<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
Only (as permitted by Rule 14a-6(e)(2))
[x] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a
</TABLE>
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
LOGO
LOGO
Dexter Corporation -- One Elm Street -- Windsor Locks, CT 06096-2334 -- Tel:
860.292.7675
NOTICE OF ANNUAL MEETING
March 9, 1999
The annual meeting of the shareholders of Dexter Corporation (the
"Company") will be held at The Hartford Club, 46 Prospect Street, Hartford,
Connecticut, on Thursday, April 22, 1999 at 10:00 A.M., local time, for the
following purposes:
(1) To elect directors;
(2) To consider and act upon a proposal to approve the 1999 Long Term
Incentive Plan;
(3) To ratify the selection by the Company's Board of Directors of the firm
of PricewaterhouseCoopers LLP as auditor of the Company for the year
1999; 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 26, 1999
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
LOGO
Dexter Corporation -- One Elm Street -- Windsor Locks, CT 06096-2334 -- Tel:
860.292.7675
March 9, 1999
PROXY STATEMENT
This proxy statement is furnished to the shareholders of 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 22, 1999. 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, 1999.
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 ChaseMellon Shareholder Services,
L.L.C., 450 West 33rd Street, New York, NY 10001, to assist in soliciting
proxies, for which services the Company will pay a fee of $4,500, 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 ChaseMellon Shareholder Services 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, 23,269,731 of which were outstanding as of February
26, 1999, 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, 1998, 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
<PAGE> 4
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 PERCENTAGE OF
COMMON STOCK COMMON
BENEFICIALLY STOCK
SHAREHOLDERS OWNED(1) OUTSTANDING(1)
- ------------ ------------ --------------
<S> <C> <C>
FMR Corp., 82 Devonshire Street, Boston, Massachusetts
02109 (Fidelity Managed Funds)......................... 2,290,600 9.8(2)
Mary K. Coffin, c/o Dexter Corporation, One Elm Street,
Windsor Locks, Connecticut 06096....................... 1,300,000 5.6(3)
Directors, Nominees and Executive Officers:
K. Grahame Walker........................................ 196,675 *
Kathleen Burdett......................................... 49,522 *
Jeffrey W. McClelland.................................... 18,721 *
R. Barry Gettins......................................... 54,036 *
David G. Gordon.......................................... 26,500 *
Charles H. Curl.......................................... 3,143 *
Henrietta Holsman Fore................................... 3,690 *
Bernard M. Fox........................................... 3,928 *
Robert M. Furek.......................................... 3,536 *
Martha Clark Goss........................................ 3,625 *
Edgar G. Hotard.......................................... 2,211 *
Peter G. Kelly........................................... 6,036 *
Jean-Francois Saglio..................................... 2,541 *
George M. Whitesides..................................... 3,743 *
All Directors, Nominees and Executive Officers as a Group
(22 persons)........................................... 568,872 2.4
</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 of restricted stock issued to
the following persons pursuant to the 1994 Long Term Incentive Plan (the
"1994 Plan") as more fully described on pages 10-11 of this proxy statement:
K. Grahame Walker -- 44,334; Kathleen Burdett -- 19,142; Jeffrey W.
McClelland -- 6,236; R. Barry Gettins -- 11,584; David G. Gordon -- 10,000;
and "All Directors, Nominees and Executive Officers as a Group" -- 168,310.
Shares of restricted stock issued pursuant to the 1994 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, 1998, 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.
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 1999 annual meeting,
the Company shall have ten directorships, four in the class whose term will
expire in 2002, three in the class whose term will expire in 2001, and three in
the class whose term will expire in 2000. At the 1999 annual meeting, four
directors are to be elected, all of whom shall constitute the class whose term
will expire in 2002. It is intended that the shares represented by the
accompanying proxy will be voted for the election of Henrietta Holsman Fore,
Bernard M. Fox, K. Grahame Walker and George M. Whitesides, whose terms will
expire in 2002.
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>
[Photo of H.H. Fore] HENRIETTA HOLSMAN FORE Director since 1996
Mrs. Fore, age 50, 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 wire and steel building materials and
additives) since prior to 1994. She is a director of HSB
Group, Inc. (equipment insurance and engineering
services).
Mrs. Fore is on the Compensation & Organization
Committee.
BERNARD M. FOX Director since 1990
[Photo of B.M. Fox] Mr. Fox, age 56, has been an independent consultant to
corporations and clients on strategic, energy and
marketing issues since September 1997. Mr. Fox had been
president and chief executive officer of Northeast
Utilities (public utility holding company) since prior
to 1994 and had been chairman since August 1995, until
his retirement in September 1997. Mr. Fox is on the
Advisory Board of Cheng Power Systems, Inc. (advanced
electrical generation technology).
Mr. Fox is Chairman of the Audit Committee and is on the
Compensation & Organization Committee.
</TABLE>
3
<PAGE> 6
<TABLE>
<C> <S>
K. GRAHAME WALKER Director since 1989
[Photo of K. Grahame Walker] Mr. Walker, age 61, has been chairman, president and
chief executive officer of the Company since prior to
1994. He is a chairman of the board of directors of Life
Technologies, Inc. (life science/ biotechnology
products), an affiliate of the Company.
[Photo of Dr. Whitesides] GEORGE M. WHITESIDES Director since 1985
Dr. Whitesides, age 59, has been a professor of
chemistry at Harvard University since prior to 1994. Dr.
Whitesides is a director of Advanced Magnetics, Inc.
(medical diagnostic products), Hyperion Catalysis, Inc.
(medical products), Geltex, Inc. (physical research) and
a director of Life Technologies, Inc. (life
science/biotechnology products), an affiliate of the
Company.
Dr. Whitesides is Chairman of the Environmental & Safety
Committee and is on the Audit Committee.
Term Expiring in 2001:
[Photo of R. Furek] ROBERT M. FUREK Director since 1990
Mr. Furek, age 56, 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
1994 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 since 1992
[Photo of Martha Clark Goss] Mrs. Goss, age 49, has been vice president and chief
financial officer of Booz, Allen & Hamilton Inc. since
July 1995. From prior to 1994 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 1994 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>
4
<PAGE> 7
<TABLE>
<C> <S>
EDGAR G. HOTARD Director since 1996
[Photo of E. Hotard] Mr. Hotard, age 55, retired as president and chief
operating officer of Praxair, Inc. (industrial gases
supplier) on December 31, 1998. Mr. Hotard had been
chief operating officer of Praxair since December 1997,
and had been president of Praxair, Inc. since prior to
1994. Mr. Hotard is a director of 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 since 1992
[Photo of C. Curl] Mr. Curl, age 50, has been president of Curl &
Associates (independent management consulting firm)
since prior to 1994.
Mr. Curl is on the Environmental & Safety Committee.
</TABLE>
<TABLE>
<C> <S>
PETER G. KELLY Director since 1994
[Photo of P. Kelley] Mr. Kelly, age 61, has been chairman of Updike, Kelly &
Spellacy, P.C., a Hartford, Connecticut-based law firm,
since prior to 1994. Mr. Kelly has been chairman of
Meridian Worldwide LLC (public affairs firm) and
Meridian Americas LLC (public affairs firm) since 1998.
Since 1997, Mr. Kelly has been chairman of the
professional advisory council of C.I.S. Strategies, Ltd.
(division of PBN Corporation) and since 1999 has been
chairman of PBN Corporation (public relations firm).
