<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the registrant /X/
Filed by a party other than the registrant / /
Check the appropriate box:
/ / Preliminary proxy statement
/X/ Definitive proxy statement
/ / Definitive additional materials
/ / Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
THE DEXTER CORPORATION
(Name of Registrant as Specified in Its Charter)
THE DEXTER CORPORATION
(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (Check the appropriate box):
/X/ $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2).
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transactions applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:(1)
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
/ / 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 registrations 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:
- --------------------------------------------------------------------------------
- ---------------
(1) Set forth the amount on which the filing fee is calculated and state how
it was determined.
<PAGE> 2
(LOGO) THE DEXTER CORPORATION
ONE ELM STREET - WINDSOR LOCKS, CONNECTICUT 06096 - 203/627-9051
NOTICE OF ANNUAL MEETING
March 9, 1995
The annual meeting of the shareholders of The Dexter Corporation (the
"Company") will be held at The Hartford Club, 46 Prospect Street, Hartford,
Connecticut, on Thursday, April 27, 1995 at 10:00 A.M., local time, for the
following purposes:
(1) To elect directors;
(2) To ratify the selection by the Company's Board of Directors of the firm
of Coopers & Lybrand as auditor of the Company for the year 1995;
(3) To consider and act upon a shareholder proposal that the Board of
Directors adopt a policy concerning severance agreements with officers
and directors; and
(4) To transact such other business as may properly come before the
meeting.
The Board of Directors has fixed the close of business on February 24, 1995
as the record date for the determination of shareholders entitled to notice of
and to vote at the meeting.
By order of the Board of Directors,
BRUCE H. BEATT,
Secretary
You are cordially invited to attend the meeting. Whether or not you plan to
attend the meeting, please indicate your votes on the enclosed proxy and date,
sign and return it in the addressed envelope which requires no postage. If you
wish, you may withdraw your proxy at any time prior to the voting.
<PAGE> 3
(LOGO) THE DEXTER CORPORATION
ONE ELM STREET - WINDSOR LOCKS, CONNECTICUT 06096 - 203/627-9051
March 9, 1995
PROXY STATEMENT
This proxy statement is furnished to the shareholders of The Dexter
Corporation (the "Company"), in connection with the solicitation of proxies to
be used in voting at the annual meeting of the shareholders of the Company to be
held on Thursday, April 27, 1995. The accompanying proxy is solicited on behalf
of the Board of Directors of the Company. This Proxy Statement and the
accompanying proxy were first mailed to shareholders on March 9, 1995.
A person giving the accompanying proxy has the power to revoke it at any
time before the voting.
The Company will bear the costs of the solicitation of proxies, which may
include the reasonable expenses of brokerage firms and others for forwarding
proxies and proxy materials to the beneficial owners of the Common Stock of the
Company. In addition, the Company has retained Morrow & Co., Inc., 909 Third
Avenue, 20th Floor, New York, NY 10022, to assist in soliciting proxies, for
which services the Company will pay a fee of $5,000, plus handling, postage and
out-of-pocket expenses. In addition to the use of the mails, proxies may be
solicited by employees of the Company personally or by telephone or telegram. An
additional fee will be paid to Morrow & Co., Inc. if it is engaged to solicit
proxies by telephone.
VOTING SECURITIES
The only outstanding voting securities of the Company are the shares of its
Common Stock, $1 par value, 24,415,454 of which were outstanding as of February
24, 1995, and only shareholders of record at the close of business on that date
will be entitled to vote at the meeting. Each share is entitled to one vote.
SHARE OWNERSHIP
The following table sets forth information, as of December 31, 1994, with
respect to the beneficial ownership of shares of the Common Stock of the Company
by (1) certain major shareholders of the Company, (2) each director and nominee
for director of the Company, (3) each of the executive officers named in the
Summary Compensation Table set forth below, and (4) all directors, nominees and
executive officers of the Company as a group. Such beneficial ownership is
reported in accordance with the rules of the Securities and Exchange Commission,
under which a person may be deemed to be the beneficial owner of shares of such
Common Stock if such person has or shares the power to vote or dispose of such
shares or has the right to acquire beneficial ownership of such shares within 60
days (for example, through the exercise of an option). Accordingly, the shares
shown in the table as beneficially owned by certain individuals may include
shares owned by certain members of their respective families. Because of such
rules more than one person may be deemed to be the beneficial owner of the same
shares. The inclusion of the shares shown in the table is not necessarily an
admission of beneficial ownership of those shares by the person indicated.
<TABLE>
<CAPTION>
SHARES OF
COMMON STOCK PERCENTAGE OF
BENEFICIALLY COMMON STOCK
SHAREHOLDERS OWNED(1)(6) OUTSTANDING(1)
------------ ------------ ---------------
<S> <C> <C>
Mitchell Hutchins Institutional Investors Inc. and related
entities, 1285 Avenue of the Americas, New York, New York
10019....................................................... 2,454,800 10.05%(2)
State Farm Mutual Automobile Insurance Company and related
entities, One State Farm Plaza, Bloomington, Illinois
61701....................................................... 1,276,873 5.24%(2)
David L. Coffin, c/o The Dexter Corporation, One Elm Street,
Windsor Locks, Connecticut 06096............................ 726,493 2.98%(3)
David L. Coffin, Deborah L. Coffin, David L. Coffin, Jr. and
Fleet Bank, N.A., Trustees under deed dated April 30, 1957
of Dexter D. Coffin, for David L. Coffin et al., c/o Fleet
Bank, N.A., One Constitution Plaza, Hartford, Connecticut
06115....................................................... 665,852 2.73%(4)(7)
</TABLE>
1
<PAGE> 4
<TABLE>
<CAPTION>
SHARES OF
COMMON STOCK PERCENTAGE OF
BENEFICIALLY COMMON STOCK
SHAREHOLDERS OWNED(1)(6) OUTSTANDING(1)
------------ ------------ ---------------
<S> <C> <C>
Dexter D. Coffin, Jr., Mary K. Coffin, Andrew C. Chase and
Fleet Bank, N.A., Trustees under deed dated April 30, 1957
of Dexter D. Coffin, for Dexter D. Coffin, Jr. et al., c/o
Fleet Bank, N.A., One Constitution Plaza, Hartford,
Connecticut 06115........................................... 1,075,716 4.41%(5)(7)
Directors, Nominees and Executive Officers:
K. Grahame Walker............................................. 157,531 *
Robert E. McGill, III......................................... 59,404 *
T. Daniel Clark............................................... 32,407 *
Kathleen Burdett.............................................. 17,966 *
R. Barry Gettins.............................................. 30,375 *
Charles H. Curl............................................... 700 *
Bernard M. Fox................................................ 1,500 *
Robert M. Furek............................................... 1,200 *
Martha Clark Goss............................................. 815 *
Peter G. Kelly................................................ 1,150 *
Jean-Francois Saglio.......................................... 700 *
Glen L. Urban................................................. 700 *
George M. Whitesides.......................................... 2,200 *
All Directors, Nominees and Executive Officers as a
Group (16 persons).......................................... 356,412 1.46%
</TABLE>
- ---------------
(1) The shares reported above as beneficially owned by the following persons
include shares which may be purchased within 60 days following December 31,
1994 by the exercise of stock options granted under the Company's stock
option plans: K. Grahame Walker -- 107,249; Robert E. McGill, III -- 48,334;
T. Daniel Clark --26,150; Kathleen Burdett -- 15,616; R. Barry
Gettins -- 25,625; and "All Directors, Nominees and Executive Officers as a
Group" -- 347,447. The shares reported above also include shares issued to
the following persons pursuant to the Long Term Incentive Plan as more fully
described on pages 9-10 of this proxy statement: K. Grahame
Walker -- 12,500; Robert E. McGill, III -- 7,450; T. Daniel Clark -- 3,000;
Kathleen Burdett -- 2,350; R. Barry Gettins -- 4,000; and "All Directors,
Nominees and Executive Officers as a Group" -- 37,000. Shares issued
pursuant to the Long Term Incentive Plan are subject to forfeiture, but may
be voted by the holders thereof unless and until forfeited. Percentages of
Common Stock of less than 1% are indicated by an asterisk.
