<PAGE> 1
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
[x] Definitive Proxy Statement Only (as permitted by Rule 14a-6(e)(2))
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a
</TABLE>
The Dexter Corporation
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[x] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
(5) Total fee paid:
------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
(3) Filing Party:
------------------------------------------------------------------------
(4) Date Filed:
------------------------------------------------------------------------
------------------------------------------------------------------------
<PAGE> 2
THE DEXTER CORPORATION
ONE ELM STREET - WINDSOR LOCKS, CONNECTICUT 06096 - 860/292-7675
NOTICE OF ANNUAL MEETING
March 10, 1998
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 23, 1998 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 L.L.P. as auditor of the Company for the year
1998;
(3) To approve an amendment to the Company's Restated Certificate of
Incorporation to change the Company's name to "Dexter Corporation"; 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 27, 1998
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
THE DEXTER CORPORATION
ONE ELM STREET - WINDSOR LOCKS, CONNECTICUT 06096 - 860/292-7675
March 10, 1998
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 23, 1998. 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 10, 1998.
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, 23,179,597 of which were outstanding as of February
27, 1998, 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, 1997, 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) OUTSTANDING(1)
- -------------------------------------------------------------- ------------ ---------------
<S> <C> <C>
FMR Corp., 82 Devonshire Street, Boston, Massachusetts 02109
(Fidelity Managed Funds).................................... 1,971,700 8.51%(2)
Mary K. Coffin, c/o The Dexter Corporation, One Elm Street,
Windsor Locks, Connecticut 06096............................ 1,300,000 5.61%(3)
Directors, Nominees and Executive Officers:
K. Grahame Walker............................................. 183,887 *
Kathleen Burdett.............................................. 41,773 *
</TABLE>
1
<PAGE> 4
<TABLE>
<CAPTION>
SHARES OF
COMMON STOCK PERCENTAGE OF
BENEFICIALLY COMMON STOCK
SHAREHOLDERS OWNED(1) OUTSTANDING(1)
- -------------------------------------------------------------- ------------ ---------------
<S> <C> <C>
Ronald C. Benham.............................................. 40,292 *
R. Barry Gettins.............................................. 47,698 *
John D. Thompson.............................................. 25,006 *
Charles H. Curl............................................... 2,370 *
Henrietta Holsman Fore........................................ 2,990 *
Bernard M. Fox................................................ 3,131 *
Robert M. Furek............................................... 2,809 *
Martha Clark Goss............................................. 3,123 *
Edgar G. Hotard............................................... 1,502 *
Peter G. Kelly................................................ 5,194 *
Jean-Francois Saglio.......................................... 1,923 *
Glen L. Urban................................................. 1,654 *
George M. Whitesides.......................................... 3,265 *
All Directors, Nominees and Executive Officers as a Group (20
persons).................................................... 461,380 1.99%(4)
</TABLE>
- ---------------
(1) The shares reported above as beneficially owned by the following persons
include vested stock options granted under the Company's stock option plans.
The shares reported above also include shares issued to the following
persons pursuant to the 1994 Long Term Incentive Plan as more fully
described on page 9 of this proxy statement: K. Grahame Walker -- 42,174;
Kathleen Burdett -- 18,922; Ronald C. Benham -- 11,430; R. Barry
Gettins -- 12,420; John D. Thompson -- 12,522; and "All Directors, Nominees
and Executive Officers as a Group" -- 141,400. Shares issued pursuant to the
1994 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) Share holdings as of December 31, 1997, as reported on the Schedule 13G most
recently filed by such shareholder.
(3) Of the 1,300,000 shares shown in the table as owned by Mary K. Coffin,
1,000,000 are held by Fleet Bank, N.A., trustee of a trust the beneficiary
of which is Dexter D. Coffin, Jr. Mary K. Coffin is a trustee of this trust
and shares the power to vote and dispose of shares owned by the trust. The
power to vote and dispose of the shares owned by this trust is held by a
majority of its three individual trustees. The remaining shares shown in the
table are held by Mary K. Coffin through a living trust.
(4) As of December 31, 1997, "All Directors, Nominees and Executive Officers as
a Group" beneficially owned 82,302 shares of the common stock of Life
Technologies, Inc., an affiliate of the Company ("LTI").