From prior to 1994 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, a subsidiary of Burson-Marsteller, from
1996 to 1997. Mr. Kelly is a director of Phillips Screw
Corp. (manufacturer and licensor) and a director of Life
Technologies, Inc. (life science/ biotechnology
products), an affiliate of the Company.
Mr. Kelly is on the Audit Committee and the
Environmental & Safety Committee.
</TABLE>
5
<PAGE> 8
<TABLE>
<C> <S>
JEAN-FRANCOIS SAGLIO Director
[Photo of J.F. Saglio] since 1991
Mr. Saglio, age 62, has been president of ERSO (a
consulting company in France) since 1994. From prior to
1994 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).
Mr. Saglio is on the Environmental & Safety Committee.
</TABLE>
The Board of Directors had twelve meetings in 1998, and six meetings have
been scheduled for 1999. The Board of Directors has appointed a Compensation &
Organization Committee, an Audit Committee and an Environmental & Safety
Committee.
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 1994 Plan and the
granting of stock options under the Company's stock option plans. Five meetings
of the Compensation & Organization Committee were held in 1998, and five
meetings have been scheduled for 1999.
The Audit Committee is composed of the following five 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, 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 1998, and three meetings have been scheduled for 1999.
The Environmental & Safety Committee is composed of the following five
members: George M. Whitesides, Chairman, Charles H. Curl, Edgar G. Hotard, Peter
G. Kelly, and Jean-Francois Saglio. 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
1998, and three meetings have been scheduled for 1999.
During 1998, 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 1998, 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 1998, 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.
6
<PAGE> 9
Pursuant to the 1994 Stock Plan for Outside Directors, on December 31,
1998, each outside director was granted 200 shares of the Company's Common
Stock. As of December 31, 1998, the value of 200 shares of the Company's Common
Stock was $6,105.
CERTAIN TRANSACTIONS AND LEGAL MATTERS
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's directors, executive officers and holders of more than 10% of the
Company's Common Stock to file with the Securities and Exchange Commission
initial reports of beneficial ownership and changes in beneficial ownership of
the Common Stock and other equity securities of the Company. The Company
believes that, during 1998, its directors, executive officers and holders of
more than 10% of the Company's Common Stock complied with all Section 16(a)
filing requirements with one exception. Peter G. Kelly, a director of the
Company, had one late report covering a single transaction.
7
<PAGE> 10
COMPENSATION OF EXECUTIVE OFFICERS
SUMMARY COMPENSATION TABLE
The following table contains information concerning compensation paid or to
be paid to the chief executive officer ("CEO") and the other four most highly
compensated executive officers of the Company for services rendered to the
Company and its subsidiaries during the past three completed fiscal years.
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
--------------------------
ANNUAL COMPENSATION AWARDS
------------------------------------------------ --------------------------
NAME AND OTHER ANNUAL(2) RESTRICTED STOCK OPTIONS ALL OTHER
PRINCIPAL POSITION YEAR SALARY($)(1) BONUS($) COMPENSATION($) AWARDS($)(3) (#) COMPENSATION($)(4)
- ------------------ ---- ------------ -------- --------------- ---------------- ------- ------------------
<S> <C> <C> <C> <C> <C> <C> <C>
K. Grahame Walker...... 1998 660,000 164,835 9,239 384,100 64,000 130,894
Chairman, President
and Chief Executive 1997 615,563 461,670 9,025 373,438 55,000 168,321
Officer 1996 576,250 429,190 8,398 340,625 0 156,464
Kathleen Burdett....... 1998 261,250 57,420 692 183,700 16,000 46,535
Vice President and 1997 247,000 156,730 789 164,313 10,000 63,057
Chief Financial
Officer 1996 237,000 146,260 742 136,250 0 46,179
Jeffrey W.
McClelland(5)........ 1998 192,000 117,100 0 66,800 10,000 8,373
Vice President and 1997 181,500 110,900 0 59,750 5,000 9,463
President, Adhesive 1996 173,500 50,900 0 40,875 0 13,929
& Coating Systems
R. Barry Gettins....... 1998 233,250 38,450 2,812 83,500 5,000 42,129
Senior Vice President, 1997 226,375 122,380 3,320 74,688 5,000 46,121
Operations and 1996 217,250 109,418 2,006 122,625 0 41,799
Technology Development
David G. Gordon(6)..... 1998 223,750 39,774 580 125,250 15,000 30,739
Vice President and 1997 211,000 83,084 44,271 119,500 10,000 45,760
President 1996 208,903 100,177 105,574 81,750 18,000 21,493
Nonwoven Materials
</TABLE>
- ---------------
(1) The salaries reported above for Mr. Walker and Ms. Burdett include payments
received by them from Life Technologies, Inc. ("LTI") as directors' fees.
The amounts of these payments were as follows: K. Grahame Walker -- $4,000
in 1996 and Kathleen Burdett -- $4,500 in 1996. 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.
For David G. Gordon, the other annual compensation reported above also
includes relocation expenses of $43,356 in 1997 and $105,224 in 1996.
(3) The restricted stock awards reported above, which were made pursuant to the
1994 Plan in 1998, show the dollar value of such awards on the date of
grant. As of December 31, 1998, the aggregate number and value of restricted
shares held by the named executive officers are as follows: K. Grahame
Walker -- 44,334 shares, $1,393,750; Kathleen Burdett -- 19,142 shares,
$601,777; Jeffrey W. McClelland -- 6,236 shares, $196,044; R. Barry
Gettins -- 11,584 shares, $364,172; and David G. Gordon -- 10,000 shares,
$314,375. 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 10-11 of
this proxy statement.
(4) The other compensation reported above is composed of five 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 (d) the contribution payable under
the Dexter 401(k) Savings Plan and (e) payment for unused vacation. The
respective amounts for each of the named executive officers are as follows:
K. Grahame Walker -- $19,764, $99,725, $11,405, $0 and $0; Kathleen
Burdett -- $19,613, $26,107, $815, $0 and $0; Jeffrey W. McClelland -- $0,
$0, $2,669, $5,000 and $704; R. Barry Gettins -- $19,684, $18,974, $3,471,
$0 and $0; and David G. Gordon -- $19,666, $9,945, $1,128, $0 and $0.
(5) Jeffrey W. McClelland became an executive officer of the Company in April
1998.
(6) The annual compensation reported above for David G. Gordon in 1996 includes
amounts paid to Mr. Gordon for services rendered by him to D&S Plastics
International, a former affiliate of the Company.
8
<PAGE> 11
OPTION GRANTS IN LAST FISCAL YEAR
The following table discloses information concerning individual grants of
stock options made during the last completed fiscal year to the executive
officers named in the Summary Compensation Table.