(2) Shareholdings as of December 31, 1994, as reported on the Schedule 13G most
recently filed by such shareholder.
(3) Of the 726,493 shares shown in the table as owned by David L. Coffin,
706,493 are held by Fleet Bank, N.A., trustee of a trust created by David L.
Coffin which he can revoke at any time, and 20,000 are held by Fleet Bank,
N.A. under an escrow agreement with David L. Coffin. Mr. Coffin's wife owns
an additional 17,375 shares, in which he disclaims any beneficial ownership.
(4) David L. Coffin is the primary beneficiary of this trust. The power to vote
and dispose of the shares owned by the trust is held by a majority of its
three individual trustees.
(5) Dexter D. Coffin, Jr. is the primary beneficiary of this trust. The power to
vote and dispose of the shares owned by this trust is held by a majority of
its three individual trustees. Mr. Coffin's wife owns an additional 225,000
shares, in which he disclaims any beneficial ownership.
(6) As of December 31, 1994, Mr. McGill also beneficially owned 5,125 shares of
the common stock of Life Technologies, Inc., an affiliate of the Company
("LTI"). "All Directors, Nominees and Executive Officers as a Group"
beneficially owned 68,902 shares of LTI common stock. Mr. McGill's adult
children owned an additional 1,000 shares of LTI common stock, in which Mr.
McGill disclaims any beneficial ownership.
(7) As reported on its most recent Schedule 13G, as of December 31, 1994, Fleet
Financial Group, Inc. (of which Fleet Bank, N.A. is a member) beneficially
owned 32,191 shares in addition to the shares held in the trusts described
in footnotes 3, 4 and 5.
2
<PAGE> 5
(1) ELECTION OF DIRECTORS
The Company's Restated Certificate of Incorporation and Bylaws provide for
three classes of directorships, with the term of one class expiring at each
annual meeting of the shareholders. Pursuant to the Bylaws, the Board of
Directors has determined that effective on the date of the 1995 annual meeting
the Company shall have nine directorships, three in the class whose term will
expire in 1998, three in the class whose term will expire in 1997 and three in
the class whose term will expire in 1996. At the 1995 annual meeting, three
directors are to be elected to constitute the class whose term will expire in
1998. It is intended that the shares represented by the accompanying proxy will
be voted for the election of Robert M. Furek, Martha Clark Goss and Glen L.
Urban to constitute the class whose term will expire in 1998, unless the proxy
specifies otherwise.
If for any reason any nominee should be unavailable to serve as a director
at the time of the meeting, a contingency which the Board of Directors does not
expect, the shares represented by the accompanying proxy may be voted for the
election in his stead of such person as may be determined by the holders of the
proxy, unless the proxy withholds authority to vote for all such nominees.
Nominees shall be elected by a majority of the shares represented in person or
by proxy at the meeting. An abstention shall be included in the determination of
the number of shares present and voting, but shall not be counted as a vote in
favor of the election of a nominee. Broker non-votes shall not be counted for
any purpose. The following information relates to the nominees listed above and
to the other directors of the Company.
NOMINEES
<TABLE>
<C> <S>
------------------- ROBERT M. FUREK Director
------------------- since 1990
Mr. Furek, age 52, has been president and chief executive officer of
Heublein Inc. (wine and spirits producer) since prior to 1989. Mr.
Furek is a director of Connecticut Mutual Life Insurance Company.
Mr. Furek is Chairman of the Compensation & Organization Committee
and is on the Audit Committee.
------------------- MARTHA CLARK GOSS Director
------------------- since 1992
Mrs. Goss, age 45, became the enterprise integrated control officer
of The Prudential Insurance Company of America in August 1994. Since
October 1993, she has been a senior vice president of The Prudential
Insurance Company of America. From March 1992 to August 1994, Mrs.
Goss was president of Prudential Asset Management Company, a
subsidiary of The Prudential Insurance Company of America, and from
January 1989 to March 1992, she was president and chief executive
officer of Prudential Power Funding Associates. Mrs. Goss is a
director of Foster Wheeler Corporation (engineering, construction and
manufacturing).
Mrs. Goss is on the Compensation & Organization Committee and the
Audit Committee.
------------------- GLEN L. URBAN Director
------------------- since 1989
Dr. Urban, age 54, has been dean of the Alfred P. Sloan School of
Management at the Massachusetts Institute of Technology since 1993,
and a professor of marketing and management sciences at the Alfred P.
Sloan School of Management since prior to 1989. Dr. Urban is a
director of Information Resources Inc. (develops and maintains
computerized data bases and software).
Dr. Urban is on the Audit Committee and the Environmental & Safety
Committee.
</TABLE>
3
<PAGE> 6
<TABLE>
<C> <S>
OTHER DIRECTORS
Term Expiring in 1997:
------------------- CHARLES H. CURL Director
------------------- since 1992
Mr. Curl, age 46, has been president of Curl & Associates
(independent management consulting firm) since 1990. From May 1989 to
December 1989, Mr. Curl was Vice President--Strategic Planning,
Direct Sales Group of Avon Products, Inc. (beauty products). From
December 1988 to May 1989, he was Vice President--International
Planning and Development of Avon Products, Inc.
Mr. Curl is on the Compensation & Organization Committee and the
Environmental & Safety Committee.
------------------- PETER G. KELLY Director
------------------- since 1994
Mr. Kelly, age 57, has been chairman of Updike, Kelly & Spellacy,
P.C., a Hartford, Connecticut based law firm, since prior to 1989. He
also has been chairman of Black, Manafort, Stone & Kelly (Alexandria,
Virginia), which is a subsidiary of Burson-Marsteller, a worldwide
public relations firm, since prior to 1989. Mr. Kelly is a director
of Phillips Screwdriver Corp. (manufacturer and licensor).
Mr. Kelly is on the Audit Committee and the Environmental & Safety
Committee.
------------------- JEAN-FRANCOIS SAGLIO Director
------------------- since 1991
Mr. Saglio, age 58, has been president of ERSO (a consulting company
in France) since 1994. From 1992 to 1994, he was senior vice
president of CEA Industrie (industrial and financial holding company
of the French Atomic Energy Commission). From 1991 to 1992, Mr.
Saglio was "ingenieur general des mines," French Ministry of
Industry, and from 1988 to 1990, he was senior vice president of
Roussel Uclaf (pharmaceuticals and chemicals). Mr. Saglio was a
member of the cabinet of M. Pompidou, President of France, and also
was director of the French Administration of Environment Protection.
Mr. Saglio is on the Environmental & Safety Committee.
Term Expiring in 1996:
------------------- BERNARD M. FOX Director
------------------- since 1990
Mr. Fox, age 52, has been president and chief executive officer of
Northeast Utilities (public utility holding company) since 1993. From
prior to 1989 to 1993, he was president and chief operating officer
of Northeast Utilities. Mr. Fox is a director of Shawmut National
Corp. (bank holding company) and of CIGNA Corp. (insurance) and is a
trustee of Northeast Utilities.
