<PAGE> 1
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SCHEDULE 14A
(RULE 14a)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement [ ] CONFIDENTIAL, FOR USE OF THE COMMISSION
ONLY (AS PERMITTED BY RULE 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
</TABLE>
CHEMED CORPORATION
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
XXXXXXXXXXXXXXXX
(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: ...........................................................
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<PAGE> 2
[LOGO]
CHEMED CORPORATION
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
MAY 18, 1998
The Annual Meeting of Stockholders of Chemed Corporation will be held at The
Phoenix Club, 812 Race Street, Cincinnati, Ohio, on Monday, May 18, 1998 at 1:30
p.m. for the following purposes:
(1) To elect directors;
(2) To ratify the selection by the Board of Directors of independent
accountants; and
(3) To transact such other business as may properly be brought before the
meeting.
Stockholders of record at the close of business on March 19, 1998 are
entitled to notice of, and to vote at, the meeting.
IF YOU DO NOT PLAN TO ATTEND THE MEETING, PLEASE COMPLETE, DATE AND SIGN THE
ENCLOSED PROXY AND RETURN IT IN THE ENVELOPE PROVIDED AT YOUR EARLIEST
CONVENIENCE. NO POSTAGE IS REQUIRED IF IT IS MAILED IN THE UNITED STATES.
Naomi C. Dallob
Secretary
March 31, 1998
<PAGE> 3
[LOGO]
CHEMED CORPORATION
PROXY STATEMENT
This Proxy Statement is furnished in connection with the solicitation by the
Board of Directors of Chemed Corporation (hereinafter called the "Company" or
"Chemed") of proxies to be used at the Annual Meeting of Stockholders ("Annual
Meeting") of the Company to be held on May 18, 1998 and any adjournments
thereof. The Company's mailing address is 2600 Chemed Center, 255 East Fifth
Street, Cincinnati, Ohio 45202. The approximate date on which this Proxy
Statement and the enclosed proxy are being sent to stockholders is March 31,
1998. Each valid proxy received in time will be voted at the meeting and, if a
choice is specified on the proxy, the shares represented thereby will be voted
accordingly. The proxy may be revoked by the stockholder at any time before the
meeting by providing notice to the Secretary.
Only stockholders of record as of the close of business on March 19, 1998
will be entitled to vote at the Annual Meeting or any adjournments thereof. On
such date, the Company had outstanding 10,102,073 shares of capital stock, par
value $1 per share ("Capital Stock"), entitled to one vote per share.
ELECTION OF DIRECTORS
Sixteen directors are to be elected at the Annual Meeting to serve until the
following annual meeting of stockholders and until their successors are duly
elected and qualified. Set forth below are the names of the persons to be
nominated by the Board of Directors, together with a description of each
person's principal occupation during the past five years and other pertinent
information.
Unless authority is withheld or names are stricken, it is intended that the
shares covered by each proxy will be voted for the nominees listed. Votes that
are withheld will be excluded entirely from the vote and will have no effect.
The Company anticipates that all nominees listed in this Proxy Statement will be
candidates when the election is held. However, if for any reason any nominee is
not a candidate at that time, proxies will be voted for any substitute nominee
designated by the Board of Directors (except where a proxy withholds authority
with respect to the election of directors). The affirmative vote of a plurality
of the votes cast will be necessary to elect each of the nominees for director.
<TABLE>
<CAPTION>
NOMINEES
<S> <C>
EDWARD L. HUTTON Mr. Hutton is Chairman and Chief Executive Officer of the Company
Director since 1970 and has held these positions since November 1993. Previously, from
Age: 78 1970 to November 1993, he served the Company as President and Chief
Executive Officer. Mr. Hutton is also the Chairman of Omnicare, Inc.,
Cincinnati, Ohio (healthcare products and services), a public corporation
in which the Company holds a 1-percent-ownership interest (hereinafter
"Omnicare"). Mr. Hutton is a director of Omnicare. Mr. Hutton is the
father of Thomas C. Hutton, a Vice President and a director of the Company.
KEVIN J. MCNAMARA Mr. McNamara is President of the Company and has held this position
Director since 1987 since August 1994. Previously, he served as Executive Vice President,
Age: 44 Secretary and General Counsel from November 1993, August 1986
and August 1986, respectively, to August 1994. From May 1992 to
November 1993, he was a Vice Chairman of the Company. He is a director
of Omnicare.
</TABLE>
1
<PAGE> 4
<TABLE>
<S> <C>
JAMES H. DEVLIN Mr. Devlin is a Vice President of the Company and has held this
Director from May 1991 position since December 1992. From December 1992 to September
to May 1992 and since 1997 he also served as Group Executive of the Company's Omnia
February 1993 Group (formerly known as the "Veratex Group").
Age: 51
CHARLES H. ERHART, JR. Mr. Erhart retired as President of W.R. Grace and Co. (hereinafter
Director since 1970 "Grace"), Boca Raton, Florida (international specialty chemicals,
Age: 72 construction and packaging) in August 1990, having held that position
since July 1989. Previously, he was Chairman of the Executive Committee
of Grace and held that position from November 1986 to July 1989. He is a
director of Omnicare.
JOEL F. GEMUNDER Mr. Gemunder is President of Omnicare and has held this position
Director since 1977 since May 1981. He is also a director of Omnicare and Ultratech
Age: 58 Stepper, Inc.
LAWRENCE J. GILLIS Mr. Gillis is a Vice President of the Company and has held this position
Director since since November 1996. He is also President and Chief Operating Officer
November 1996 of Roto-Rooter Services Company, an indirectly wholly owned
Age: 63 subsidiary of the Company, and has held these positions since October 1994.