OPTION GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANTS
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE VALUE
AT ASSUMED ANNUAL RATES OF
NUMBER OF STOCK PRICE APPRECIATION
SECURITIES % OF TOTAL FOR OPTION TERM
UNDERLYING OPTIONS GRANTED EXERCISE ---------------------------
OPTIONS TO EMPLOYEES PRICE EXPIRATION 5% 10%
NAME GRANTED(#) IN FISCAL YEAR ($/SHARE) DATE ($)(A) ($)(a)
- ---- ---------- --------------- --------- ----------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
K. Grahame Walker.................... 21,333 7.4% $41.4063 May 1, 2004 $300,413 $ 681,536
21,333 7.4% $41.4063 May 1, 2005 $359,600 $ 838,021
21,334 7.4% $41.4063 May 1, 2006 $421,766 $1,010,203
Kathleen Burdett..................... 5,333 1.9% $41.4063 May 1, 2004 $ 75,100 $ 170,376
5,333 1.9% $41.4063 May 1, 2005 $ 89,896 $ 209,496
5,334 1.9% $41.4063 May 1, 2006 $105,451 $ 252,574
Jeffrey W. McClelland................ 3,333 1.2% $41.4063 May 1, 2004 $ 46,936 $ 106,481
3,333 1.2% $41.4063 May 1, 2005 $ 56,183 $ 130,930
3,334 1.2% $41.4063 May 1, 2006 $ 65,912 $ 157,871
R. Barry Gettins..................... 1,666 0.6% $41.4063 May 1, 2004 $ 23,461 $ 53,225
1,667 0.6% $41.4063 May 1, 2005 $ 28,100 $ 65,485
1,667 0.6% $41.4063 May 1, 2006 $ 32,956 $ 78,935
David G. Gordon...................... 5,000 1.7% $41.4063 May 1, 2004 $ 70,411 $ 159,737
5,000 1.7% $41.4063 May 1. 2005 $ 84,283 $ 196,414
5,000 1.7% $41.4063 May 1, 2006 $ 98,848 $ 236,759
</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 1994 Plan. On May 1, 1998, three grants of stock options were made to each
of the above-named executive officers. The first grant will vest on May 1, 1999,
the second grant will vest on May 1, 2000, and the third grant will vest on May
1, 2001. 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 1998 under the 1994 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 1994 Plan permits the grant of stock appreciation
rights in tandem with options or as freestanding awards.
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.
9
<PAGE> 12
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................ 21,667 $411,987 83,500/100,667 $475,471/$55,001
Kathleen Burdett................. 3,000 $ 55,358 14,667/ 22,667 $ 83,754/$10,001
Jeffrey W. McClelland............ 3,500 $ 64,719 8,666/ 13,334 $ 49,812/$ 5,001
R. Barry Gettins................. 6,000 $114,500 24,666/ 8,334 $155,812/$ 5,001
David G. Gordon.................. 833 $ 16,629 15,667/ 27,667 $ 66,027/$38,876
</TABLE>
- ---------------
(a) The value of unexercised options was determined using the closing price of
the Company's Common Stock as of December 31, 1998.
LONG TERM INCENTIVE PLAN -- 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 1994 Plan.
LONG TERM INCENTIVE PLAN -- AWARDS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
PERFORMANCE ESTIMATED FUTURE PAYOUTS UNDER
NUMBER OF OR OTHER NON-STOCK 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............ 4,600 May 1, 2001 1,150 4,600 4,600
4,600 May 1, 2004 1,150 4,600 4,600
Kathleen Burdett............. 2,200 May 1, 2001 550 2,200 2,200
2,200 May 1, 2004 550 2,200 2,200
Jeffrey W. McClelland........ 800 May 1, 2001 200 800 800
800 May 1, 2004 200 800 800
R. Barry Gettins............. 1,000 May 1, 2001 250 1,000 1,000
1,000 May 1, 2004 250 1,000 1,000
David G. Gordon.............. 1,500 May 1, 2001 375 1,500 1,500
1,500 May 1, 2004 375 1,500 1,500
</TABLE>
- ---------------
(a) The restricted shares reported in this table were granted to the named
executive officers on May 1, 1998, 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, 1998 and ending on December 31, 2000 ("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
restrictions will lapse if the Company achieves 100% of the financial
targets. No additional shares will be awarded if the Company achieves
10
<PAGE> 13
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
business units. 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 business unit of the
Company, participated in the pension plan and Mr. McClelland, as an employee of
a business unit of the Company, participates in the pension plan. The estimated
annual benefit payable under the pension plan to Mr. Walker and Mr. McClelland
upon normal retirement is $47,018 and $75,072, respectively. Ms. Burdett, Mr.
Gettins and Mr. Gordon are not participants in the Company's 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 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, 1998 is 33 for
K. Grahame Walker, 17 for Kathleen Burdett, 20 for Jeffrey W. McClelland, 25 for
R. Barry Gettins, and 23 for David G. Gordon.
11
<PAGE> 14
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 Jeffrey W. McClelland and David G. Gordon 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 of Jeffrey W. McClelland and David G. Gordon 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 Jeffrey W. McClelland and David G. Gordon
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.
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 return to shareholders. Of particular importance to
the Company is its ability to grow and enhance its competitiveness into the next
century. 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
12
<PAGE> 15
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 1998
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 benefits,
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.
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
1997, which was the direct result of the CEO's leadership in simplifying the
Company's structure and focusing on its competitive strengths and global
opportunities. Based upon this evaluation, the Compensation Committee
established a base salary of $670,000 for the period commencing April 1, 1998
and ending March 31, 1999, an increase of 6.35% over the $630,000 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 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
business unit financial performance and (2) an assessment of the executive's
individual performance. Each year the Compensation Committee
13
<PAGE> 16
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 1998,
the sole financial measure for corporate financial performance, which was
approved by the Compensation Committee, was earnings per share. The financial
measures used in 1998 for individual businesses, 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 business 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 1998 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. Because not all of the
Company's business units achieved the financial measures necessary for a full
payout, the actual payout amounts for these individuals ranged from 16.5% to 61%
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 1998
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 did
not meet the targeted amount established by the Compensation Committee for 1998,
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 25% of his base salary, or $164,835. This represents a decrease
from the $461,670 of incentive compensation paid to the CEO in 1997.
It should be emphasized that the Company's 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. In years in which the
targets have not been met, on the other hand, such payouts have been reduced.
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 business unit employees.
STOCK OPTIONS
The third component of executive compensation is the Company's stock option
program, 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 185,000 options were granted to executive officers and other
senior management in 1998 under the 1994 Plan, 64,000 of which were granted to
the CEO and 46,000 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 1998 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 restricted stock, which
the Company granted in 1998 to executive officers and other senior management
under the 1994 Plan.
A total of 41,500 shares of restricted stock were granted to executive
officers and other senior management in 1998, 9,200 of which were granted to the
CEO and 11,000 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
14
<PAGE> 17
1998 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 1998 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, 1998 and ending on December 31, 2000 ("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 1998 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 guidelines for ownership of
Dexter Common Stock by executive officers. Under these guidelines, each
executive officer is expected to own, within three years of becoming an
executive officer, 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. As of December 31, 1998, these ownership guidelines have been met.
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 1998 to the four most highly compensated executive officers (other
than the CEO) will be fully deductible. The CEO's compensation in 1998 exceeded
the $1 million limit by $108,711. This was due primarily to the fact that
additional income was realized by the CEO in the first half of 1998 as a result
of a significant increase for which provision had not been made in the value of
restricted stock granted to the CEO in 1995. The Company is proposing a new long
term incentive plan for approval by the shareholders of the Company, as more
fully described on pages 16-20 of this proxy statement. The new plan will, among
other things, allow the Company to issue restricted stock and other
stock-related awards that satisfy the requirements of Section 162(m). The
Company believes that the new plan, if approved by the shareholders, together
with procedures already in place, will assure that the compensation paid to
executive officers of the Company (including the CEO) will 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
15
<PAGE> 18
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, 1993 and ending December 31, 1998. 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, 1993)
<TABLE>
<CAPTION>
S&P SPECIALTY CHEMICALS
IDEXTER CORPORATION S&P 500 INDEX INDEX
------------------- ------------- -----------------------
<S> <C> <C> <C>
1993 $100.00 $100.00 $100.00
1994 $ 96.11 $101.32 $ 87.30
1995 $108.35 $139.40 $114.75
1996 $150.61 $171.40 $117.69
1997 $209.63 $228.59 $145.74
1998 $157.68 $293.91 $124.11
</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
1998, none of the members of the Compensation Committee had any relationship
requiring disclosure in accordance with Item 402(j)(3) of Regulation S-K of the
Securities and Exchange Commission.