Mr. Fox is Chairman of the Audit Committee and is on the Compensation
& Organization Committee.
</TABLE>
4
<PAGE> 7
<TABLE>
<C> <S>
------------------- K. GRAHAME WALKER Director
------------------- since 1989
Mr. Walker, age 57, has been chairman, president and chief executive
officer of the Company since April 1993. From December 1989 to April
1993, he was president and chief executive officer of the Company,
and from April 1988 to December 1989, he was president and chief
operating officer of the Company. He is a director of Barnes Group
Inc. (manufacturer and distributor of industrial parts and supplies)
and Life Technologies, Inc. (life science/biotechnology products), an
affiliate of the Company.
------------------- GEORGE M. WHITESIDES Director
------------------- since 1985
Dr. Whitesides, age 55, has been a professor of chemistry at Harvard
University since prior to 1989. Dr. Whitesides is a director of
Advanced Magnetics, Inc. (medical diagnostic products), Hyperion
Catalysis, Inc. (medical products), Geltex, Inc. (physical research)
and Bioinformation Associates (management consulting services).
Dr. Whitesides is Chairman of the Environmental & Safety Committee
and is on the Audit Committee.
</TABLE>
The Board of Directors currently has ten members, two of whom are officers
of the Company. Robert E. McGill, III, whose term as director expires on the
date of the 1995 annual meeting, will not stand for reelection. Mr. McGill, age
63, served as Executive Vice President -- Finance and Administration of the
Company from 1989 to December 1994, when he retired.
The Board of Directors had six meetings in 1994, and six meetings have been
scheduled for 1995. The Board of Directors has appointed a Compensation &
Organization Committee, an Audit Committee and an Environmental & Safety
Committee, but has not appointed a nominating committee.
The Compensation & Organization Committee is composed of the following four
members, none of whom is an officer or employee of the Company or its
subsidiaries: Robert M. Furek, Chairman, Charles H. Curl, Bernard M. Fox and
Martha Clark Goss. This Committee monitors the Company's compensation policy,
with particular emphasis on pension and officer remuneration matters. It also is
concerned with Company and Board of Director organizational matters, and
administers the granting of restricted stock under the Company's Long Term
Incentive Plan and the granting of stock options under the Company's stock
option plans. Five meetings of the Compensation & Organization Committee were
held in 1994, and five meetings have been scheduled for 1995.
The Audit Committee is composed of the following six members, none of whom
is an officer or employee of the Company or its subsidiaries: Bernard M. Fox,
Chairman, Robert M. Furek, Martha Clark Goss, Peter G. Kelly, Glen L. Urban and
George M. Whitesides. Its meetings include, as a matter of course, private
sessions with the Company's independent certified public accountants and
internal auditors. The Committee recommends the selection of independent
accountants to the Board of Directors and is concerned with the scope and
quality of audit and quarterly reviews performed by the independent accountants
as well as other services provided by them to the Company. The Audit Committee
monitors the Company's policy on ethics and business conduct, the integrity of
officers, accounting policies, internal control and the quality of accounting
and published financial statements. Two meetings of the Audit Committee were
held in 1994, and three meetings have been scheduled for 1995.
The Environmental & Safety Committee is composed of the following five
members: George M. Whitesides, Chairman, Charles H. Curl, Peter G. Kelly,
Jean-Francois Saglio and Glen L. Urban. The Committee monitors and evaluates the
Company's environmental and safety policies and practices and formulates
recommendations in respect thereof to the Board of Directors. The Committee held
five meetings in 1994 and has scheduled five meetings to be held in 1995.
5
<PAGE> 8
During 1994, each of the directors attended at least 75% of the total
number of the meetings of the Board of Directors and of the committees on which
he served, except Messrs. Furek and Urban, each of whom attended 69% of those
meetings.
COMPENSATION OF DIRECTORS
In 1994, each director of the Company who was not an officer of the Company
or a subsidiary received (a) a fee of $1,000 for each meeting of the Board (with
the exception of meetings not held at the Company's headquarters, for which a
fee of $2,000 was paid), and (b) a fee of $1,000 for each meeting of a permanent
committee of the Board. For 1994, the annual retainers for serving on the Board
and for serving as Chairman of a permanent committee were $10,000 and $2,000,
respectively.
Pursuant to The 1994 Stock Plan for Outside Directors, which was approved
at the 1994 annual meeting of shareholders, on December 31, 1994, each outside
director was granted 200 shares of the Company's Common Stock (prorated for
those directors serving part of 1994). As of December 31, 1994, the value of 200
shares of the Company's Common Stock was $4,350.
In consideration of certain consulting services performed on behalf of the
Company by Charles H. Curl, the Company paid Mr. Curl $17,250.
CERTAIN TRANSACTIONS AND LEGAL MATTERS
At December 31, 1994, the Company had outstanding indebtedness of
$173,243,462 to The Prudential Insurance Company of America. In addition, at
December 31, 1994, the Company had $7,948,087 invested in a guaranteed
investment contract with The Prudential Insurance Company of America. Martha
Clark Goss serves as a senior vice president of The Prudential Insurance Company
of America.
Updike, Kelly & Spellacy, P.C., a law firm of which Mr. Kelly is chairman,
rendered legal services to the Company during 1994. The fees paid by the Company
to Updike, Kelly & Spellacy, P.C. for services rendered in 1994 totalled
approximately $30,000.
6
<PAGE> 9
COMPENSATION OF EXECUTIVE OFFICERS
SUMMARY COMPENSATION TABLE
The following table contains information concerning compensation paid or to
be paid to the chief executive officer ("CEO") and the other four most highly
compensated executive officers of the Company for services rendered to the
Company and its subsidiaries during the past three completed fiscal years. The
compensation reported in the following table includes all the compensation paid
to the named executive officers for any year during which at any time they
served as an executive officer. The information reported for Mr. Gettins, who
became an executive officer of the Company on April 23, 1992, includes all the
compensation paid to him for 1992.
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
------------
ANNUAL COMPENSATION AWARDS
------------------------------------------------ ------------
NAME AND OTHER ANNUAL(2) OPTIONS ALL OTHER
PRINCIPAL POSITION YEAR SALARY($)(1) BONUS($) COMPENSATION($) (#)(3) COMPENSATION($)(4)
- ---------------------------- ---- ------------ -------- --------------- ------------ ------------------
<S> <C> <C> <C> <C> <C> <C>
K. Grahame Walker, 1994 547,500 400,780 7,805 18,500 141,250
Chairman, President and 1993 500,250 300,520 6,686 25,000 120,119
Chief Executive Officer 1992 447,500 241,300 2,658 25,000 114,185
Robert E. McGill, III, 1994 313,500 207,920 5,364 10,000 248,879
Executive Vice President -- 1993 300,000 163,330 4,812 15,000 67,441
Finance and Administration 1992 277,500 136,175 3,362 15,000 72,207
T. Daniel Clark, 1994 177,000 120,517 1,466 5,000 12,572
Vice President and 1993 165,250 87,470 1,439 6,000 33,770
Senior Division President, 1992 152,250 70,305 925 6,000 31,170
Dexter Packaging Products
Kathleen Burdett, 1994 166,250 91,870 275 3,000 30,778
Vice President and 1993 150,625 68,670 235 4,000 27,770
Controller 1992 134,375 53,780 170 5,000 20,742
R. Barry Gettins, 1994 199,750 57,486 1,570 9,000 37,823
Vice President and 1993 184,000 90,213 1,063 8,000 37,670
Senior Division President, 1992 171,950 102,088 950 7,500 30,000
Dexter Nonwovens Division
</TABLE>
- ---------------
(1) The salaries reported above for Mr. Walker and Mr. McGill include payments
received by them from Life Technologies, Inc. as directors fees. The amount
of these payments in 1994, 1993 and 1992 were as follows: Mr.