Previously, he was Senior Vice President - Operations of Roto-Rooter Services
Company, from February 1991 to October 1994.
PATRICK P. GRACE Mr. Grace is Chief Financial Officer of Compucook, Inc., Westport,
Director since 1996 Connecticut (interactive marketing) and has held this position since
Age: 42 December 1997. Previously, from October 1995 to December 1997, he was a
consultant and investment adviser. From February 1991 to October 1995, he
was President of Grace Logistics Services, Inc., Greenville, South Carolina
(a full-service provider of logistical support), a subsidiary of Grace.
THOMAS C. HUTTON Mr. Hutton is a Vice President of the Company and has held this
Director since 1985 position since February 1988. Mr. Hutton is a director of Omnicare. He
Age: 47 is a son of Edward L. Hutton, the Chairman and Chief Executive Officer and a
director of the Company.
WALTER L. KREBS Mr. Krebs is the Chief Financial Officer of Service America Systems,
Director from May 1989 Inc., a wholly owned subsidiary of the Company ("Service America"),
to April 1991 and since and has held this position since October 1997. Previously, he retired in
May 1995 April 1996 as Director - Financial Services of Diversey Lever, Inc.
Age: 65 (formerly known as Diversey Corporation), Detroit, Michigan (specialty
chemicals) ("Diversey"), having held this position since April 1991.
Previously, from January 1990 to April 1991, he was a Senior Vice President
and the Chief Financial Officer of the Company's then wholly owned subsidiary,
DuBois Chemicals, Inc. ("DuBois").
SANDRA E. LANEY Ms. Laney is Senior Vice President and the Chief Administrative
Director since 1986 Officer of the Company and has held these positions since November
Age: 54 1993 and May 1991, respectively. Previously, from May 1984 to November 1993, she
was a Vice President of the Company. Ms. Laney is a director of Omnicare.
</TABLE>
2
<PAGE> 5
<TABLE>
<S> <C>
JOHN M. MOUNT Mr. Mount is a Vice President of the Company and has held this
Director from May 1986 position since November 1997. He is also President and Chief
to April 1991 and Executive Officer of Service America and has held these positions
since February 1994 since October 1997. Previously, he was a Principal of Lynch-Mount
Age: 56 Associates, Cincinnati, Ohio (management consulting), from November
1993 to October 1997. From April 1991 to November 1993, Mr. Mount
was Senior Vice President of Diversey and President of Diversey's DuBois
Industrial division. Previously, from May 1989 to April 1991, Mr. Mount
was an Executive Vice President of the Company and President of DuBois.
He held the latter position from September 1986 to April 1991. He is a
director of Omnicare.
TIMOTHY S. O'TOOLE Mr. O'Toole is an Executive Vice President and the Treasurer of the
Director since August 1991 Company and has held these positions since May 1992. He is also the
Age: 42 Chairman and Chief Executive Officer of Patient Care, Inc., a 100-percent-owned
subsidiary of the Company. He is a director of Vitas Healthcare Corporation.
D. WALTER ROBBINS, JR. Mr. Robbins retired as Vice Chairman of Grace in January 1987 and
Director since 1970 thereafter became a consultant to Grace until July 1995. He is a director
Age: 78 of Omnicare.
DONALD E. SAUNDERS Mr. Saunders is President of DuBois, a division of Diversey Lever,
Director from May 1981 Inc., and has held this position since November 1993. From April 1991
to May 1982 and May 1983 to October 1993, he was Executive Vice President of Diversey and
to May 1987 from January 1991 to March 1991, he was Executive Vice President of
Age: 54 DuBois.
PAUL C. VOET Mr. Voet is an Executive Vice President of the Company and has held
Director since 1980 this position since May 1991. From January 1992 to September 1997,
Age: 51 he also served as President and Chief Executive Officer of the Company's
then majority-owned subsidiary, National Sanitary Supply Company ("National").
From May 1988 to November 1993, he also served the Company as a Vice Chairman.
GEORGE J. WALSH III Mr. Walsh is a partner with the law firm of Gould & Wilkie, New
Director since November 1995 York, New York, and has held this position since January 1978.
Age: 52
</TABLE>
DIRECTORS EMERITI
In May 1983, the Board of Directors adopted a policy of conferring the
honorary designation of Director Emeritus upon former directors who have made
valuable contributions to the Company and whose continued advice is believed to
be of value to the Board of Directors. Under this policy, each Director Emeritus
is furnished with a copy of all agendas and other materials furnished to members
of the Board of Directors generally and is invited to attend all meetings of the
Board; however, a Director Emeritus is not entitled to vote on any matters
presented to the Board. In 1985, Dr. Herman B Wells, who served as a director of
the Company from 1970 until 1985, was designated as a Director Emeritus, and in
1994, Neal Gilliatt, who served as a director of the Company from 1970 to 1994,
was designated as a Director Emeritus. Each Director Emeritus is paid an annual
fee of $6,200, and for each meeting attended, a Director Emeritus is paid $200.
It is anticipated that at the annual meeting of the Board of Directors, each
of Mr. Gilliatt and Dr. Wells will again be designated as a Director Emeritus.
3
<PAGE> 6
COMPENSATION OF DIRECTORS
Throughout most of 1997, each member of the Board of Directors who was not a
regular employee of the Company and Mr. Voet, while he was the President and
Chief Executive Officer of National, were paid an annual fee of $5,000, and each
member of a Committee of the Board (other than its chairman) was paid an
additional annual fee of $1,600. For each meeting of the Board of Directors
attended, a director was paid $1,750. A Committee member was paid $800 for each
meeting of a Committee he attended unless the Committee met on the same day as
the Board of Directors met, in which event, the Committee member was paid $400
for his attendance at the Committee meeting. Mr. Mount also received $6,000 for
attending quarterly management meetings, and effective November 1, 1996, Mr.
