[LOGO]
4636 Somerton Road, Trevose, Pennsylvania 19053
--------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
--------------
Dear Shareholder,
The 1994 Annual Meeting of Shareholders of Betz Laboratories, Inc. (the
"Company") will be held at the Holiday Inn Bucks County, 4700 Street Road,
Trevose, Pennsylvania, on Thursday, April 14, 1994 at 11:00 a.m. Daylight
Savings Time, for the following purposes:
1. To elect four (4) Directors of the Company as members of a class for a
term of three (3) years expiring in 1997 or until their respective
successors are elected and qualified;
2. To elect Ernst & Young as the Company's independent auditors for 1994;
3. To transact such other business as may properly come before the Annual
Meeting or any adjournment thereof.
Shareholders of record at the close of business on February 11, 1994 shall
be entitled to vote at the meeting and at any adjournment thereof. It is
important that your shares be represented and voted and you are cordially
invited to attend the meeting. WHETHER OR NOT YOU EXPECT TO ATTEND, PLEASE
VOTE, SIGN, DATE AND RETURN THE ENCLOSED PROXY OR CONFIDENTIAL INSTRUCTION
CARD IN THE ENCLOSED ENVELOPE WHICH REQUIRES NO ADDITIONAL POSTAGE IF MAILED
IN THE UNITED STATES.
A copy of the Company's Annual Report for 1993 is enclosed. The Annual
Report is not to be regarded as proxy solicitation material.
Very truly yours,
William C. Brafford
Secretary
March 11, 1994
Trevose, Pennsylvania
<PAGE>
BETZ LABORATORIES, INC.
4636 SOMERTON ROAD, TREVOSE, PENNSYLVANIA 19053
PROXY STATEMENT
This Proxy Statement is furnished by Betz Laboratories, Inc. (the
"Company") in connection with the solicitation of proxies by the Board of
Directors ("Board") from the holders of the Company's Preferred Shares and
Common Shares to be used at the 1994 Annual Meeting of Shareholders (the
"Meeting") to be held on April 14, 1994 and any adjournments thereof. It is
intended that this Proxy Statement and the enclosed proxy will be first sent
to Shareholders on or about March 11, 1994.
The Proxy appoints proxies as indicated thereon. A Proxy may be revoked by
a Shareholder anytime prior to its use by giving notice of revocation to the
Secretary of the Company prior to the Meeting or by voting in person at the
Meeting. If a Proxy is properly signed and is not revoked by a Shareholder, it
will be voted at the Meeting in accordance with the instructions, if any, of
the Shareholder. In the absence of instructions for one or more of the matters
indicated on the Proxy, the Proxy will be voted FOR the election of the four
(4) Directors nominated by the Board and FOR the election of Ernst & Young as
the Company's independent auditors for the year ending December 31, 1994. As
to any other matters that may properly come before the Meeting the persons
named in the Proxy are expected to consult with the whole Board (including the
nominees) and thereafter use their discretion in voting upon such matters.
Solicitations may be made by mail, personal interview, telephone and
telegraph by officers and regular employees of the Company, not exceeding
twenty-five in number, who will receive no additional compensation therefor.
The Company may request banks, brokers and other nominees to forward proxy
materials to the beneficial owners of shares held of record by such persons
and the Company will reimburse such banks, brokers and other nominees for
their reasonable out-of-pocket expenses incurred in doing so.
Only holders of record of the Company's Preferred Shares and Common Shares
at the close of business on February 11, 1994 will be entitled to receive
notice of, and vote at, the Meeting. Each such Shareholder is entitled to one
vote for each share held of record on all business that comes before the
Meeting. Cumulative voting in the election of Directors is not permitted. On
February 11, 1994, there were 28,148,637 Common Shares and 495,842 Preferred
Shares of the Company issued and outstanding.
The Company's Annual Report for 1993, on which no action will be asked by
the Board, is enclosed with this Proxy Statement. It is not to be regarded as
proxy solicitation material.
* * * * *
THE COMPANY WILL PROVIDE TO EACH SHAREHOLDER, UPON WRITTEN REQUEST AND
WITHOUT CHARGE, A COPY OF THE COMPANY'S MOST RECENT ANNUAL REPORT ON FORM 10-K,
INCLUDING THE FINANCIAL STATEMENTS AND SCHEDULES THERETO, AS FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. ALL REQUESTS FOR SUCH ANNUAL REPORT SHOULD
BE DIRECTED TO EITHER R. DALE VONCANON, VICE PRESIDENT -- FINANCE AND
TREASURER OR WILLIAM C. BRAFFORD, SECRETARY, BETZ LABORATORIES, INC., 4636
SOMERTON ROAD, TREVOSE, PENNSYLVANIA 19053.
1
<PAGE>
ELECTION OF DIRECTORS (PROPOSAL 1)
Under the Company's Bylaws, the Board consists of not less than five (5)
or more than thirteen (13) Directors divided into three (3) classes
approximately equal in number. Normally, at each Annual Meeting, the Directors
of one class stand for election to three (3) year terms, with the result that
each class stands for election once every three (3) years. This year's Meeting
will relate to the election of four (4) Directors to a class for three (3)
year terms expiring in 1997.
The class of Directors whose term of office will expire at the 1994 Annual
Meeting consists of Messrs. John F. McCaughan and Theodore B. Palmer, 3rd,
each of whom was previously elected by the Shareholders for a three (3) year
term. Mr. John R. Quarles was elected as a Director at the 1992 Annual Meeting
of Shareholders. Mr. Robert L. Yohe was appointed as a Director by the Board
at its regular meeting in August, 1991 to fill an existing vacancy and was
elected as a Director at the 1992 Annual Meeting of Shareholders. Unless
otherwise instructed, the persons named in the enclosed Proxy will vote shares
subject to a valid Proxy in favor of the election of Messrs. McCaughan,
Palmer, Quarles and Yohe for three (3) year terms expiring at the Annual
Meeting of Shareholders in 1997. If any nominee should become unable to stand
for election, the persons named in the Proxy, after consultation with the full
Board, will exercise their discretion in voting for such person or persons as
the Board may recommend. The Board knows of no reason why any of the persons
nominated by it will be unavailable or unable to serve.