(2) APPROVAL OF 1999 LONG TERM INCENTIVE PLAN
The purpose of the 1999 Long Term Incentive Plan (the "1999 Plan") is to
enable the Company to offer stock-based and other incentive compensation
opportunities to designated key employees of the Company and of its affiliates
in order to promote the Company's long-term financial success and enhance
shareholder value.
Internal Revenue Code Section 162(m) and the regulations thereunder
("Section 162(m)") limit the amount of compensation a corporation may deduct as
a business expense. That limit, which applies to the chief executive officer and
the other four most highly compensated executive officers, is $1 million per
individual, per year. This limitation, however, does not apply to
performance-based compensation that meets the requirements of Section 162(m).
The 1999 Plan has been designed to allow the Company to issue stock and
stock-related awards that will meet Section 162(m) requirements.
16
<PAGE> 19
The full text of the 1999 Plan recommended by the Board of Directors is
attached to this proxy statement as Exhibit A. The essential features of the
1999 Plan are outlined below, but such outline is qualified in its entirety by
reference to the full text of the 1999 Plan.
TYPES OF AWARDS
The 1999 Plan would permit the granting of any or all of the following
types of awards: (1) stock options, including incentive stock options ("ISOs");
(2) stock appreciation rights ("SARs"), in tandem with stock options or
freestanding; (3) restricted stock; (4) performance awards; (5) incentive
shares; (6) dividend equivalent rights ("DERs"), in tandem with other awards or
freestanding; and (7) other awards based on, payable in, or related to Common
Stock of the Company.
ELIGIBILITY FOR PARTICIPATION
In addition to employee directors and officers, all key employees of the
Company or of any affiliate of the Company will be eligible for selection for
participation under the 1999 Plan. The selection of participants from among
eligible employees will be entirely within the discretion of the Compensation
Committee or another committee designated by the Company's Board (the "Plan
Committee"), which shall be composed entirely of outside directors.
ADMINISTRATION AND AMENDMENT OF THE PLAN
The 1999 Plan will be administered by the Plan Committee, which will have
the authority to grant and fix the terms of any awards made under the 1999 Plan,
to interpret its provisions, and to promulgate, amend, and rescind rules and
regulations for its administration. The Plan Committee may delegate to the Chief
Executive Officer and/or other senior officers of the Company its duties under
the 1999 Plan; provided, however, that only the Plan Committee may grant awards
or make determinations regarding grants to executive officers.
The Board of Directors is authorized to amend or terminate the 1999 Plan,
except that further shareholder approval is required for amendments that would
decrease the minimum exercise price of an option or SAR, increase the number of
shares that may be granted, or as otherwise necessary under applicable
securities, tax, or other laws. Under applicable federal securities law as
currently in effect, shareholder approval would generally be required for any
amendment that would materially increase the benefits accruing to reporting
persons under the 1999 Plan.
TERM OF THE PLAN
The 1999 Plan will become effective on the date shareholder approval is
obtained and will terminate on February 25, 2009, after which time no additional
grants may be made thereunder.
SHARES SUBJECT TO THE PLAN
Subject to certain exceptions set forth in the 1999 Plan for stock splits,
stock dividends and other changes in the capitalization that are determined to
be dilutive to outstanding awards under the 1999 Plan, (a) the aggregate number
of shares of the Common Stock of the Company that may be effectively issued
under the 1999 Plan shall not exceed the sum of (i) 1,500,000 shares plus (ii)
the number of shares available for new awards under the 1994 Plan; and (b) the
aggregate number of shares of the Common Stock of the Company that may be
effectively granted under the 1999 Plan to any eligible employee in any given
year shall not exceed 150,000. In the event that any award expires, lapses or
terminates without issuance of unrestricted shares, the shares allocable to such
award shall again be available for issuance under the 1999 Plan. The number of
shares issued under the 1999 Plan will be determined net of any previously-owned
shares tendered by the holder of a 1999 Plan award in payment of the exercise
price or withholding taxes and net of any shares withheld for the payment of the
exercise price or withholding taxes.
STOCK OPTIONS
Stock options granted under the 1999 Plan will be subject to the terms and
conditions determined by the Plan Committee, except that (i) options may be
granted only during the ten years following the effective date of the 1999
17
<PAGE> 20
Plan; (ii) the option price cannot be less than 100 percent of the fair market
value of Common Stock at the time the option is granted; (iii) no option may be
exercised more than ten years after it is granted; and (iv) no option may be
exercised more than five years after the grantee's termination of employment
except in certain circumstances if the grantee dies after termination of
employment. Unless otherwise provided in the award, outstanding options may be
exercised three years after the grantee's death.
Payment of the exercise price of a stock option will be made in cash,
shares, and other consideration in accordance with the terms of the 1999 Plan
and any applicable rules of the Plan Committee. Shares surrendered in payment of
the exercise price shall be valued at fair market value on the date of
surrender.
An employee receiving a stock option will not realize any compensation
income under the Internal Revenue Code upon the grant of the option. However, an
employee will generally realize compensation income at the time of exercise
(except for options which are ISOs) in the amount of the difference between the
option price and the fair market value on the date of exercise. The Company is
entitled to a corresponding deduction under the Internal Revenue Code, subject
to Section 162(m) limitations on deductibility of executive compensation.
In the case of ISOs, although no compensation income is realized upon
exercise, the excess of the fair market value on the date of exercise over the
option price is included in alternative minimum taxable income for alternative
minimum tax purposes. If stock acquired upon exercise of an ISO is sold within
one year of the option exercise or two years of the option grant, then, in
general, the optionee's gain on the sale will be ordinary income to the extent
of the option spread on the exercise date and the balance of the gain, if any,
will be capital gain. If the stock acquired is sold after the one-year/two-year
holding period, then all of the gain on the sale will be capital gain. The
Company will be entitled to a deduction on the amount, if any, of the gain which
is treated as ordinary income to the optionee.
STOCK APPRECIATION RIGHTS (SARs)
A SAR may be granted in tandem with a stock option or as a freestanding
award. A SAR permits the holder to receive a number of shares having an
aggregate value equal to any excess of the fair market value of the Company's
shares subject to the SAR over the grant price of the SAR (which may not be less
than 100 percent of fair market value of such shares at the time of grant). If
the SAR is granted in tandem with a stock option, exercise of the SAR cancels
the related option to the extent of such exercise and vice versa.
In the case of SARs granted either freestanding or in tandem with an
option, the employee will not realize any compensation income at the time of
grant. However, the fair market value of stock or cash delivered pursuant to the
exercise of such SARs will be treated as compensation income taxable to the
employee at the time of exercise, and the Company will be entitled to a
corresponding deduction, subject to Section 162(m) limitations on deductibility
of executive compensation.