Mount was retained by the Company as a consultant at a rate of $100,000 per
annum. Both of these arrangements terminated October 15, 1997 when Mr. Mount
became an officer of Service America.
In addition, in May 1997 each member of the Board of Directors (other than
those serving on the Incentive Committee of either the Company or an affiliated
company) was granted an unrestricted stock award covering 100 shares of Capital
Stock under the Company's 1993 Stock Incentive Plan. Those directors who are
members of the Incentive Committee of either the Company or an affiliated
company were paid the cash equivalent of the 100-share stock award or $3,638.
Throughout 1997, the chairman of each Committee of the Board of Directors was
paid an annual fee in addition to the attendance fees referred to above. The
chairman of the Audit Committee was paid at the rate of $5,350 per annum and the
chairman of each of the Incentive Committee and the Compensation Committee was
paid at the rate of $2,568 per annum. In addition, each member of the Board of
Directors and of a Committee was reimbursed for his reasonable travel expenses
incurred in connection with such meetings. Effective November 5, 1997, each
member of the Board of Directors who is not a regular employee of the Company is
paid an annual fee of $12,000 and a fee of $2,000 for each meeting attended.
The Company has a deferred compensation plan for nonemployee directors under
which certain directors who are nonregular employees of the Company or of a
wholly or partially owned subsidiary of the Company participate. Under the plan,
which is not a tax-qualified plan, an account is established for each
participant to which amounts are credited quarterly at the rate of $4,000 per
annum. Amounts credited to these accounts are used to purchase shares of Capital
Stock and all dividends received on such shares are reinvested in such Capital
Stock. Each participant is entitled to receive the balance in his account within
90 days following the date he ceases to serve as a director.
COMMITTEES AND MEETINGS OF THE BOARD
The Company has the following Committees of the Board of Directors: Audit
Committee, Compensation Committee and Incentive Committee. It does not have a
nominating committee of the Board of Directors.
The Audit Committee (a) recommends to the Board of Directors a firm of
independent accountants to audit the Company and its consolidated subsidiaries,
(b) reviews and reports to the Board of Directors on the Company's annual
financial statements and the independent accountants' report on such financial
statements and (c) meets with the Company's senior financial officers, internal
auditors and independent accountants to review audit plans and work and other
matters regarding the Company's accounting, financial reporting and internal
control systems. The Audit Committee consists of Messrs. Erhart, Robbins and
Walsh. The Audit Committee met on two occasions during 1997.
The Compensation Committee makes recommendations to the Board of Directors
concerning (a) salary and incentive compensation payable to officers and certain
other key employees of the Company, (b) establishment of incentive compensation
plans and programs generally and (c) adoption and administration of certain
employee benefit plans and programs. The Compensation Committee consists of
Messrs. Erhart, Grace and Robbins. During 1997, the Compensation Committee met
on seven occasions.
4
<PAGE> 7
The Incentive Committee administers the Company's seven Stock Incentive Plans
and its 1983 Incentive Stock Option Plan. In addition, the Incentive Committee
makes (a) grants of stock options and stock awards to key employees of the
Company and (b) recommendations to the Board of Directors concerning additional
year-end contributions by the Company under the Savings and Investment Plan. The
Incentive Committee consists of Messrs. Erhart, Grace and Robbins. The Incentive
Committee met on two occasions during 1997.
During 1997, there were seven meetings of the Board of Directors, and each
director attended at least 75 percent of the aggregate of (a) the total number
of meetings held by the Board of Directors and (b) the total number of meetings
held by all Committees of the Board of Directors on which he served that were
held during the period for which he was a director or member of any such
Committee.
EXECUTIVE COMPENSATION
JOINT REPORT OF THE COMPENSATION COMMITTEE AND INCENTIVE COMMITTEE ON
EXECUTIVE COMPENSATION
The Company believes that executive compensation must align executive
officers' interests with those of the Company's stockholders and that such
interests are served by having compensation directly and materially linked to
financial and operating performance criteria which, when successfully achieved,
will enhance stockholder value.
The Company attempts to achieve this objective with an executive compensation
package for its senior executives which combines base salary, annual cash
incentive compensation, and long-term incentive compensation in the form of
stock options and restricted stock awards along with various benefit plans,
including pension plans, savings plans and medical benefits generally available
to the employees of the Company.
The executive compensation program is administered through the coordinated
efforts of the Compensation Committee and the Incentive Committee of the Board
of Directors. The membership of the Incentive Committee is composed of three
outside directors (i.e., nonemployees of the Company) and the Compensation
Committee is composed of three outside directors. The Compensation Committee is
responsible for the review, approval and recommendation to the Board of
Directors of matters concerning base salary and annual cash incentive
compensation for key executives of the Company. The recommendations of the
Compensation Committee on such matters must be approved by the full Board of
Directors. The Incentive Committee administers the Company's stock incentive
plans under which it reviews and approves grants of stock options and restricted
stock awards.
Both the Compensation and Incentive Committees may use their discretion to
set executive compensation where, in their collective judgment, external,
internal or individual circumstances warrant.
Following is a discussion of the components of the executive officer
compensation program.