DIRECTORS AND EXECUTIVE OFFICERS
In 1993, the Board held six (6) regular meetings. The Board has
established, among others, the Audit, Corporate Governance, Executive
Compensation and Employee Benefits, Retirement Plan and Administrative
Committees as standing committees of the Board. The Audit Committee, which
presently is comprised of Messrs. Butler, Boyer, Miller, Quarles and Shober,
has authority to review the qualifications and independence of the Company's
auditors and to recommend a firm to the Board for election by the Shareholders
of the Company. The Audit Committee also reviews and approves in advance the
scope of the Company's annual audit, the annual compensation of the Company's
independent auditors, the scope and range of fees for non-audit services
performed by the Company's independent auditors and, with the assistance of
the Company's independent auditors, reviews the Company's internal accounting
policies and procedures. The Audit Committee met two (2) times during 1993.
The Corporate Governance Committee, consisting of the Chairman of the
Board and four additional Directors, evaluates and recommends to the full
Board the slate of Directors to be submitted to the Shareholders at the Annual
Meeting of Shareholders as well as candidates to be appointed by the Board to
fill vacancies that may occur from time to time. The Corporate Governance
Committee also evaluates director compensation methods in order to attract and
retain qualified Directors. In considering candidates for nomination as a
Director, the Corporate Governance Committee will consider individuals
suggested by Shareholders of the Company. Shareholders wishing to suggest an
individual for consideration as a Director should submit the candidate's name
and complete biographical resume to the Committee's Chairman, John A. Miller,
Betz Laboratories, Inc., 4636 Somerton Road, Trevose, PA 19053. All
Shareholder suggestions must be received by not later than November 11
immediately preceding the Annual Meeting at which such nominee would be
eligible for election to be considered for recommenda-
tion by the Corporate Governance Committee. The Corporate Governance
Committee, which presently consists of Messrs. Miller, Boyer, McCaughan,
Palmer and Shober, met two (2) times during 1993.
The Executive Compensation and Employee Benefits Committee establishes
ranges of base compensation for all Company employees other than officers and,
following consultation with the Chairman of
2
<PAGE>
the Board, fixes base compensation rates for officers. The Executive
Compensation and Employee Benefits Committee also makes determinations as to
the grants of stock options and incentive stock. The Executive Compensation
and Employee Benefits Committee, which presently consists of Messrs. Palmer,
Brennan, Butler, Stengel and Yohe, met two (2) times during 1993.
The Retirement Plan Committee administers the Company's Employee
Retirement Plan and the Company's Employee Stock Ownership and 401(k) Plan.
The Committee has full and final authority, subject to the provisions of the
Plan and the full Board, to establish guidelines for administration and
operation of the Plan. The Retirement Plan Committee, which presently consists
of Mr. Boyer, Ms. Burger, Mr. Cook, Mr. McCaughan and Mr. Stengel, met two (2)
times in 1993.
The Administrative Committee acts in lieu of the Board on limited matters
specifically delegated to it in advance by the full Board. The Administrative
Committee, which consists of Messrs. Cook and McCaughan, met six (6) times in
1993.
The following table sets forth certain biographical information as to each
Director-nominee, continuing Director and those officers who performed policy-
making functions for the Company during 1993.
<TABLE>
NOMINEES FOR ELECTION
---------------------
<CAPTION>
POSITION OR OFFICE WITH
THE COMPANY, BUSINESS
NAME, AGE AND PERIODS EXPERIENCE DURING PAST
SERVED AS A DIRECTOR FIVE (5) YEAR PERIOD AND PRESENT
OF THE COMPANY OTHER DIRECTORSHIPS TERM EXPIRES
-------------- ------------------- ------------
<S> <C> <C>
John F. McCaughan, 58 Chairman of the Board, 1994 to present; Chairman of the Board 1994
Director, 1972 to present and Chief Executive Officer, 1982 to 1987 and 1989 to 1994;
Chairman of the Board, President and Chief Executive Officer,
1987 to 1989; Director, Independence Capital Group, 1989 to
1992; Director, Philadelphia Suburban Corporation, 1984 to
present; Director, Penn Mutual Life Insurance Company, 1993 to
present; Chairman, YMCA, Philadelphia and vicinity, 1991 to
present.
Theodore B. Palmer, 3rd, 69 President and Chief Executive Officer, Yarway Corporation, 1977 1994
Director, 1985 to present to 1986, and Director, 1969 to 1986; Director, Rorer Group,
Inc., 1982 to 1990; Director, The West Company, Inc., 1980 to
1990; Director, Envirite Corporation, 1975 to 1984 and 1987 to
present; Director, The Provident Mutual Life Insurance Company
of Philadelphia, 1980 to present.
John R. Quarles, 58 (1) Partner, Morgan, Lewis and Bockius, Attorneys at Law, 1977 to 1994
Director, 1992 to present present; Director, Environmental Law Institute, 1988 to
present.