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 1998 annual meeting,
the Company shall have ten directorships, three in the class whose term will
expire in 2001, three in the class whose term will expire in 2000, and four in
the class whose term will expire in 1999. At the 1998 annual meeting, three
directors are to be elected, all of whom shall constitute the class whose term
will expire in 2001. 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 Edgar G. Hotard, whose terms will expire in 2001, 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 or her 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
Photo since 1990
------------------- Mr. Furek, age 55, has been chairman of the State Board of Trustees
for the Hartford, Connecticut public school system since June 1997.
Mr. Furek is also a partner in Resolute Partners, a private equity
investment firm. Mr. Furek served as president and chief executive
officer of Heublein Inc. (wine and spirits producer) from prior to
1993 until his retirement in December 1996. Mr. Furek is a director
of Massachusetts Mutual Life Insurance Company.
Mr. Furek is Chairman of the Compensation & Organization Committee
and is on the Audit Committee.
------------------- MARTHA CLARK GOSS Director
Photo since 1992
------------------- Mrs. Goss, age 48, has been vice president and chief financial
officer of Booz, Allen & Hamilton Inc. since July 1995. From
September 1993 to July 1995, Mrs. Goss was a senior vice president of
The Prudential Insurance Company of America. From August 1994 to July
1995, Mrs. Goss was the enterprise control officer of The Prudential
Insurance Company of America; and from prior to 1993 to August 1994,
she was the president of Prudential Asset Management Company, a
subsidiary of The Prudential Insurance Company of America. 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.
</TABLE>
3
<PAGE> 6
<TABLE>
<C> <S>
------------------- EDGAR G. HOTARD Director
Photo since 1996
------------------- Mr. Hotard, age 54, has been chief operating officer of Praxair, Inc.
(industrial gases supplier) since December 1997, and has been
president of Praxair, Inc. since prior to 1993. Mr. Hotard is a
director of Praxair, Inc., Aquarion Company (holding company for
regulated utility and non-utility businesses) and Iwatani Industrial
Gases Corp. (industrial gases supplier in Japan).
Mr. Hotard is on the Compensation & Organization Committee and the
Environmental & Safety Committee.
OTHER DIRECTORS
Term Expiring in 2000:
------------------- CHARLES H. CURL Director
Photo since 1992
------------------- Mr. Curl, age 49, has been president of Curl & Associates
(independent management consulting firm) since prior to 1993.
Mr. Curl is on the Environmental & Safety Committee.
------------------- PETER G. KELLY Director
Photo since 1994
------------------- Mr. Kelly, age 60, has been chairman of Updike, Kelly & Spellacy,
P.C., a Hartford, Connecticut based law firm, since prior to 1993.
Mr. Kelly has been chairman of Meridian Worldwide, L.L.C. (public
affairs firm) since 1998. Since 1997, Mr. Kelly has been chairman of
the professional advisory council of C.I.S. Strategies, Ltd. (public
affairs firm). From prior to 1993 to 1996 Mr. Kelly was chairman of
Black, Manafort, Stone & Kelly, a subsidiary of Burson-Marsteller
(worldwide public relations firm). Mr. Kelly was also the managing
director of Black, Kelly, Scruggs & Healy (public relations firm),
from 1996 to 1997. Mr. Kelly is a director of Phillips Screw Corp.
(manufacturer and licensor).
Mr. Kelly is on the Audit Committee and the Environmental & Safety
Committee.
------------------- JEAN-FRANCOIS SAGLIO Director
Photo since 1991
------------------- Mr. Saglio, age 61, has been president of the French National
Institute for the Environment since 1995 and president of ERSO (a
consulting company in France) since 1994. From prior to 1993 to 1995,
he was senior vice president of CEA Industrie (industrial and
financial holding company of the French Atomic Energy Commission).
Mr. Saglio is a former member of the cabinet of M. Pompidou,
President of France, and also served as director of the French
Administration of Environment Protection. Mr. Saglio is a director of
EEM (a French investment fund) and IMI (a French industrial holding
company).
Mr. Saglio is on the Environmental & Safety Committee.
</TABLE>
4
<PAGE> 7
<TABLE>
<C> <S>
Term Expiring in 1999:
------------------- HENRIETTA HOLSMAN FORE Director
Photo since 1996
------------------- Mrs. Fore, age 49, has been chairman and chief executive officer of
Holsman International (investment and management company) and
chairman and president of Stockton Products, formerly Stockton Wire
Products (manufacturer of steel structural products, cement additives
and wire building materials) since 1993.
