3,677
Executive Vice President 1996 $250,000 $140,000 31,250 $ 1,112
and Chief Financial 1995 $160,000 $120,000 18,750 $ 2,141
Officer
Richard E. Klar 1997(3) $240,000 $175,000 55,000 $ 12,393
Vice President 1996 $225,000 $160,000 25,000 $ 8,884
1995 $215,000 $145,000 25,000 $ 26,289
</TABLE>
- ------------------
(1) All Other Compensation consists of (i) insurance premiums paid by the
Company in connection with split dollar and other executive life insurance
policies and (ii) in fiscal 1997, the value ($2,375 per Named Executive
Officer) of the Company's matching contributions, in the form of Common
Shares, to the RPM, Inc. 401(k) Plan relating to before-tax contributions
made by the Named Executive Officers.
(2) 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 1997 and 1996, respectively: Mr. Thomas C. Sullivan $9,420
(1997) and $8,280 (1996); Mr. Karman $7,530 (1997); Mr. Morris $3,488
(1997) and $2,926 (1996); Mr. Frank C. Sullivan $710 (1997) and $667
(1996); and Mr. Klar $4,288 (1997) and $3,462 (1996). 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.
(3) Mr. Klar resigned as Treasurer of the Company in February 1997 and became
Chief Financial Officer of Tremco Incorporated, which was acquired in
February 1997 by the Company. Mr. Klar remains a Vice President of the
Company.
12
<PAGE> 17
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, 1997 to
the executive officers who are named in the Summary Compensation Table.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
INDIVIDUAL GRANTS VALUE AT ASSUMED
- ----------------------------------------------------------------------------------------------------
PERCENTAGE ANNUAL RATES OF
OF TOTAL STOCK PRICE APPRECIATION
OPTIONS
GRANTED TO EXERCISE OR FOR OPTION TERMS(3)(4)
NUMBER OF EMPLOYEES BASE PRICE
SECURITIES IN FISCAL (PER EXPIRATION -------------------------
NAME UNDERLYING OPTIONS(1) YEAR SHARE)(2) DATE 5% 10%
- -------------------------- ------------------------ ---------- ----------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Thomas C. Sullivan 63,000(5) 10.5% $15.00 7/17/2006 $ 594,301 $1,506,083
Chairman of the Board
and Chief Executive
Officer
James A. Karman 50,000(5) 8.3% $15.00 7/17/2006 $ 471,667 $1,195,304
President and Chief
Operating Officer
John H. Morris, Jr. 31,000(5) 5.1% $15.00 7/17/2006 $ 292,433 $ 741,088
Executive Vice President
Frank C. Sullivan 31,000(5) 5.1% $15.00 7/17/2006 $ 292,433 $ 741,088
Executive Vice President
and Chief Financial
Officer
Richard E. Klar 25,000(6) 9.1% $15.00 7/17/2006 $ 235,834 $ 597,652
Vice President 30,000(7) $16.125 4/24/2007 $ 304,226 $ 770,971
</TABLE>
- ---------------
(1) 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.
(2) This price represents the fair market value at the date of grant pursuant to
the terms of the Company's 1989 Stock Option Plan.
(3) 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>
(4) Value created for all shareholders: $ 937,080,170 $2,374,745,136
Gain of named executive officers as a percent of value created for all
shareholders: 0.23% 0.23%
</TABLE>
(5) These options were granted on July 17, 1996 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.
(6) This option was granted on July 17, 1996 pursuant to the Company's 1989
Stock Option Plan. One hundred percent of the shares subject to the option
became exercisable on the first anniversary date thereof.
(7) This option was granted on April 24, 1997 pursuant to the Company's 1989
Stock Option Plan. One hundred percent of the shares subject to the option
become exercisable on the first anniversary date thereof.
13
<PAGE> 18
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, 1997 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, 1997 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, 1997 OPTION VALUE
<TABLE>
<CAPTION>
NUMBER OF NUMBER OF SECURITIES VALUE OF UNEXERCISED
SHARES UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
ACQUIRED OPTIONS AT MAY 31, 1997 AT MAY 31, 1997 (2)
ON VALUE ----------------------------- -----------------------------
NAME EXERCISE REALIZED (1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- --------------------- ---------- ------------ ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Thomas C. Sullivan 18,953 $193,049 164,846 147,373 $1,029,164 $ 601,990
Chairman of the
Board and Chief
Executive Officer
James A. Karman 24,751 $129,992 104,189 115,624 $ 651,533 $ 469,996
President and Chief
Operating Officer
John H. Morris, Jr. 40,532 $381,222 77,911 73,184 $ 470,705 $ 298,985
Executive Vice
President
Frank C. Sullivan -- -- 42,503 66,935 $ 249,600 $ 266,492
Executive Vice
President and Chief
Financial Officer
Richard E. Klar 15,000 $162,562 96,205 92,498 $ 701,150 $ 346,240
Vice President
</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 $19.00 on the Nasdaq
National Market on May 30, 1997 (the last trading day of the Company's
fiscal year ended May 31, 1997). 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.
