<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
AIR PRODUCTS AND CHEMICALS, INC.
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(Name of Registrant as Specified in Its Charter)
AIR PRODUCTS AND CHEMICALS, INC.
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(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[ ] $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:(1)
------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by 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:
------------------------------------------------------------------------
- ---------------
(1)Set forth the amount on which the filing fee is calculated and state how it
was determined.
<PAGE> 2
LOGO
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AIR PRODUCTS AND CHEMICALS, INC.
7201 Hamilton Boulevard
Allentown, PA 18195-1501
December 11, 1996
Dear Shareholder:
On behalf of your Board of Directors, I am pleased to invite you to attend
the 1997 Annual Meeting of Shareholders of Air Products and Chemicals, Inc.
The meeting will be held on Thursday, January 23, 1997, at 2:00 p.m., in the
Tompkins College Center Theater at Cedar Crest College in Allentown,
Pennsylvania.
The attached Notice of Annual Meeting and Proxy Statement describe the
business to be conducted at the meeting, including the election of six
directors. In addition to myself, the Board of Directors has nominated
Messrs. Tom H. Barrett, L. Paul Bremer III, Edward E. Hagenlocker, Joseph J.
Kaminski and Terry R. Lautenbach.
It is important that your shares be represented at the meeting, regardless
of the number you may hold. WHETHER OR NOT YOU CAN BE PRESENT IN PERSON,
PLEASE SIGN, DATE AND RETURN YOUR PROXY AS SOON AS POSSIBLE. If you do
attend, your proxy can be revoked at your request in the event you wish to
vote in person. A summary report of actions taken at the meeting will be
available upon request with the financial results of the first quarter of
fiscal year 1997.
We look forward to seeing you at the meeting.
Cordially,
LOGO
HAROLD A. WAGNER
Chairman of the Board,
President and Chief Executive Officer
<PAGE> 3
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD
JANUARY 23, 1997
To the Holders of Common Stock of
Air Products and Chemicals, Inc.
The Annual Meeting of Shareholders of Air Products and
Chemicals, Inc., a Delaware corporation, will be held in the
Tompkins College Center Theater at Cedar Crest College in
Allentown, Pennsylvania, on Thursday, January 23, 1997, at 2:00
p.m. for the following purposes:
1. To elect four directors each for a three-year term, one
director for a one-year term, and one director for a
two-year term.
2. To ratify the appointment of independent certified
public accountants for the fiscal year ending September
30, 1997.
3. To transact such other business as may properly come
before the meeting or any adjournment thereof.
Shareholders of record at the close of business on November 29,
1996, are entitled to receive notice and to vote at the
meeting. A complete list of such shareholders will be open for
examination by any shareholder for any purpose germane to the
meeting at the Company's office at 7201 Hamilton Boulevard,
Allentown, Pennsylvania 18195-1501, for a period of ten days
prior to the meeting.
If you do not plan to attend the meeting in person, you are
urged to vote, sign, date and mail the enclosed proxy
immediately. The proxy is revocable and will not affect your
right to vote in person in the event you find it convenient to
attend the meeting.
By order of the Board of Directors
/s/ James H. Agger
JAMES H. AGGER
Vice President, General Counsel
and Secretary
December 11, 1996
<PAGE> 4
PROXY STATEMENT
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
MATTERS TO BE CONSIDERED AT THE ANNUAL MEETING........................................ 1
AGENDA ITEM NO. ONE: ELECTION OF DIRECTORS.......................................... 1
The Board of Directors........................................................... 1
Nominees for Director............................................................ 2
Directors Continuing in Office................................................... 4
Meetings and Committees of the Board............................................. 6
Other Relationships and Transactions............................................. 7
Remuneration of Directors........................................................ 7
Director Term Limitation and Retirement Policy................................... 8
AGENDA ITEM NO. TWO: RATIFICATION OF APPOINTMENT OF
INDEPENDENT ACCOUNTANTS.......................................................... 8
OTHER MATTERS....................................................................... 9
ADDITIONAL INFORMATION FOR SHAREHOLDERS............................................... 9
COMPENSATION OF EXECUTIVE OFFICERS.................................................. 9
Report of the Management Development and Compensation Committee.................. 9
Compensation and Option Tables................................................... 12
Stock Performance Information.................................................... 16
Pension Plans.................................................................... 17
Certain Agreements With Executive Officers....................................... 18
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT....................................................................... 19
CERTAIN PROCEDURAL INFORMATION...................................................... 22
</TABLE>
<PAGE> 5
LOGO
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AIR PRODUCTS AND CHEMICALS, INC.
7201 Hamilton Boulevard
Allentown, PA 18195-1501
ANNUAL MEETING OF SHAREHOLDERS
JANUARY 23, 1997
PROXY STATEMENT
This Proxy Statement is furnished in connection with the solicitation of proxies
by the Board of Directors of Air Products and Chemicals, Inc., a Delaware
corporation (the "Company" or "Air Products"), to be used at the Annual Meeting
of Shareholders of the Company to be held January 23, 1997, and at any
adjournment thereof, for the purposes set forth in the accompanying Notice of
Annual Meeting of Shareholders and in this Proxy Statement.
MATTERS TO BE CONSIDERED AT THE ANNUAL MEETING
AGENDA ITEM NO. ONE: ELECTION OF DIRECTORS
THE BOARD OF DIRECTORS
The Board of Directors currently has 12 positions. Assuming the election by the
shareholders of the six persons standing for election as directors on January
23, 1997, the Board will continue to have 12 members after the Annual Meeting.
The Board is divided into three classes, with each director normally elected to
serve for a three-year term and one full class of directors to be elected at
each Annual Meeting.
At this year's meeting, Messrs. L. Paul Bremer III and Harold A. Wagner, two
incumbent Class II directors whose terms are currently scheduled to expire at
the 1997 Annual Meeting, and Mr. Terry R. Lautenbach have been nominated for
re-election, and Mr. Edward E. Hagenlocker has been nominated for election, each
for three-year terms as Class II directors. Mr. Tom H. Barrett has been
nominated for re-election for a one-year term as a Class III director, and Mr.
Joseph J. Kaminski has been nominated for election for a two-year term as a
Class I director.
THE BOARD OF DIRECTORS AND MANAGEMENT RECOMMEND A VOTE "FOR" THE ELECTION TO THE
BOARD OF DIRECTORS OF MESSRS. BARRETT, BREMER, HAGENLOCKER, KAMINSKI, LAUTENBACH
AND WAGNER.
The following pages set forth information regarding the nominees for election as
well as information about the directors whose terms of office do not expire this
year. Each such director has consented to being named as nominee for director
and agreed to serve if elected. All of the nominees are currently directors and
all have been elected by the shareholders at prior meetings, except for Mr.
Hagenlocker, who has been nominated for election for the first time, and Mr.
Kaminski, who was elected as a Class III director by the directors in May 1996.
The foregoing slate of directors involves changing the class designation for
Messrs. Lautenbach and Barrett, who have previously served as Class I and II
directors, respectively, and for Mr. Kaminski, who has previously served as a
Class III director. This will enable Messrs. Barrett and Lautenbach to each
serve terms expiring coincident with his normal retirement from the Board of
Directors in accordance with the Company's term limitation and retirement policy
for directors; Mr. Hagenlocker to be initially elected for a full three-year
term; and the number of directorships to be apportioned among the classes as
nearly equal in number as possible as provided in the Company's Restated
Certificate of Incorporation, as amended. Messrs. Barrett, Kaminski and
Lautenbach will each resign from his current class of director if elected as a
member of the new class for which he has been nominated.
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Under applicable Delaware law, directors must be elected by a plurality of the
shares present in person or represented by proxy at the Annual Meeting and
entitled to vote on the election of directors. Thus, the nominees for election
to the Board of Directors receiving the greatest number of the affirmative votes
cast, up to the number of directors to be elected, will be elected as directors.
Proxies will be voted for the election of all six of the foregoing nominees
unless instructions to "withhold" votes are set forth on the proxy card,
although withholding votes will not influence voting results so long as a quorum
is present. Abstentions may not be specified as to election of directors. Under
the rules of the New York Stock Exchange, Inc. brokers who hold shares in street
name for customers have the authority to vote on certain items when they have
not received instructions from their customers, the beneficial owners of the
shares. Thus, brokers that do not receive instructions are entitled to vote on
the election of the foregoing six nominees for director. If, as a result of
circumstances not known or unforeseen, any of such nominees become unavailable
to serve as a director, proxies will be voted for the election of any other
person or persons as the Board of Directors may select.
Information follows with regard to the age, business experience and certain
Board committee memberships as of November 1, 1996 of the nominees for directors
and the directors continuing in office.
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NOMINEES FOR DIRECTOR:
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Class II -- To serve until the annual election of directors in 2000 or until
their successors are elected and qualified.
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L. PAUL BREMER III, age 55. Managing Director of Kissinger
Associates. Director of the Company since 1993. Chairman of
the Nominating and Corporate Governance Committee and member
of the Environmental, Safety and Public Policy Committee.