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
POSITION OR OFFICE WITH
THE COMPANY, BUSINESS
NAME, AGE AND PERIODS EXPERIENCE DURING PAST
SERVED AS A DIRECTOR FIVE (5) YEAR PERIOD AND PRESENT
OF THE COMPANY OTHER DIRECTORSHIPS TERM EXPIRES
-------------- ------------------- ------------
<S> <C> <C>
Robert L. Yohe, 57 Vice Chairman, Olin Corporation, 1993 to 1994, and Director, 1994
Director, 1991 to present Olin, since 1990; Executive Vice President, 1987 to 1993;
President, Chemicals Group, 1985 to 1991; Director of the
Southwestern Area Commerce and Industry Association of
Connecticut, since 1991; Director, Connecticut Business &
Industry Association, since 1992; Director, the Connecticut
Business for Education Coalition, Inc., since 1991; and serves
on the Commission of Educational Excellence for Connecticut;
Trustee of Lafayette College since 1992.
<CAPTION>
CONTINUING DIRECTORS
--------------------
<S> <C> <C>
Carolyn S. Burger, 53 President and Chief Executive Officer, Bell Atlantic-Delaware, 1995
Director, 1993 to present Inc., 1991 to present, and Director, 1989 to present; Vice
President, Secretary and Treasurer, Bell Atlantic Corporation,
1988 to 1991; Director, Wilmington Trust Corporation, 1992 to
present; Director, Delaware State Chamber of Commerce, 1991 to
present; Director, The Philadelphia Orchestra Association, 1988
to present; Director, The Balch Institute for Ethnic Studies,
1985 to present; Director, Delaware Community Foundation, 1991
to present; Director, Medical Center of Delaware, 1992 to
present.
George A. Butler, 65 President, CoreStates Financial Corp, 1990 to 1991; Chairman, 1995
Director, 1988 to present First Pennsylvania Bank, 1979 to 1990; Director, CoreStates
Financial Group, 1990 to present; Director, Pierce-Phelps,
Inc., 1977 to present; Director, General Accident Insurance
Company of America, 1974 to present; Director, First
Pennsylvania Bank, 1974 to present; Director, First
Pennsylvania Corporation, 1974 to 1990; Director, Federal
Reserve Bank of Philadelphia, 1986 to 1990.
John A. Miller, 66 Chairman, Executive Committee, Provident Mutual Life Insurance 1995
Director, 1986 to present Company of Philadelphia, 1991 to present, Chairman of the
Board, 1984 to 1992, and Chief Executive Officer, 1978 to 1991;
Director, CoreStates Financial Corp. and CoreStates Bank, N.A.,
1977 to present; Director, Greater Philadelphia Chamber of
Commerce, 1977 to 1991; Chairman, Greater Philadelphia First
Corporation, 1987, and Director, 1984 to 1992; Director, Bryn
Mawr Hospital, 1990 to present; Chairman, Insurance Federation
of Pennsylvania, 1988 and 1991, and Director, 1986 to 1992;
Chairman of the Board, Guarantee Reassurance Corp., 1992 to
present.
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
POSITION OR OFFICE WITH
THE COMPANY, BUSINESS
NAME, AGE AND PERIODS EXPERIENCE DURING PAST
SERVED AS A DIRECTOR FIVE (5) YEAR PERIOD AND PRESENT
OF THE COMPANY OTHER DIRECTORSHIPS TERM EXPIRES
-------------- ------------------- ------------
<S> <C> <C>
Geoffrey Stengel, Jr., 50 President and Director, Envirite Corporation, 1983 to present; 1995
Director, 1987 to present President, Hazardous Waste Treatment Council, 1986 to 1987;
Chairman, Hazardous Waste Treatment Council, 1987 to 1988;
Chairman, Board of Trustees, The Shipley School, 1987 to 1989.
John W. Boyer, Jr., 65 Director, Philadelphia Suburban Corporation, 1981 to present, 1996
Director, 1981 to present Chairman, 1992 to 1993, Chairman and President, 1981 to 1992;
Trustee, Eastern College, and Chairman of Finance Committee,
1985 to present, Distinguished Visiting Professor of Finance,
1993 to present; Director, Gilbert Associates, Inc., 1984 to
present.
Patrick F. Brennan, 62 President, Chief Executive Officer and Chief Operating Officer, 1996
Director, 1992 to present Consolidated Papers, Inc., 1993 to present, President and Chief
Operating Officer, 1988 to 1993, Director, 1987 to present, and
Executive Vice President, 1987 to 1988; Director, Northland
Cranberries, Inc., 1989 to present; Director, Wisconsin
Manufacturers & Commerce, 1990 to present.
William R. Cook, 50 President and Chief Executive Officer, 1994 to present; 1996
Director, 1989 to present President and Chief Operating Officer, 1989 to 1994; President,
Industrial Division, 1989 to 1990; Senior Vice President, 1988
to 1989; Chairman, Betz Process Chemicals, Inc. and Betz Energy
Chemicals, Inc., 1991 to present; Chairman, Betz Entec, Inc.,
1987 to 1991 and 1992 to present; Chairman, Betz PaperChem,
Inc. 1988 to 1989 and 1990 to present.
John A. H. Shober, 60 Vice Chairman of the Board of Directors, Penn Virginia Corp., 1996
Director, 1987 to present 1992 to present; President, Chief Executive Officer and
Director, 1989 to 1992; and President, Chief Operating Officer
and Director, 1978 to 1989; Director, MIBRAG GmbH, 1994 to
present; Director, Germantown Savings Bank, 1992 to present;
Director, Ensign-Bickford Industries, Inc., 1990 to present;
Director, AirGas, Inc., 1990 to present; Board of Managers,
Pennsylvania Hospital, 1977 to present; Board of Trustees,
Eisenhower Exchange Fellowships, Inc., 1989 to present;
Director, YMCA of Philadelphia and vicinity, 1992 to present.
<FN>
- ---------
(1) Mr. Quarles is a partner in the law firm of Morgan, Lewis and Bockius, Philadelphia, PA, which was retained by the Company
during 1993 to provide legal services on one matter.