14
<PAGE> 19
EMPLOYMENT AGREEMENTS
Under an Amended Employment Agreement, dated as of July 16, 1997, Thomas C.
Sullivan is employed as Chairman of the Board and Chief Executive Officer of the
Company for a five-year period ending May 31, 2002. Mr. Sullivan has advised the
Compensation Committee that both he and Mr. James A. Karman, President,
presently intend to retire as executive officers of the Company when their
Agreements terminate on May 31, 2002. Thus, the period of their Agreements will
not be extended for an additional year in 1998 as has been done on an annual
basis in prior years. Pursuant to the terms of the Agreement, Mr. Sullivan's
annual base salary, effective as of June 1, 1997, is $785,000. 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 under the 1995 Incentive Compensation Plan 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
$3,794,167 as of July 31, 1997. 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 16, 1997, James A.
Karman is employed as President and Chief Operating Officer of the Company for a
five-year period ending May 31, 2002. Pursuant to the terms of the Agreement,
Mr. Karman's annual base salary, effective as of June 1, 1997, is $620,000. 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 $2,996,667 as of July 31, 1997.
Effective July 16, 1997, 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, respectively, for a one-year period ending July 31, 1998. The
Employment Agreements provide for the following base salaries, effective June 1,
1997: Mr. Morris -- $365,000; Mr. Sullivan -- $300,000; and Mr. Klar --
$250,000. The Employment Agreements also provide for severance
15
<PAGE> 20
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 enforce the provisions of
the Agreements following a Change of Control as described above in connection
with Mr. Thomas C. 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, 1997) 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, 1997) 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>
$ 100,000 $ 6,022 $ 12,045 $ 24,089 $ 36,134 $ 38,407
$ 150,000 9,505 19,009 38,018 57,027 60,907
$ 200,000 12,987 25,973 51,947 77,920 83,407
$ 250,000 16,469 32,938 65,875 98,813 105,907
$ 300,000 19,951 39,902 79,804 119,706 128,407
$ 350,000 23,433 46,866 93,732 140,599 150,907
$ 400,000 26,915 53,830 107,661 161,491 173,407
$ 450,000 30,397 60,795 121,589 182,384 195,907
$ 500,000 33,880 67,759 135,518 203,277 218,407
$ 550,000 37,362 74,723 149,447 224,170 240,907
$ 600,000 40,844 81,688 163,375 245,063 263,407
$ 650,000 44,326 88,652 177,304 265,956 285,907
$ 700,000 47,808 95,616 191,232 286,849 308,407
$ 750,000 51,290 102,580 205,161 307,741 330,907
$ 800,000 54,772 109,545 219,089 328,634 353,407
$ 850,000 58,255 116,509 233,018 349,527 375,907
$ 900,000 61,737 123,473 246,947 370,420 398,407
$ 950,000 65,219 130,438 260,875 391,313 420,907
$1,000,000 68,701 137,402 274,804 412,206 443,407
$1,050,000 72,183 144,366 288,732 433,099 465,907
$1,100,000 75,665 151,330 302,661 453,991 488,407
$1,150,000 79,147 158,295 316,589 474,884 510,907
$1,200,000 82,630 165,259 330,518 495,777 533,407
$1,250,000 86,112 172,223 344,447 516,670 555,907
</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
$160,000 and the maximum annual benefit payable under the Retirement Plan to
$125,000. Prior to June 1, 1997, the Company maintained a cash
16
<PAGE> 21
Benefit Restoration Plan for its executive officers and certain subsidiary
presidents providing for the payment of supplemental retirement benefits
because of such Internal Revenue Code limits. See "Benefit Restoration Plan"
below. The shareholders are being asked to approve a proposal to adopt the
RPM, Inc. 1997 Restricted Stock Plan effective June 1, 1997. See "Adoption
of RPM, Inc. 1997 Restricted Stock Plan." If the RPM, Inc. 1997 Restricted
Stock Plan is approved and adopted by the shareholders, the cash Benefit
Restoration Plan would be frozen as of June 1, 1997, and eliminated over
time. The Compensation Committee and Board of Directors believe that
replacing the cash Benefit Restoration Plan with the Restricted Stock Plan
will benefit the Company and tie the executive officers' and subsidiary
presidents' supplemental retirement benefits more closely to the value of
the Company's Common Shares.
(2) Includes base compensation as in effect on June 1, 1997, overtime and
commissions 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 35.4 years of service; Mr. Karman, 34.4 years
of service; Mr. Morris, 20.4 years of service; Mr. Frank C. Sullivan, 8.3 years
of service; and Mr. Klar, 28.6 years of service.
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, James A. Karman and John H.