RESTRICTED STOCK
An award of restricted stock may be granted under the 1999 Plan, either at
no cost to the recipient, or for such cost as may be required by law or
otherwise determined by the Plan Committee. Restricted stock may not be disposed
of by the recipient until the restrictions specified in the award expire. These
restrictions could be based solely on a specified period of continuous
employment or could also be contingent on attaining specific business objectives
or other quantitative or qualitative criteria. The participant will have, with
respect to restricted stock, all of the rights of a shareholder of the Company,
including the right to vote the shares and the right to receive any cash
dividends, unless otherwise specified in the award.
In the case of restricted stock, the employee will realize compensation
income in an amount equal to the fair market value of such stock less any amount
paid for such stock at a time when the employee's rights with respect to such
stock are no longer subject to a substantial risk of forfeiture unless the
employee otherwise elects pursuant to a special election provided in the
Internal Revenue Code. Dividends paid to the employee during a period of
restriction will be taxable as compensation income unless the election referred
to in the preceding sentence has been made. The Company will be entitled to a
deduction under the Internal Revenue Code at the time and equal to the amount of
compensation income that is realized by the employee, subject to Section 162(m)
limitations on deductibility of executive compensation.
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PERFORMANCE AWARDS
A performance award may be granted under the 1999 Plan, either at no cost
to the recipient or for such cost as may be required by law or otherwise
determined by the Plan Committee. Performance awards may take the form of
shares, restricted stock, incentive shares or such other form of award as the
Plan Committee may determine. The terms and conditions of performance awards
shall be established by the Plan Committee and specified by the grant; provided,
however, that, in order to entitle the Company to deduct, for U.S. income tax
purposes, the compensation resulting form such awards, such terms and conditions
must, in each case, comply with the applicable requirements of Section 162(m).
Performance awards shall require the attainment of objective,
pre-established goals based on one or more of the following criteria: "business
contribution," "earnings per share," "return on equity," or "revenues," as these
criteria are defined in Article II of the Plan, a copy of which is attached as
Exhibit A. The extent to which any such performance criteria have been achieved
shall be conclusively determined by the Plan Committee in accordance with the
requirements of Section 162(m). The maximum amount that may be payable to any
individual in any year under performance awards that are not measured in shares
is $500,000.
Performance awards are subject to forfeiture if the grantee terminates
employment prior to normal retirement time (subject to exceptions for
termination due to incapacity or for certain approved terminations) or is
determined to have engaged in activity detrimental to the interests of the
Company or its affiliates.
In general, employees will realize taxable income upon receipt of cash or
property in settlement of a performance award. The Company will be entitled to a
corresponding deduction, subject to Section 162(m) limitations on deductibility
of executive compensation.
INCENTIVE SHARES
The 1999 Plan also allows grants of incentive shares as a form of bonus.
Incentive shares may be granted under the 1999 Plan either at no cost to the
recipient or for such cost as may be required by law or otherwise determined by
the Plan Committee. Each grant shall specify the time and method for delivery of
the incentive shares, provided that the delivery of any incentive shares shall
be completed no later than the tenth anniversary of the grantee's date of
termination.
Any undelivered incentive shares may be subject to forfeiture if the
grantee terminates employment prior to normal retirement time (subject to
exceptions for termination due to incapacity or for certain approved
terminations) or is determined to have engaged in activity detrimental to the
interests of the Company or its affiliates.
In the case of incentive shares, the employee will realize compensation
income in an amount equal to the fair market value of such stock, less any
amount paid for such stock, at the time when the shares are delivered to the
employee. The Company will be entitled to a deduction under the Internal Revenue
Code at the time and equal to the amount of compensation income that is realized
by the employee, subject to Section 162(m) limitations on deductibility of
executive compensation.
OTHER AWARDS
Other forms of awards (including, for example, DERs) based on, payable in,
or otherwise related in whole or in part to Common Stock of the Company may be
granted under the 1999 Plan if the Plan Committee determines that such awards
are consistent with the purposes and restrictions of the 1999 Plan. The terms
and conditions of such awards shall be specified by the grant. Such awards shall
be granted for no cash consideration, for such minimum consideration as may be
required by applicable law, or for such other consideration as may be specified
by the Plan Committee.
In general, employees will realize taxable income upon receipt of cash or
property in settlement of a performance award. The Company will be entitled to a
corresponding deduction, subject to Section 162(m) limitations on deductibility
of executive compensation.
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ADJUSTMENTS
In the event of any stock split, stock dividend, or other relevant change
in capitalization that is determined to be dilutive to outstanding awards under
the 1999 Plan, appropriate adjustment will be made in the number of shares and
the purchase price per share, if any, under such awards, and in determining
whether a particular award may thereafter be granted.
WITHHOLDING TAXES
The 1999 Plan provides that any award thereunder may allow the grantee of
such award to elect to pay withholding taxes due with respect to such award by
delivering shares of Company Common Stock to the Company or authorizing the
Company to withhold such shares otherwise due under such award. Such shares
delivered or withheld will be valued at fair market value. All payments or
distributions under the 1999 Plan will be subject to satisfaction of applicable
withholding requirements.
The Board of Directors has approved the adoption of the Plan, subject to
shareholder approval. The affirmative vote of the holders of a majority of the
shares of Common Stock entitled to notice of and to vote at the 1999 Annual
Meeting is required to approve the 1999 Plan. If the shareholders approve the
1999 Plan, then no additional grants will be made under the 1994 Plan.
THE BOARD OF DIRECTORS DEEMS PROPOSAL NO. 2 TO BE IN THE BEST INTERESTS OF
THE COMPANY AND ITS STOCKHOLDERS AND RECOMMENDS A VOTE FOR APPROVAL THEREOF.
(3) RATIFICATION OF SELECTION OF AUDITOR
The Board of Directors, upon recommendation of its Audit Committee, has
selected the firm of PricewaterhouseCoopers LLP ("PricewaterhouseCoopers"),
independent certified public accountants, to audit the accounts of the Company
for the year 1999, and it is proposed that the selection of such firm be
ratified by the shareholders at the annual meeting.
PricewaterhouseCoopers audited the accounts of the Company and certain
employee benefit plans for the year 1998. In connection with its audit function,
PricewaterhouseCoopers reviewed the Company's 1998 quarterly and annual reports
to its shareholders and certain filings with the Securities and Exchange
Commission. In addition, during 1998, PricewaterhouseCoopers 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 PricewaterhouseCoopers,
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 PricewaterhouseCoopers 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 PRICEWATERHOUSECOOPERS AS AUDITOR OF THE
ACCOUNTS OF THE COMPANY FOR THE YEAR 1999.
(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
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must be received at the principal executive offices of Dexter Corporation, One
Elm Street, Windsor Locks, Connecticut 06096-2334, marked for the attention of
the Secretary, by November 10, 1999.
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 Dexter Corporation, One Elm
Street, Windsor Locks, Connecticut 06096-2334, 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 17, 1999 through February 7, 2000, unless next year's annual meeting is
called for a date prior to February 7, 2000, 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 1998 will be sent without charge after March 31, 1999 to any
shareholder upon written request directed to:
Dexter Corporation
Attention: Secretary
One Elm Street
Windsor Locks, CT 06096-2334
By order of the Board of Directors,
Bruce H. Beatt,
Secretary
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EXHIBIT A
DEXTER CORPORATION
1999 LONG TERM INCENTIVE PLAN
GENERAL PROVISIONS
I. PURPOSE.
The purpose of the 1999 Long Term Incentive Plan (the "Plan") is to enable
Dexter Corporation (the "Company") to offer stock-based and other incentive
compensation opportunities to designated key employees of the Company and of its
affiliates in order to promote the Company's long-term financial success and
enhance shareholder value.