</TABLE>
5
<PAGE>
<TABLE>
EXECUTIVE OFFICERS
------------------
<CAPTION>
POSITION OR OFFICE WITH
THE COMPANY, BUSINESS
EXPERIENCE DURING PAST
FIVE (5) YEAR PERIOD AND
OTHER DIRECTORSHIPS
-------------------
<S> <C>
William C. Brafford, 61 Vice President, Secretary and General Counsel, 1980 to present.
Dennis L. Holland, 47 Senior Vice President, 1990 to present; President, Water Management Group, 1990 to
present; President, Betz PaperChem, Inc., 1988-1990; Chairman, Betz PaperChem, Inc.
1990.
Dr. Hillel Lieberman, 52 Senior Vice President, 1988 to present and Operations Management of Corporate
Functions; Chairman, Betz Inc., 1986 to 1990; Vice President, Research and
Development, 1981 to 1988; Chairman, Betz Analytical Services Division, 1988 to 1993;
Chairman, Betz Equipment Systems Division, 1989 to 1993.
Andrew J. Miciotto, 53 Vice President, Marketing, Industrial Division, 1990 to 1993; Vice President,
Operations, Betz Europe, Inc., 1989 to 1990; Assistant Vice President, Industrial
Division, 1988 to 1989.
B. C. Moore, 56 Senior Vice President, 1988 to present; President, Industrial Division, 1987 to 1989.
Larry V. Rankin, 50 Senior Vice President, 1988 to present; Chairman, Betz Inc., 1990 to present;
Chairman, Betz International, Inc. and Betz Europe, Inc., 1987 to present.
R. Dale Voncanon, 60 Vice President--Finance and Treasurer, 1988 to present.
</TABLE>
6
<PAGE>
OWNERSHIP OF COMPANY SHARES
Set forth below is certain information regarding beneficial ownership of
the Company's Common Shares by owners of more than 5% of such shares.
<TABLE>
<CAPTION>
NAME AND ADDRESS OF AMOUNT AND NATURE PERCENT OF
TITLE OF CLASS BENEFICIAL OWNER OF BENEFICIAL OWNERSHIP CLASS OUTSTANDING
- ---------- -------------------- ------------- ---------
<S> <C> <C> <C>
Common Stock Scudder, Stevens & Clark, Inc. 1,549,444 5.5%
345 Park Avenue
New York, New York 10154
Common Stock The State Teachers Retirement 1,466,400 5.2%
System of Ohio
275 East Broad Street
Columbus, Ohio 43215
</TABLE>
The Company is not aware of any other person or group which is the
beneficial owner of more than 5% of the Company's Common Shares or Preferred
Shares.
Set forth below is certain information regarding beneficial ownership of
the Company's shares by each Director and nominee and for all Directors and
executive officers of the Company as a group as of February 11, 1994. Unless
otherwise indicated in the footnotes to this table, each individual exercises
sole voting and investment power over all Common Shares and Preferred Shares
set forth opposite his or her name.
<TABLE>
<CAPTION>
PERCENT OF PERCENT OF
COMMON SHARES(1) CLASS OUTSTANDING PREFERRED SHARES CLASS OUTSTANDING
------------------ ----------------- ---------------- -----------------
<S> <C> <C> <C> <C>
John W. Boyer, Jr......................... 1,000 less than 1% less than 1%
Patrick F. Brennan........................ 500 less than 1% less than 1%
Carolyn S. Burger......................... 100(2) less than 1% less than 1%
George A. Butler.......................... 1,800 less than 1% less than 1%
William R. Cook........................... 15,100 less than 1% 150 less than 1%
John F. McCaughan......................... 79,149(3) less than 1% 151 less than 1%
John A. Miller............................ 2,200 less than 1% less than 1%
Theodore B. Palmer, 3rd................... 3,000 less than 1% less than 1%
John R. Quarles........................... 1,500(4) less than 1% less than 1%
John A.H. Shober.......................... 2,500 less than 1% less than 1%
Geoffrey Stengel, Jr...................... 500 less than 1% less than 1%
Robert L. Yohe............................ 1,000 less than 1% less than 1%
All executive officers and Directors as a
Group (19 persons)...................... 205,762 less than 1% 1,326 less than 1%
<FN>
- ---------
(1) The numbers shown include shares granted subject to forfeiture and restrictions on transfer pursuant to the Company's
Employee Stock Incentive Plan over which the persons named have voting power as follows: Mr. McCaughan, 10,949 shares
and Mr. Cook, 5,571 shares; all Directors and executive officers as a group (19 persons), 41,822 shares. Also included
is each person's respective interest in certain shares held by the Trustee of the Company's Employee Stock Ownership
and 401(k) Plan over which such persons have voting and investment power: Mr. McCaughan, 9,242 shares; and Mr. Cook,
639 shares; all Directors and executive officers as a group (19 persons) 28,593 shares. Not included are shares which
may be acquired upon the exercise of stock options granted under the Betz Laboratories, Inc. Stock Option Plan of 1981
and the Betz Laboratories, Inc. Stock Option Plan of 1987 over which the named individuals have neither voting nor
investment power until exercise of the options: Mr. McCaughan, 120,314 shares and Mr. Cook, 43,613 shares; all Directors
and executive officers as a group (19 persons), 312,844 shares.
7
<PAGE>
(2) Ms. Burger filed her initial ownership report (Form 3) with the Securities and Exchange Commission after its due date
because of uncertainty whether such report was required to be filed if she owned no Company stock at the time of her
election as Director.
(3) Does not include 200 shares held by Mr. McCaughan's wife for herself or as a trustee, 600 shares held by his daughter
for herself, nor 280 shares held by his mother with respect to which Mr. McCaughan disclaims beneficial ownership.
(4) Mr. Quarles filed a Form 4 report with the Securities and Exchange Commission after its due date disclosing the purchase
of 500 shares of the Company's common stock.