Morris, Jr. as participants in the Benefit Restoration Plan. In July 1993, the
Board of Directors also designated Messrs. Frank C. Sullivan, Richard E. 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 cash 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 equal to the cash benefits at the time such cash benefits are paid
to a participant. See "Adoption of RPM, Inc. 1997 Restricted Stock Plan."
17
<PAGE> 22
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors administers the cash
salary, bonus, and other incentive 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. Each member of the Compensation
Committee qualifies as a "non-employee director" within the definition of Rule
16b-3 under the Securities Exchange Act of 1934.
The Compensation Committee reviews and recommends the cash salaries,
incentive compensation, 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 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 Incentive Compensation Plan (the "Plan") which would satisfy
the requirements of Section 162(m). The Plan was approved by the Committee and
the Board of Directors in July 1995 and was approved by the Company's
shareholders at the October 1995 Annual Meeting.
18
<PAGE> 23
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) of the Internal Revenue Code as
"performance-based" compensation and therefore be fully tax deductible to the
Company.
In late August 1996, 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, 1997 as follows: Thomas C. Sullivan, 30%; James A. Karman, 25%;
John H. Morris, Jr., 18%; Frank C. Sullivan, 15%; and Richard E. Klar, 12%.
These same five individuals shall participate in the Incentive Plan for fiscal
1998, and the Compensation Committee will follow the same procedure in 1998 as
in 1997.
For fiscal year May 31, 1997, the Company's pre-tax income was $135.0
million, and consequently the Bonus Award pool for the five highest paid
executive officers totaled $1,755,000. However, upon the recommendation of Mr.
Thomas C. Sullivan, the Compensation Committee awarded bonuses totaling
$1,483,000 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 1996 Key Employees Stock Option Plan (which was approved by
the shareholders at the October 1996 Annual Meeting) 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
19
<PAGE> 24
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 vest at the rate of
25% per year after one year.
As of May 31, 1997, 3,600,000 shares were available for future grant under
the 1996 Key Employees Stock Option Plan. The Compensation Committee at its July
1997 meeting granted options totaling 877,000 shares to executive officers and
other key employees of the Company and, in addition, it is contemplated that
approximately an additional 300,000 shares will be granted in October 1997 to
subsidiary presidents and key subsidiary employees. Included in the 877,000
options awarded by the Committee on July 16, 1997 were one time option grants of
400,000 to Mr. Thomas C. Sullivan and 275,000 to Mr. Karman, which will vest
over a five-year period coinciding with their five-year Employment Agreements,
which terminate on May 31, 2002. See "Executive Compensation -- Employment
Agreements." Neither Mr. Sullivan nor Mr. Karman will receive any further awards
of options under any stock option plan of the Company. The Compensation
Committee believes that the award of these one time only options, together with
their other outstanding stock options, will continue to provide Messrs. Sullivan
and Karman with incentives to further improve the business of the Company for
the benefit of all shareholders.
The Company does not have any "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 the Company's 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.
Edward B. Brandon, Chairman
Kevin O'Donnell
Albert B. Ratner
20
<PAGE> 25
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 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, 1992 and May 31, 1987, 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>
5/92 100 100 100
5/93 125 107 112
5/94 126 114 116
5/95 143 125 140
5/96 154 150 180
5/97 181 186 232
</TABLE>
* $100 INVESTED ON 05/31/92 IN STOCK OR INDEX --
INCLUDING REINVESTMENT OF DIVIDENDS.
FISCAL YEAR ENDING MAY 31.
21
<PAGE> 26
COMPARISON OF TEN-YEAR CUMULATIVE TOTAL RETURN*
AMONG RPM, INC., THE S&P 500 INDEX AND A PEER GROUP
<TABLE>
<CAPTION>
MEASUREMENT PERIOD LOGO
(FISCAL YEAR COVERED) RPM,INC. PEER GROUP S&P 500
<S> <C> <C> <C>
5/87 100 100 100
5/88 107 84 94
5/89 135 74 119
5/90 172 73 138
5/91 223 84 155
5/92 236 103 170
5/93 294 111 190
5/94 296 117 198
5/95 338 131 237
5/96 363 157 305
5/97 427 195 395
</TABLE>
* $100 INVESTED ON 05/31/87 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, 1997, except for the inadvertent omission
to report on a Form 4 one transaction involving a sale of 1,929 Common Shares by
Paul A. Granzier, which was promptly reported on a Form 5, and the filing of a
late Form 4 to report the inadvertent omission of one transaction involving a
purchase of 1,000 Common Shares by Kevin O'Donnell.
22
<PAGE> 27
ADOPTION OF RPM, INC. 1997 RESTRICTED STOCK PLAN
BACKGROUND
The shareholders will be asked at the meeting to vote on a proposal to
approve the adoption of the RPM, Inc. 1997 Restricted Stock Plan (the "1997
Plan"). The 1997 Plan was approved and adopted by the Compensation Committee and
the Board of Directors on April 24, 1997, effective as of June 1, 1997, subject
to shareholder approval.