Former Ambassador Bremer joined Kissinger Associates, a
strategic consulting firm headed by former Secretary of
State, Henry Kissinger, in 1989 following a 23 year career in
the United States Diplomatic Service. Ambassador Bremer
held various assignments including political, economic and
commercial officer at the American Embassies in Afghanistan
and Malawi and Deputy Chief of Mission and charge d'affaires at the American
Embassy in Oslo, Norway. He was appointed Executive Secretary of the State
Department and Special Assistant to the Secretary of State in 1981. In 1983, he
was named United States Ambassador to the Netherlands and in 1986 he was
appointed Ambassador-at-Large for Counter-Terrorism. Ambassador Bremer is also a
director of Vivid Technologies, Inc. and the Netherland-America Foundation.
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EDWARD E. HAGENLOCKER, age 57. Vice Chairman of Ford Motor
Company. Not previously a director of the Company.
Mr. Hagenlocker joined Ford Motor Company as a research
scientist in 1964 and later held engineering management
positions in Product Development, Chassis Division, Body and
Electrical Product Engineering, Climate Control Division, and
Truck Operations. In 1986, he was elected a Ford vice
president and named General Manager of Truck Operations. Mr.
Hagenlocker was appointed Vice President of General
Operations for Ford North American Automotive Operations
("NAAO") in 1992 and Executive Vice President of NAAO in 1993. He was elected
President of Ford Automotive Operations in 1994 and Chairman, Ford of Europe in
1996. He assumed his current position in 1996.
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NOMINEES FOR DIRECTOR:
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Class II -- Continued
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TERRY R. LAUTENBACH, age 58. Former Senior Vice President of
International Business Machines Corporation. Director of the
Company since 1991. Chairman of the Management Development
and Compensation Committee and member of the Environmental,
Safety and Public Policy Committee.
Mr. Lautenbach joined IBM, a manufacturer and supplier of
information handling systems, equipment and services, in
1959, and held numerous positions in the marketing area until
becoming IBM Vice President -- Marketing in 1984, President
-- Communication Products Division in 1985, Vice President
and Group Executive -- Information Systems and Communications Group in 1986,
and Senior Vice President and General Manager in 1988. Mr. Lautenbach served as
Senior Vice President and was a member of IBM's Management Committee from 1990
to 1992. He serves as a director of CVS Corp., Loomis Sayles Mutual Funds,
Varian Associates, Inc., and Footstar Corp.
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HAROLD A. WAGNER, age 61. Chairman of the Board, President
and Chief Executive Officer of the Company. Director of the
Company since 1991. Member of the Executive and Finance
Committees.
Mr. Wagner joined the Company in 1963 and held various
positions of increasing responsibility becoming Vice
President, Sales, Industrial Gas Division -- U.S. in 1981. He
became Vice President -- Planning in 1982, Vice
President -- Business Divisions, Chemicals Group in 1987,
President of Air Products Europe, Inc. in 1988, Executive
Vice President -- Gases and Equipment in 1990, and President
and Chief Operating Officer in 1991. Mr. Wagner was elected
to his present position in 1992. Mr. Wagner is a director of United
Technologies Corporation and the Chemical Manufacturers Association, and a
trustee of Lehigh University and the Eisenhower Exchange Fellowships, Inc.
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Class III -- To serve until the annual election of directors in 1998 or until
his successor is elected and qualified.
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TOM H. BARRETT, age 66. Partner in American Industrial
Partners, a private investment partnership, since 1992. Prior
to this, he was Chairman of the Board, President and Chief
Executive Officer of The Goodyear Tire & Rubber Company until
his retirement in 1991. Director of the Company since 1990.
Chairman of the Finance Committee and member of the Audit and
Management Development and Compensation Committees.
Mr. Barrett joined The Goodyear Tire & Rubber Company, a
major producer of tires, in 1953 and held numerous positions
in the technical and production areas. He was elected an
officer of the Company in 1976, a director in 1979, and
President and Chief Operating Officer in 1982. He became Chief Executive
Officer in 1988 and Chairman in 1989. Mr. Barrett is a director of A. O. Smith
Corporation, Mutual Life Insurance of New York, Rubbermaid, Inc. and Easco
Corp., which is owned by American Industrial Partners.
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3
<PAGE> 8
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NOMINEES FOR DIRECTOR:
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Class I -- To serve until the annual election of directors in 1999 or until his
successor is elected and qualified.
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JOSEPH J. KAMINSKI, age 57. Corporate Executive Vice
President of the Company. Director of the Company since 1996.
Mr. Kaminski joined the Company in 1965 as a project engineer
and held various positions in Corporate Planning, Treasury,
and Controllership. He became Vice President -- Corporate
Planning in 1988, President -- Air Products Europe, Inc. in
1990, and Executive Vice President -- Gases and Equipment in
1993. Mr. Kaminski assumed his present position in 1996. He
is a director of the International Oxygen Manufacturers
Association, the National Association of Manufacturers, and
the Pacific Basin Economic Council, and a trustee of the Manufacturers' Alliance
for Productivity and Innovation and the Committee for Economic Development.
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DIRECTORS CONTINUING IN OFFICE:
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Class III -- To serve until the annual election of directors in 1998 or until
their successors are elected and qualified.
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DEXTER F. BAKER, age 69. Former Chairman of the Board and
Chief Executive Officer of the Company. Director of the
Company since 1964. Chairman of the Executive Committee and
member of the Finance Committee.
Mr. Baker joined the Company in 1952 and became head of the
Company's operations in Europe in 1964. He was elected
Executive Vice President in 1968, President and Chief
Operating Officer in 1978, and Chairman of the Board and
Chief Executive Officer in 1986. In 1988 he relinquished the
position of President which he reassumed in 1990 and
relinquished again in 1991. In accordance with the Company's retirement policy
for senior executives, Mr. Baker retired from his position of Chairman and
Chief Executive Officer in 1992. Mr. Baker is a director of AMP Incorporated
and Eastman Chemical Company, and a trustee of the Harry C. Trexler
Foundation.
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TAKEO SHIINA, age 67. Chairman of IBM Japan, Ltd. Director
of the Company and Chairman of the Company's Japanese
Advisory Council since 1993. Member of the Environmental,
Safety and Public Policy and Nominating and Corporate
Governance Committees.
Mr. Shiina joined IBM Japan, Ltd., a manufacturer and
supplier of information handling systems, equipment and
services, in 1953 and thereafter held marketing, operations
and corporate staff positions. Mr. Shiina was elected
President of IBM Japan, Ltd. in 1975, became its President
and Chief Executive Officer in 1978, and its Chairman and
Chief Executive Officer in January 1993. He was elected Vice President of
International Business Machines Corporation (U.S.) in 1989 and served until
March 1993. Mr. Shiina assumed his current position and became Chairman of the
IBM Japan Advisory Board in March 1993. Mr. Shiina is a director of IBM Asia
Pacific, AMP Incorporated, HOYA Corp., and Proudfoot PLC. He is Senior Advisor
of Bankers Trust Company, Japan, and serves on the European Advisory Board of
Bankers Trust Company.
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DIRECTORS CONTINUING IN OFFICE:
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Class III -- Continued
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LAWRASON D. THOMAS, age 62. Former Vice Chairman of Amoco
Corporation. Director of the Company since 1994. Member of
the Audit and Nominating and Corporate Governance Committees.
Mr. Thomas joined Amoco Chemical Company, a subsidiary of
Amoco Corporation, an integrated petroleum company, in 1958.
He held various sales, marketing and administrative positions
with Amoco's chemical and oil subsidiaries before being named
Amoco Oil Company's Vice President of Operations, Planning,
and Transportation in 1976, Executive Vice President in
1979, and President in 1981. He was elected a director of
Amoco Corporation in 1989, Executive Vice President in 1990 and assumed the
position of Vice Chairman in July 1992. Mr. Thomas retired as Vice Chairman and
from the Board of Directors of Amoco Corporation effective January 1, 1996 and
continued until April 1996 as senior advisor to the Chairman and a senior
representative to international trade groups, partners and governments.
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Class I -- To serve until the annual election of directors in 1999 or until
their successors are elected and qualified.
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ROBERT CIZIK, age 65. Former Chairman of the Board of Cooper
Industries, Inc. Director of the Company since 1992. Member
of the Executive, Finance, and Management Development and
Compensation Committees.
Mr. Cizik joined Cooper Industries, Inc., a diversified,
worldwide manufacturing company, in 1961 and served in
various financial, planning and management positions prior to
becoming President and Chief Operating Officer in 1973. He
served as Cooper's Chief Executive Officer from 1975 to 1995,
and served as Chairman of the Board from 1983 until his
retirement effective April 30, 1996. Mr. Cizik is a director
of American Industrial Partners, Harris Corporation,
PanEnergy Corporation, Temple-Inland, Inc., and the National Association of
Manufacturers.
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RUTH M. DAVIS, age 68. Since 1981, President and Chief
Executive Officer of The Pymatuning Group, Inc., Alexandria,
Virginia, which specializes in technology management
services. Director of the Company since 1984. Chairman of the
Environmental, Safety and Public Policy Committee and member
of the Executive and Nominating and Corporate Governance
Committees.