</TABLE>
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth certain information regarding compensation
paid, accrued or set aside by the Company during each of the Company's last
three fiscal years to the Company's Chief Executive Officer and each of the
Company's four other most highly compensated executive officers, as determined
by salary earned during 1993.
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
-------------------------------------
ANNUAL COMPENSATION AWARDS PAYOUTS
--------------------------------------------- ----------------------- ------------
(A) (B) (C) (D) (E) (F) (G) (H) (I)
OTHER ALL
ANNUAL RESTRICTED OTHER
COMPEN- STOCK LTIP COMPEN-
NAME AND SATION AWARD(S) OPTIONS PAYOUTS SATION
PRINCIPAL POSITION YEAR SALARY ($) BONUS($)(1) ($)(2) ($)(3) (#) ($)(4) ($)(5)
-------- ------ ----------- ----------- ----------- ------------- -------- ------------ -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
John F. McCaughan,
Chairman................... 1993 $471,016 -0- -- $298,394 23,071 -- $6,237
1992 453,000 135,900 -- -0- 21,819 -- $8,484
1991 425,000 255,000 -- -0- 14,081 -- --
William R. Cook,
President and C.E.O........ 1993 $315,016 -0- -- $161,548 11,585 -- $6,237
1992 295,000 88,500 -- -0- 10,669 -- $8,484
1991 273,000 163,800 -- -0- 7,545 -- --
Dr. Hillel Lieberman,
Senior Vice Pres........... 1993 $210,000 -0- -- $ 82,353 16,744 -- $6,237
1992 199,000 49,750 -- -0- -0- -- $8,484
1991 187,000 93,500 -- -0- -0- -- --
Dennis L. Holland,
Senior Vice Pres........... 1993 $210,000 -0- -- $ 82,353 16,744 -- $6,237
1992 199,000 49,750 -- -0- -0- -- $8,484
1991 187,000 89,760 -- -0- -0- -- --
Larry V. Rankin,
Senior Vice Pres........... 1993 $208,000 -0- -- $ 81,564 16,584 -- $6,237
1992 199,000 49,750 -- -0- -0- -- $8,484
1991 187,000 93,500 -- -0- -0- -- --
<FN>
- ---------
(1) Reflects bonus earned in year indicated, but paid the following year.
8
<PAGE>
(2) The aggregate of other annual compensation of each of the named executive
officers does not exceed the lesser of $50,000 or 10% of his total annual
salary and bonus, and therefore is not reportable in column (e).
(3) The aggregate number of shares and value of restricted stock held as of
12/31/93 pursuant to the Company's Employee Stock Incentive Plan by each
of the above individuals is: John F. McCaughan, 10,949 shares, $480,357;
William R. Cook, 5,571 shares, $244,428; Dr. Hillel Lieberman, 3,962
shares, $173,833; Dennis L. Holland, 3,832 shares, $168,129; and Larry V.
Rankin, 3,944 shares, $173,043. The value is the closing price for the
Company common stock as reported by the New York Stock Exchange on
December 31, 1993 ($43.875) multiplied by aggregate number of shares.
Shares granted vest in equal increments in the third, fourth and fifth
years from date of grant.
(4) The Company has no Long Term Investment Plan ("LTIP").
(5) Consists of $3,988 in participant allocations and $2,249 in Company
matching contributions, each in the form of Preferred Shares, pursuant to
the Company's Employee Stock Ownership and 401k Plan.
</TABLE>
STOCK OPTION GRANTS DURING 1993
The following table sets forth the number, exercise price, expiration date
of stock options and their potential realizable values based on assumed annual
compounded rates of stock price appreciation granted during 1993 pursuant to
the Company's Stock Option Plan of 1987.
<TABLE>
<CAPTION>
POTENTIAL
REALIZABLE VALUE
AT ASSUMED ANNUAL
RATES OF STOCK PRICE
APPRECIATION
INDIVIDUAL GRANTS FOR OPTION TERM
-------------------------------------------------------------------------------------- -----------------------------
(A) (B) (C) (D) (E) (F) (G)
% OF
TOTAL
OPTIONS/
SARS
GRANTED TO EXPIRATION
OPTIONS EMPLOYEES EXERCISE DATE
GRANTED IN FISCAL OR BASE OF OPTION
NAME (#) YEAR(1) PRICE TERM 5% ($) 10% ($)
--- -------- ----------- -------- ---------- ----------- --------------
<S> <C> <C> <C> <C> <C> <C>
John F. McCaughan,
Chairman................................ 23,071 3.77% $59.00 1/29/03 $856,044 $2,169,385
William R. Cook,
President and C.E.O..................... 11,585 1.89% $59.00 1/29/03 $429,859 $1,089,347
Dr. Hillel Lieberman,
Senior Vice President................... 8,898 1.45% $59.00 1/29/03 $330,158 $836,686
7,846 1.28% $43.625 12/17/03 $215,259 $545,509
Dennis L. Holland,
Senior Vice President................... 8,898 1.45% $59.00 1/29/03 $330,158 $836,686
7,846 1.28% $43.625 12/17/03 $215,259 $545,509
Larry V. Rankin,
Senior Vice President................... 8,813 1.44% $59.00 1/29/03 $327,004 $828,693
7,771 1.27% $43.625 12/17/03 $213,201 $540,294
<FN>
- ---------
(1) No stock appreciation rights are granted pursuant to the Company's Stock Option Plan of 1987.
</TABLE>
9
<PAGE>
STOCK OPTION EXERCISES DURING 1993 AND YEAR END OPTION VALUES
The following table sets forth information related to aggregated stock
options exercised by the named executive officers of the Company during 1993
and the number and value of stock options held at year end. The Company does
not have any outstanding stock appreciation rights.