Mrs. Fore is on the Compensation & Organization Committee.
------------------- BERNARD M. FOX Director
Photo since 1990
------------------- Mr. Fox, age 55, retired as chairman, president and chief executive
officer of Northeast Utilities (public utility holding company) in
September 1997. Mr. Fox had been president and chief executive
officer of Northeast Utilities since 1993 and had been chairman since
August 1995. Mr. Fox is a director of CIGNA
Corporation (insurance).
Mr. Fox is Chairman of the Audit Committee and is on the Compensation
& Organization Committee.
------------------- K. GRAHAME WALKER Director
Photo since 1989
------------------- Mr. Walker, age 60, has been chairman, president and chief executive
officer of the Company since April 1993. From prior to 1993 to April
1993, he was president and chief executive officer of the Company. He
is a director of Life Technologies, Inc. (life science/biotechnology
products), an affiliate of the Company.
------------------- GEORGE M. WHITESIDES Director
Photo since 1985
------------------- Dr. Whitesides, age 58, has been a professor of chemistry at Harvard
University since prior to 1993. Dr. Whitesides is a director of
Advanced Magnetics, Inc. (medical diagnostic products), Hyperion
Catalysis, Inc. (medical products) and Geltex, Inc. (physical
research).
Dr. Whitesides is Chairman of the Environmental & Safety Committee
and is on the Audit Committee.
</TABLE>
The Board of Directors currently has eleven members, one of whom is an
officer of the Company. Glen L. Urban, whose term as a director expires on the
date of the 1998 annual meeting, will not stand for re-election. Dr. Urban, age
57, 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 1993. Dr. Urban is a director of Information Resources, Inc. (develops and
maintains computerized data bases and software).
The Board of Directors had six meetings in 1997, and six meetings have been
scheduled for 1998. The Board of Directors has appointed a Compensation &
Organization Committee, an Audit Committee and an Environmental & Safety
Committee.
5
<PAGE> 8
The Compensation & Organization Committee is composed of the following five
members, none of whom is an officer or employee of the Company or its
subsidiaries: Robert M. Furek, Chairman, Henrietta Holsman Fore, Bernard M. Fox,
Martha Clark Goss and Edgar G. Hotard. This Committee monitors the Company's
compensation policy, with particular emphasis on officer remuneration matters.
It also serves as a nominating committee for the Board of Directors, oversees
organizational matters for the Company and the Board of Directors, and
administers the granting of restricted stock under the Company's 1994 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 1997, and five meetings have been scheduled for 1998.
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. The Audit Committee's meetings include, as a matter of
course, private sessions with the Company's independent certified public
accountants and internal auditors. The Audit 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 controls and the quality of
accounting and published financial statements. Three meetings of the Audit
Committee were held in 1997, and three meetings have been scheduled for 1998.
The Environmental & Safety Committee is composed of the following six
members: George M. Whitesides, Chairman, Charles H. Curl, Edgar G. Hotard, Peter
G. Kelly, Jean-Francois Saglio and Glen L. Urban. The Environmental & Safety
Committee monitors and evaluates the Company's environmental and safety policies
and practices and makes recommendations in respect thereof to the Board of
Directors. Three meetings of the Environmental & Safety Committee were held in
1997, and three meetings have been scheduled for 1998.
During 1997, each of the directors attended at least 75% of the aggregate
number of meetings of the Board of Directors and committees of the Board of
Directors.
COMPENSATION OF DIRECTORS
In 1997, 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 1997, the annual retainers for serving on the Board
of Directors of the Company and for serving as Chairman of a permanent committee
were $20,000 and $4,000, respectively. Under the 1996 Non-Employee Directors'
Stock Plan, as amended, each director receives 50% of his or her annual retainer
in the form of Common Stock and may also elect to receive all or a portion of
the remainder of his or her retainer in the form of Common Stock.
Pursuant to the 1994 Stock Plan for Outside Directors, on December 31,
1997, each outside director was granted 200 shares of the Company's Common
Stock. As of December 31, 1997, the value of 200 shares of the Company's Common
Stock was $8,523.
CERTAIN TRANSACTIONS AND LEGAL MATTERS
Updike, Kelly & Spellacy, P.C., a law firm of which Mr. Kelly is chairman,
rendered legal services to the Company during 1997. The fees paid by the Company
to Updike, Kelly & Spellacy, P.C. for services rendered in 1997 totaled less
than $1,000.