Walker -- $15,000, $16,500 and $10,000; and Mr. McGill -- $17,000, $18,000
and $12,500.
(2) The other annual compensation reported above includes the amounts paid by
the Company to the executive officers for reimbursement of income taxes
incurred by the executive officers in connection with the term life
insurance premiums paid by the Company on the executive officer's behalf.
(3) As more fully described on pages 9-10 of this proxy statement, the named
executive officers were issued restricted shares pursuant to the Long Term
Incentive Plan, in addition to the stock options reported above. The
aggregate number of restricted shares held by the named executive officers
as of December 31, 1994 and the value thereof (as of the date of grant) are
as follows: K. Grahame Walker -- 12,500 shares, $318,750; Robert E. McGill,
III -- 7,450 shares, $189,975; T. Daniel Clark -- 3,000 shares, $76,500;
Kathleen Burdett -- 2,350 shares, $59,925; and R. Barry Gettins -- 4,000
shares, $102,000. Unless and until the restricted shares are forfeited,
dividends will be paid on such shares.
(4) The other compensation reported above is composed of three principal
components: (a) the contribution payable to the Employees' Savings and
Profit Sharing Retirement Income Trust, (b) the benefit payable under the
Amended and Restated Retirement Equalization Plan, and (c) term life
insurance premiums. The respective amounts for each of the named executive
officers are as follows: K. Grahame Walker -- $19,358, $112,563 and $9,329;
Robert E. McGill, III -- $19,330, $73,500 and $6,049; T. Daniel
Clark -- $10,618, $0 and $1,954; Kathleen Burdett -- $19,218, $11,201 and
$359; and R. Barry Gettins -- $19,292, $16,359 and $2,172. The other
compensation reported for Mr. McGill for 1994 also includes a severance
benefit ($150,000) which was paid to Mr. McGill on December 31, 1994, as
more fully described on page 12 of this proxy statement.
7
<PAGE> 10
OPTION GRANTS IN LAST FISCAL YEAR
The following table discloses information concerning individual grants of
stock options made during the last completed fiscal year to the executive
officers named in the Summary Compensation Table.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT
INDIVIDUAL GRANTS ASSUMED ANNUAL RATES OF
- ----------------------------------------------------------------------------------------- STOCK PRICE
NUMBER OF APPRECIATION
SECURITIES FOR OPTION TERM
UNDERLYING % OF TOTAL OPTIONS EXERCISE -----------------------
OPTIONS GRANTED TO EMPLOYEES PRICE EXPIRATION 5% 10%
NAME GRANTED(#) IN FISCAL YEAR ($/SHARE) DATE ($) (A) ($) (A)
- --------------------- ---------- -------------------- --------- ------------------ -------- ---------
<S> <C> <C> <C> <C> <C> <C>
K. Grahame Walker.... 6,167 3.9% $ 25.50 February 21, 2000 $53,480 $121,328
6,167 3.9% $ 25.50 February 21, 2001 $64,017 $149,186
6,166 3.9% $ 25.50 February 21, 2002 $75,072 $179,810
Robert E. McGill,
III................ 3,333 2.1% $ 25.50 February 21, 2000 $28,908 $65,583
3,333 2.1% $ 25.50 February 21, 2001 $34,604 $80,641
3,334 2.1% $ 25.50 February 21, 2002 $40,592 $97,224
T. Daniel Clark...... 1,667 1.1% $ 25.50 February 21, 2000 $14,454 $32,791
1,667 1.1% $ 25.50 February 21, 2001 $17,302 $40,320
1,666 1.1% $ 25.50 February 21, 2002 $20,284 $48,583
Kathleen Burdett..... 1,000 .6% $ 25.50 February 21, 2000 $8,672 $19,675
1,000 .6% $ 25.50 February 21, 2001 $10,381 $24,192
1,000 .6% $ 25.50 February 21, 2002 $12,175 $29,162
R. Barry Gettins..... 3,000 1.9% $ 25.50 February 21, 2000 $26,017 $59,024
3,000 1.9% $ 25.50 February 21, 2001 $31,143 $72,577
3,000 1.9% $ 25.50 February 21, 2002 $36,525 $87,485
</TABLE>
- ---------------
(a) The five percent and ten percent rates of appreciation were set by the
Securities and Exchange Commission and are not intended to forecast future
appreciation of the Company's Common Stock. No gain to the optionees is
possible without an increase in stock price, which would benefit all
shareholders commensurately. At the five percent and ten percent annual
rates of stock appreciation, the stock price would be $37.68 and $54.66,
respectively, in the year 2002, and the total value realized by all the
shareholders would be $297,240,234 and $711,942,045, respectively, based on
the shares outstanding at December 31, 1994.
The option grants described in the foregoing table were made pursuant to
The Dexter Corporation 1988 Stock Option Plan (the "Option Plan"). On February
21, 1994, three grants of stock options were made to each of the executive
officers named in the Summary Compensation Table. The first grant will vest on
February 21, 1995, the second grant will vest on February 21, 1996, and the
third grant will vest on February 21, 1997. All grants become exercisable
without regard to any performance-based conditions upon vesting. All options
expire five years after vesting. The exercise price for all options granted in
1994 under the Option Plan is the fair market value per share of the Company's
Common Stock on the date of grant and is not subject to change. The Option Plan
does not permit the grant of stock appreciation rights, or other instruments, in
tandem with options.
8
<PAGE> 11
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES
The table set forth below discloses certain information concerning the
exercise of stock options during the last completed fiscal year by the executive
officers named in the Summary Compensation Table as well as certain information
concerning the number and value of unexercised options.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES
<TABLE>
<CAPTION>
NUMBER OF VALUE OF
SECURITIES UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS AND SARS OPTIONS AND SARS
AT FY-END(#) AT FY-END($)(A)
SHARES
ACQUIRED VALUE EXERCISABLE/ EXERCISABLE/
NAME ON EXERCISE(#) REALIZED($) UNEXERCISABLE UNEXERCISABLE
- ------------------------------ -------------- ----------- --------------------- -----------------
<S> <C> <C> <C> <C>
K. Grahame Walker............. 107,249/43,501 $ 34,100/$0
Robert E. McGill, III......... 48,334/25,000 $ 1,250/$0
T. Daniel Clark............... 900 $ 8,307 26,150/11,000 $ 13,252/$0
Kathleen Burdett.............. 15,616/ 7,334 $ 4,289/$0
R. Barry Gettins(b)........... 750 $ 13,844 25,625/16,834 $ 7,972/$0
</TABLE>
- ---------------
(a) The value of unexercised options was determined using the closing price of
the Company's Common Stock as of December 31, 1994.
(b) Mr. Gettins exercised 750 stock appreciation rights in tandem with his
exercise of 750 stock options. The sum of $13,844 represents the total value
realized on the exercise of both the stock appreciation rights and the stock
options.
LONG-TERM INCENTIVE PLANS -- AWARDS IN LAST FISCAL YEAR
The table set forth below discloses certain information concerning the
grant of restricted shares of the Company's Common Stock during the last
completed fiscal year to the executive officers named in the Summary
Compensation Table. The grants were made pursuant to the Company's 1994 Long
Term Incentive Plan.