Dr. Davis was Assistant Secretary of Energy from 1979 to 1981
and Deputy
Under Secretary of Defense for Research and Advanced
Technology from 1977 to 1979. Dr. Davis is chairman of the
board of trustees of The Aerospace Corporation and serves as a director or
trustee of Sprint Corporation, Consolidated Edison Company of New York, Inc.,
Varian Associates, Inc., Ceridian Corporation, Premark International, Inc.,
Giddings & Lewis, Inc., BTG, Inc., Tupperware Corp., and the Principal Financial
Group of Des Moines, Iowa. Dr. Davis has been elected to the National Academy of
Engineering, the National Academy of Public Administration and the American
Academy of Arts and Sciences.
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DIRECTORS CONTINUING IN OFFICE:
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Class I -- Continued
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RUUD F. M. LUBBERS, age 57. A Minister of State and the
former Prime Minister of the Netherlands. Director of the
Company since 1995. Member of the Audit and Environmental,
Safety and Public Policy Committees.
Mr. Lubbers held senior level positions within the Dutch
government for over twenty years. Between 1973 and 1977, he
served as Minister for Economic Affairs, in 1978 he became
Parliamentary leader of the Christian Democratic Alliance,
and he was Prime Minister from 1982 until 1994. Mr. Lubbers
is a professor of international economics and globalization.
He teaches at the Katholic University Brabant and at the
John F. Kennedy School of Government at Harvard University.
He serves as the Chair of the Institute of Foreign Relations in The Hague and
holds Chair positions at Delft University of Technology and the Tinbergen
Institute. Mr. Lubbers serves as a director of Hollandia Industriele
Maatschappij and Content Beheer B.V.
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MEETINGS AND COMMITTEES OF THE BOARD
The Board of Directors of the Company met seven times during fiscal year 1996
and the outside members of the Board of Directors met once for their annual
review of CEO performance, in a session led by the Chairman of the Management
Development and Compensation Committee and preceded by Mr. Wagner's review of
his management succession and organizational plans. During the year, the average
attendance of directors at meetings of the Board of Directors and meetings of
committees of the Board to which they belonged was approximately 95%.
The Board has six standing committees. These committee memberships are indicated
in the preceding biographical information.
The Audit Committee consists of four directors, none of whom is an employee of
the Company. The Committee, which met three times in fiscal year 1996, reviews
significant matters relating to the audit and internal controls of the Company,
reviews the results of audits by the Company's independent auditors, reviews the
activities of the internal audit staff, and recommends selection of the
Company's independent auditors for approval by the Board, subject to
ratification by the shareholders. The Committee reviews and transmits to the
Board the audited financial statements of the Company after the close of each
fiscal year.
The Environmental, Safety and Public Policy Committee, which consists of five
directors, met twice during the last fiscal year. The Committee is responsible
for monitoring for and reporting to the Board regarding Company responses to
issues and matters of concern in such areas as environmental compliance, safety,
government, political and economic matters, community relations, and corporate
and foundation philanthropic programs and charitable contributions.
The Executive Committee, which consists of four directors, did not meet during
fiscal year 1996. Such Committee has authority to act on most matters during
intervals between Board meetings.
The Finance Committee, which consists of five directors, met three times in
fiscal year 1996. The Committee reviews the Company's financial policies, keeps
informed of its operations and financial condition, including requirements for
funds, advises the Board concerning sources and disposition of Company funds,
evaluates investment programs, and reviews the Company's continuing financial
arrangements and methods of external financing.
The Management Development and Compensation Committee, which consists of three
nonemployee directors, met four times in fiscal year 1996. The Committee
provides advice in connection with the Company's succession planning,
establishes the Company's executive compensation policies, oversees the
administration of the incentive compensation plans for executives and key
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employees, and reviews the actions of those responsible for the administration
of the Company's pension and savings plans, from time to time approving
amendments to such incentive, pension and savings plans on behalf of the Board.
The Committee is also charged with the responsibility of approving the
individual salary, bonus and incentive plan awards of the chief executive
officer, the other executive officers and certain other senior executives, and
for annually reviewing with the Board of Directors the performance of the chief
executive officer.
The Nominating and Corporate Governance Committee, which consists of four
nonemployee directors, met three times during the last fiscal year. The
Committee reviews possible candidates for membership on the Board of Directors,
including any recommended in good faith by a registered shareholder with the
consent of the candidate, and makes recommendations to the Board concerning
candidates for the Board of Directors. Any recommendations from shareholders
should be sent to the Secretary of the Company. The Committee also recommends
for Board approval the functions and schedules of the Board and of its various
committees and the membership of the committees; director remuneration, plans
and programs; and Board tenure and retirement policies.
OTHER RELATIONSHIPS AND TRANSACTIONS
During the past fiscal year, the Company has had commercial transactions in the
ordinary course of business with industrial corporations, banks, universities
and other entities with which certain of the directors are or were affiliated,
as indicated on pages 2-6 of this Proxy Statement. Such transactions arose out
of negotiations between the parties conducted at arm's length in competitive
situations, were on the same basis as those with nonaffiliated companies, and
the Company believes them to have been fair. The Company does not believe that
the interest of any such director in the transactions is material either to the
Company or to the individual involved. The Company anticipates that it will
continue to have similar transactions with such entities in the future.
REMUNERATION OF DIRECTORS
Upon the recommendation of the Nominating and Corporate Governance Committee,
the Board of Directors recently approved several changes to the compensation
program for directors who are not Company employees, intended to align more
closely the interests of the directors with those of the shareholders. As a
result of the changes, Board members will be paid an annual retainer of $48,000
($51,000 for committee chairpersons), with no meeting fees paid for Board or
committee meetings. $12,000 of this retainer will be paid in deferred stock
units under the deferred compensation plan for directors described in the next
paragraph. At the option of the director, the remaining retainer will be paid
either in cash, or credited to the interest account or to additional deferred
stock units under the deferred compensation plan. Further, the pension plan for
nonemployee directors was terminated by requiring current nonvested directors
(i.e., those with less than six years of service) and permitting vested
directors to be credited with deferred stock units equivalent to the
actuarially-determined present value of their accrued pension benefit. The
pension, commencing at age 65 or later end of Board service, was $3,750
quarterly for the director's life (an amount which had been frozen since 1990).
Future nonemployee directors will receive a grant of 200 deferred stock units
upon initial election to the Board. As described more completely in the next
paragraph, deferred stock units will be paid by delivery of shares of Company
common stock to the director following the end of service on the Board.
Under the deferred compensation plan for directors, nonemployee directors are
permitted to defer receiving payment of all or a portion of their retainers
otherwise payable quarterly in cash, until after their Board service ends. At
the choice of the director, the amount of such elective deferrals may be
credited to an unfunded interest account which is deemed to earn interest at
Moody's long-term "A"-rated industrial bond rate; or to an unfunded Company
common stock account and converted to deferred stock units by dividing the
dollar amount credited by the market value of a share of Company common stock on
the date credited. In the stock account, amounts equivalent to dividends paid on
Company common stock are deemed reinvested in further deferred stock units.
There are no
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voting rights attached to the deferred stock units. Payments of deferred
compensation can be made in a lump sum or in up to ten installments, as elected
by the director before the compensation was earned. Payment of amounts credited
to the interest account is in the form of cash and payment of deferred stock
units is made in shares of Company common stock. In the case of the death of a
director or a change in control of the Company (as defined in the plan) followed
by a director's cessation of Board service, the director's entire plan account
is payable immediately in a single cash lump sum.
Each year under the Company's stock option plan for directors, directors who
have not been Company employees and who are members of the Board immediately
following the annual meeting of shareholders, receive an option to purchase
1,000 shares of Company common stock at market value on the date of grant. Each
option becomes exercisable six months after grant, and remains exercisable for
10 years after grant unless Board service ceases before six years (other than
for disability or death).
Nonemployee directors are reimbursed for expenses incurred in performing their
duties as directors. Members of the Company's Japan Advisory Council, including
Mr. Shiina, receive an annual fee of $15,000 for serving on such Council, and
members of the Company's European Advisory Council, including Mr. Lubbers,
receive an annual fee of $10,000 for serving on such Council, along with
reimbursement of their expenses incurred in performing related duties.
DIRECTOR TERM LIMITATION AND RETIREMENT POLICY
The Company's term limitation and retirement policy for directors limits
directors to four three-year terms (or 12 years) of Board service, unless the
director had already attained age 65 when the term limitation policy was first
adopted. Further, directors who have never been Company employees are to tender
their resignation for consideration by the Nominating and Corporate Governance
Committee upon a change in principal position or identity other than due to
normal retirement and are not to stand for election to a term during which age
71 would be achieved. Finally, directors who are also Company employees,
including the chief executive officer, must retire from the Board upon
retirement on or after January 1, 1994 from active employment with the Company.
Company policy requires the chief executive officer and other executive officers
to retire from Company employment at age 65.