II. DEFINITIONS.
As used in this Plan, except where the context otherwise indicates, the
following definitions apply:
(1) "affiliate" means any corporation, partnership, or entity in which
the Company, directly or indirectly, owns a 50 percent or greater equity
interest.
(2) "award" means a stock option, stock appreciation right ("SAR"),
restricted stock, performance award, incentive share, dividend equivalent
right ("DER"), or other award under the Plan.
(3) "Board" means the Board of Directors of the Company.
(4) "Business Contribution" means, for any performance period, with
respect to the Company or a designated business unit, net income for such
period, before acquisition charges, interest expense, LIFO gain or loss,
other non-operating charges, taxes on income and minority interest income,
all as reflected in the financial statements of the Company or designated
business unit, as applicable, prepared in accordance with generally
accepted accounting practices, consistently applied, for such performance
period.
(5) "Code" means the Internal Revenue Code, as in effect from time to
time.
(6) "Committee" means the Company's Compensation & Organization
Committee or another committee designated by the Board, which committee
shall consist of two or more members of the Board, each of whom is an
"outside director" as that term is defined in Section 162(m) and a
"disinterested person" within the meaning of Rule 16b-3.
(7) "designated beneficiary" means the person designated by the
grantee of an award hereunder to be entitled, on the death of the grantee,
to any remaining rights arising out of such award. Such designation must be
made in writing and in accordance with such regulations as the Committee
may establish.
(8) "detrimental activity" means activity that is determined in
individual cases, by the Committee, to be detrimental to the interests of
the Company or any affiliate.
(9) "dividend equivalent right," herein sometimes called a "DER,"
means the right of the holder thereof to receive, pursuant to the terms of
the DER, credits based on the cash dividends that would be paid on the
shares specified in the DER if such shares were held by the grantee, as
more particularly set forth in Section XII (1).
(10) "Earnings Per Share" means, for any performance period, the
consolidated net income of the Company for such period, before
extraordinary and unusual items and the cumulative effect of any change in
accounting principles, divided by the weighted average number of shares of
the Company's outstanding common stock.
(11) "effectively granted" means, for purposes of determining the
number of shares subject to an outstanding award under the Plan, the number
of shares subject to such award or the number of shares with respect to
which the value of such award is measured, as applicable, determined in
each case according to the standards of Rule 16b-3. An option that includes
a SAR shall be considered a single award for this purpose.
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(12) "effectively issued" means the gross number of shares purchased,
issued, delivered, or paid free of restrictions upon the exercise,
settlement, or payment of an award, or lapse of restrictions thereon, as
the case may be.
(13) "eligible employee" means an employee who is a director or
officer, or in a managerial, professional, or other key position as
determined by the Committee.
(14) "employee" means a regular employee of the Company or one of its
affiliates.
(15) "Exchange Act" means the Securities Exchange Act of 1934, as
amended from time to time.
(16) "fair market value" in relation to a share as of any specific
time shall mean such value as reported for stock exchange transactions
determined in accordance with any applicable regulations of the Committee
in effect at the relevant time.
(17) "grantee" means a recipient of an award under the Plan.
(18) "incentive shares" means an award of shares granted pursuant to
Section XI.
(19) "incentive stock option," herein sometimes called an "ISO," means
a stock option meeting the requirements of Section 422 of the Code or any
successor provision.
(20) "performance award" means an award of shares, or of units or
rights based on, payable in, or otherwise related to shares, granted
pursuant to Section X.
(21) "performance period" means any period specified by the grant of a
performance award during which specified performance criteria are to be
measured.
(22) "reporting person" means a person subject to the reporting
requirements of Section 16(a) of the Exchange Act with respect to equity
securities of the Company.
(23) "restricted stock" means any share issued with the restriction
that the holder may not sell, transfer, pledge, or assign such share and
such other restrictions (which may include, but are not limited to,
restrictions on the right to vote or receive dividends) which may expire
separately or in combination, at one time or in installments, all as
specified by the grant.
(24) "Return on Equity" means, for any performance period,
consolidated net income of the Company for such period, before
extraordinary or unusual items and the cumulative effect of any change in
accounting principles, divided by average shareholder equity (adjusted for
any extraordinary or unusual items and the cumulative effect of any change
in accounting principles), all as determined in accordance with generally
accepted accounting principles, consistently applied.
(25) "Revenues" means, for any performance period, (a) in respect of
the Company, the consolidated net sales of the Company for such period, and
(b) in respect of a business unit of the Company, the net sales of said
business unit for such period.
(26) "Rule 16b-3" means Rule 16b-3 (or any successor thereto) under
the Exchange Act that exempts transactions under employee benefit plans, as
in effect from time to time.
(27) "Section 162(m)" means Section 162(m) of the Code and the
regulations thereunder, as in effect from time to time.
(28) "share" means a share of Common Stock of the Company issued and
reacquired by the Company or previously authorized but unissued.
(29) "stock appreciation right," herein sometimes called a "SAR,"
means the right of the holder thereon to receive, pursuant to the terms of
the SAR, a number of shares or cash or a combination of shares and cash,
based on the increase in the value of the number of shares specified in the
SAR, as more particularly set forth in Section VIII.
(30) "terminate" means cease to be an employee, except by death, but a
change of employment from the Company or one affiliate to another affiliate
or to the Company shall not be considered a termination.
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(31) "terminate normally" for an employee participating in the Plan
means terminate
(a) at normal retirement time for that employee, or
(b) as a result of that employee's becoming incapacitated, or
(c) with written approval of the Committee given in the context of
recognition that all or a specified portion of the outstanding awards to
that employee will not expire or be forfeited or annulled because of
such termination
and, in each such case, without being terminated by reason of
detrimental activity.
(32) "year" means calendar year.
III. ADMINISTRATION.
(1) The Plan shall be administered by the Committee, which shall have
authority:
(a) to determine the employees of the Company and its affiliates to
whom, and the times at which, awards shall be granted, and the number of
shares to be subject to each such award, taking into account the nature
of services rendered by the particular employee, the employee's
potential contribution to the long-term success of the Company and/or
its affiliates and such other factors as the Committee in its discretion
shall deem relevant;
(b) to interpret the Plan and to establish rules and regulations
relating to it;
(c) to prescribe the terms and provisions of the awards; and
(d) to make all other determinations necessary or advisable in
order to administer the Plan.
(2) The Committee may delegate to the Chief Executive Officer and/or
to other senior officers of the Company its duties under the Plan pursuant
to such conditions and limitations as the Committee may establish, except
that only the Committee may make any awards or other discretionary
determinations regarding grants to reporting persons.
(3) All decisions of the Committee upon questions concerning the Plan,
or any award, shall be binding and conclusive upon the individual employees
involved and all persons claiming under them.
(4) With respect to reporting persons, transactions under the Plan are
intended to comply with all applicable conditions of Rule 16b-3. To the
extent any provision of the Plan or any action by an authority under the
Plan fails to so comply, such provision or action shall, without further
action by any person, be deemed to be automatically amended to the extent
necessary to effect compliance with Rule 16b-3, provided that if such
provision or action cannot be amended to effect such compliance, such
provision or action shall be deemed null and void, to the extent permitted
by law and deemed advisable by the appropriate authority. Each award to a
reporting person under the Plan shall be deemed issued subject to the
foregoing qualification.