9
<PAGE> 12
LONG-TERM INCENTIVE PLANS -- AWARDS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
PERFORMANCE ESTIMATED FUTURE PAYOUTS UNDER NON-STOCK
NUMBER OF OR OTHER PRICE-BASED PLANS
SHARES, UNITS PERIOD UNTIL ---------------------------------------------
OR OTHER MATURATION OR THRESHOLD(B) TARGET(C) MAXIMUM(C)
NAME RIGHTS PAYOUT(A) (# OF SHARES) (# OF SHARES) (# OF SHARES)
- --------------------------- ------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
K. Grahame Walker.......... 6,250 shares May 4, 1997 1,562 6,250 6,250
6,250 shares May 4, 2000 1,562 6,250 6,250
Robert E. McGill, III...... 3,725 shares May 4, 1997 931 3,725 3,725
3,725 shares May 4, 2000 931 3,725 3,725
T. Daniel Clark............ 1,500 shares May 4, 1997 375 1,500 1,500
1,500 shares May 4, 2000 375 1,500 1,500
Kathleen Burdett........... 1,175 shares May 4, 1997 294 1,175 1,175
1,175 shares May 4, 2000 294 1,175 1,175
R. Barry Gettins........... 2,000 shares May 4, 1997 500 2,000 2,000
2,000 shares May 4, 2000 500 2,000 2,000
</TABLE>
- ---------------
(a) The restricted shares reported in this table were granted to the named
executive officers on May 4, 1994, and are subject to two types of
restrictions: (a) restrictions based on the achievement by the Company of
certain financial targets during the three year period commencing on January
1, 1994 and ending on December 31, 1996 ("performance target restrictions"),
and (b) restrictions based on continuous employment by the Company over
specified periods of time ("time-lapse restrictions"). Seventy-five percent
of the restricted shares granted to each executive officer are subject to
both performance target restrictions and time-lapse restrictions. The
remaining twenty-five percent are subject solely to time-lapse restrictions,
which will lapse if the executive officer remains in the Company's
employment through the date set forth in this column.
(b) If the Company fails to achieve at least 85% of the financial targets
established for the performance target restrictions, then all the shares
subject to performance target restrictions will be forfeited. Thus, the
"Threshold" amount shown in this column is the number of restricted shares
which are subject solely to time-lapse restrictions.
(c) The "Target" amount reflects the number of shares for which the performance
target restrictions will lapse if the Company achieves 100% of the financial
targets. No additional shares will be awarded if the Company achieves more
than 100% of the financial targets. Accordingly, the "Maximum" amount is the
same as the "Target" amount.
PENSION PLANS
The Company maintains The Dexter Pension Plan for the employees of certain
divisions. Employees are eligible to participate in the pension plan after one
year of service and after attaining age 21 and become fully vested after five
years of service. The annual benefit payable upon normal retirement is equal to
the sum of: (i) 1.5% of a participant's average compensation times the
participant's years of service prior to January 1, 1976; (ii) 1% of the
participant's average annual compensation times the participant's years of
service after December 31, 1975; and (iii) .5% of the participant's average
annual compensation in excess of Social Security covered compensation times the
participant's years of service after December 31, 1975. For purposes of
calculating the annual benefit, a participant shall be credited with no more
than 35 years of service. The annual benefit payable upon normal retirement (age
65) is reduced or increased, respectively, if the participant elects an early
retirement or postponed retirement. Messrs. Walker and Clark, while employed by
divisions of the Company, each participated in the pension plan. The estimated
annual benefits payable under the pension plan to Messrs. Walker and Clark, upon
normal retirement, are $47,018 and $18,732, respectively. Messrs. McGill and
Gettins and Ms. Burdett are not participants in the pension plan.
The Company has a supplemental retirement plan intended to provide
retirement benefits, supplementing those provided under other plans, to certain
executive officers and key employees. The executive officers named in the
Summary Compensation Table are participants in the supplemental retirement plan.
Upon retirement, participants are entitled to receive an annual benefit equal to
55% of their average final compensation (the annual average of (a) salaries, and
(b) cash incentive payments, during the highest 60 consecutive calendar months
of a participant's last ten years as a participant in the plan) less all other
retirement benefits received (including the full primary Social Security benefit
and all retirement benefits
10
<PAGE> 13
from other Company-related plans and plans of other employers). Unless otherwise
stipulated by the Board of Directors, such annual benefit will be reduced
ratably for employment of less than, and will not be increased for employment of
more than, 20 years of service with the Company.
The following table shows the estimated annual benefit (prior to an offset
for other retirement benefits received) which participants are entitled to
receive under the supplemental retirement plan, on a straight life annuity basis
assuming retirement at age 65 in the indicated compensation classification with
certain years of service. If the annual retirement benefits payable to a
participant under other Company-related plans and plans of other employers (plus
his or her primary Social Security benefit) exceed the annual retirement benefit
shown in the table, the participant will instead receive the benefits payable
under those other plans.
<TABLE>
<CAPTION>
AVERAGE YEARS OF SERVICE
FINAL ------------------------------------------------------------
COMPENSATION 15 20 25 30 35
- ------------ -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
125,000... $ 51,563 $ 68,750 $ 68,750 $ 68,750 $ 68,750
150,000... 61,875 82,500 82,500 82,500 82,500
175,000... 72,188 96,250 96,250 96,250 96,250
200,000... 82,500 110,000 110,000 110,000 110,000
225,000... 92,813 123,750 123,750 123,750 123,750
250,000... 103,125 137,500 137,500 137,500 137,500
300,000... 123,750 165,000 165,000 165,000 165,000
350,000... 144,375 192,500 192,500 192,500 192,500
400,000... 165,000 220,000 220,000 220,000 220,000
450,000... 185,625 247,500 247,500 247,500 247,500
500,000... 206,250 275,000 275,000 275,000 275,000
</TABLE>
The number of credited years of service as of December 31, 1994 is 29 for
K. Grahame Walker, 20 for Robert E. McGill, III, 21 for T. Daniel Clark, 13 for
Kathleen Burdett, and 21 for R. Barry Gettins.
SEVERANCE AGREEMENTS
The Company has entered into agreements with the executive officers named
in the Summary Compensation Table and with certain other executive officers and
key employees of the Company which, in the event of a change of control, provide
for certain benefits in the following circumstances: (i) involuntary termination
of the individual's employment within 395 days of the change in control for
reasons other than death, permanent disability, attainment of age 65 or cause;
(ii) resignation within 395 days of the change of control for good reason; and
(iii) resignation for any reason during the thirty-day period immediately
preceding the expiration of the severance period. In such circumstances, the
employee shall be entitled to a severance payment equal to a certain percentage
(200% in the case of the executive officers named in the Summary Compensation
Table) of (i) the employee's base salary at the time of termination or
resignation, and (ii) the highest annual incentive compensation paid in any of
the three full years immediately prior to the change of control. In addition,
the employee will be entitled to a continuation of certain employee welfare
benefits for a certain period (two years in the case of the executive officers
named in the Summary Compensation Table) provided by the Company on the date of
the change of control, and the employee will be credited with a certain number
of additional years of service (two in the case of the executive officers named
in the Summary Compensation Table) for retirement income plan purposes. The
employees are also entitled to receive additional payments, if necessary, to
reimburse the employee for (i) any legal expenses, plus interest thereon,
incurred in enforcing or defending a severance agreement, and (ii) any excise
tax liability that may be imposed by reason of Section 4999 of the Internal
Revenue Code. For purposes of the severance agreements, the term "change of
control" means: (i) the Company is merged, consolidated or reorganized, (ii) the
Company sells substantially all of its assets, (iii) a person acquires
beneficial ownership of 19% or more of the Company's Common Stock, (iv) a
contract or transaction is entered into which will result in a change of control
within two years, or (v) the Company's board of directors changes within a two
year period such that the directors at the beginning of such two year period do
not constitute a majority of the directors at the end of such two year period.