AGENDA ITEM NO. TWO: RATIFICATION OF
APPOINTMENT OF INDEPENDENT ACCOUNTANTS
At its meeting held on November 21, 1996, the Board of Directors of the Company
upon recommendation of its Audit Committee approved the designation of Arthur
Andersen LLP of Philadelphia, Pennsylvania, as independent certified public
accountants for the Company for the fiscal year ending September 30, 1997,
subject to ratification by the shareholders at the Annual Meeting. This
accounting firm has performed such service since 1948.
A representative of Arthur Andersen LLP is expected to be present at the Annual
Meeting of Shareholders. Such representative will be offered the opportunity to
make a statement and will be available to respond to appropriate questions.
Under applicable Delaware law and the Company's By-Laws, as amended, the outcome
of this agenda item will be determined by the vote of the holders of a majority
of the shares present in person or represented by proxy at the Annual Meeting
and having voting power on this matter. Proxies marked as abstaining will be
counted in the tabulation of the vote cast and, thus, will have the effect of a
vote against the proposal. Under New York Stock Exchange Rules, brokers that do
not receive instructions from their customers may nevertheless vote on the
matter.
THE BOARD OF DIRECTORS AND MANAGEMENT RECOMMEND A VOTE "FOR" THE RATIFICATION OF
THE APPOINTMENT OF ARTHUR ANDERSEN LLP AS INDEPENDENT CERTIFIED PUBLIC
ACCOUNTANTS.
8
<PAGE> 13
OTHER MATTERS
The Board of Directors and management of the Company do not know of any matter
other than referred to in the foregoing Notice of Annual Meeting of Shareholders
and this Proxy Statement that may come before the meeting. However, if any other
matter should properly come before the meeting or any adjournment thereof, it is
the intention of the persons named in the proxy to vote such proxies in
accordance with their judgment on such matters.
ADDITIONAL INFORMATION FOR SHAREHOLDERS
COMPENSATION OF EXECUTIVE OFFICERS
REPORT OF THE MANAGEMENT DEVELOPMENT AND COMPENSATION COMMITTEE
COMPENSATING EXECUTIVE OFFICERS. The Management Development and Compensation
Committee of the Company's Board of Directors (the "Committee"), comprised of
three nonemployee directors, is responsible for determining and administering
all of the compensation policies and plans for Company executive officers.
Executive officers are paid for individual performance and responsibility, with
a significant amount of total compensation at risk. This at risk portion is tied
to both the annual and longer-term financial performance of the Company, as well
as to the creation of incremental shareholder value which is expected to result
from achieving an above average return on shareholders' equity in combination
with sustained long-term growth. The financial goals used to guide the Company's
investment decisions and evaluate its overall performance are also used in the
Company's management compensation program, the primary elements of which are
base salary, cash bonus, and stock based intermediate and long-term
compensation.
The Committee specifically determines each executive officer's individual
salary, annual cash bonus, and stock based incentive awards. Each year the
Committee sets target levels for salary and bonus awards by reference to the
median level for executive compensation reported by compensation surveys, and
guidelines for numbers of units of long-term incentives intended to provide
stock based compensation opportunity valued above the compensation survey
median. Since a large portion of the compensation opportunity is determined by
performance-based variables, total compensation may be above or below the median
based on individual and/or Company performance. The Committee uses survey data
for industrial companies with annual revenues of three to six billion dollars,
and focuses on chemical and nondurable manufacturing companies in particular.
Variable, performance-based components of compensation paid and awarded in
fiscal year 1996 were progressively greater for higher level positions in order
to encourage these individuals to manage from the perspective of owners with an
equity stake in the Company. The approximate range was 60 to 70 percent variable
compensation for the six executives named in this Proxy Statement.
During fiscal year 1996, the Committee, the Board of Directors, and the
Company's shareholders approved amendments and terms applicable to the
performance-based bonus and incentive plans in order to exempt all such
compensation to be paid to the Company's executive officers for fiscal year 1996
and later years from the limit on tax deductibility under Section 162(m) of the
Internal Revenue Code of 1986. No compensation paid for 1996 will exceed the
deduction limit which applies to nonperformance-based compensation in excess of
$1,000,000 paid to any of the five most highly compensated executive officers.
However, the Committee has in the past and may in the future structure
compensatory arrangements that are subject to the deduction limit.
1996 ANNUAL CASH COMPENSATION -- BASE SALARY. Late in fiscal year 1995, the
Committee fixed the fiscal year 1996 salaries for Mr. Wagner and each of the
other executive officers. The Committee considered pay data for comparable
positions derived from the compensation surveys; individual performance,
position in salary range, and time since last increase; and, most importantly,
the
9
<PAGE> 14
Company's overall performance as related to Mr. Wagner's leadership and the
impact of the other executive officers on the business.
BONUS. The shareholder approved Annual Incentive Plan provides that in granting
annual cash bonuses the Committee consider the Company's performance for the
fiscal year based upon the measure or measures of performance selected by the
Committee. The plan also sets a maximum individual annual bonus limit of the
lesser of $2,000,000 or 150% of the recipient's most recent annualized base
salary rate.
At the beginning of fiscal year 1996, the Committee adopted performance
objectives for the year and established an objective formula for computing bonus
awards for the chief executive officer and other executive officers which,
applied to the target bonus for each position, established a maximum dollar
bonus payment for each of them. These performance objectives were based on
return on shareholders' equity (ROE) and growth in net income. Following the end
of the year, in addition to establishing the maximum bonus by measuring
performance against the performance objectives, the Committee also considered
growth in revenues, growth in earnings per share, total return to shareholders,
the overall economic environment, and the performance of each of the nine other
companies besides Air Products which comprise the Standard & Poor's Chemicals
Index for a single year and over multiple years, to determine the actual bonus
award level. Further, in determining Mr. Wagner's actual bonus, the Committee
made use of its 1996 CEO performance review focusing on objectives developed by
the Committee to evaluate Mr. Wagner's leadership to the Company, its various
stakeholders, and the Board of Directors.
At the November 1996 meeting, the Committee completed its assessment of the
Company's and Mr. Wagner's performance and set 90% of the 1996 target bonus
guideline as the overall bonus award level for fiscal year 1996, including for
Mr. Wagner's award. This award level is substantially lower than the 1995 award
which was set at 155% of the 1995 target bonus guideline.
1996 AND FUTURE STOCK BASED COMPENSATION. This compensation component is
particularly important since it reflects the Company's capital intensive
business portfolio which requires long-term commitments for success. Last
January, shareholders approved the continuation of the Long-Term Incentive Plan
and additional shares of Company common stock for future plan awards. There are
currently two main forms of plan awards -- stock options and deferred stock
units.
Individuals chosen for awards of fiscal year 1996 options and deferred stock
units (Career Shares) in the fall of 1995, including all of the executive
officers, received a number of units within the guideline award range for their
salary grade, reflecting their position and responsibilities. These fiscal year
1996 options have an exercise price which is the market value on the date of
grant. Since these options provide gains to executives only if the stock price
improves over the market value at the date of grant and since shares in payment
of deferred stock units are not delivered until two years following retirement,
these awards serve to retain and motivate the Company's executive officers and
to align their interests with the interests of Air Products shareholders. Both
forms of long-term awards are subject to forfeiture should executives engage in
certain activities including competing with the Company.
This fall, the Committee approved a two-year performance-based component to the
management compensation program intended to complement existing practices and
further strengthen the alignment of the financial interests of Air Products'
management team with those of our shareholders by significantly increasing the
portion of total executive compensation determined by Air Products' short to
intermediate term financial performance. First, for fiscal year 1997 grants of
Career Share deferred stock units were discontinued. Instead, performance-based
deferred stock units have been granted with earn out predicated upon the
achievement of a compound annual earnings growth rate above the Company's
published goal of 12% over the next two years. The range of earn out is 0 to
150%, depending on the earnings per share and operating group net income
achieved by 1998. Second, in addition to market-priced ten-year stock options,
five-year premium-priced options were granted for fiscal year 1997. To encourage
earnings momentum by and beyond 1998, these five-year
10
<PAGE> 15
options are exercisable after two years at approximately 125% of Air Products'
October 1, 1996 share price. A third new initiative relates to longer term
profitable growth. It requires Company officers to attain an investment position
in Air Products stock or stock units of five times base salary for Mr. Wagner
and two to four times base salary for the other officers, depending on the
individual's responsibility, within a five-year period beginning October 1,
1996.
SUMMARY. Air Products' management compensation program is designed to
closely link the performance of management to accomplishing long-term growth
strategies and building shareholder value, while also addressing nearer-term
results. The individual elements of the program are coherent and collectively
provide a package that is well suited to the type of capital-intensive
businesses in which Air Products is engaged, within the market guidelines for
similarly sized companies. Air Products' management clearly understands the
linkage of investment decision-making, operating performance, and compensation.
Because of this linkage, the Committee believes that management is clearly
focused on corporate growth, as well as the nearer and long-term interests of
our shareholders.