In determining base salary levels for the Company's executive officers, the
Compensation Committee takes into account the magnitude of responsibility of the
position, individual experience and performance and specific issues particular
to the Company. In general, base salaries are set at levels believed by this
Compensation Committee to be sufficient to attract and retain qualified
executives when considered with the other components of the Company's
compensation structure.
The Compensation Committee believes that a significant portion of total cash
compensation should be linked to annual performance criteria. Consequently, the
purpose of annual incentive compensation for senior executives and key managers
is to provide a direct financial incentive in the form of an annual cash bonus
to those executives who achieve their business units' and the Company's annual
goals. Operational and financial goals are established at the beginning of each
fiscal year and generally take into account such measures of performance as
sales and earnings growth, profitability, cash flow and return on investment.
Other nonfinancial measures of performance relate to organizational development,
product or service expansion and strategic positioning of the Company's assets.
5
<PAGE> 8
Individual performance is also taken into account in determining individual
bonuses. It is the Company's belief that bonuses as a percentage of a senior
executive's salary should be sufficiently high to provide a major incentive for
achieving annual performance targets. Bonuses for senior executives of the
Company generally range from 25 percent to 100 percent of base salary.
The stock option and restricted stock program forms the basis of the
Company's incentive plans for executive officers and key managers. The objective
of these plans is to align executive and long-term stockholder interests by
creating a strong and direct link between executive pay and stockholder return.
Stock options and restricted stock awards are granted annually and are
generally regarded as the primary incentive for long-term performance as they
are granted at fair market value and have vesting restrictions ranging from
three- to seven-year periods. The Committee considers each grantee's current
option and award holdings in making grants. Both the amounts of restricted stock
awards and proportion of stock options increase as a function of higher salary
and position of responsibility within the Company.
The Compensation Committee and Incentive Committee have considered, and are
continuing to review, the qualifying compensation regulations issued by the
Internal Revenue Service in December 1993. Generally, the Committees structure
compensation arrangements to achieve deductibility under the tax regulations,
except where the benefit of such deductibility is outweighed by the need for
flexibility or the attainment of other corporate objectives.
The base salary of Mr. E. L. Hutton, Chairman and Chief Executive Officer of
the Company, for 1997 was $590,000. His bonus in respect of 1997 services was
$274,165, which represents an increase of 3.9 percent over 1996 and 46.5 percent
of his current base salary. In addition, Mr. Hutton received a special bonus of
$635,000 in connection with the Company's sale of The Omnia Group to Banta
Corporation, effective September 20, 1997, and the sale of National to a
subsidiary of Unisource Worldwide, Inc., effective September 30, 1997, and a
special bonus of $330,000 in connection with the Company's 1997 capital gains.
Mr. Hutton received unrestricted stock awards having a value of $156,375, and he
was granted 25,000 stock options. Factors considered in establishing the
compensation levels in 1997 for Mr. Hutton were the Company's increase in sales
from continuing operations of 13.5% and the Company's increase in income from
continuing operations, excluding capital gains, of 27.6 percent. The
Compensation Committee and the Incentive Committee believe that Mr. Hutton's
base salary, cash bonus, and special bonuses and unrestricted stock awards and
stock options granted to Mr. Hutton are consistent with his performance as
measured by these factors and the other criteria discussed above.
<TABLE>
<CAPTION>
Compensation Committee Incentive Committee
--------------------- -----------------
<S> <C>
Charles H. Erhart, Jr., Chairman D. Walter Robbins, Jr., Chairman
Patrick P. Grace Charles H. Erhart, Jr.
D. Walter Robbins, Jr. Patrick P. Grace
</TABLE>
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<PAGE> 9
SUMMARY COMPENSATION TABLE
The following table shows the compensation paid to the Chief Executive
Officer and the four most highly compensated executive officers of the Company
for the past three years for all services rendered in all capacities to the
Company and its subsidiaries:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
SUMMARY COMPENSATION TABLE
- ------------------------------------------------------------------------------------------------------------------------------------
ANNUAL COMPENSATION LONG-TERM COMPENSATION AWARDS
- ------------------------------------------------------------------------------------------------------------------------------------
SECURITIES NATIONAL SECURITIES
CHEMED UNDERLYING RESTRICTED UNDERLYING
NAME AND RESTRICTED CHEMED STOCK NATIONAL ALL OTHER
PRINCIPAL BONUS STOCK STOCK AWARDS STOCK COMPENSATION
POSITION YEAR SALARY ($) ($)(1) AWARDS ($)(2) OPTIONS (#) ($)(3) OPTIONS (#) ($)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
E. L. Hutton 1997 $590,000 $1,239,165 $156,375 25,000 $ - 0 - 25,000 $473,518 (4)
Chairman and 1996 583,333 533,776 966,000 31,000 93,502 20,000 287,885
CEO 1995 550,000 532,000 266,200 48,000 109,982 40,000 635,003
K. J. McNamara 1997 292,259 496,600 24,750 16,000 - 0 - 3,500 237,781 (5)
President 1996 270,167 174,502 362,000 20,000 15,007 2,500 146,313
1995 246,000 143,250 72,600 30,000 17,496 5,000 183,863
P. C. Voet 1997 296,375 346,867 17,531 3,000 - 0 - 25,000 222,251 (6)
Executive 1996 285,333 113,960 54,000 4,000 93,502 20,000 137,973
Vice President 1995 264,500 141,250 10,000 7,000 109,982 40,000 263,211
T. S. O'Toole 1997 178,559 270,000 15,000 11,500 - 0 - 1,000 135,855 (7)
Executive 1996 161,667 67,304 261,000 14,000 10,004 1,000 83,676
Vice President 1995 150,000 63,000 66,550 21,000 11,503 2,000 128,830
and Treasurer
S. E. Laney 1997 179,041 374,211 15,000 11,500 - 0 - 2,000 177,811 (8)
Senior Vice 1996 162,583 172,488 261,000 14,000 10,004 1,500 116,063
President 1995 148,000 139,000 60,500 21,000 11,503 3,000 167,074
and Chief
Administrative
Officer
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
7
<PAGE> 10
- --------------------------------------------------------------------------------
SUMMARY COMPENSATION TABLE (continued)
- --------------------------------------------------------------------------------
(1) Bonuses paid in 1997 include the following amounts which were paid as
special bonuses in connection with the Company's 1997 capital gains: E. L.