The following is a summary of the material features of the 1997 Plan and is
qualified in its entirety by reference to it. A copy of the 1997 Plan is
attached hereto as Appendix A to this Proxy Statement.
PURPOSE
The purpose of the 1997 Plan is to promote the interests of the Company and
its shareholders by replacing, over a period of time, the Company's existing
cash based Benefit Restoration Plan with a stock based plan, which provides a
means to encourage stock ownership and a proprietary interest in the Company to
selected executives and subsidiary presidents upon whose judgment, initiative,
and efforts the financial success and growth of the Company largely depend. The
1997 Plan aligns the interests of shareholders and plan participants by awarding
Common Shares subject to certain vesting and forfeiture restrictions (the
"Restricted Shares") at fair market value thereby providing additional incentive
for the participants to increase the value of the Company's Common Shares.
Furthermore, since the Company will be able to take a tax deduction for the
value of the Restricted Shares awarded under the 1997 Plan upon the vesting of
such shares, the Company will also benefit from increases in value of RPM, Inc.
Common Shares. Conversely, the Company will realize reduced tax deductions if
the Company's Common Shares depreciate in value. Restricted Shares granted under
the 1997 Plan will directly reduce and replace the cash amount of supplemental
retirement restoration benefits and supplemental death restoration benefits owed
to participants under the RPM, Inc. Benefit Restoration Plan.
ADMINISTRATION AND DURATION
The 1997 Plan is administered by the Compensation Committee of the Board of
Directors. Each member of the Compensation Committee is a "non-employee
director" within the meaning of Rule 16b-3 promulgated under the Securities
Exchange Act of 1934. The Compensation Committee has the exclusive right in its
sole discretion to authorize the granting of Restricted Shares. The 1997 Plan
will expire on May 31, 2007 or such earlier date as may be determined by the
Board of Directors.
SECURITIES SUBJECT TO THE 1997 PLAN
The Company will award authorized but unissued Common Shares under the 1997
Plan. The maximum aggregate number of Common Shares to be issued under the 1997
Plan shall not exceed 1,250,000 Common Shares, except that in the event of share
splits or combinations, recapitalization or reorganizations, or shares
dividends, the Compensation Committee may make an appropriate adjustment in the
Common Shares subject to the 1997 Plan.
23
<PAGE> 28
ELIGIBILITY
The Compensation Committee will, from time to time, determine those
employees of the Company and its subsidiaries who are eligible to receive awards
of Restricted Shares. Only employees of the Company, including employee
Directors who are not members of the Compensation Committee, are eligible to
participate in the 1997 Plan.
PARTICIPATION AND GRANTS OF RESTRICTED SHARES
The 1997 Plan provides for the granting of Restricted Shares to eligible
employees. The Restricted Shares are Common Shares of the Company which are
forfeitable and nontransferable for a specified period of time. The transfer
restrictions remain in place until the earliest of (a) the later of either the
employee's termination of employment or the lapse of forfeiture restrictions,
(b) a "change in control" with respect to the Company, as such is defined in the
1997 Plan, or (c) the termination of the 1997 Plan. The Restricted Shares are
subject to complete forfeiture until the earliest to occur of (a) the later of
either the employee's attainment of age 55 or the fifth anniversary of the May
31st immediately preceding the date on which the Restricted Shares were awarded,
(b) the retirement of the employee on or after the attainment of age 65, or (c)
a "change in control" with respect to the Company, as such is defined in the
1997 Plan. Notwithstanding the above, if the employees' service to the Company
and its subsidiaries is terminated on account of death or total disability prior
to the lapsing of restrictions, such restrictions shall lapse.
SHAREHOLDER RIGHTS
The Compensation Committee may require that the Company or an escrow agent
retain possession of the certificates representing the Restricted Shares with
respect to which all of the restrictions have not lapsed. Notwithstanding
retention of the certificates by the Company or an escrow agent, the employee in
whose name certificates are issued shall have all rights of a shareholder of the
Company, including dividend and voting rights.
AMENDMENTS
The Board may amend the 1997 Plan as it shall deem advisable, except that
no amendment may impair the rights of participants who have been awarded, or
have been granted the right to an award of Restricted Shares. In addition, no
amendment to increase the 1,250,000 shares that may be issued pursuant to the
1997 Plan may be made without shareholder approval.
FEDERAL TAX CONSEQUENCES
There will be no tax consequences as a result of the grant of Restricted
Shares until the Restricted Shares are no longer subject to forfeiture.
Generally, when the forfeiture restrictions expire, the holder will recognize
ordinary income, and the Company will be entitled to a deduction, in an amount
equal to the fair market value of the Common Shares at that time. Subsequently
realized changes in the value of the shares generally will be treated as
long-term or short-term capital gain or loss, depending on the length of time
the Common Shares are held prior to disposition of such shares.