Management Development and Compensation Committee
Terry R. Lautenbach, Chairman
Tom H. Barrett
Robert Cizik
11
<PAGE> 16
COMPENSATION AND OPTION TABLES
TABLE 1 presents before-tax information concerning compensation earned, paid to,
awarded or accrued for services by the chief executive officer and five other
most highly compensated executive officers of the Company as of the end of
fiscal year 1996, during fiscal years 1994, 1995, and 1996 including Career
Share awards (referred to under the column "Restricted Stock Awards") granted
under the 1990 Deferred Stock Plan and ten year, market-priced options granted
under the 1997 Long-Term Incentive Plan (formerly known as the 1990 Long-Term
Incentive Plan). TABLE 2 presents more detailed information concerning the
foregoing stock option awards granted in fiscal year 1996 to the individuals
named in Table 1 pursuant to the 1997 Long-Term Incentive Plan. TABLE 3 presents
information as to options exercised and held by such persons in fiscal year
1996.
TABLE 1
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION AWARDS
ANNUAL COMPENSATION --------------------------
---------------------------------- RESTRICTED SECURITIES
OTHER ANNUAL STOCK UNDERLYING ALL OTHER
NAME AND PRINCIPAL FISCAL SALARY BONUS COMPENSATION AWARD STOCK OPTIONS COMPENSATION
POSITION YEAR ($)(1) ($)(1) ($)(2) ($)(3)(5) (#)(4)(5) (6)
- --------------------- ------ -------- -------- ------------ ---------- ------------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Harold A. Wagner..... 1996 $738,077 $473,000 $ 0 $390,450 50,100 $ 25,198(7)
Chairman, 1995 $686,539 $640,000 $ 0 $346,875 50,000 $ 20,597
President and 1994 $600,000 $378,000 $ 207 $289,562 46,010 $ 18,653
Chief Executive
Officer
James H. Agger....... 1996 $295,577 $119,000 $ 0 $130,150 12,100 $ 8,908(8)
Vice President, 1995 $283,808 $176,000 $ 0 $115,625 12,000 $ 8,516
General Counsel 1994 $254,000 $122,000 $ 0 $ 27,391 10,230 $ 8,186
and Secretary
Robert E. Gadomski... 1996 $311,538 $162,000 $ 0 $156,180 16,000 $ 9,402(9)
Executive Vice 1995 $297,962 $208,000 $ 0 $185,000 16,000 $ 8,940
President, 1994 $247,000 $119,000 $ 0 $ 43,043 14,060 $ 7,728
Chemicals
John P. Jones III.... 1996 $305,268 $139,000 $268,556 $156,180 16,000 $ 9,166(10)
Executive Vice 1995 $274,231 $185,000 $281,815 $185,000 12,100 $ 8,229
President, Gases 1994 $255,000 $122,000 $225,305 $ 43,043 11,510 $ 7,681
and Equipment
Joseph J. Kaminski... 1996 $384,423 $178,000 $ 0 $208,240 20,000 $ 11,562(11)
Corporate 1995 $368,462 $257,000 $ 0 $231,250 20,000 $ 11,056
Executive Vice 1994 $330,000 $178,000 $ 91,874 $ 66,521 16,620 $ 10,233
President
Arnold H. Kaplan..... 1996 $274,039 $113,000 $ 0 $104,120 12,100 $ 8,266(12)
Vice President, 1995 $227,693 $124,000 $ 0 $ 92,500 9,000 $ 6,831
Finance 1994 $219,385 $ 92,000 $ 0 $ 19,565 7,670 $ 7,291
</TABLE>
- ---------------
(1) Amounts shown include cash compensation earned in or for each fiscal year,
including amounts received by the executive as well as any amounts earned
but deferred at the election of the executive.
(2) The value of perquisites and other personal benefits, if any, is not
included, because in each instance the aggregate incremental cost to the
Company for such benefits was below the Securities and Exchange
Commission's ("SEC's") required disclosure thresholds. The amounts shown in
this column are comprised of payments made under the Company's plans
applicable to all employees who are U.S. citizens on international
assignments. The amount shown for Mr. Wagner for fiscal year 1994 was for
tax equalization relating to his overseas
12
<PAGE> 17
assignment which concluded during fiscal year 1990. The amounts shown for
Messrs. Jones and Kaminski are comprised of payments for foreign cost of
living and exchange rate adjustments, foreign housing costs and domestic
housing management, and for tax equalization relating to their overseas
assignments. Mr. Jones' overseas assignment concluded during fiscal year
1996 and Mr. Kaminski's concluded during fiscal year 1993.
(3) Deferred stock units referred to as "Career Shares" awarded to executives
at the beginning of the indicated fiscal years under the 1990 Deferred
Stock Plan, each unit entitling the recipient to receive from the Company
one share of Company common stock at or following the end of the applicable
deferral period, together with a cash payment equivalent to the dividends
which would have accrued on a share of common stock during the deferral
period. The deferral period established by the Management Development and
Compensation Committee is the earlier of two years following the
executive's retirement or disability, or his death (but no earlier than two
years from the grant date), subject to acceleration by this Committee upon
a change in control of the Company as defined in the plan. Under the latter
circumstances, the Committee may determine to pay the units in cash in an
amount prescribed by a plan formula defining stock value. Amounts reported
in the Table are based on the grant date market values of $52.06 per share
for the fiscal year 1996 awards, $46.25 per share for the fiscal year 1995
awards, and $39.13 per share for the fiscal year 1994 awards (the mean of
the high and low sale prices as reported on the New York Stock Exchange
("NYSE") Composite Transactions, for the date indicated), without giving
effect to the diminution of value attributable to the nontransferability,
absence of voting rights and other features and restrictions applicable to
such units. As of September 30, 1996, Mr. Wagner held an aggregate of
34,000 units valued at $1,974,125; Mr. Agger held 7,100 units valued at
$412,244; Mr. Gadomski held 9,900 units valued at $574,819; Mr. Jones held
9,400 units valued at $545,788; Mr. Kaminski held 12,900 units valued at
$749,006; and Mr. Kaplan held 5,500 units valued at $319,344, such values
determined in the same manner as were the amounts in the Table but based on
the 1996 fiscal year-end $58.0625 market value of a share of Company common
stock.
(4) During a thirty-day period following a change in control of the Company as
defined in the 1997 Long-Term Incentive Plan, pursuant to which the options
were granted, such options can be canceled upon or surrendered for payment
of 100% of the "spread" between the value of the shares of Company common
stock subject to the option, as defined in such plan, and the option
exercise price.
(5) Deferred stock unit and option awards are subject to forfeiture at the
discretion of the Management Development and Compensation Committee for
breaching any agreement with or obligation to the Company or engaging in
certain specified activities including competing with the Company.
(6) The amounts shown for fiscal years 1994 and 1996 are comprised principally
and the amounts shown for fiscal year 1995 are comprised solely of Company
matching contributions and/or accruals (together, the "Company match")
under the Company's qualified 401(k) plan and nonqualified supplementary
defined contribution savings plan (together, the "Savings Plan") under
which the Company matches 50% of each participant's Savings Plan elective
salary reduction up to 6% of base pay (i.e., a 3% match). In addition,
incidental amounts of interest deemed to be compensatory by the SEC are
included for the portion of the interest accrued on such Savings Plan and
certain deferred bonus accounts at a rate above 120% of the applicable
federal long-term rate for the period of compounding. No such compensatory
interest was earned for fiscal year 1995. Interest accrued on such deferred
compensation at a rate below such a market rate is not included because it
is not treated as compensatory by the SEC.
(7) The Savings Plan Company match for fiscal years 1996, 1995, and 1994 is
$25,143, $20,597, and $18,000, respectively.
13
<PAGE> 18
(8) The Savings Plan Company match for fiscal years 1996, 1995, and 1994 is
$8,869, $8,516, and $7,621, respectively.
(9) The Savings Plan Company match for fiscal years 1996, 1995, and 1994 is
$9,377, $8,940, and $7,410, respectively.
(10) The Savings Plan Company match for fiscal years 1996, 1995, and 1994 is
$9,159, $8,229, and $7,654, respectively.
(11) The Savings Plan Company match for fiscal years 1996, 1995, and 1994 is
$11,534, $11,056, and $9,900, respectively.
(12) The Savings Plan Company match for fiscal years 1996, 1995, and 1994 is
$8,222, $6,831, and $6,620, respectively.