Hutton - $330,000; K. J. McNamara - $150,000; P. C. Voet - $25,000; T. S.
O'Toole - $51,000; and S. E. Laney - $148,000; and special bonuses paid in
connection with the Company's sale of its wholly owned businesses
comprising The Omnia Group to Banta Corporation and the Company's sale of
National to Unisource Worldwide, Inc.: E. L. Hutton - $635,000; K. J.
McNamara - $310,000; P. C. Voet - $250,000; T. S. O'Toole - $197,000; and
S. E. Laney - $197,000.
(2) The number and value of the aggregate restricted shares of Capital Stock
held by the named executives at December 31, 1997 were as follows: E. L.
Hutton - 39,150 shares, $1,408,137; K. J. McNamara - 13,454 shares,
$482,610; P. C. Voet - 1,772 shares, $63,958; T. S. O'Toole - 10,336
shares, $371,504; and S. E. Laney - 10,065 shares, $361,470. Restricted
shares granted with respect to 1995 vest evenly over a three-year period.
The restricted shares with respect to 1996 vest in varying percentages over
a seven-year period. The stock awards granted with respect to 1997 were
unrestricted. Recipients receive dividends on the awarded shares and are
entitled to vote them, whether or not vested.
(3) As a result of the consummation of the Agreement and Plan of Merger dated
August 11, 1997 among National, Unisource Worldwide, Inc. and TFBC, Inc.,
all outstanding restricted shares of National Common Stock were converted
to cash in the amount of $21.00 per share on September 30, 1997.
(4) Includes the following amounts: $452,326 allocated to Mr. Hutton's account
under the Company's Employee Stock Ownership Plans ("ESOP") with respect to
1997; a $2,304 premium payment for term life insurance; $3,588 in the form
of an unrestricted stock award of 100 shares of Capital Stock; and $15,300
in director fees from National, including an unrestricted stock award of
100 shares of National Common Stock.
(5) Includes the following amounts: $200,130 allocated to Mr. McNamara's
account under the ESOP with respect to 1997; a $2,304 premium payment for
term life insurance; $12,509, which is the value of premium payments made
by the Company for the benefit of Mr. McNamara under a split dollar life
insurance policy, which provides for the refund of premiums to the Company
upon termination of the policy ("Split Dollar Policy"); $3,588 in the form
of an unrestricted stock award of 100 shares of Capital Stock; and $19,250
in director fees from National, including an unrestricted stock award of
100 shares of National Common Stock.
(6) Includes the following amounts: $178,862 allocated to Mr. Voet's account
under the ESOP with respect to 1997; a $2,304 premium payment for term life
insurance; $15,285, which is the value of premium payments made by the
Company for the benefit of Mr. Voet under a Split Dollar Policy; $10,500 in
director fees from the Company, including an unrestricted stock award of
100 shares of Capital Stock; and $15,300 in director fees from National,
including an unrestricted stock award of 100 shares of National Common
Stock.
(7) Includes the following amounts: $113,756 allocated to Mr. O'Toole's account
under the ESOP with respect to 1997; a $1,581 premium payment for term life
insurance; $6,180, which is the value of premium payments made by the
Company for the benefit of Mr. O'Toole under a Split Dollar Policy; $3,588
in the form of an unrestricted stock award of 100 shares of Capital Stock;
and $10,750 in director fees from National, including an unrestricted stock
award of 100 shares of National Common Stock.
(8) Includes the following amounts: $142,163 allocated to Ms. Laney's account
under the ESOP with respect to 1997; a $2,163 premium payment for term life
insurance; $8,747, which is the value of premium payments made by the
Company for the benefit of Ms. Laney under a Split Dollar Policy; $3,588 in
the form of an unrestricted stock award of 100 shares of Capital Stock; and
$21,150 in director fees from National, including an unrestricted stock
award of 100 shares of National Common Stock.
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<PAGE> 11
STOCK OPTIONS
The table below shows information concerning Chemed stock options granted in
1997 to the named executives in the Summary Compensation Table.
<TABLE>
<CAPTION>
CHEMED STOCK OPTION GRANTS IN 1997
- ---------------------------------------------------------------------------------------------------------------------------
POTENTIAL REALIZABLE
VALUE
AT ASSUMED ANNUAL
RATES OF STOCK
PRICE APPRECIATION
INDIVIDUAL GRANTS FOR OPTION TERM
- ---------------------------------------------------------------------------------------------------------------------------
% OF
NUMBER OF TOTAL
SECURITIES OPTIONS
UNDERLYING GRANTED
OPTIONS TO EXERCISE
GRANTED EMPLOYEES PRICE EXPIRATION
NAME (#)(1) IN 1997 ($/SHARE) DATE 5% ($) 10% ($)
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
E. L. Hutton 25,000 11.7% $35.94 5/19/07 $565,062 $1,431,978
K. J. McNamara 16,000 7.5 35.94 5/19/07 361,640 916,466
P. C. Voet 3,000 1.4 35.94 5/19/07 67,807 171,837
T. S. O'Toole 11,500 5.4 35.94 5/19/07 259,928 658,710
S. E. Laney 11,500 5.4 35.94 5/19/07 259,928 658,710
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) These options, which were granted on May 19, 1997, provide for the purchase
price of option shares equal to the fair market value of Capital Stock on
that date; are transferable by will, by the laws of descent and
distribution, pursuant to a qualified domestic relations order or to
certain family members, if permitted under SEC Rule 16b-3 or any successor
rule thereto; and become exercisable in four equal annual installments
beginning on November 19, 1997.