<TABLE>
<CAPTION>
AGGREGATED OPTION EXERCISES IN LAST CALENDAR YEAR AND YEAR END OPTION VALUES
- ------------------------------------------------------------------------------
(A) (B) (C) (D) (E)
NUMBER OF VALUE OF
UNEXERCISED UNEXERCISED
OPTIONS AT OPTIONS AT
FY-END (#) FY-END ($)(2)
---------------- ----------------------
SHARES ACQUIRED VALUE EXERCISABLE/ EXERCISABLE/
NAME ON EXERCISE (#) REALIZED ($)(1) UNEXERCISABLE UNEXERCISABLE
--- ---------------- --------------- ---------------- ----------------------
<S> <C> <C> <C> <C>
John F. McCaughan,
Chairman.............................. -- -- 97,660/22,654 $1,063,243/-0-
William R. Cook,
President and C.E.O................... -- -- 32,332/11,281 $147,873/-0-
Dr. Hillel Lieberman,
Senior Vice President................. -- -- 11,513/5,231 $654/1,308
Dennis L. Holland,
Senior Vice President................. 10,000 $391,700 21,698/5,231 $35,028/1,308
Larry V. Rankin,
Senior Vice President................. -- -- 22,267/5,181 $37,314/1,295
<FN>
- ---------
(1) Value realized is the difference between the option exercise price and the closing market price of the Common Stock on
the date of exercise multiplied by the number of shares to which the exercise relates.
(2) The closing price for the Company's Common Stock as reported by the New York Stock Exchange on December 31, 1993 was
$43.875. Value is the difference between the option exercise price and $43.875 multiplied by the number of shares of
Common Stock underlying the option.
</TABLE>
BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
EXECUTIVE COMPENSATION PHILOSOPHY
Betz' executive compensation program is based on two objectives:
* Provide a strong and direct link between Company performance and
executive pay.
* Position executive pay levels at the median (i.e., 50th percentile) of
a peer group of specialty chemical companies and a broad cross-section
of U.S. companies of comparable size.
Betz has been tracking its executive pay levels and performance versus
a comparable group of specialty chemical companies since 1987. This
group, which has operating and market characteristics similar to Betz',
includes 11 specialty chemical companies. This is the same peer group
used in the performance graph included in this Proxy Statement. Betz'
size (annual revenues) is at about the median of the group.
In recent years, Betz has generally performed in the top 25% of these
specialty chemical companies on both financial measures (i.e., Return
on Assets and Earnings per Share Increase) and stock market measures
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(i.e., Total Return to Shareholders), as indicated in the performance
graph. However, performance in 1993 declined from historically high
levels.
* Pay is sufficiently variable so that performance in the top 25% will
result in top 25% total compensation, and below average performance
levels will result in below average total compensation.
EXECUTIVE COMPENSATION COMPONENTS
* Betz' executive compensation program has three components: Base salary,
annual bonus, and long-term incentives. All components combined are
intended to attract, retain and motivate executives to high
performance.
-- Base Salary. Base salaries are set by periodic comparison to
external rates of pay for comparable positions within the peer group
and are targeted at the 50th percentile for such positions.
Individual salaries are considered for adjustment annually;
adjustments are based upon general movement in salary levels in the
peer group and a relevant broad cross-section of U.S. companies,
individual performance and potential and/or changes in duties and
responsibilities. Actual salaries may range from 4% below to 12%
above targeted salary levels.
-- Annual Bonus. Betz' annual bonus measures the Company's financial
performance based on operating earnings growth. Payouts will vary
depending on the actual level of operating earnings growth achieved
over the previous calendar year. Annual bonus opportunities are
targeted to be at the 50th percentile of the peer group when
performance is at the 50th percentile, at the top quartile of the
peer group when performance is in the top quartile, and at or below
the bottom quartile of the peer group when performance is in the
bottom quartile. If the annual minimum target is not met, no bonus
is payable.
-- Long-term Incentives. Long-term incentive gains under the Betz Stock
Option and Restricted Stock Plans reflect Betz' stock market
performance. Potential gain opportunities vary based on total return
to shareholders. Stock options are typically granted annually, while
restricted stock awards are generally granted every three years.
Awards are targeted to provide annual gain opportunities at the 50th
percentile of the peer group and a relevant broad cross-section of
U.S. companies.
The Committee has reviewed the new Internal Revenue Code provisions which
place a limit on deductions for compensation above $1,000,000. Although no
executive officer received compensation exceeding this limit in 1993, the
Committee adopted guidelines several years ago which meet the requirements and
qualify Betz' annual bonus and stock option plans as performance based. The
value of the incentive stock program increases with increase in stock market
performance. However, the plan does not technically qualify as a performance-
based plan.
CHIEF EXECUTIVE OFFICER COMPENSATION
Pay Positioning: Betz' policy is to set the Chief Executive Officer's
target pay levels at average (median) Chief Executive Officer pay levels for
the specialty chemical group after adjusting for Betz' size. Recent analysis
of total compensation levels for Chief Executive Officers within the specialty
chemical companies indicates that Betz' Chief Executive Officer's total
compensation is actually between the 25th and 50th percentiles. The Committee
decided not to adjust for this discrepancy in 1993 but agreed to continue to
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monitor specialty chemical company pay levels and Betz' earnings per share,
return on assets and total return to shareholders performance as the basis for
any future adjustments.
Pay Mix: Betz' Chief Executive Officer's actual compensation is highly
variable because it is based on actual performance in a given calendar year.
In fact, over half of his potential compensation is not assured because it is
provided through the annual bonus plan and long-term incentive opportunities.
Determination of Specific Compensation Levels in 1993:
* Base salary: The Chief Executive Officer's salary increase at 1/1/93
was 4.0% based on competitive increases in the peer group and a broad
cross-section of U.S. industry.