6
<PAGE> 9
COMPENSATION OF EXECUTIVE OFFICERS
SUMMARY COMPENSATION TABLE
The following table contains information concerning compensation paid or to
be paid to the chief executive officer ("CEO") and the other four most highly
compensated executive officers of the Company for services rendered to the
Company and its subsidiaries during the past three completed fiscal years.
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
-------------------------------
ANNUAL COMPENSATION AWARDS
------------------------------------------------ -------------------------------
NAME AND OTHER ANNUAL(2) RESTRICTED STOCK OPTIONS ALL OTHER
PRINCIPAL POSITION YEAR SALARY($)(1) BONUS($) COMPENSATION($) AWARDS($)(3) (#) COMPENSATION($)(4)
- ------------------------ ---- ------------ -------- --------------- ---------------- ------------ ------------------
<S> <C> <C> <C> <C> <C> <C> <C>
K. Grahame Walker, 1997 615,563 461,670 9,025 373,438 55,000 168,321
Chairman, President 1996 576,250 429,190 8,398 340,625 0 156,464
and
Chief Executive 1995 581,438 280,320 8,295 296,000 0 133,401
Officer
Kathleen Burdett, 1997 247,000 156,730 789 164,313 10,000 63,057
Vice President and 1996 237,000 146,260 742 136,250 0 46,179
Chief Financial 1995 237,750 93,910 431 175,750 0 42,894
Officer
Ronald C. Benham, 1997 209,000 151,591 0 104,563 10,000 4,750
Vice President and 1996 198,500 32,502 0 95,375 0 4,633
Senior Division 1995 191,500 79,250 0 80,937 0 4,500
President,
Dexter Electronic
Materials
R. Barry Gettins, 1997 226,375 122,380 3,320 74,688 5,000 46,121
Senior Vice President, 1996 217,250 109,418 2,006 122,625 0 41,799
Operations and 1995 210,750 59,941 1,939 104,062 0 40,317
Technology Development
John D. Thompson, 1997 203,125 122,050 1,020 119,500 6,000 47,531
Senior Vice President, 1996 193,750 120,400 974 114,450 0 38,410
Strategic and Business 1995 189,000 71,340 949 80,938 0 35,912
Development
</TABLE>
- ---------------
(1) The salaries reported above for Mr. Walker and Ms. Burdett include payments
received by them from Life Technologies, Inc. as directors' fees. The
amounts of these payments were as follows: K. Grahame Walker -- $4,000 in
1996 and $16,000 in 1995 and Kathleen Burdett -- $4,500 in 1996 and $12,500
in 1995. In April, 1996, at their request, Mr. Walker and Ms. Burdett
discontinued receiving directors' fees from LTI.
(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 officers' behalf.
(3) The restricted stock awards reported above, which were made pursuant to the
1994 Long Term Incentive Plan in 1997, show the dollar value of such awards
on the date of grant. As of December 31, 1997, the aggregate number and
value of restricted shares held by the named executive officers are as
follows: K. Grahame Walker -- 42,174 shares, $1,821,389; Kathleen
Burdett -- 18,922 shares, $817,194; Ronald C. Benham -- 11,430 shares,
$493,633; R. Barry Gettins -- 12,420 shares, $536,389; and John D.
Thompson -- 12,522 shares, $540,794. Unless and until the restricted shares
are forfeited, dividends will be paid on such shares. Additional information
regarding the restricted shares issued to the named executive officers is
set forth on pages 9-10 of this proxy statement.
(4) The other compensation reported above is composed of four principal
components: (a) the contribution payable under the Dexter ESPRIT Plan, (b)
the benefit payable under the Amended and Restated Retirement Equalization
Plan, (c) term life insurance premiums and (d) the contribution payable
under the Dexter 401(k) Savings Plan. The respective amounts for each of the
named executive officers are as follows: K. Grahame Walker -- $19,948,
$137,585, $10,788 and $0; Kathleen Burdett -- $19,796, $42,372, $889 and $0;
Ronald C. Benham -- $0, $0, $0 and $4,750; R. Barry Gettins -- $19,867,
$22,286, $3,968 and $0; and John D. Thompson -- $19,823, $26,488, $1,220 and
$0.