The table below shows information concerning Chemed stock options exercised
during 1997 and the year-end number and value of unexercised Chemed stock
options held by the executive officers named in the Summary Compensation Table.
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
AGGREGATED CHEMED STOCK OPTION EXERCISES
IN 1997 AND YEAR-END STOCK OPTION VALUES
- ---------------------------------------------------------------------------------------------------------------------------
NUMBER
OF NUMBER OF SECURITIES VALUE OF UNEXERCISED
SHARES UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
ACQUIRED VALUE OPTIONS AT 12/31/97 (#) AT 12/31/97 ($)
ON EXERCISE REALIZED --------------------------- --------------------------------------
NAME (#) ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
E. L. Hutton 25,000 $211,750 74,750 46,250 $518,952 $232,969
K. J. McNamara 15,000 127,960 30,000 29,500 176,649 149,382
P. C. Voet 3,750 29,220 2,000 6,000 4,750 30,972
T. S. O'Toole 4,250 61,370 35,125 20,875 249,069 105,373
S. E. Laney 15,000 170,320 41,625 20,875 318,247 105,373
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
9
<PAGE> 12
The table below shows information concerning National stock options granted
in 1997 to the named executives in the Summary Compensation Table. In connection
with the consummation of the Company's sale of National to Unisource Worldwide,
Inc., effective September 30, 1997, all of the outstanding National stock
options vested in full. In lieu of receiving stock, holders of National stock
options received $21.00 for each outstanding option, less the respective option
price.
<TABLE>
<CAPTION>
NATIONAL STOCK OPTION GRANTS IN 1997
- ---------------------------------------------------------------------------------------------------------------------------
INDIVIDUAL GRANTS
- ---------------------------------------------------------------------------------------------------------------------------
% OF
TOTAL
NUMBER OF OPTIONS
SECURITIES GRANTED
UNDERLYING TO
OPTIONS EMPLOYEES EXERCISE
GRANTED IN 1997 PRICE EXPIRATION
NAME (1) (#) (2) ($/SHARE) DATE
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
E. L. Hutton 25,000 18.4% $13.00 5/19/07
K. J. McNamara 3,500 2.5 13.00 5/19/07
P. C. Voet 25,000 18.4 13.00 5/19/07
T. S. O'Toole 1,000 1.0 13.00 5/19/07
S. E. Laney 2,000 1.4 13.00 5/19/07
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) These options, which were granted on May 19, 1997, provided for the
purchase price of option shares equal to the fair market value of National
Common Stock on that date; were transferable by will, by the laws of
descent and distribution, pursuant to a qualified domestic relations order
or to certain family members, if permitted under SEC Rule 16b-3 or any
successor rule thereto; and became exercisable in four equal annual
installments beginning on November 19, 1997.
(2) Percentage of total options granted to employees is based on the total
number of options granted to Chemed and National employees.
The table below shows information concerning National stock options which
were either exercised during 1997 or cashed out in connection with the sale of
National to Unisource Worldwide, Inc. by the executive officers named in the
Summary Compensation Table.
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
AGGREGATED NATIONAL STOCK OPTION EXERCISES
AND STOCK OPTIONS CASHED OUT IN 1997
- ---------------------------------------------------------------------------------------------------------------------------
NUMBER OF SHARES
ACQUIRED ON EXERCISE VALUE REALIZED
NAME OR CASHED OUT IN 1997 (#) ($)
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
E. L. Hutton 113,600 $ 870,425
K. J. McNamara 13,500 124,870
P. C. Voet 132,500 1,141,800
T. S. O'Toole 4,000 34,750
S. E. Laney 6,813 60,506
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
10
<PAGE> 13
EMPLOYMENT AGREEMENTS
The Company has entered into employment agreements with Messrs. E. L. Hutton,
McNamara, Voet and O'Toole and Ms. Laney. Mr. Hutton's employment agreement
provides for his continued employment as Chairman and Chief Executive Officer of
the Company through May 3, 1999, subject to earlier termination under certain
circumstances, at a base salary of $590,000 per annum or such higher amounts as
the Board of Directors may determine, as well as participation in incentive
compensation plans, stock incentive plans and other benefit plans. In the event
of termination without cause, the agreement provides that Mr. Hutton will
receive severance payments equal to 150 percent of his then current base salary,
the amount of incentive compensation most recently paid or approved in respect
of the previous year, and the fair market value of all stock awards which have
vested during the 12 months prior to termination for the balance of the term of
the agreement. Messrs. McNamara, Voet and O'Toole and Ms. Laney have employment
agreements which provide for their continued employment as senior executives of
the Company through May 3, 2002 and are identical in all material respects to
that of Mr. Hutton, except their respective agreements provide for a base salary
of $283,728, $289,500, $171,525, and $174,825 per annum or such higher amounts
as the Board of Directors may determine. In addition, each agreement for Messrs.
Hutton, McNamara and Voet and Ms. Laney provides for the officer's nomination as
a director of the Company.