14
<PAGE> 19
TABLE 2
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL REALIZABLE VALUE AT
- -------------------------------------------------------------------------------- ASSUMED ANNUAL RATES OF
NUMBER OF PERCENT(%) STOCK PRICE APPRECIATION
SECURITIES OF TOTAL FOR TEN YEAR
UNDERLYING OPTIONS OPTION TERM(3)
OPTIONS GRANTED TO EXERCISE ---------------------------------
GRANTED EMPLOYEES IN PRICE EXPIRATION 5% 10%
NAME (#)(1) FISCAL YEAR ($/SH)(2) DATE ($) ($)
- ---------------------- ---------- ------------ --------- ---------------- --------------- ----------------
<S> <C> <C> <C> <C> <C> <C>
Harold A. Wagner...... 50,100 2.2% $ 52.06 October 3, 2005 $1,640,287 $4,156,809
James H. Agger........ 12,100 0.5% $ 52.06 October 3, 2005 $ 396,157 $1,003,940
Robert E. Gadomski.... 16,000 0.7% $ 52.06 October 3, 2005 $ 523,844 $1,327,524
John P. Jones III..... 16,000 0.7% $ 52.06 October 3, 2005 $ 523,844 $1,327,524
Joseph J. Kaminski.... 20,000 0.9% $ 52.06 October 3, 2005 $ 654,805 $1,659,405
Arnold H. Kaplan...... 12,100 0.5% $ 52.06 October 3, 2005 $ 396,157 $1,003,940
5% 10%
($84.80/SHARE) ($135.03/SHARE)
--------------- ----------------
Increase in market value of Air Products stock at assumed annual rates of stock
price appreciation used in Table 2 above over the ten-year period beginning on
October 2, 1995.(4)........................................................... $4.0 billion $10.1 billion
</TABLE>
- ---------------
(1) Nonqualified stock options which become exercisable in one-third increments
on the first three anniversaries of grant except that upon a change in
control of the Company, as defined in the option plan, there would be an
automatic acceleration of their exercisability. During a thirty-day period
following such a change in control, options can be cancelled upon or
surrendered for payment of 100% of the "spread" between the market value of
the shares subject to the option, as defined in the option plan, and the
option exercise price. The option exercise price may be paid by delivery of
owned shares and/or tax withholding obligations relating to exercise may be
satisfied by delivery of owned shares and/or withholding shares purchased
upon exercise. Outstanding options are subject to forfeiture at the
discretion of the Management Development and Compensation Committee for
breaching any agreement with or obligation to the Company or engaging in
certain specified activities including competing with the Company. This
Committee also retains discretion, subject to plan limits, to modify
outstanding options. In general, options terminate when employment ends
except due to retirement, disability or death, where the exercisable options
(and unexercisable options prorated to termination of employment) continue
through their expiration date and, if the Committee so approves, as has been
its practice for retiring executive officers including the chief executive
officer, unexercisable portions will become exercisable in accordance with
the original grant terms.
(2) Granted at market value (the mean of the high and low sale prices on the
grant date as reported on the NYSE -- Composite Transactions).
(3) Figures shown under "Potential Realizable Value" are the pre-tax gains which
would be recognized on October 2, 2005 if an executive exercised all of his
1996 options on October 2, 2005 and Air Products stock price had grown
between October 2, 1995 and October 2, 2005 at the 5% and 10% assumed growth
rates set by the SEC to $84.80 and to $135.03 per share, respectively. The
amounts shown are not intended to forecast possible future appreciation, if
any, of the price of Air Products stock. Since granted at market value, no
gain to the optionees is possible without an increase in stock price, which
will benefit all shareholders commensurately.
(4) These amounts represent the increase in the market value of Air Products
outstanding shares (121.7 million) as of September 30, 1995, that would
result from the same stock price growth assumptions used to show the
Potential Realizable Values for the executives named in Table 2 above.
15
<PAGE> 20
TABLE 3
AGGREGATED OPTION EXERCISES IN
LAST FISCAL YEAR AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS
AT FISCAL YEAR END (#) AT FISCAL YEAR END ($)(2)
SHARES ACQUIRED VALUE --------------------------- ---------------------------
NAME ON EXERCISE (#) REALIZED ($)(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- -------------------------------- --------------- --------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Harold A. Wagner................ 13,520 $ 560,607 181,458 98,772 $ 4,486,169 $ 984,870
James H. Agger.................. 7,000 $ 283,675 71,530 23,510 $ 2,055,503 $ 231,690
Robert E. Gadomski.............. 0 $ 0 79,785 31,355 $ 2,276,007 $ 310,799
John P. Jones III............... 0 $ 0 45,595 27,905 $ 1,141,510 $ 263,994
Joseph J. Kaminski.............. 9,020 $ 380,216 81,946 38,874 $ 2,255,091 $ 382,444
Arnold H. Kaplan................ 0 $ 0 59,532 20,658 $ 1,798,686 $ 191,935
</TABLE>
- ---------------
(1) Before-tax amounts determined by subtracting the exercise price from the
exercise date market value (the mean of the high and low sale prices on the
exercise date as reported on the NYSE -- Composite Transactions).
(2) Derived by subtracting the aggregate of the option exercise prices from the
1996 fiscal year-end market value for all shares underlying outstanding
options since all of such options were "in-the-money" -- that is, the
September 30, 1996 market value of $58.0625 exceeded the applicable option
exercise price.
As a general matter, whether or not financial benefit will be derived from the
exercise of options depends on the relationship between the market price of the
underlying securities and the exercise price of the options, and on the
executive's own investment decisions. To the extent that options have an
exercise price above the market price ("out-of-the-money"), such options may
ultimately confer no financial benefit to the executive as they may expire
before they can be exercised profitably. Similarly, options "in-the-money" on a
given date can become "out-of-the-money" due to price fluctuations in the stock
market. Also, the value of the stock purchased on exercise may later decline to
below the option exercise price before the stock is sold. For these reasons, the
Company believes that placing a current value on outstanding options is highly
speculative and that such valuations may not represent the true benefit, if any,
that may be realized by an executive.
STOCK PERFORMANCE INFORMATION
The following Graph compares the cumulative total shareholder returns of (a) the
Company's common stock, (b) the Standard & Poor's 500 Stock Index and (c) the
Standard & Poor's Chemicals Index, at each September 30 during the five-year
period beginning September 30, 1991 and ending September 30, 1996. The Graph
assumes the investment of $100 on September 30, 1991 in Air
16
<PAGE> 21
Products common stock, in the S&P 500 and in the S&P Chemicals, and total
shareholder return was calculated on the basis that in each case all dividends
were reinvested.
<TABLE>
<CAPTION>
Measurement Period
(Fiscal Year Covered) Air Products S&P 500 S&P Chemicals
<S> <C> <C> <C>
Sep 91 100 100 100
Sep 92 135 111 110
Sep 93 120 125 119
Sep 94 148 130 156
Sep 95 169 169 185
Sep 96 192 203 239
</TABLE>
PENSION PLANS
The Company funds a tax-qualified, defined benefit pension plan for virtually
all U.S. employees, including the executives named in the Summary Compensation
Table. Retirement income benefits for salaried employees are based upon the
participant's years of credited service and average base salary for the highest
three consecutive years during the final ten years of service ("Final Average
Earnings"). In addition, the Company has an unfunded supplementary pension plan
under which certain employees, including those named in the Summary Compensation
Table, are provided pension benefits which cannot be paid under the qualified
pension plan because of Internal Revenue Code limitations, as well as pension
benefits which would be payable under the qualified plan if bonus payments were
taken into consideration in determining Final Average Earnings.
Table 4 shows the approximate annual retirement benefits payable to salaried
employees retiring at age 65 in calendar year 1996, after selected periods of
service with selected amounts of Final Average Earnings, under the straight-life
annuity option under the pension plans without reduction for any survivor
benefit.
17
<PAGE> 22
TABLE 4
PENSION PLAN TABLE
<TABLE>
<CAPTION>
REMUNERATION YEARS OF SERVICE
(FINAL AVERAGE --------------------------------------------------------------------------------
EARNINGS) 15 20 25 30 35 40 45
- -------------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
$ 300,000 $ 66,271 $ 88,361 $110,452 $132,542 $154,633 $177,133 $199,633
400,000 $ 88,771 $118,361 $147,952 $177,542 $207,133 $237,133 $267,133
500,000 $111,271 $148,361 $185,452 $222,542 $259,633 $297,133 $334,633
600,000 $133,771 $178,361 $222,952 $267,542 $312,133 $357,133 $402,133
700,000 $156,271 $208,361 $260,452 $312,542 $364,633 $417,133 $469,633
800,000 $178,771 $238,361 $297,952 $357,542 $417,133 $477,133 $537,133
900,000 $201,271 $268,361 $335,452 $402,542 $469,633 $537,133 $604,633
1,000,000 $223,771 $298,361 $372,952 $447,542 $522,133 $597,133 $672,133
1,100,000 $246,271 $328,361 $410,452 $492,542 $574,633 $657,133 $739,633
1,200,000 $268,771 $358,361 $447,952 $537,542 $627,133 $717,133 $807,133
1,300,000 $291,271 $388,361 $485,452 $582,542 $679,633 $777,133 $874,633
1,400,000 $313,771 $418,361 $522,952 $627,542 $732,133 $837,133 $942,133
</TABLE>
Retirement benefits are not subject to any deductions for Social Security
benefits or other offsets. The normal form of benefit is an annuity, but a lump
sum payment is available, subject to certain conditions, as an optional form of
payment for the portion of the retirement benefit payable under the
supplementary pension plan.