7
<PAGE> 10
OPTION GRANTS IN LAST FISCAL YEAR
The following table discloses information concerning individual grants of
stock options made during the last completed fiscal year to the executive
officers named in the Summary Compensation Table.
OPTION GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANTS
<TABLE>
<CAPTION>
POTENTIAL
REALIZABLE VALUE AT
ASSUMED ANNUAL
RATES OF STOCK
NUMBER OF PRICE APPRECIATION
SECURITIES % OF TOTAL OPTIONS FOR OPTION TERM
UNDERLYING GRANTED TO EXERCISE -------------------
OPTIONS EMPLOYEES PRICE EXPIRATION 5% 10%
NAME GRANTED(#) IN FISCAL YEAR ($/SHARE) DATE ($)(a) ($)(a)
- --------------------------- ---------- ------------------ --------- ------------ -------- -------
<S> <C> <C> <C> <C> <C> <C>
K. Grahame Walker.......... 18,333 27.1% $ 29.9375 May 1, 2003 $186,660 423,467
18,333 27.1% $ 29.9375 May 1, 2004 $223,435 520,698
18,334 27.1% $ 29.9375 May 1, 2005 $262,063 627,686
Kathleen Burdett........... 3,333 4.9% $ 29.9375 May 1, 2003 $ 33,935 76,988
3,333 4.9% $ 29.9375 May 1, 2004 $ 40,621 94,665
3,334 4.9% $ 29.9375 May 1, 2005 $ 47,656 114,143
Ronald C. Benham........... 3,333 4.9% $ 29.9375 May 1, 2003 $ 33,935 76,988
3,333 4.9% $ 29.9375 May 1, 2004 $ 40,621 94,665
3,334 4.9% $ 29.9375 May 1, 2005 $ 47,656 114,143
R. Barry Gettins........... 1,666 2.5% $ 29.9375 May 1, 2003 $ 16,963 38,482
1,666 2.5% $ 29.9375 May 1, 2004 $ 20,317 47,346
1,667 2.5% $ 29.9375 May 1, 2005 $ 23,828 57,072
John D. Thompson........... 2,000 3.0% $ 29.9375 May 1, 2003 $ 20,363 46,197
2,000 3.0% $ 29.9375 May 1, 2004 $ 24,375 56,804
2,000 3.0% $ 29.9375 May 1, 2005 $ 28,588 68,472
</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.
The option grants described in the foregoing table were made pursuant to
The Dexter Corporation 1988 Stock Option Plan (the "Option Plan"). On May 1,
1997, three grants of stock options were made to each of the above-named
executive officers. The first grant will vest on May 1, 1998, the second grant
will vest on May 1, 1999, and the third grant will vest on May 1, 2000. 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 1997 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 ON VALUE EXERCISABLE/ EXERCISABLE/
NAME EXERCISE(#) REALIZED UNEXERCISABLE UNEXERCISABLE
- --------------------------- -------------- -------- --------------------- ------------------
<S> <C> <C> <C> <C>
K. Grahame Walker.......... 26,333 $187,426 86,834/55,000 $1,666,296/$728,750
Kathleen Burdett........... 3,000 $ 30,884 14,334/10,000 $ 273,452/$132,500
Ronald C. Benham........... 6,166 $ 48,692 19,334/10,000 $ 371,639/$132,500
R. Barry Gettins........... -- -- 29,000/ 5,000 $ 548,563/$ 66,250
John D. Thompson........... -- -- 9,000/ 6,000 $ 164,938/$ 79,500
</TABLE>
- ---------------
(a) The value of unexercised options was determined using the closing price of
the Company's common stock as of December 31, 1997.
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.
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 May 1, 2000 1,562 6,250 6,250
6,250 May 1, 2003 1,562 6,250 6,250
Kathleen Burdett......... 2,750 May 1, 2000 687 2,750 2,750
2,750 May 1, 2003 687 2,750 2,750
Ronald C. Benham......... 1,750 May 1, 2000 438 1,750 1,750
1,750 May 1, 2003 438 1,750 1,750
R. Barry Gettins......... 1,250 May 1, 2000 312 1,250 1,250
1,250 May 1, 2003 312 1,250 1,250
John D. Thompson......... 2,000 May 1, 2000 500 2,000 2,000
2,000 May 1, 2003 500 2,000 2,000
</TABLE>
- ---------------
(a) The restricted shares reported in this table were granted to the named
executive officers on May 1, 1997, 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, 1997 and ending on December 31, 1999 ("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.