* Annual bonus: In 1993, Betz' operating income performance was below
target. The Chief Executive Officer earned no bonus because the Betz
operating income threshold was not reached.
* Long-term incentives: Stock option and restricted stock grants were
made at levels that provide average gain opportunity in the comparable
specialty chemical group for average stock market performance. In
determining the size of the grant, the Committee also considered the
competitiveness of the Chief Executive Officer's gain opportunities in
the context of the competitiveness of his total compensation package.
This report is submitted by the Executive Compensation and Employee
Benefits Committee consisting of the following outside members of the Board:
Theodore B. Palmer, 3rd, Chairman
Patrick F. Brennan
George A. Butler
Geoffrey Stengel, Jr.
Robert L. Yohe
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PERFORMANCE GRAPH
The following graph compares the yearly percentage change in the
cumulative total shareholder return on the Company's Common Stock during the
five years ending December 31, 1993 with the cumulative total return on the
S&P 500 Index and an eleven company peer group comprised of Chemed
Corporation, Ecolab Inc., HB Fuller Company, Loctite Corporation, Millipore
Corporation, NCH Corporation, Nalco Chemical Company, Pall Corporation,
Petrolite Corporation, Quaker Chemical Corporation and Sigma Aldrich
Corporation. The comparison assumes that $100.00 was invested on December 31,
1988 in the Company's Common Stock, the S&P 500 Index and the identified peer
group and assumes the reinvestment of dividends.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
BETZ LABORATORIES, INC., S&P 500 INDEX & PEER GROUP
GRAPH HERE ON PRINTED PROXY
The historical trends depicted on the graph above provide no assurance
that such stock performance will continue in the future. The Company makes no
representation or predictions as to the future stock performance.
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ESTIMATED ANNUAL BENEFITS UNDER FINAL PAY FORMULA
PENSION PLAN TABLE
The Company's Employee Retirement Plan (the "Plan") was established in
1953. The Plan, which is noncontributory, presently covers all U.S. employees
of the Company and its domestic subsidiaries who meet the Plan's eligibility
requirements. Upon retirement, eligible employees are entitled to receive
retirement payments in accordance with one of several optional forms of
payment.
The Plan, as amended, provides an annual retirement benefit in an amount
determined by multiplying the participant's final average earnings (defined as
the highest 3 consecutive years of service) by 1.2% for each of the
participant's first thirty-five (35) years of service and adding to that an
amount determined by multiplying the participant's final average earnings in
excess of covered compensation (defined as an accumulated average of Social
Security wage bases) by .6% for each of the participant's first thirty-five
years of service.
The amount of the estimated retirement income will be reduced for early
retires and for vested terminated employees not working to normal retirement
age to conform to the maximum benefit limitations imposed by the Employee
Retirement Income Security Act of 1974. The Betz Laboratories, Inc. Benefit
Restoration Plan ("Benefit Restoration Plan") restores any benefits reduced by
the maximum benefit limitations of ERISA. Benefits under the Retirement Plan
are computed on a straight line annuity basis. As of February 11, 1994, the
following individuals have the respective years of credited service for
Retirement Plan purposes set forth after their names: Mr. McCaughan, 34; Mr.
Cook, 22; Dr. Lieberman, 28; Mr. Holland, 18; and Mr. Rankin, 24.
The following table shows the estimated annual benefits payable under the
Plan and Benefit Restoration Plan to eligible employees retiring in 1993 at
normal retirement age in the stated salary classifications.
<TABLE>
<CAPTION>
YEAR OF PARTICIPATION IN PLAN
FINAL AVERAGE --------------------------------------------------------------------------------------------
EARNINGS 15 20 25 30 35
-------------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
$200,000 $ 51,956 $ 69,274 $ 86,593 $103,911 $121,230
250,000 65,456 87,274 109,093 130,911 152,730
300,000 78,956 105,274 131,593 157,911 184,230
400,000 105,956 141,274 176,593 211,911 247,230
500,000 132,956 177,274 221,593 265,911 310,230
</TABLE>
REMUNERATION OF DIRECTORS
Each Director who is not an employee of the Company is paid a retainer of
$18,000 per annum as compensation for Board Committee assignments and meetings
and a fee of $1,500 for each Board Meeting attended. Each Committee Chairman
is paid a fee of $750 and each member is paid a fee of $500 for each committee
meeting attended. Each Director who is an employee of the Company or a
subsidiary is paid a fee of $300 for each Board meeting attended.
EMPLOYMENT AGREEMENTS
The Company has entered into employment contracts with each of the named
executive officers of the Company. Such agreements provide for the employment
of each named executive officer for a period of five (5) years, unless sooner
terminated by death, disability or termination for cause. Employment also may
be terminated by the Board of Directors of the Company ("Board") in its sole
discretion upon two years advance written notice to the employee. If, during
such notice period, the Board does not elect to continue the employee in his
present capacity, the Company agrees to pay the employee the
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cash equivalent of his salary which would have been earned during the notice
period, together with stock under the Company's Employee Stock Incentive Plan
and bonus which would have been payable had the employee continued in his
present capacity for the full term of the termination notice.
The agreements further set forth certain covenants whereby the employee
agrees, both during and after his employment, to protect and not divulge the
Company's proprietary and confidential information and agrees that during his
employment and for eighteen (18) months after termination of active
employment, he shall not work for or substantially invest in a competitor,
except if employee's employment is terminated as a result of the acquisition
of all or substantially all of the stock or assets of the Company, in which
case the employee's employment opportunities are not so restricted, and the
employee may elect to receive his severance salary and bonus in a lump sum at
the time active employment is terminated.