In the case of the executives named in the Summary Compensation Table,
compensation covered by the pension plans which is used to calculate Final
Average Earnings is the annual compensation reported in the Salary and Bonus
columns of the Summary Compensation Table (Table 1, at page 12). The approximate
years of service as of September 30, 1996 for the executive officers named in
the Summary Compensation Table are: Mr. Wagner, 33 years; Mr. Agger, 28 years;
Mr. Gadomski, 26 years; Mr. Jones, 24 years; Mr. Kaminski, 31 years; and Mr.
Kaplan, 32 years.
The Company's obligations to pay benefits under the supplementary pension plan
are secured by a grantor trust. Likewise, the Company's obligation to pay
benefits under the nonqualified supplementary savings plan referred to in
footnote 6 to Table 1, Summary Compensation Table, at page 13, is secured by a
grantor trust. The Company's obligation to provide funding for each trust is
secured by a letter of credit. Each letter of credit permits and each trust
agreement requires the trustee to draw on the letter of credit to (a) pay
benefits or trust administration expenses which the Company fails to pay and (b)
fund each trust if the Company fails to maintain the letter of credit or if the
Company fails to cash fund the trust on the day a change in control of the
Company occurs (as defined in the trust). The assets of each trust will at all
times be subject to claims of the Company's creditors and the trustee will not
be able to draw on the letter of credit if the Company is insolvent (as defined
in each trust).
CERTAIN AGREEMENTS WITH EXECUTIVE OFFICERS
The Company has identical agreements ("employment agreements") with certain
Company executives including each of the current executive officers. The
employment agreements are designed to retain the executives and provide for
continuity of management in the event of any actual or threatened change in
control of the Company. The employment agreements provide that in the event of a
change in control of the Company (as defined in the employment agreements) each
executive would have the right to continue in the Company's employment and
receive compensation and benefits specified in the agreement to the earlier of
his age 65 or three years following the later of the change in control or a
subsequent merger, consolidation or reorganization of the Company occurring
within three years of the change in control while he is still employed. If,
during
18
<PAGE> 23
this period after such change in control, either the executive's employment is
terminated by the Company without cause (as defined) or the executive is forced
to resign due to a failure by the Company to comply with any material provision
of the employment agreement, the executive would generally be entitled to
receive liquidated damages equivalent to the compensation and benefits he would
have received during the then remaining period of the employment agreement. This
would include, in addition to continued medical, dental and other welfare
benefits for such period and reimbursement of legal expenses, a lump sum cash
payment equal to the then present value of (1) his monthly base salary, bonus
and Company matching contribution or accrual under the Company's qualified
401(k) and nonqualified supplementary defined contribution savings plans,
multiplied by the number of months remaining in the term of the employment
agreement following his termination, and (2) the difference between the pension
benefits which would have been payable at the end of the term of the employment
agreement and the executive's earlier termination under or by reference to the
Company's defined benefit pension plans.
Each employment agreement provides for indemnification of the executive if he
becomes involved in litigation because he is a party to the agreement.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table furnishes information known by the Company as to the
beneficial owners of more than five percent of the Company's common stock, as of
September 30, 1996.
<TABLE>
<CAPTION>
AMOUNT AND NATURE
OF BENEFICIAL
NAME AND ADDRESS OF BENEFICIAL OWNER OWNERSHIP PERCENT OF CLASS
- ----------------------------------------------------------- ----------------- ----------------
<S> <C> <C>
State Farm Mutual Automobile Insurance Company(1).......... 7,486,800 6.0%
One State Farm Plaza
Bloomington, IL 61710
State Street Bank and Trust Company, Trustee(2)............ 7,323,195 5.9%
P.O. Box 1389
Boston, MA 02104
Mellon Bank (DE) National Association...................... 10,000,000 8.0%
Trustee of the Air Products and Chemicals, Inc.
Flexible Employee Benefits Trust (the "Trust")(3)
Mellon Bank Center
10th and Market Streets, 2nd Floor
Wilmington, DE 19801
</TABLE>
- ---------------
(1) Based upon information in a report on Schedule 13G for the period ending
December 31, 1995 filed by State Farm Mutual Automobile Insurance Company
("State Farm") with the Securities and Exchange Commission ("SEC"), as
updated by State Farm through September 30, 1996. State Farm has sole voting
power and sole investment power as to all 7,486,800 shares. In addition,
based upon information filed by State Farm Investment Management Corp.
("SFIMC") with the SEC and other information available to the Company, the
Company has reason to believe that SFIMC is the beneficial owner of 725,000
shares, which represents 0.58% of the class, and that SFIMC has sole voting
and investment power as to all 725,000 shares.
(2) Based upon information in a report on Schedule 13G for the period ending
December 31, 1995 filed by State Street Bank and Trust Company ("State
Street") with the SEC, as updated by State Street through September 30,
1996. State Street shares voting and investment power as to 5,839,850 shares
held in trust by it as Trustee for the Company's Retirement Savings and
Stock Ownership Plan (the "Savings Plan") representing 4.7% of the class.
The Savings Plan trust agreement provides that the Trustee will vote, and
tender or exchange, the shares held in the Savings Plan trust as the
participants in the Savings Plan direct, as described under CERTAIN
PROCEDURAL INFORMATION at page 23 and in footnote 1(d) on page 22. State
Street also has sole
19
<PAGE> 24
investment power as to 1,168,130 shares held in trust by it as trustee or
discretionary advisor for various collective investment funds for employee
benefit plan and other index accounts, representing .9% of the class (of
which shares it has sole voting power over 1,126,530 shares and no voting
power over 41,600 shares); and has beneficial ownership of 315,215 shares
held in trust by it as trustee or co-trustee under various trust accounts,
representing .3% of the class (of which shares it has sole voting power over
243,182 shares, shared voting power over 72,033 shares, sole investment
power over 202,377 shares, and shared investment power over 112,838 shares).
(3) As indicated in a report on Schedule 13D filed by the Trust with the SEC,
the Trust holds the Company's common stock under a grantor trust agreement
between the Company and Mellon Bank (DE) National Association, as Trustee,
creating the Trust which was entered into to provide for the satisfaction of
certain obligations of the Company and its affiliates under various employee
benefit and compensation plans, programs, contracts and structures (the
"plans"). Beginning in the Company's fiscal year 1997, shares held in the
Trust will periodically be transfered from the Trust to satisfy plan
obligations specified by the Company. Both the Trust and Trustee have
disclaimed beneficial ownership of all 10,000,000 shares. The Trustee has no
discretion in the manner in which the shares will be voted. The trust
agreement provides that the Trustee will vote, and tender or exchange, the
shares held in the Trust only in the same proportions and manner as the
participants in the Company's Savings Plan direct the trustee of the Savings
Plan with respect to shares of Company common stock held in the Savings Plan
trust. The particular rules for Savings Plan voting are described under
CERTAIN PROCEDURAL INFORMATION at page 23, and, for tendering or exchanging,
in footnote 1(d) on page 22. The trust agreement further provides that all
voting and all tendering or exchange actions and directions with respect to
the shares will be held in confidence and not disclosed to any person,
including officers and employees of the Company.
20
<PAGE> 25
The table below sets forth information furnished by the following persons and,
where possible, confirmed from records of the Company, as to the number of
shares of the Company's common stock beneficially owned by the directors,
nominees for director and executive officers of the Company generally as of
November 1, 1996.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF BENEFICIAL
OWNERSHIP(1) AND PERCENT OF
NAME OF BENEFICIAL OWNER CLASS(2)
------------------------------------------------ ---------------------------------
<S> <C> <C>
James H. Agger.................................. 104,822(3)
Dexter F. Baker................................. 659,885(3)(4)
Tom H. Barrett.................................. 14,139(5)
L. Paul Bremer III.............................. 5,620(5)
Robert Cizik.................................... 8,570(5)
Ruth M. Davis................................... 5,308(5)
Robert E. Gadomski.............................. 119,787(3)
Edward E. Hagenlocker........................... 0
John P. Jones III............................... 77,074(3)
Joseph J. Kaminski.............................. 137,027(3)
Arnold H. Kaplan................................ 93,426(3)
Terry R. Lautenbach............................. 6,772(5)
Ruud F. M. Lubbers.............................. 1,176(5)
Judith Rodin.................................... 5,748(5)
Takeo Shiina.................................... 4,321(5)
Lawrason D. Thomas.............................. 3,587(5)
Harold A. Wagner................................ 309,031(3)
All directors and executive officers as a group
comprised of the above 17 persons............. 1,556,293 1.13%
</TABLE>
- ---------------
(1) Beneficial ownership of common stock as reported in the above table has
generally been determined in accordance with Rule 13d-3 under the Securities
Exchange Act of 1934. Accordingly, all Company securities over which the
directors, nominees and executive officers named or the group directly or
indirectly have or share voting or investment power have been deemed
beneficially owned and have been included in the table. Except as otherwise
noted in this footnote, the directors, nominees and executive officers have
sole voting and investment power over the securities indicated in the table
as beneficially owned by them.