(5) An award under the Plan is not transferable except, as provided in
the award, by will or the laws of descent and distribution, and is not
subject, in whole or in part, to attachment, execution, or levy of any
kind. The designation by a grantee of a designated beneficiary shall not
constitute a transfer.
(6) Any rights with respect to an award granted under the Plan
existing after the grantee dies are exercisable by the grantee's designated
beneficiary or, if there is no designated beneficiary, by the grantee's
personal representative.
(7) Except as otherwise provided herein, a particular form of award
may be granted to an eligible employee either alone or in addition to other
awards hereunder. The provisions of particular forms of award need not be
the same with respect to each recipient.
(8) The Plan and all action taken under it shall be governed by the
laws of the State of Connecticut.
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IV. TERM.
The term of the Plan begins on the date shareholder approval of the Plan is
obtained and ends on February 25, 2009.
V. SHARES SUBJECT TO THE PLAN.
Subject to the provisions of Section VI, (a) the aggregate number of shares
of the Common Stock of the Company that may be effectively issued under the Plan
shall not exceed the sum of (i) 1,500,000 shares plus (ii) the number of shares
available for new awards under the Company's 1994 Long Term Incentive Plan (the
"1994 Plan"); and (b) the aggregate number of shares of the Common Stock of the
Company that may be effectively granted under the Plan to any eligible employee
in any given year shall not exceed 150,000. In the event that any award expires,
lapses or terminates without issuance of unrestricted shares, the shares
allocable to such award shall again be available for issuance under the Plan.
The number of shares issued under the Plan will be determined net of any
previously-owned shares tendered by the holder of a Plan award in payment of the
exercise price or withholding taxes and net of any shares withheld for the
payment of withholding taxes.
VI. ADJUSTMENTS.
Whenever a stock split, stock dividend, or other relevant change in
capitalization which the Committee determines to be dilutive to outstanding
awards occurs,
(1) the number of shares that can thereafter be obtained under
outstanding awards and the purchase price per share, if any, under such
awards,
(2) the number of shares that may be effectively granted to any
employee in any year, and
(3) every number of shares used in determining whether a particular
award is grantable thereafter,
shall be adjusted as the Committee determines is appropriate.
VII. STOCK OPTIONS.
One or more stock options may be granted to any eligible employee. Each
stock option so granted shall be subject to such terms and conditions as the
Committee shall impose, which shall include the following:
(1) The exercise price per share shall be specified by the grant, but
shall in no instance be less than 100 percent of fair market value at the
time of grant. Payment of the exercise price shall be made in cash, shares,
or other consideration in accordance with the terms of the Plan and any
applicable regulations of the Committee in effect at the time and valued at
fair market value on the date of exercise of the stock option.
(2) Unless the Committee determines otherwise, if the grantee has
terminated before a stock option or portion thereof becomes exercisable,
that stock option or portion thereof shall be forfeited and shall never
become exercisable. Except as otherwise specified by the grant, a stock
option shall become immediately exercisable in full upon the death of the
grantee.
(3) Any stock option or portion thereof that is exercisable is
exercisable for the full amount or for any part thereof, except as
otherwise provided by the grant.
(4) Each stock option ceases to be exercisable, as to any share, when
the stock option is exercised to purchase that share, or when a related SAR
is exercised either by the holder or automatically in accordance with its
terms, or when the stock option expires. To the extent a SAR included in a
stock option is exercised, such stock option shall be deemed to have been
exercised and shall not be deemed to have expired.
(5) A stock option or portion thereof that is exercisable shall expire
in the following situations:
(a) if the grantee is then living, it shall expire at the earliest
of:
(i) ten years after it is granted,
(ii) five years after the grantee terminates normally, or
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(iii) any earlier time specified by the grant;
(b) if the grantee terminates, but does not terminate normally, it
shall expire at the time of termination;
(c) if the grantee is determined to have engaged in detrimental
activity, it shall expire as of the date of such determination; or
(d) if the grantee dies, it shall expire at the earlier of:
(i) three years after the grantee's death, or
(ii) any earlier time specified by the grant;
but, in any case, no later than ten years after it is granted.
(6) Except to the extent otherwise specified in this Section VII (6),
stock options granted hereunder may be designated as ISOs. To the extent
that the aggregate fair market value of shares with respect to which stock
options designated as ISOs are exercisable for the first time by any
grantee during any year (under all plans of the Company and any affiliate
thereof) exceeds $100,000, such stock options shall be treated as not being
ISOs. The foregoing shall be applied by taking stock options into account
in the order in which they were granted. For the purposes of the foregoing,
the fair market value of any share shall be determined as of the time the
stock option with respect to such share is granted. In the event the
foregoing results in a portion of a stock option designated as an ISO
exceeding the above $100,000 limitation, only such excess shall be treated
as not being an ISO.
VIII. STOCK APPRECIATION RIGHTS.
(1) A SAR may be granted to an eligible employee as a separate award or as
a component of another award. Any such SAR shall be subject to such terms and
conditions as the Committee shall impose, which shall include provisions that
(a) such SAR shall entitle the holder thereof, upon exercise thereof in
accordance with such SAR and the regulations of the Committee, to receive from
the Company that number of shares having an aggregate value equal to the excess
of the fair market value, at the time of exercise of such SAR, of one share over
the exercise price per share specified by the grant of such SAR (which shall in
no instance be less than 100 percent of fair market value at the time of grant)
times the number of shares specified in such SAR, or portion thereof, which is
so exercised; and (b) such SAR shall be exercisable, or be forfeited or expire,
upon the same conditions set forth for freestanding options in Section VII,
paragraphs (2), (3), (4), and (5).
(2) Any stock option granted under the Plan may include a SAR, either at
the time of grant or by amendment. A SAR included in a stock option shall be
subject to such terms and conditions as the Committee shall impose, which shall
include provisions that (a) such SAR shall be exercisable to the extent, and
only to the extent, the stock option is exercisable; and (b) such SAR shall
entitle the optionee to surrender to the Company unexercised the stock option in
which the SAR is included, or any portion thereof, and to receive from the
Company in exchange therefor that number of shares having an aggregate value
equal to the excess of the fair market value, at the time of exercise of such
SAR, of one share over the exercise price specified in such stock option times
the number of shares specified in such stock option, or portion thereof, which
is so surrendered.
(3) A SAR may provide that such SAR shall be deemed to have been exercised
at the close of business on the business day preceding the expiration of such
SAR or the related stock option, if any, if at such time such SAR has positive
value and would have expired in accordance with the conditions set forth in
Section VII (5)(a).
IX. RESTRICTED STOCK.
(1) An award of restricted stock may be granted hereunder to an eligible
employee, for no cash consideration, for such minimum consideration as may be
required by applicable law, or for such other consideration as may be specified
by the grant. The terms and conditions of restricted stock shall be specified by
the grant.
(2) Any restricted stock issued hereunder may be evidenced in such manner
as the Committee in its sole discretion shall deem appropriate, including,
without limitation, book-entry registration or issuance of a stock
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certificate or certificates. In the event any stock certificate is issued in
respect of shares of restricted stock awarded hereunder, such certificate shall
bear an appropriate legend with respect to the restrictions applicable to such
award.