11
<PAGE> 14
On December 31, 1994, Robert E. McGill, III resigned as an executive
officer of the Company. The Company has agreed to pay Mr. McGill the sum of
$300,000 ($150,000 of which was paid on December 31, 1994) and to continue
certain of Mr. McGill's employee benefits for a limited period of time.
REPORT OF COMPENSATION & ORGANIZATION COMMITTEE
ON EXECUTIVE COMPENSATION
The Compensation & Organization Committee ("Compensation Committee") is
responsible for, among other things, establishing the compensation policies
applicable to executive officers. The Compensation Committee is composed
exclusively of outside directors. There are presently four members: Robert M.
Furek, Chairman, Charles H. Curl, Bernard M. Fox and Martha Clark Goss.
OVERALL POLICY
The Company's executive compensation program is designed to be linked to
corporate performance and returns to shareholders. Of particular importance to
the Company up to this time has been the restructuring of the Company's
businesses into strategic segments of global markets in such a manner as to
preserve its ability to grow and enhance its competitiveness for the rest of the
decade and beyond. Shorter term performance, although scrutinized by the
Compensation Committee, stands behind issues of viability and furtherance of
strategic goals. To this end, the Company has developed an overall compensation
strategy and specific compensation plans that tie a significant portion of
executive compensation to the Company's success in meeting specified performance
goals and to growth of the Company's stock price. The overall objectives of this
strategy are to attract and retain the best possible executive talent, to
motivate these executives to achieve the goals inherent in the Company's
business strategy, to link executive and shareholder interests through equity-
based plans and to provide a compensation package that recognizes individual
contributions as well as overall business results.
Each year the Compensation Committee conducts a full review of the
Company's executive compensation program. This review includes a comprehensive
evaluation, based on compensation surveys prepared by independent compensation
consultants, of the competitiveness of the Company's compensation program and a
comparison of the Company's executive compensation to a peer group of public
corporations (the "Compensation Peer Group") which, in the view of the
Compensation Committee, represent the Company's most direct competitors for
executive talent. There are currently 16 companies in the Compensation Peer
Group, which is subject to occasional change as the Company or its competitors
change their focus, merge or are acquired, or as new competitors emerge. It is
the Compensation Committee's policy to target overall compensation for executive
officers of the Company at a level which is at the average paid for such
positions by the Compensation Peer Group. A variety of other factors, however,
including position and time in position, experience, and both company
performance and individual performance, will have an impact on individual
compensation amounts.
The Compensation Committee believes that the Compensation Peer Group
represents the group of companies for which remuneration data is available that
compete most directly with the Company for executive talent. It should be noted
that, while there are overlaps, the Compensation Peer Group is composed of a
different group of companies than is contained in either of the indices used in
the performance graph contained in this proxy statement.
The Compensation Committee approves the compensation of the executive
officers of the Company, including the individuals whose compensation is
detailed in this proxy statement, and reviews the compensation policies and pay
practices employed with respect to all the Company's other executive-level
employees. This is designed to ensure consistency throughout the executive
compensation program.
The key elements of the Company's executive compensation program in 1994
consisted of base salary, annual incentive compensation, stock options and
restricted stock awards. The Compensation Committee's policies with respect to
each of these elements, including the basis for the compensation awarded to the
CEO, are discussed below. In addition, while the elements of compensation
described below are considered
12
<PAGE> 15
separately, the Compensation Committee takes into account the full compensation
package afforded by the Company to the individual, including pension benefits,
supplemental retirement benefits, severance plans, insurance and other benefits,
as well as the programs described below.
BASE SALARIES
Base salaries for executive officers are established by evaluating, on an
annual basis, the performance of such individuals (which evaluation involves
management's consideration of such factors as responsibilities of the position
held, contribution toward achievement of the strategic plan, attainment of
specific individual objectives, interpersonal managerial skills and civic
involvement), and by reference to the marketplace for executive talent,
including a comparison to base salaries for comparable positions at companies
within the Compensation Peer Group.
The Compensation Committee took into account the CEO's performance, the
substantial restructuring of the Company, which the CEO has led over the past
several years, the compensation market for senior executives, and a substantial
reduction in the going forward cost of running the Company, which the CEO has
led, in establishing the CEO's base salary. Based upon this evaluation, the
Compensation Committee established a base salary of $545,000 for the period
commencing April 1, 1994 and ending March 31, 1995, an increase of 10% over the
$495,000 base salary paid to him during the immediately preceding 12 month
period.
ANNUAL INCENTIVE COMPENSATION
Annual incentive compensation accounts for a significant percentage of each
executive officer's compensation. Executive officers and other executive-level
employees participate in the Company's Executive Incentive Compensation Plan
("EIC Plan"), which is a pay-for-performance plan designed to compensate
executives for performance that increases shareholder value over time. The EIC
Plan is approved by the Compensation Committee and is reviewed annually.
The EIC Plan has two performance components: (1) corporate and/or division
financial performance and (2) the assessment by the Company's management of the
executive's individual performance. Each year the Compensation Committee reviews
the specific financial measures to be used and approves the target payout
amounts for all executive officers of the Company. The target payouts are
determined by reference to each executive's job classification as determined
pursuant to a Hay point system. The Hay point system evaluates jobs according to
the knowledge required to do the job, the intensity of thinking needed to solve
the problems commonly faced, and the accountability of the position. In 1994,
the sole financial measure for corporate financial performance, which was
approved by the Compensation Committee, was operating earnings (before interest
and taxes). The financial measure used in 1994 for individual divisions, on the
other hand, included several from a variety of factors, such as sales growth,
gross margin, growth in operating earnings, return on investment and strategic
milestones. These factors were weighted differently for each division to reflect
the corporate management's assessment of those issues that were in need of
emphasis, all in accordance with the Company's strategic plan.
The four most highly compensated executive officers other than the CEO were
eligible to receive incentive compensation payouts in 1994 ranging from 50% to
70% of their base salaries in the event that financial performance targets were
fully achieved, which amounts were subject to further adjustment, up or down,
based upon management's assessment of individual performance. Because operating
earnings of the Company (before interest and taxes) were .5% above the targeted
amount established by the Compensation Committee for 1994, and because the
Company's divisions did not all achieve the financial measures necessary for a
full payout, the actual payout amounts for these individuals ranged from 28% to
70% of their base salaries. The assessment of management as to the performance
of these individuals did not result in a significant (over 10%) reduction or
increase in the amount of the payout.
The CEO was eligible to receive an incentive compensation payout in 1994
equal to 75% of his base salary, which is the same as last year. There was no
reduction or increase in the CEO's incentive compensation payout based on an
assessment of the CEO's individual performance. Because operating earnings of
the Company (before interest and taxes) were .5% above the targeted amount
established by the Compensation Committee for 1994, the
13
<PAGE> 16
CEO's actual payout was approximately 75% of his base salary, or $400,780. This
represents an increase from the $300,520 of incentive compensation paid to the
CEO under the EIC Plan in 1993. This increase is attributable to the Company's
financial performance and to the increase in the CEO's base salary from 1993 to
1994.