9
<PAGE> 12
(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
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 or
postponed retirement. Mr. Walker, while employed by a division of the Company,
participated in the pension plan and Mr. Benham, as an employee of a division of
the Company, participates in the pension plan. The estimated annual benefits
payable under the pension plan to Mr. Walker and Mr. Benham upon normal
retirement are $47,018 and $77,654, respectively. Ms. Burdett, Mr. Gettins and
Mr. Thompson are not participants in the Company's pension plan.
Mr. Thompson, while an employee of LTI, participated in the LTI Pension
Plan. Mr. Thompson is fully vested in the LTI Pension Plan. Under the LTI
Pension Plan, normal retirement age is 65, and actuarially reduced benefits are
available to participants who are age 55 and have ten years of service. In
general, under the LTI Pension Plan the participant accrues an annual retirement
benefit equal to 1% of the participant's final five-year average LTI
compensation times the number of years of service credited after October 31,
1975. Eligible compensation is defined as salary, hourly wages, bonus and
commissions. The estimated annual benefits payable to Mr. Thompson under the LTI
Pension Plan upon normal retirement are $23,201.
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 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
10
<PAGE> 13
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, 1997 is 32 for
K. Grahame Walker, 16 for Kathleen Burdett, 30 for Ronald C. Benham, 24 for R.
Barry Gettins, and 19 for John D. Thompson.
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
(100% in the case of Ronald C. Benham and 200% in the case of the other
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 (one year in the case on Ronald C. Benham and two years in the case of
the other executive officers named in the Summary Compensation Table) provided
by the Company on the date of the change in control, and the employee will be
credited with a certain number of additional years of service (one in the case
of Ronald C. Benham and two in the case of the other 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" generally means: (i) the Company is merged, consolidated or reorganized
into or with another corporation or other legal person, or sells or otherwise
transfers substantially all of its assets to another corporation or other legal
person, and as a result of such merger, consolidation, reorganization, sale or
transfer of assets less than a majority of the combined voting power of the
then-outstanding securities of such corporation or person immediately after such
transaction is held in the aggregate by the holders of voting stock of the
Company immediately prior to such transaction; (ii) a person acquires beneficial
ownership of 19% or more of the Company's Common Stock; (iii) a contract or
transaction is entered into which will result in a change of control within two
years; or (iv) 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
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 of the Company. The Compensation Committee is
composed exclusively of outside directors. There are presently five members:
Robert M. Furek, Chairman, Henrietta Holsman Fore, Bernard M. Fox, Martha Clark
Goss and Edgar G. Hotard.
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 is 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 the issue of furthering the Company's
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 19 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 median 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 1997
consisted of base salary, annual incentive compensation and long term incentive
compensation in the form of 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 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.
12
<PAGE> 15
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.
In establishing the CEO's base salary, the Compensation Committee took into
account the salaries of chief executive officers at companies within the
Compensation Peer Group and the strong earnings growth of the Company during the
past year, which was the direct result of the CEO's leadership in restructuring
the Company and reducing its cost structure. Based upon this evaluation, the
Compensation Committee established a base salary of $630,000 for the period
commencing April 1, 1997 and ending March 31, 1998, an increase of 10.1% over
the $572,250 base salary paid to him during the immediately preceding 12 month
period. It should be noted that, at the request of the CEO, the Committee did
not increase the CEO's base salary in 1996. Thus, for a two year period,
beginning on April 1, 1995 and ending on March 31, 1997, the CEO's salary
remained constant at $572,250. The Committee believes that the increase in the
CEO's base salary in 1997 was fully justified and consistent with its overall
compensation philosophy.
ANNUAL INCENTIVE COMPENSATION
Annual incentive compensation accounts for a significant percentage of each
executive officer's compensation. Executive officers of the Company (other than
the CEO) participate in the Company's Executive Incentive Compensation Plan, and
the CEO participates in the Company's Senior Management Executive Incentive
Plan, which was designed to conform with the requirements of Internal Revenue
Code Section 162(m) and approved by the Company's shareholders in 1996. (These
plans are collectively referred to herein as the "EIC Plans"). The EIC Plans are
designed to compensate executives for performance that increases shareholder
value over time, and are reviewed annually by the Compensation Committee.