24
<PAGE> 29
NEW PLAN BENEFITS
An award of shares has been made under the 1997 Plan. Decisions regarding
future awards have not been made. Subject to shareholder approval of the 1997
Plan, the following table sets forth the amount and dollar value of the initial
awards to be received under the 1997 Plan:
RPM, INC. 1997 RESTRICTED STOCK PLAN
<TABLE>
<CAPTION>
PROJECTED DOLLAR
VALUE OF
NUMBER OF CASH BENEFITS
NAME AND POSITION SHARES(1) DOLLAR VALUE(2) CANCELLED(3)
- ------------------------------------------ --------- --------------- ------------------
<S> <C> <C> <C>
Thomas C. Sullivan
Chairman of the Board and Chief
Executive Officer 31,893 $ 514,275 $ 753,477
James A. Karman
President and Chief Operating Officer 25,608 412,929 604,992
John H. Morris, Jr.
Executive Vice President 8,234 132,773 255,549
Frank C. Sullivan
Executive Vice President and Chief
Financial Officer 1,884 30,380 202,591
Richard E. Klar(4)
Vice President 0 0 0
Executive officers as a group 69,007 1,112,738 1,907,764
Non-executive Directors as a group 0 0 0
Non-executive officer employees as a group 18,745 302,263 0(5)
</TABLE>
- ---------------
(1) On April 24, 1997, the Board of Directors and Compensation Committee adopted
and approved the 1997 Plan, subject to shareholder approval. The initial
award of shares was subsequently made on July 18, 1997.
(2) The dollar value of the awards is based on the closing price of the
Company's Common Shares on April 24, 1997 ($16.125). The projected dollar
value at retirement of the initial award of Restricted Shares to those
individuals who were participants in the RPM, Inc. Benefit Restoration Plan
is designed to be equivalent to the projected dollar value at retirement of
the cancelled cash benefits.
(3) The dollar amounts under this column represent the projected dollar value at
retirement of the cash benefit payments the Company estimates that each of
the above individuals would have received under the terms of the RPM, Inc.
Benefit Restoration Plan. The 1997 Plan, however, cancels these cash benefit
payments and replaces them with awards of Restricted Shares.
(4) Both Richard E. Klar and Paul A. Granzier, Vice President, Secretary and
General Counsel, have reached age 65. As a result, their benefits are frozen
under the all cash Benefit Restoration Plan.
(5) The individuals in this group are not participants in the RPM, Inc. Benefit
Restoration Plan.
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 1997 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. 1997
RESTRICTED STOCK PLAN.
25
<PAGE> 30
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, 1998. 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.
SHAREHOLDER PROPOSALS FOR 1998 ANNUAL MEETING
Any shareholder proposal intended to be presented at the 1998 Annual
Meeting of Shareholders must be received by the Company's Secretary at its
principal executive offices not later than April 30, 1998 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.
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.
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
August 28, 1997
26
<PAGE> 31
APPENDIX A
RPM, INC.
1997 RESTRICTED STOCK PLAN
1. NAME AND PURPOSE.
The name of this plan is the RPM, Inc. 1997 Restricted Stock Plan. The Plan
will be maintained by RPM, Inc. (herein referred to as the "Company") to further
the growth, success and interest of the Company and its subsidiaries and the
Shareholders of the Company by requiring certain employees of the Company and
its subsidiaries to own Common Shares, without par value, of the Company
("Shares") under the terms and conditions of and in accordance with this Plan,
thereby increasing their direct involvement in the success of the Company.
2. ADMINISTRATION OF THE PLAN.
2.1 This Plan shall be administered by the Compensation Committee (the
"Committee") of the Board of Directors of the Company ("Board of Directors")
which shall consist of at least three Directors, each of whom shall be a
"non-employee director" within the meaning of Rule 16b-3 promulgated under the
Securities Exchange Act of 1934 and any successor to such rule ("Rule 16b-3").
The Committee may, from time to time, designate one or more persons or agents to
carry out any or all of its administrative duties hereunder; provided that none
of the duties required to be performed by the Committee under Rule 16b-3 or
Section 2.3 of the Plan may be delegated to any other person.
2.2 The Plan shall be administered and operated on the same annual
accounting period as the Company (herein referred to as the "Plan Year"), which
presently is the twelve (12) month period ending on May 31. The first Plan Year
will be deemed to have commenced June 1, 1997 and will end May 31, 1998. In the
event that the Company changes its annual accounting period, the Plan Year shall
automatically change and the Committee may make such adjustments to the
operation of the Plan as appropriate to reflect any short Plan Years,
adjustments to the dates that Shares are awarded or that restrictions lapse
hereunder or any other adjustments that may be appropriate to reflect the change
in the Plan Year.