RELATIONSHIP WITH INDEPENDENT AUDITORS (PROPOSAL 2)
The Board, on the recommendation of the Company's Audit Committee, has
nominated Ernst & Young as independent auditors for the year ending December
31, 1994. Ernst & Young has been the Company's independent auditors since the
Company's first public offering of its securities in 1965. Although not
required, the Board has determined that it is desirable to have the Company's
auditors elected by the Shareholders of the Company. In the event Ernst &
Young is not elected, the Board would reconsider its choice. Representatives
of Ernst & Young are expected to be present at the Meeting and will be
accorded an opportunity to make a statement should they so desire and are
expected to be able to respond to appropriate questions from Shareholders.
VOTE REQUIRED FOR APPROVAL
Matters submitted to Shareholders of record are decided by the vote of the
holders of a majority of the outstanding shares entitled to vote, present in
person or represented by proxy at a meeting at which a quorum is present,
though such majority may be less than a majority of all the shares entitled to
vote. Under applicable Pennsylvania law, if a quorum is present with respect
to a specific matter, such matter will be authorized upon receiving approval
by a majority of the votes cast on such matter and for such purposes an
abstention, broker non-vote or the specific direction not to cast any vote on
any specific matter will not constitute the casting of a vote on such matter.
OTHER MATTERS
SHAREHOLDER PROPOSALS
Under the Securities and Exchange Commission rules certain Shareholder
proposals may be included in the Company's Proxy Statement. Any such proposal
for the 1995 Annual Meeting must be received by the Company not later than
November 10, 1994. All proposals should be submitted to William C. Brafford,
Secretary, Betz Laboratories, Inc., 4636 Somerton Road, Trevose, Pennsylvania
19053.
The Board knows of no other matters which will be brought before the
Meeting by any person other than those matters set forth in the attached
Notice of Annual Meeting of Shareholders. If, however, any other matter shall
properly come before the Meeting or any adjournment thereof, the persons named
in the Proxy will vote thereon in accordance with their best judgment.
William C. Brafford
Secretary
Dated: March 11, 1994
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<PAGE>
[LOGO]
NOTICE OF 1994
ANNUAL MEETING
AND
[LOGO] PROXY
STATEMENT
<PAGE>
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BETZ LABORATORIES, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
PROXY FOR THE ANNUAL MEETING OF STOCKHOLDERS APRIL 14, 1994
The undersigned hereby appoints John W. Boyer, Jr., William R. Cook and
John A. H. Shober, or any of them, attorneys and proxies with full power of
substitution in each of them, in the name, place and stead of the undersigned
to vote as proxy all the stock of the undersigned in Betz Laboratories, Inc.
(the "Company").
(TO BE SIGNED ON REVERSE SIDE)
- ------------------------------------------------------------------------------
[X] Please mark your
votes as in this
example.
THE SHARES REPRESENTED BY THIS INSTRUCTION CARD WILL BE VOTED FOR PROPOSALS 1
THROUGH 3 IF NO INSTRUCTION TO THE CONTRARY IS INDICATED OR IF NO INSTRUCTION
IS GIVEN.
<TABLE>
<C> <C> <C> <C> <C> <C> <C> <C>
1. To elect the FOR WITHHELD 2. To elect Ernst & FOR AGAINST ABSTAIN 3. To transact such other business
following [ ] [ ] Young as the [ ] [ ] [ ] as may properly come before the
nominees, as Company's annual meeting or any
set forth in independent auditors adjournment thereof.
the proxy for 1994.
statement:
</TABLE>
John F. McCaughan, Theodore B. Palmer, 3rd, John R. Quarles and Robert L. Yohe.
Instructions: To withhold authority to vote for any individual nominee, place
an "X" in the box on the left and strike a line through the nominee's name
listed above.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY IN THE ENCLOSED ENVELOPE.
SIGNATURE(S)__________________________________________________DATE____________
NOTE: Please sign exactly as name appears hereon. Executors, Administrators,
Trustees, etc. should so indicate when signing, giving full title as
such. If signer is a corporation, execute in full corporate name by
authorized officer. If shares held in the name of two or more persons,
all should sign.
- ------------------------------------------------------------------------------
<PAGE>
BETZ LABORATORIES, INC.
INSTRUCTION CARD FOR THE ANNUAL MEETING ON APRIL 14, 1994
The undersigned hereby instructs American Stock Transfer & Trust Company
to vote as designated below all the preferred and common shares of Betz
Laboratories, Inc. (the "Company") entitled to be voted by the undersigned
under the Company's Employee Stock Ownership and 401(k) Plan.
(TO BE SIGNED ON REVERSE SIDE)
- ------------------------------------------------------------------------------
[X] Please mark your
votes as in this
example.
THE SHARES REPRESENTED BY THIS INSTRUCTION CARD WILL BE VOTED FOR PROPOSALS 1
THROUGH 3 IF NO INSTRUCTION TO THE CONTRARY IS INDICATED OR IF NO INSTRUCTION
IS GIVEN.
<TABLE>
<C> <C> <C> <C> <C> <C> <C> <C>
1. To elect the FOR WITHHELD 2. To elect Ernst & FOR AGAINST ABSTAIN 3. To transact such other business
following [ ] [ ] Young as the [ ] [ ] [ ] as may properly come before the
nominees, as Company's annual meeting or any
set forth in independent auditors adjournment thereof.
the proxy for 1994.
statement:
</TABLE>
John F. McCaughan, Theodore B. Palmer, 3rd, John R. Quarles and Robert L. Yohe.
Instructions: To withhold authority to vote for any individual nominee, place
an "X" in the box on the left and strike a line through the nominee's name
listed above.
PLEASE MARK, SIGN, DATE AND RETURN THIS CARD IN THE ENCLOSED ENVELOPE.
SIGNATURE(S)__________________________________________________DATE____________
NOTE: Please sign exactly as name appears hereon. Executors, Administrators,
Trustees, etc. should so indicate when signing, giving full title as
such.
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