Each of the EIC Plans has two performance components: (1) corporate and/or
division financial performance and (2) an assessment 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 1997, the sole
financial measure for corporate financial performance, which was approved by the
Compensation Committee, was earnings per share. The financial measures used in
1997 for individual divisions, on the other hand, included several from a
variety of factors, such as sales growth, growth in operating earnings, and
return on investment. 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 executive officers named in the Summary Compensation Table (other than
the CEO) were eligible to receive incentive compensation payouts in 1997 of 60%
of their base salaries in the event that financial performance targets were
fully achieved. Such payouts were subject to further adjustment, up or down,
based upon management's assessment of individual performance. Based upon these
factors, the actual payout amounts for these individuals ranged from 54% to 72%
of their base salaries.
The CEO was eligible to receive an incentive compensation payout in 1997
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 earnings per share met
the targeted amount established by the Compensation Committee for 1997, a target
that, in the opinion of the Compensation Committee, was aggressive and required
significant efforts on the part of the CEO, the CEO's actual payout was
approximately 75% of his base salary, or $461,670. This represents an increase
from the $429,190 of incentive compensation paid to the CEO in 1996. It should
be emphasized that the Company's
13
<PAGE> 16
EIC Plans are pay-for-performance plans and, as a result, payments under such
plans vary from year to year depending upon the Company's financial performance.
In years in which performance targets have been met, such as in 1996 and 1997,
there has been a full payout of incentive compensation to the CEO. On the other
hand, in years in which the targets have not been met, such payouts have been
reduced. In 1995, for example, when the Company failed to fully achieve its
performance targets, the CEO received an incentive compensation payment of
$280,320, or 50% of his base salary that year.
Because the purpose of the EIC Plans is to reward performance that
increases shareholder value over time, the Compensation Committee requires that
the overall corporate return to shareholders, apart from unusual items, exceeds
the cost of capital for the Company as a whole before any executive incentive
compensation is paid. There are also minimum thresholds established for payouts
to corporate and division employees.
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 other
senior management 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 130,000 options were granted to executive officers and other
senior management in 1997 under the Company's stock option plan, 55,000 of which
were granted to the CEO and 31,000 of which were granted (in the aggregate) to
the four other executive officers named in the Summary Compensation Table. The
number of stock options granted in 1997 were determined by reference to the long
term compensation for comparable positions at companies within the Compensation
Peer Group and based upon an assessment of individual performance.
RESTRICTED STOCK AWARDS
The final component of executive compensation is the Company's 1994 Long
Term Incentive Plan, pursuant to which, in 1997, the Company granted restricted
stock awards to executive officers and other senior management.
A total of 55,000 shares of restricted stock were granted to executive
officers and other senior management in 1997, 12,500 of which were granted to
the CEO and 15,500 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 1997 were determined by reference to the long
term compensation for comparable positions at companies within the Compensation
Peer Group and based upon an 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 1997 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, 1997 and ending on December 31, 1999 ("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 1997 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.
In 1995, the Compensation Committee established ownership guidelines of
Dexter Common Stock for executive officers. Under these guidelines, by the end
of 1998, each executive officer is expected to own Dexter Common Stock with a
value of between two to four times his or her base salary, depending upon the
individual's position with the Company.
14
<PAGE> 17
DEDUCTIBILITY OF COMPENSATION
Internal Revenue Code 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 $1 million per
individual, per year, subject to certain specified exceptions. All compensation
payments in 1997 to the five executive officers named in the Summary
Compensation Table will be fully deductible. The Company has procedures in
place, including an executive incentive plan which conforms to the requirements
of Section 162(m), to assure that compensation paid to executive officers
continues to be fully deductible in the future.
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
Henrietta Holsman Fore
Bernard M. Fox
Martha Clark Goss
Edgar G. Hotard
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, 1992 and ending December 31, 1997. 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.
15
<PAGE> 18
COMPARISON OF FIVE YEAR
CUMULATIVE TOTAL SHAREHOLDER RETURN
(ASSUMING AN INVESTMENT OF $100 ON DECEMBER 31, 1992)
<TABLE>
<CAPTION>
MEASUREMENT PERIOD THE DEXTER S&P CHEMICALS
(FISCAL YEAR COVERED) CORPORATION S&P 500 INDEX INDEX
<S> <C> <C> <C>
1992 100.00 100.00 100.00
1993 94.34 110.08 114.02
1994 90.67 111.53 99.54
1995 102.21 153.45 130.83
1996 142.08 188.68 134.19
1997 197.76 251.63 166.17
</TABLE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee is composed of five members: Robert M. Furek,
Chairman, Henrietta Holsman Fore, Bernard M. Fox, Martha Clark Goss and Edgar G.