2.3 The Committee shall interpret the Plan, and to the extent and in the
manner contemplated herein, it shall exercise the discretion granted to it. The
Committee may issue from time to time such rules and interpretations as in its
judgment are necessary in order to administer the Plan effectively. The
Committee shall have the exclusive right in its sole discretion to determine the
number of Shares awarded to each participant, to determine the price or prices
at which Shares shall be awarded to each participant, to determine the time or
times when Shares may be awarded and to prescribe the form, which shall be
consistent with this Plan, of the instruments evidencing any award and issuance
under this Plan and the legend, if any, to be affixed to the certificates
representing Shares issued under this Plan.
3. ELIGIBLE EMPLOYEES AND PARTICIPATION.
3.1 The Committee shall, from time to time, determine those employees of
the Company and its subsidiaries who are eligible to receive awards of Shares
hereunder.
A-1
<PAGE> 32
3.2 No member of the Board of Directors, unless he is also an employee of
the Company, and no member of the Committee, shall be eligible to participate in
the Plan.
4. AWARDS OF SHARES.
4.1 The Committee shall, from time to time, determine the number of Shares
that shall be awarded to an eligible employee hereunder. The Committee shall use
the closing price of one (1) Share on the day of the Board of Directors meeting
held next preceding each May 31 fiscal year end in determining the number of
Shares awarded to an eligible employee for a Plan Year.
4.2 The Shares which may be awarded and issued to employees under this Plan
shall be made available from authorized and unissued Shares of the Company.
4.3 Subject to the provisions of the succeeding paragraphs of this Section
4, the aggregate number of Shares which may be issued under this Plan shall not
exceed one million two hundred fifty thousand (1,250,000) Shares.
4.4 In the event that the outstanding Shares shall be changed by reason of
share splits or combinations, recapitalization or reorganizations, or share
dividends, the number of Shares and the class or classes of securities which may
thereafter be issued under this Plan may be appropriately adjusted as determined
by the Committee so as to reflect such change.
5. TRANSFER RESTRICTIONS.
5.1 The Shares shall not be sold, transferred or otherwise disposed of and
shall not be pledged or otherwise hypothecated (and any such sale, transfer or
other disposition, pledge or other hypothecation being hereinafter referred to
as "to dispose of" or a "disposition") until the earliest of (a) the later of
either the employee's termination of employment with the Company and any of its
subsidiaries or the lapse of the right of the Company to a return of such Shares
pursuant to Section 5.2 below; (b) a change in control that occurs with respect
to the Company; or (c) the termination of the Plan. Notwithstanding the
foregoing, the Company may direct that a specified number of Shares may be sold
by an employee after the date that any Shares become nonforfeitable under
Section 5.2 below to enable such employee to pay any applicable taxes incurred
as a result of such Shares becoming nonforfeitable.
5.2 Any Shares awarded hereunder shall be subject to complete forfeiture
and return to the Company of such Shares if the employee terminates employment
for any reason with the Company and any of its subsidiaries before the earliest
to occur of the following: (a) the later of either the attainment of age
fifty-five (55) by the employee or the fifth (5th) anniversary of the May 31
immediately preceding the date on which such Shares are awarded; (b) the
retirement of the participant from employment with the Company and any of its
subsidiaries on or after attainment of age 65; and (c) a change in control that
occurs with respect to the Company.
5.3 In the event that an employee's employment with the Company and any of
its subsidiaries shall terminate by reason of death or total disability prior to
the earliest of (a) the lapse of the right of the Company to a return of such
Shares pursuant to Section 5.2 above; (b) a change in control that occurs with
respect to the Company; or (c) the termination of the Plan, then the
restrictions imposed on such Shares by this Section 5 shall lapse and be of no
further force and effect.
A-2
<PAGE> 33
5.4 The Board of Directors, in its sole discretion, shall decide whether a
change in control has occurred. If the Board of Directors shall decide that a
change in control has occurred it shall cause to be issued a written notice to
the participants of such fact and shall issue all Shares which have become
unrestricted to participants as soon as possible after such notice. In
determining whether a change in control has occurred, the Board of Directors
shall consider, but shall not be limited to, the occurrence of the following
events: (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 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 not be the continuing or surviving corporation or pursuant to which
Common Shares of the Company, or any class or any securities convertible into
such Common Shares of the Company, would be converted into cash, securities, or
other property, other than a merger of the Company in which the holders of
shares of all classes of the Company's capital stock immediately prior to the
merger would have the same proportion of ownership of capital 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; or (v) the adoption of any plan or
proposal for the liquidation (but not a partial liquidation) or dissolution of
the Company.
5.5 The Committee may require any participant to execute and deliver to the
Company a stock power in blank with respect to the Shares issued subject to the
restrictions in Section 5.2 above and may require that the Company retain
possession of the certificates for Shares with respect to which all of the
restrictions have not lapsed. Notwithstanding retention of certificates by the
Company or an escrow agent, the participant in whose name certificates are
issued shall have all rights (including dividend and voting rights) with respect
to the Shares represented by such certificates, subject to the terms, conditions
and restrictions specified under this Plan, and the Shares represented by such
certificates shall be considered as issued and outstanding and fully paid and
non-assessable for all purposes.