COMPARATIVE STOCK PERFORMANCE
The graph below compares the yearly percentage change in the Company's
cumulative total stockholder return on Capital Stock (as measured by dividing
(i) the sum of (A) the cumulative amount of dividends for the period December
31, 1992 to December 31, 1997, assuming dividend reinvestment, and (B) the
difference between the Company's share price at December 31, 1992 and December
31, 1997; by (ii) the share price at December 31, 1992) with the cumulative
total return, assuming reinvestment of dividends, of the (1) S & P 500 Stock
Index and (2) Dow Jones Industrial Diversified Index.
11
<PAGE> 14
CHEMED CORPORATION
CUMULATIVE TOTAL STOCKHOLDER RETURN FOR
FIVE-YEAR PERIOD ENDING DECEMBER 31, 1997
[GRAPH]
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------
DECEMBER 31 . . . 1992 1993 1994 1995 1996 1997
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Chemed Corporation 100.00 119.57 139.05 171.78 170.35 204.39
- ------------------------------------------------------------------------------------------------------------
S&P 500 100.00 110.08 111.53 153.45 188.68 251.63
- ------------------------------------------------------------------------------------------------------------
Dow Jones Industrial Diversified 100.00 122.19 112.07 146.76 189.89 248.91
- ------------------------------------------------------------------------------------------------------------
</TABLE>
12
<PAGE> 15
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information as of December 31, 1997 with
respect to the only person who is known to be the beneficial owner of more than
5 percent of Capital Stock:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------
NAME AND ADDRESS AMOUNT AND NATURE OF PERCENT OF
OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP CLASS
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C>
The Fifth Third Bank 1,403,651 shares; Trustee of the Company's 13.9%
Fifth Third Center Savings and Investment Plan, Employee Stock
Cincinnati, Ohio Ownership Plans and Excess Benefit Plan (1)
- -----------------------------------------------------------------------------------------------------------
(1) Shared voting power, 1,403,651 shares; shared dispositive power, 1,403,651 shares.
- -----------------------------------------------------------------------------------------------------------
</TABLE>
The following table sets forth information as of December 31, 1997 with
respect to Capital Stock beneficially owned by all nominees and directors of the
Company, the executive officers named in the Summary Compensation Table and the
Company's directors and executive officers as a group:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------
AMOUNT AND NATURE PERCENT OF
NAME OF BENEFICIAL OWNERSHIP (1) CLASS (2)
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C>
E. L. Hutton 45,293 Direct
74,750 Option
4,967 Trustee
J. H. Devlin 10,219 Direct
9,500 Option
C. H. Erhart, Jr. 1,500 Direct
J. F. Gemunder 6,551 Direct
5,000 Option
L. J. Gillis 2,916 Direct
3,500 Option
P. P. Grace 200 Direct
T. C. Hutton 26,007 Direct
9,000 Option
5,467 Trustee (3)
W. L. Krebs 2,621 Direct
S. E. Laney 32,128 Direct
41,625 Option
Trustee (3)
K. J. McNamara 25,002 Direct
30,000 Option
Trustee (3)
J. M. Mount 7,120 Direct
600 Trustee
T. S. O'Toole 22,006 Direct
35,125 Option
- -----------------------------------------------------------------------------------------------------------
</TABLE>
13
<PAGE> 16
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------
AMOUNT AND NATURE PERCENT OF
NAME OF BENEFICIAL OWNERSHIP (1) CLASS (2)
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C>
D. W. Robbins, Jr. 2,000 Direct
D. E. Saunders 814 Direct
P. C. Voet 29,769 Direct
2,000 Option
Trustee (3)
G. J. Walsh III 1,100 Direct
Directors and 230,640 Direct 2.3%
Executive Officers 232,100 Option 2.3%
as a Group 61,620 Trustee (4)
(17 persons)
- -----------------------------------------------------------------------------------------------------------
</TABLE>
FOOTNOTES TO STOCK OWNERSHIP TABLE
(1) Includes securities beneficially owned (a) by the named persons or group
members, their spouses and their minor children (including shares of
Capital Stock allocated as of December 31, 1997 to the account of each
named person or member of the group under the Company's Savings and
Investment Plan and under the Company's ESOP or, with respect to Mr.
Gemunder, allocated to his account as of December 31, 1997 under the
Omnicare Employees Savings and Investment Plan), (b) by trusts and
custodianships for their benefit and (c) by trusts and other entities as to
which the named person or group has or shares the power to direct voting or
investment of securities. "Direct" refers to securities in categories (a)
and (b) and "Trustee" to securities in category (c). Where securities would
fall into both "Direct" and "Trustee" classifications, they are included
under "Trustee" only. "Option" refers to shares which the named person or
group has a right to acquire within 60 days from December 31, 1997. For
purposes of determining the Percent of Class, all shares subject to stock
options which were exercisable within 60 days from December 31, 1997 were
assumed to have been issued.
(2) Percent of Class under 1.0 percent is not shown.
(3) Messrs. T. Hutton, McNamara and Voet and Ms. Laney are trustees of the
Chemed Foundation which holds 56,153 shares of Capital Stock over which the
trustees share both voting and investment power. This number is included in
the total number of "Trustee" shares held by the Directors and Executive
Officers as a Group but is not reflected in the respective holdings of the
individual trustees.