Hotard. None of the members of the Compensation Committee is an officer,
employee or former officer or employee of the Company or its subsidiaries. In
1997, none of the members of the Compensation Committee had any relationship
requiring disclosure pursuant to Item 402(j)(3) of Regulation S-K of the
Securities and Exchange Commission.
(2) RATIFICATION OF SELECTION OF AUDITOR
The Board of Directors, upon recommendation of its Audit Committee, has
selected the firm of Coopers & Lybrand L.L.P. ("Coopers & Lybrand"), independent
certified public accountants, to audit the accounts of the Company for the year
1998, and it is proposed that the selection of such firm be ratified by the
shareholders at the annual meeting.
Coopers & Lybrand audited the accounts of the Company and certain employee
benefit plans for the year 1997. In connection with its audit function, Coopers
& Lybrand reviewed the Company's 1997 quarterly and annual reports to its
shareholders and certain filings with the Securities and Exchange Commission. In
addition, during 1997, 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 1998.
16
<PAGE> 19
(3) CHANGE OF CORPORATE NAME
The Board of Directors has unanimously approved, subject to shareholder
approval, an amendment to Article I of the Company's Restated Certificate of
Incorporation to change the name of the Company from "The Dexter Corporation" to
"Dexter Corporation". The purpose of the change is to streamline the name and
thereby enhance the Company's identity. Under Connecticut law, the affirmative
vote of a majority of the votes cast on the amendment at the annual meeting is
required to approve this proposed amendment to the Company's Restated
Certificate of Incorporation. Upon approval by the shareholders, the proposed
amendment to the Restated Certificate of Incorporation will become effective
upon the filing of a certificate of amendment with the Secretary of State of the
State of Connecticut, which is expected to occur promptly after the annual
meeting.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR THE
PROPOSAL TO AMEND THE COMPANY'S CERTIFICATE OF INCORPORATION TO CHANGE THE
COMPANY'S NAME TO "DEXTER CORPORATION".
(4) OTHER MATTERS
The Board of Directors does not know of any matters which will be presented
for action at the annual meeting other than those described above and matters
incident to the conduct of the annual meeting. If, however, any other matters
should come before the annual 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, 1998.
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 18, 1998 through February 5, 1999, unless next year's annual meeting is
called for a date prior to February 5, 1999, in which case notice must be
received within fifteen days of when notice of the annual meeting is given.
ANNUAL REPORT ON FORM 10-K
The Company's Annual Report on Form 10-K to the Securities and Exchange
Commission for 1997 will be sent without charge after March 31, 1998 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
17
<PAGE> 20
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 23,
1998, 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) FOR the ratification of auditors, (C) FOR
the amendment to the Company's restated Certificate Of Incorporation to change
the Company's name and (D) 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 other side)
- -------------------------------------------------------------------------------
FOLD AND DETACH HERE
<PAGE> 21
_______________________________________________________________________________
Please mark
your votes as [X]
indicated in
the example
The Board of Directors recommends a vote "FOR" Items 1, 2 and 3.
ITEM 1. ELECTION OF ALL DIRECTOR NOMINEES: Robert M. Furek, Martha Clark Goss
and Edgar G. Hotard (Page 3-4)
FOR all nominees listed WITHHOLD AUTHORITY
above *(except as to vote for all nominees
marked to the contrary). listed above.
[ ] [ ]
*EXCEPTIONS
(Instruction: To withhold authority to vote for any individual nominee, write
that nominee's name on the space provided below.)
_______________________________________________________________________________
ITEM 2. RATIFICATION OF AUDITORS ITEM 3. CHANGE OF CORPORATE NAME
FOR AGAINST ABSTAIN FOR AGAINST ABSTAIN
[ ] [ ] [ ] [ ] [ ] [ ]
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY PROMPTLY USING THE ENCLOSED
ENVELOPE.
IF YOU DO NOT SIGN AND RETURN A PROXY, OR ATTEND THE MEETING, YOUR SHARES
CANNOT BE VOTED.
Signature ________________________ Signature ___________________ Date _________
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.
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