6. OTHER RESTRICTIONS.
Notwithstanding anything in this Plan to the contrary, in lieu of the
restrictions set forth in Article 5 above, the Committee may impose other
restrictions as it deems appropriate on any Shares awarded hereunder which lapse
at an earlier date than set forth herein or accelerate the lapse of restrictions
imposed on a prior award of Shares hereunder. Awards of Shares under the Plan
are not required to be made on the same terms and conditions even though the
Shares are awarded at the same time. The terms of awards of Shares hereunder may
vary from time to time and from employee to employee.
7. ESCROW AGREEMENT AND LEGENDS.
In order to enforce the restrictions imposed upon Shares issued hereunder,
the Committee also may require any participant to enter into an Escrow Agreement
providing that the certificates
A-3
<PAGE> 34
representing Shares issued pursuant to this Plan shall remain in the physical
custody of an escrow agent until any or all of the restrictions imposed pursuant
to this Plan have terminated. The Committee may impose such additional
restrictions on any Shares awarded pursuant to the Plan as it may deem
advisable, including, without limitation, restrictions under the Securities Act
of 1933, as amended, under the requirements of NASDAQ or any other stock
exchange upon which such Shares are then listed and under any state blue sky or
securities laws applicable to such Shares. In addition, the Committee may cause
a legend or legends to be placed on any certificates representing Shares issued
pursuant to this Plan, which legend or legends shall make appropriate reference
to the various restrictions imposed hereunder.
8. AMENDMENTS.
This Plan may be amended at any time by the Board of Directors, provided,
that if this Plan shall have been approved by the Shareholders of the Company no
such amendment shall increase the maximum number of Shares that may be issued
pursuant to this Plan, except pursuant to Section 4 hereof, without the further
approval of such Shareholders; and provided further, that no amendment to this
Plan shall modify or impair the rights of participants who have been awarded
Shares, or who have been granted the right to an award of Shares hereunder prior
to any such amendment.
9. DURATION.
This Plan became effective upon its adoption by the Board of Directors for
the Plan Year ending May 31, 1998 and shall terminate on May 31, 2007 or such
earlier date as may be determined by the Board of Directors; provided, however,
that the Plan shall terminate and all awards of Shares under the Plan shall be
revoked if, within 12 months of the date of its adoption by the Board of
Directors, the Plan does not receive the approval of a majority of the
outstanding Shares present in person or by proxy and entitled to vote at a
meeting of Shareholders of the Company.
10. BENEFICIARY DESIGNATION.
Unless a participant has designated a beneficiary in accordance with the
provisions of the following sentence, any Shares that become unrestricted and
payable on account of the death of an employee shall be paid to the person or
persons in the first of the following classes in which there are any survivors
of such participant:
(a) his or her spouse at the time of death;
(b) his or her issue per stirpes;
(c) his or her parents; and
(d) the executor or administrator of his or her estate.
Instead of having any Shares that become payable on account of a participant's
death paid to a beneficiary as determined above, a participant may sign a
document designating a beneficiary or beneficiaries to receive such Shares and
filing such designation with the Company.
A-4
<PAGE> 35
11. COORDINATION WITH DEFERRED COMPENSATION PLAN.
In the event that an employee has previously received an award of Shares
that are subject to the restrictions set forth in Section 5.2 above, such an
employee has not made an election under Section 83(b) of the Internal Revenue
Code, and the lapse of such restrictions will result in the receipt of an amount
of compensation in excess of the amount that may be deducted under Section
162(m) of the Internal Revenue Code, the Committee shall have the right and
authority to cancel such number of Shares as is necessary so that the
compensation amount attributable to the remaining Shares that will become
unrestricted on the next immediate May 31 will be deductible by the Company
after taking into account Section 162(m) of the Internal Revenue Code, and the
employee shall automatically receive as a credit to his account under the RPM,
Inc. Deferred Compensation Plan an amount equal to (i) multiplied by (ii) where:
(i) equals the average closing price of one Share for the five (5)
trading day period ending on such May 31; and
(ii) equals the number of Shares that the employee has elected to
forfeit as set forth above in this Article 11.
The Committee may determine to make such a cancellation only during the period
commencing May 1 and ending May 21 which immediately precedes the May 31 on
which the restrictions for such Shares lapse pursuant to Section 5.2 above. The
Employee shall be notified of any such cancellation which shall be in writing
and shall be subject to such further requirements as determined by the Committee
in its sole discretion.
IN WITNESS WHEREOF, RPM, Inc., by its Chairman of the Board duly
authorized, has caused this Plan to be executed as of this 16th day of July,
1997.