Incentive compensation is paid quarterly although the amounts paid by the
EIC Plan are based on and adjusted for the Company's and/or a division's annual
performance. Because the purpose of the EIC Plan is to reward performance that
increases shareholder value over time, the plan requires that the return to
shareholders, apart from unusual items, exceeds the cost of capital (9.7% for
1994) before any executive incentive compensation is paid. There are also
minimum thresholds established for payouts to division employees, which
thresholds vary from division to division.
STOCK OPTIONS
The third component of executive compensation is the Company's stock option
plan, pursuant to which the Company has granted to executive officers and key
employees options to purchase shares of its Common Stock. Stock options are
granted with an exercise price equal to the market price of the Common Stock on
the date of grant, vest over three years and expire five years from the date of
vesting.
A total of 157,095 options were granted to executive officers and key
employees in 1994 under the Company's stock option plan, 18,500 of which were
granted to the CEO and 27,000 of which were granted (in the aggregate) to the
four other executive officers named in the Summary Compensation Table. The
number of options granted in 1994 was based upon the Hay points for each
position and management's assessment of individual performance.
It is presently the intention of the Compensation Committee to replace
stock options with restricted stock awards as the principal form of long term
incentive compensation to be awarded to the Company's executive officers and
other senior management in the future.
RESTRICTED STOCK AWARDS
The final component of executive compensation is the Company's 1994 Long
Term Incentive Plan, pursuant to which, in 1994, the Company granted restricted
stock awards to executive officers and other senior management.
A total of 64,250 shares of restricted stock were granted to executive
officers and other senior management in 1994, 12,500 of which were granted to
the CEO and 16,800 of which were granted (in the aggregate) to the four other
executive officers named in the Summary Compensation Table. The number of
restricted stock awards granted in 1994 was based upon the Hay points for each
position and management's assessment of individual performance.
Restricted stock awards are intended to align the interests of executives
with those of the shareholders. The shares of restricted stock issued to
executive officers and other senior management in 1994 are subject to two types
of restrictions: (a) restrictions based on the achievement by the Company of
certain financial performance targets during the three year period commencing on
January 1, 1994 and ending on December 31, 1996 ("performance target
restrictions") and (b) restrictions based on continuous employment of the
recipient over a specified period of time ("time-lapse restrictions").
Seventy-five percent of the restricted shares issued in 1994 are subject to both
performance target restrictions and time-lapse restrictions. The remaining 25
percent of the restricted shares are subject solely to time-lapse restrictions.
This approach is intended to incentivize the creation of shareholder value over
the long term.
DEDUCTIBILITY OF COMPENSATION
On December 20, 1993, the Internal Revenue Service issued proposed
regulations pursuant to Internal Revenue Code Section 162(m). These proposed
regulations were amended in 1994, but, as of the date of this proxy statement,
no final regulations have been issued. Section 162(m), which was added to the
Internal Revenue Code by the Omnibus Budget Reconciliation Act of 1993, limits
the amount of compensation a corporation may deduct as a business expense. That
limit, which applies to up to five executives individually, is
14
<PAGE> 17
$1 million per individual, per year, subject to certain specified exceptions.
All compensation payments in 1994 to the five executive officers named in the
Summary Compensation Table will be fully deductible. The Company will review the
final regulations after they are issued by the Internal Revenue Service and
determine what, if any, action is appropriate in regard to deductibility of
compensation payments in future years.
CONCLUSION
Through the programs described above, a very significant portion of the
Company's executive compensation is linked directly to individual and corporate
performance and stock price appreciation over the long term. The Compensation
Committee intends to continue and strengthen the policy of linking executive
compensation to corporate performance and returns to shareholders, recognizing
that the fluctuations of the business cycle from time to time may result in an
imbalance for a particular period.
Compensation & Organization Committee
Robert M. Furek, Chairman
Charles H. Curl
Bernard M. Fox
Martha Clark Goss
PERFORMANCE GRAPH
The following graph shows how an initial investment of $100 in the
Company's Common Stock would have compared to an equal investment in the S&P 500
Index or in the S&P Specialty Chemicals Index over the five-year period
beginning December 31, 1989 and ending December 31, 1994. The graph reflects
reinvestment of all dividends.
NOTE: The total shareholder return shown on the graph below is not
necessarily indicative of future returns on the Company's Common
Stock.
COMPARISON OF FIVE YEAR
CUMULATIVE TOTAL SHAREHOLDER RETURN
(ASSUMING AN INVESTMENT OF $100 ON DECEMBER 31, 1989)
<TABLE>
<CAPTION>
MEASUREMENT PERIOD THE DEXTER S&P 500 S&P SPECIALTY
(FISCAL YEAR COVERED) CORPORATION INDEX CHEMICALS INDEX
<S> <C> <C> <C>
1989 100.00 100.00 100.00
1990 100.14 96.89 96.11
1991 107.46 126.42 135.68
1992 133.10 136.05 143.73
1993 125.56 149.76 163.88
1994 120.68 151.74 143.07
</TABLE>
15
<PAGE> 18
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation & Organization Committee is composed of four members:
Robert M. Furek, Chairman, Charles H. Curl, Bernard M. Fox and Martha Clark
Goss. During 1994, none of the executive officers of the Company served as a
director of another entity, one of whose executive officers served as a director
of the Company. As described above under the heading "Certain Transactions and
Legal Matters," Martha Clark Goss serves as a senior vice president of The
Prudential Insurance Company of America, with which the Company has outstanding
indebtedness totalling $173,243,462.
(2) RATIFICATION OF SELECTION OF AUDITOR
The Board of Directors, upon recommendation of its Audit Committee, has
selected the firm of Coopers & Lybrand, independent certified public
accountants, to audit the accounts of the Company for the year 1995, and it is
proposed that the selection of such firm be ratified by the shareholders at the
meeting.
Coopers & Lybrand audited the accounts of the Company and certain employee
benefit plans for the year 1994. In connection with its audit function, Coopers
& Lybrand reviewed the Company's 1994 quarterly and annual reports to its
shareholders and certain filings with the Securities and Exchange Commission. In
addition, during 1994, Coopers & Lybrand provided other professional services to
the Company.
The Audit Committee approved in advance the nature of the professional
services for which the Company retained the firm of Coopers & Lybrand,
considering the possible effect of such retention on the independence of such
firm, and has determined that the services provided were within the scope of
such approval.
Representatives of Coopers & Lybrand are expected to be present at the
meeting and will have an opportunity to make a statement if they desire to do so
and will be available to respond to questions.
The Board of Directors recommends that the shareholders vote FOR the
proposal to ratify the selection of Coopers & Lybrand as auditor of the accounts
of the Company for the year 1995.
(3) SHAREHOLDER PROPOSAL CONCERNING SEVERANCE AGREEMENTS
Mr. William Steiner, 4 Radcliffe Drive, Great Neck, New York 11024, acting
on behalf of The William Steiner 1990 Trust, holder of 150 shares of the
Company's Common Stock, has requested that the following proposal be considered
at this year's meeting:
"RESOLVED, that the shareholders recommend that the board of directors adopt
a policy against entering into future agreements with officers and directors
of this corporation which provide compensation contingent on a change of
control of the corporation, unless such compensation agreements are
submitted to a vote of the shareholders and approved by a majority of shares
present and voting at the meeting.
SUPPORTING STATEMENT
Lucrative severance contracts awarded to senior corporate executives which
provide compensation contingent on a change of control, usually through a
merger or acquisition of the corporation, are known as "golden parachutes".