(4) Shares over which more than one individual holds beneficial ownership have
only been counted once in calculating the aggregate number of shares owned
by Directors and Executive Officers as a Group.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Pursuant to Section 16(a) of the Securities Exchange Act of 1934 and the
regulations thereunder, the Company's executive officers and directors and
persons who own more than 10 percent of Capital Stock are required to file
reports with respect to their ownership and changes in ownership of Capital
Stock with the Securities and Exchange Commission ("SEC"). In addition, such
persons are required to forward copies of such reports to the Company. Based on
a review of the copies of such reports furnished to the Company and on the
written representation of such non-reporting persons that, with respect to 1997,
no reports on Form 5 were required to be filed with the SEC, except for Mr.
Gemunder, the Company believes that, during the period January 1, 1997 through
December 31, 1997, the Company's executive officers and directors and
greater-than-10 percent stockholders have complied with all Section 16(a)
reporting requirements. Mr. Gemunder did not report the grant of an unrestricted
stock award covering 100 shares of Capital Stock.
14
<PAGE> 17
RATIFICATION OF SELECTION OF INDEPENDENT ACCOUNTANTS
The Board of Directors has selected the firm of Price Waterhouse LLP as
independent accountants for the Company and its consolidated subsidiaries for
the year 1998. This firm has acted as independent accountants for the Company
and its consolidated subsidiaries since 1970. Although the submission of this
matter to the stockholders is not required by law or by the By-Laws of the
Company, the selection of Price Waterhouse LLP will be submitted for
ratification at the Annual Meeting. The affirmative vote of a majority of the
shares represented at the meeting, with abstentions having the effect of
negative votes and broker nonvotes deemed to be absent shares, will be necessary
to ratify the selection of Price Waterhouse LLP as independent accountants for
the Company and its consolidated subsidiaries for the year 1998. If the
selection is not ratified at the meeting, the Board of Directors will reconsider
its selection of independent accountants.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR RATIFICATION.
It is expected that a representative of Price Waterhouse LLP will be present
at the Company's Annual Meeting. Such representative shall have the opportunity
to make a statement if he desires to do so and shall be available to respond to
appropriate questions raised at the meeting.
STOCKHOLDER PROPOSALS
Any proposals by stockholders intended to be included in the proxy materials
for presentation at the 1999 Annual Meeting of Stockholders must be in writing
and received by the Secretary of the Company no later than December 1, 1998.
OTHER MATTERS
As of the date of this Proxy Statement, the management knows of no other
matters which will be presented for consideration at the Annual Meeting.
However, if any other business should come before the meeting, the persons named
in the enclosed proxy (or their substitutes) will have discretionary authority
to take such action as shall be in accordance with their best judgment.
EXPENSES OF SOLICITATION
The expense of soliciting proxies in the accompanying form will be borne by
the Company. The Company will request banks, brokers and other persons holding
shares beneficially owned by others to send proxy materials to the beneficial
owners and to secure their voting instructions, if any. The Company will
reimburse such persons or institutions for their expenses in so doing. In
addition to solicitation by mail, officers and regular employees of the Company
may, without extra remuneration, solicit proxies personally, by telephone or by
telegram from some stockholders if such proxies are not promptly received. The
Company has also retained D. F. King & Co., Inc., a proxy soliciting firm, to
assist in the solicitation of such proxies at a cost which is not expected to
exceed $7,500 plus reasonable expenses. This Proxy Statement and the
accompanying Notice of Meeting are sent by order of the Board of Directors.
Naomi C. Dallob
Secretary
March 31, 1998
15
<PAGE> 18
CHEMED CORPORATION
2600 CHEMED CENTER
255 EAST FIFTH STREET PLEASE MARK, SIGN, DATE AND RETURN PROXY
CINCINNATI, OHIO 45202 CARD PROMPTLY USING THE ENCLOSED ENVELOPE.
---------------------------------------------------------------------------
This proxy is solicited by the Board of Directors for the Annual Meeting
of Stockholders, May 18, 1998.
P
R The undersigned hereby appoints E. L. Hutton, K. J. McNamara and
O N. C. Dallob as Proxies, each with the power to appoint a substitute,
X and hereby authorizes them to represent and to vote, as designated on
Y the reverse side, all the shares of stock of Chemed Corporation held of
record by the undersigned on March 19, 1998, at the Annual Meeting of
Stockholders to be held on May 18, 1998, or at any adjournment thereof.
(continued and to be signed on reverse side)
FOLD AND DETACH HERE
CHEMED LOGO
<PAGE> 19
(continued from other side) Please mark
your votes as
indicated in [X]
this example
(1) Election of Directors (mark only one box):
FOR all FOR nominees WITHHOLD
nominees listed EXCEPT ALL
listed. those whose AUTHORITY
names I have to vote in the
stricken. selection of
directors.
[ ] [ ] [ ]
Edward L. Hutton Lawrence J. Gillis John M. Mount
Kevin J. McNamara Patrick P. Grace Timothy S. O'Toole
James H. Devlin Thomas C. Hutton D. Walter Robbins, Jr.
Charles H. Erhart, Jr. Walter L. Krebs Donald E. Saunders
Joel F. Gemunder Sandra E. Laney Paul C. Voet
George J. Walsh III
(2) Ratifying the selection of independent accountants.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
(3) In their discretion, the Proxies are authorized to vote upon such
other business as may properly come before the meeting.
IF NO CHOICE IS SPECIFIED, THIS PROXY WILL BE VOTED FOR PROPOSALS (1) AND (2).
NOTE: Please sign as name appears hereon. Joint owners should each sign. When
signed on behalf of a corporation, partnership, estate, trust, or other
stockholder, state your title or capacity or otherwise indicate that you are
authorized to sign.
(Be sure to date Proxy)
Signature__________________ Signature_________________ Dated____________, 1998.
FOLD AND DETACH HERE
CHEMED LOGO