(3) Except as otherwise specified by the grant, if a holder of record of
restricted stock terminates, but does not terminate normally, all shares of
restricted stock (whether or not stock certificates have been issued) then held
by such holder and then subject to restriction shall be forfeited by such holder
and reacquired by the Company. Except as otherwise specified by the grant, if a
holder of record of restricted stock terminates normally or dies, any and all
remaining restrictions with respect to such restricted stock shall expire.
Notwithstanding the foregoing, if a holder of record of restricted stock is
determined to have engaged in detrimental activity, all shares of restricted
stock (whether or not stock certificates have been issued) then held by such
holder and then subject to restriction shall be forfeited by such holder as of
the date of such determination and shall be reacquired by the Company.
X. PERFORMANCE AWARDS.
(1) Performance awards may be granted hereunder to an eligible employee,
for no cash consideration, for such minimum consideration as may be required by
applicable law, or for such other consideration as may be specified by the
grant. Performance awards may be granted in the form of shares, restricted
stock, incentive shares or in such other form of award as the Committee may
determine. The terms and conditions of performance awards shall be established
by the Committee and specified by the grant; provided, however, that, in order
to entitle the Company to deduct, for U.S. income tax purposes, the compensation
resulting from such awards, the Committee will grant such awards, if at all, at
such times, in such manner and upon such terms and conditions as are necessary
or appropriate in order, in each case, to comply with the applicable
requirements of Section 162(m).
(2) Performance awards shall require the attainment of objective,
pre-established goals based on one or more of the following criteria: Business
Contribution, Earnings Per Share, Return on Equity, or Revenues. The extent to
which any such performance criteria have been achieved shall be conclusively
determined by the Committee in accordance with the requirements of Section
162(m). The maximum amount that may be payable to any individual in any year
under performance awards that are not measured in shares is $500,000.
(3) Except as otherwise specified by the grant, if the grantee terminates,
but does not terminate normally, any performance award or installment thereof
not payable prior to the grantee's termination shall be annulled as of the date
of termination. If the grantee is determined to have engaged in detrimental
activity, any performance award or installment thereof not payable prior to the
date of such determination shall be annulled as of such date.
XI. INCENTIVE SHARES.
(1) An incentive award may be granted hereunder in the form of shares.
Incentive shares may be granted to an eligible employee for no cash
consideration, for such minimum consideration as may be required by applicable
law, or for such other consideration as may be specified by the grant. The terms
and conditions of incentive shares shall be specified by the grant.
(2) Incentive shares may be paid to the grantee in a single installment or
in installments and may be paid at the time of the grant or deferred to a later
date or dates. Each grant shall specify the time and method of payment as
determined by the Committee, provided that no such determination shall authorize
delivery of shares to be made later than the tenth anniversary of the grantee's
date of termination.
(3) If any incentive shares are payable after the grantee dies, such shares
shall be payable
(a) to the grantee's designated beneficiary or, if there is no
designated beneficiary, to the grantee's personal representative, and
(b) either in the form specified by the grant or otherwise, as may be
determined in the individual case by the Committee under the Plan.
A-6
<PAGE> 30
(4) Any grant of incentive shares is provisional, as to any share, until
delivery of the certificate representing such share. If, while the grant is
provisional,
(a) the grantee terminates, but does not terminate normally, or
(b) the grantee is determined to have engaged in detrimental activity,
the grant shall be annulled as of the date of termination, or the date of such
determination, as the case may be.
XII. DIVIDEND EQUIVALENT RIGHTS; INTEREST EQUIVALENTS.
(1) A DER may be granted hereunder to an eligible employee, as a component
of another award or as a separate award. The terms and conditions of DERs shall
be specified by the grant. Dividend equivalents credited to the holder of a DER
may be paid currently or may be deemed to be reinvested in additional shares
(which may thereafter accrue additional dividend equivalents.) Any such
reinvestment shall be at fair market value at the time thereof. DERs may be
settled in cash or shares or a combination thereof, in a single installment or
installments. A DER granted as a component of another award may provide that
such DER shall be settled upon exercise, settlement, or payment of, or lapse of
restrictions on, such other award, and that such DER shall expire or be
forfeited or annulled under the same conditions as such other award. A DER
granted as a component of another award may also contain terms and conditions
different from such other award.
(2) Any award under the Plan that is settled in whole or in part in cash on
a deferred basis may provide in the grant for interest equivalents to be
credited with respect to such cash payment. Interest equivalents may be
compounded and shall be paid upon such terms and conditions as may be specified
by the grant.
XIII. OTHER AWARDS.
Other forms of award based on, payable in, or otherwise related in whole or
in part to shares may be granted to an eligible employee under the Plan if the
Committee determines that such awards are consistent with the purposes and
restrictions of the Plan. The terms and conditions of such awards shall be
specified by the grant. Such awards shall be granted for no cash consideration,
for such minimum consideration as may be required by applicable law, or for such
other consideration as may be specified by the grant.
XIV. AMENDMENTS TO THE PLAN.
The Board can from time to time amend or terminate the Plan, or any
provision thereof, except that approval of the shareholders of the Company shall
be required for any amendment (1) to increase the maximum number of shares that
may be effectively granted as awards hereunder; (2) to decrease the minimum
exercise price per share of a stock option or SAR; or (3) for which such
approval is otherwise necessary to comply with Rule 16b-3 or any other
applicable law, regulation, or listing requirement, or to qualify for an
exemption or characterization that is deemed desirable by the Board.
XV. WITHHOLDING TAXES.
The Company shall have the right to deduct from any cash payment made under
the Plan any federal, state or local income or other taxes required by law to be
withheld with respect to such payment. It shall be a condition to the obligation
of the Company to deliver shares or securities of the Company upon exercise of a
stock option or SAR, upon settlement of a performance award or DER, upon
delivery of restricted stock or incentive shares, or upon exercise, settlement,
or payment of any other award under the Plan, that the grantee of such award pay
to the Company such amount as may be requested by the Company for the purpose of
satisfying any liability for such withholding taxes. Any award under the Plan
may provide by the grant that the grantee of such award may elect, in accordance
with any applicable regulations of the Committee, to pay a portion or all of the
amount of such minimum required or additional permitted withholding taxes in
shares. The grantee shall authorize the Company to withhold, or shall agree to
surrender back to the Company, on or about the date such withholding tax
liability is determinable, shares previously owned by such grantee or a portion
of the shares that were or otherwise would be distributed to such grantee
pursuant to such award having a fair market value equal to the amount of such
required or permitted withholding taxes to be paid in shares.
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<PAGE> 31
P R O X Y P R O X Y
DEXTER CORPORATION
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 Dexter Corporation (the "Company") to be held on April 22,
1999, 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 approval of the 1999 Long Term
Incentive Plan, (c) FOR the ratification of auditors 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)
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- FOLD AND DETACH HERE -
<PAGE> 32
Please mark
your votes as
indicated in
the sample /X/
The Board of Directors recommends a vote "FOR" Items 1, 2 and 3.
ITEM 1. ELECTION OF ALL DIRECTOR NOMINEES: Henrietta Holsman Fore, Bernard M.
Fox, K. Grahame Walker and George M. Whitesides (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.)
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ITEM 2. ADOPTION OF 1999 LONG TERM ITEM 3. RATIFICATION OF AUDITORS
INCENTIVE PLAN
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 supercede this proxy.
- ------------------------------------------------------------------------------
- FOLD AND DETACH HERE -