RPM, Inc.
By: /s/ THOMAS C. SULLIVAN
-------------------------------------
Thomas C. Sullivan, Chairman
A-5
<PAGE> 36
PROXY PROXY
RPM, INC.
ANNUAL MEETING OF SHAREHOLDERS -- OCTOBER 17, 1997
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby (i) appoints THOMAS C. SULLIVAN and RICHARD E. KLAR, and
each of them, as Proxy holders and attorneys, with full 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 Annual Meeting of Shareholders of the Company
to be held at Severance Hall, located on the northeast corner of Euclid Avenue
and East Boulevard in the University Circle area of Cleveland, Ohio, on Friday,
October 17, 1997 at 2:30 P.M. Eastern Daylight Time, and at any adjournment or
postponement thereof, hereby revoking any and all proxies heretofore given, and
(ii) authorizes and directs said Proxy holders to vote all of the Common Shares
of the Company represented by 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 AND "FOR" THE
PROPOSAL TO APPROVE AND ADOPT THE RPM, INC. 1997 RESTRICTED STOCK PLAN.
Election of Directors, Nominees:
Lorrie Gustin,
James A. Karman,
Donald K. Miller,
Kevin O'Donnell
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.
- --------------------------------------------------------------------------------
FOLD AND DETACH HERE
PLEASE VOTE, SIGN, DATE, AND RETURN THIS PROXY FORM PROMPTLY
USING THE ENCLOSED ENVELOPE.
<PAGE> 37
RPM, INC.
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY. [ ]
FOR WITHHELD FOR ALL
ALL ALL EXCEPT
1. Election of Directors [ ] [ ] [ ]
(see reverse)
For, except vote withheld from the
following nominee(s):
FOR AGAINST ABSTAIN
2. Approve and adopt RPM, Inc. [ ] [ ] [ ]
1997 Restricted Stock Plan.
3. In their discretion to act on any other
matter or matters which may properly come
before the meeting.
Change of Address (mark oval and revise [ ]
pre-printed address as necessary)
----------------------------------
THE BOARD OF DIRECTORS RECOMMENDS YOU
VOTE FOR THE ABOVE PROPOSALS.
Date_________________________________, 1997
-------------------------------------------
Signature(s)
-------------------------------------------
Signature(s)
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.
- --------------------------------------------------------------------------------
FOLD AND DETACH HERE
PLEASE VOTE, SIGN, DATE, AND RETURN THIS PROXY FORM PROMPTLY
USING THE ENCLOSED ENVELOPE.
<PAGE> 38
PROXY PROXY
DIRECTION CARD
RPM, INC. 401(K) PLAN (FORMERLY RETIREMENT SAVINGS TRUST AND PLAN)
TO: KEY TRUST COMPANY OF OHIO, N.A., TRUSTEE
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) Plan account at the Annual Meeting of
Shareholders of the Company to be held at Severance Hall, located on the
northeast corner of Euclid Avenue and East Boulevard in the University Circle
area of Cleveland, Ohio, on Friday, October 17, 1997 at 2:30 P.M. 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 SIDE, SAID SHARES WILL BE VOTED "FOR" THE ELECTION
OF THE FOUR DIRECTORS NOMINATED BY THE BOARD OF DIRECTORS AND "FOR" THE PROPOSAL
TO APPROVE AND ADOPT THE RPM, INC. 1997 RESTRICTED STOCK PLAN AND TO VOTE IN
ACCORDANCE WITH ITS DISCRETION ON SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE
THE MEETING. ANY CONFIDENTIAL DIRECTION CARDS WHICH ARE NOT RETURNED WILL BE
VOTED BY THE TRUSTEE OF THE PLAN IN ITS DISCRETION.
Election of Directors, Nominees:
Lorrie Gustin,
James A. Karman,
Donald K. Miller,
Kevin O'Donnell
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.
- --------------------------------------------------------------------------------
FOLD AND DETACH HERE
<PAGE> 39
RPM, INC.
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY. [ ]
FOR WITHHELD FOR ALL
ALL ALL EXCEPT
1. Election of Directors [ ] [ ] [ ]
(see reverse)
For, except vote withheld from the
following nominee(s):
FOR AGAINST ABSTAIN
2. Approve and adopt RPM, Inc. [ ] [ ] [ ]
1997 Restricted Stock Plan.
3. In their discretion to act on any other
matter or matters which may properly come
before the meeting.
PLEASE DATE, SIGN AND RETURN PROMPTLY
IN THE ACCOMPANYING ENVELOPE.
----------------------------------
THE BOARD OF DIRECTORS RECOMMENDS YOU
VOTE FOR THE ABOVE PROPOSALS.
Date_________________________________, 1997
-------------------------------------------
Signature(s)
-------------------------------------------
Signature(s)
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.
- --------------------------------------------------------------------------------
FOLD AND DETACH HERE