These contracts are awarded without shareholder approval.
The practice of providing these large cash awards to a small group of senior
corporate managers without shareholder approval has been a subject of public
outcry. In 1988, the U.S. Senate in emphasizing the potential conflict of
interest between management and shareholders created by these agreements
voted ninety eight to one to require shareholder approval of golden
parachutes which exceed three times annual compensation.
16
<PAGE> 19
Although final action was not taken, it is clear to me that the overwhelming
vote in favor of the measure reflects public sentiment against golden
parachutes. A shareholder vote would allow the corporation's owners to
decide for themselves whether golden parachutes are in their best interests.
As a founding member of the Investors Rights Association of America it is
clear to me that requiring a shareholder vote is necessary to address the
conflicts of interest between management and shareholders that arise in the
awarding of golden parachutes.
I URGE YOUR SUPPORT. VOTE FOR THIS RESOLUTION."
BOARD OF DIRECTORS RECOMMENDATION:
The Board recommends a vote AGAINST this proposal.
The Board believes that retaining the discretion to offer severance
agreements to the Company's officers and directors is an important means
available to the Board to attract and retain experienced and highly qualified
executives. Past experience has shown that severance agreements permit
executives to remain focused and objective during a critical situation and to
act decisively to protect the Company and stockholder value. For example, such
agreements act to deter efforts by executive headhunters who occasionally seek
to raid the executive talent pool of a company during a period of crisis or
transition. Requiring stockholder approval of severance agreements would weaken
the Board's flexibility to respond in the competitive marketplace, thereby
depriving the Company and its stockholders of the leadership necessary to ensure
steady growth and maximize stockholder value over the long term. The Company
needs the discretion to offer severance agreements to officers and directors
when management continuity is considered critical to the Company's continued
success.
The Company has entered into severance agreements with 20 senior
executives, the terms of which are described on pages 11-12 of this proxy
statement. It should be noted that the Company has fully disclosed the existence
and nature of these severance agreements for several years in past proxy
statements. It should also be noted that none of these severance agreements
provide for the kind of large cash awards referred to in the stockholder
proposal, i.e. awards which exceed three times annual compensation.
Accordingly, a vote AGAINST this proposal is recommended.
(4) OTHER MATTERS
The Board of Directors does not know of any matters which will be presented
for action at the meeting other than those described above and matters incident
to the conduct of the meeting. If, however, any other matters should come before
the meeting, it is intended that the shares represented by the accompanying
proxy will be voted on such matters in accordance with the discretion of the
holders of such proxy.
PROPOSALS OF SHAREHOLDERS
In order to be considered for inclusion in the Company's proxy statement
and form of proxy relating to next year's annual meeting of shareholders,
proposals of shareholders intended to be presented for action at that meeting
must be received at the principal executive offices of The Dexter Corporation,
One Elm Street, Windsor Locks, Connecticut 06096, marked for the attention of
the Secretary, by November 10, 1995.
Under the Company's Bylaws, notice of any other matter intended to be
presented by a shareholder for action at next year's annual meeting must be
addressed to the principal executive offices of The Dexter Corporation, One Elm
Street, Windsor Locks, Connecticut 06096, marked for the attention of the
Secretary, and must contain the information required by the Bylaws. The notice
must be received at the principal executive offices during the period from
December 22, 1995, through February 12, 1996, unless next year's annual meeting
is called for a date prior to February 12, 1996, in which case notice must be
received within fifteen days of when notice of the annual meeting is given.
17
<PAGE> 20
ANNUAL REPORT ON FORM 10-K
The Company's Annual Report on Form 10-K to the Securities and Exchange
Commission for 1994 will be sent without charge after March 31, 1995, to any
shareholder upon written request directed to:
The Dexter Corporation
Attention: Secretary
One Elm Street
Windsor Locks, CT 06096
By order of the Board of Directors,
BRUCE H. BEATT,
Secretary
18
<PAGE> 21
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE FOLLOWING NOMINEES
ITEM 1. ELECTION OF ALL DIRECTOR NOMINEES: Robert M. Furek, Martha Clark Goss
and Glen L. Urban (Pages 3-16)
FOR all nominees WITHHOLD *EXCEPTIONS
listed above *(except AUTHORITY (Instruction: To withhold authority to
as marked to the to vote for all vote for any individual nominee,
contrary.) nominees listed write that nominee's name on the space
above. provided below.)
_______________________________________
/ / / /
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" ITEM 2
ITEM 2. RATIFICATION OF AUDITORS
(PAGE 16)
FOR AGAINST ABSTAIN
/ / / / / /
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "AGAINST" ITEM 3
ITEM 3. SHAREHOLDER PROPOSAL CONCERNING
SEVERANCE AGREEMENTS (PAGE 16-17)
FOR AGAINST ABSTAIN
/ / / / / /
IF YOU DO NOT SIGN AND RETURN A PROXY, OR ATTEND THE MEETING,
YOUR SHARES CANNOT BE VOTED.
PLEASE SIGN THIS PROXY AND RETURN IT PROMPTLY WHETHER OR NOT YOU PLAN TO ATTEND
THE MEETING. IF SIGNING FOR A CORPORATION OR PARTNERSHIP OR AS AGENT, ATTORNEY
OR FIDUCIARY, INDICATE THE CAPACITY IN WHICH YOU ARE SIGNING. IF YOU DO ATTEND
THE MEETING AND DECIDE TO VOTE BY BALLOT, SUCH VOTE WILL SUPERSEDE THIS PROXY.
DATED____________________________________________________________________, 1995
______________________________________________________________________________
SIGNATURE
______________________________________________________________________________
SIGNATURE, IF HELD JOINTLY
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY PROMPTLY USING THE ENCLOSED
ENVELOPE.
FOLD AND DETACH HERE
<PAGE> 22
PROXY THE DEXTER CORPORATION PROXY
WINDSOR LOCKS, CONNECTICUT, U.S.A.
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints K. Grahame Walker, Bernard M. Fox, and George
M. Whitesides, or any one or more of them, with power of substitution,
attorneys and proxies to represent the undersigned at the annual meeting of the
shareholders of The Dexter Corporation (the "Company") to be held on April 27,
1995, and at any adjournments thereof, with all powers which the undersigned
would possess if personally present, and to vote, as and to the extent
indicated below all shares of stock which the undersigned may be entitled to
vote at said meeting or any adjournments thereof, upon all matters that may
properly come before the meeting, including the matters listed on the reverse
side of this card which are more fully described in the Notice of Annual
Meeting and Proxy Statement relating to said meeting. THE SHARES REPRESENTED
BY THIS PROXY WILL BE VOTED AS AND TO THE EXTENT DIRECTED ON THE REVERSE SIDE
HEREOF. IF NO DIRECTIONS ARE GIVEN, THE PROXIES WILL VOTE: (a) FOR THE
ELECTION OF ALL LISTED DIRECTOR NOMINEES, (b) IN ACCORDANCE WITH THE BOARD OF
DIRECTOR'S RECOMMENDATION ON THE OTHER MATTERS LISTED ON THE REVERSE SIDE OF
THIS CARD, AND (c) AT THEIR DISCRETION ON ANY OTHER MATTER THAT MAY PROPERLY
COME BEFORE THE MEETING.
IF YOU DO NOT SIGN AND RETURN A PROXY, OR ATTEND THE MEETING, YOUR SHARES
CANNOT BE VOTED.
(CONTINUED AND TO BE SIGNED ON THE OTHER SIDE)