Included in the figures in the table are:
(a) an aggregate of 1,004,814 options granted under the Company's Long-Term
Incentive Plans and under the Company's Stock Option Plan for
Directors, an aggregate of 78,800 deferred stock units known as "Career
Shares" awarded under the Company's 1990 Deferred Stock Plan, an
aggregate of 47,500 deferred stock units known as "Performance Shares"
granted under the 1997 Long-Term Incentive Plan (said awards being
subject to achieving certain performance objectives and being reported
herein at the 100% target level of earn out), and an aggregate of
19,357 deferred stock units under the Deferred Compensation Plan for
Directors (5,554 of which were acquired by the directors after November
1, 1996 in connection with terminating the pension plan for nonemployee
directors), as to which securities the recipient directors, nominees,
and executive officers have no voting or investment power;
(b) an aggregate of 7,775 shares held by, or for the benefit of, members of
the immediate families or other relatives of certain of the directors,
nominees and executive officers, of which amount such directors,
nominees and executive officers disclaim beneficial ownership of 7,050
shares;
21
<PAGE> 26
(c) an aggregate of 4,022 shares owned jointly by certain of the directors,
nominees and executive officers with their spouses with whom they share
voting and investment power; and
(d) shares represented by units of interest allocated to the account of the
current and former executive officers named above under the Company's
Retirement Savings and Stock Ownership Plan (the "Savings Plan").
Participants are entitled to confidentially direct the Savings Plan
trustee as to how to vote such shares represented by units of interest
allocated to their Savings Plan accounts, as described under CERTAIN
PROCEDURAL INFORMATION at page 23. Further, participants have the right
to confidentially direct the trustee as to whether or not to tender or
exchange such Savings Plan shares, but if the trustee does not receive
timely directions from participants such shares will not be tendered or
exchanged. The trustee will respond as to fractional shares in the same
proportions as Savings Plan shares for which participant directions
have been received.
(2) No individual director's, nominee's or executive officer's beneficial
holdings totaled 1% or more of the outstanding shares as of such date,
determined in accordance with Rule 13d-3 under the Securities Exchange Act
of 1934 (under which the deferred stock units referred to in footnote 1(a)
above are disregarded for all percentage calculation purposes).
(3) These figures include shares which may be acquired in the following amounts
by exercise of stock options exercisable within 60 days of November 1, 1996,
which options were granted under the Company's Long-Term Incentive Plans:
Mr. Agger -- 82,973; Mr. Baker -- 343,800; Mr. Gadomski -- 95,139; Mr.
Jones -- 58,799; Mr. Kaminski -- 100,818; Mr. Kaplan -- 69,123; and Mr.
Wagner -- 230,162.
(4) This figure includes 80,000 shares owned by a private corporation and 77,618
shares owned by a charitable foundation, as to which shares Mr. Baker has
shared voting and investment power.
(5) These figures include 3,000 shares which may be acquired by each nonemployee
director by exercise of stock options exercisable within 60 days of November
1, 1996, granted under the Company's stock option plan for directors (except
that the figure shown for Mr. Thomas includes only 2,000 shares and the
figure shown for Mr. Lubbers includes only 1,000 shares, since they were not
serving as directors at the time of the first grant(s) under this plan).
CERTAIN PROCEDURAL INFORMATION
The Annual Report for the fiscal year ended September 30, 1996, including
financial statements, has been mailed to all shareholders together with this
Proxy Statement, which was first mailed December 11, 1996. The Annual Report is
not considered part of the proxy solicitation materials.
Only holders of common stock of record at the close of business on November 29,
1996, will be entitled to vote at the Annual Meeting. Under applicable Delaware
law and the Company's By-Laws, as amended, the holders of a majority of such
outstanding shares of common stock of the Company entitled to vote, present in
person or represented by proxy, will constitute a quorum for the transaction of
business at the meeting. Proxies marked as abstaining (and broker nonvotes which
are described below) will be treated as present for purposes of determining a
quorum for the meeting.
Each holder of the 120,403,539 issued and outstanding shares of $1 par value
common stock of the Company as of the November 29, 1996 record date is entitled
to one vote in person or by proxy for each share held. Such shares represented
by each duly signed proxy will be voted as directed by the shareholder on the
reverse side of the proxy and, if no direction is given on a duly signed proxy,
such shares will be voted in favor of the proposals described in this Proxy
Statement. Such shares will be voted in the judgment of the persons named in the
proxy upon such other business as may properly come before the meeting.
A broker nonvote will occur when a broker who holds shares in street name for a
customer, does not have the authority under the rules of the New York Stock
Exchange ("NYSE") to cast a vote on a
22
<PAGE> 27
particular matter because its customer, the beneficial owner of the shares, has
not furnished voting instructions on the matter. NYSE rules permit brokers to
vote customer shares without instruction on the type of proposals described in
this Proxy Statement, so it is not expected that broker nonvotes will occur.
Should any such proposal or other matter to properly come before the Annual
Meeting be or become subject to the NYSE broker nonvote rules, broker nonvotes
would not be counted for any purpose as to any matter for which nonvote is
indicated on the broker's proxy and, thus, would have no effect on the outcome
of the vote on such matter.
Full shares of common stock held for the account of shareholders participating
in the Dividend Reinvestment and Stock Purchase Program as of the record date
will be voted in the same manner as those shareholders have authorized their
shares held of record to be voted. If such shareholders fail to instruct how the
shares registered in their names shall be voted by not returning a proxy, the
shares held in their dividend reinvestment accounts will likewise not be voted.
Full shares of common stock represented by units of interest allocated to the
account of participants in the Company's Retirement Savings and Stock Ownership
Plan will be voted by the plan trustee pursuant to confidential directions
received from the plan participants. Any such shares for which the trustee
receives no voting directions and fractional shares will be voted by the trustee
in the same proportions as plan shares for which voting directions have been
received.
The total expense of solicitation of proxies will be borne by the Company and
will include reimbursement paid to brokerage firms and others for their expenses
in forwarding solicitation material regarding the meeting to beneficial owners.
The Company has retained Morrow & Co. to assist in the solicitation of proxies
for a fee of approximately $7,500, plus expenses. It may be that further
solicitation of proxies will be made by telephone or oral communication by
employees of the Company who will not be directly compensated therefor and the
cost thereof will be borne by the Company.
Shareholders may submit proposals on matters appropriate for shareholder action
at the Company's annual meetings consistent with regulations adopted by the
Securities and Exchange Commission. For such proposals to be considered for
inclusion in the Proxy Statement and form of proxy relating to the 1998 Annual
Meeting, they must be received by the Company not later than August 13, 1997.
Such proposals should be directed to the attention of the Secretary of the
Company, at 7201 Hamilton Boulevard, Allentown, Pennsylvania 18195-1501.
23
<PAGE> 28
[ X ] Please mark your votes
as in this example.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSALS 1 AND 2.
FOR WITHHELD Nominees are: J. J.
Kaminski as a Class I
1. To elect all director for a two-year
nominees [ ] [ ] term; L. P. Bremer III,
E. E. Hagenlocker, T. R.
Lautenbach, and H. A.
Wagner as Class II
For all nominees except those named below: directors for three-year
terms; and T. H. Barrett
as a Class III director
for a one-year term.
_______________________________________________
2. APPOINTMENT OF AUDITORS. FOR AGAINST ABSTAIN
Ratification of appointment of
Arthur Andersen LLP, as independent [ ] [ ] [ ]
certified public accountants for fiscal
year 1997.
The shares represented by
this proxy will be voted
as directed by the
shareholder on this proxy
with respect to Proposals
1 and 2. If no direction
is given, such shares
will be voted for
Proposals 1 and 2. Such
shares will be voted in
the proxies' discretion
upon such other business
as may properly come
before the meeting.
SIGNATURE(S) ______________________________________ DATE___________
NOTE: Please sign exactly as name appears hereon. Joint owners
should each sign. When signing as attorney, executor,
administrator, trustee, or guardian, please give full title
as such.
- --------------------------------------------------------------------------------
* FOLD AND DETACH HERE *
<PAGE> 29
AIR PRODUCTS AND CHEMICALS, INC.
NEW SHAREHOLDER SERVICES
DIRECT INVESTMENT PROGRAM FOR SHAREHOLDERS
Effective December 1996 the new Direct Investment Program will replace the
current Dividend Reinvestment and Stock Purchase Program. This new Program
provides an alternative to traditional retail brokerage methods for registered
shareholders and non-shareholders to purchase Air Products and Chemicals, Inc.
common stock and to reinvest dividends in Air Products stock. It is a convenient
and economical way for you to initiate and increase your investment in Air
Products through the purchase of shares with voluntary cash payments and all or
part of your dividends. Cash payments may be made by mail or through automatic
monthly deductions from your bank account.
DIRECT DEPOSIT OF DIVIDENDS
Shareholders receiving a dividend check may have payments deposited directly
into their checking or savings account at any financial institution
participating in the ACH network. Through an Electronic Funds Transfer, your
dividend can be deposited electronically on the dividend payment date. There is
no charge to shareholders for this service.
For details or enrollment in the Direct Investment Program or for direct deposit
of dividends, simply contact First Chicago Trust Company of New York, which
administers these programs for Air Products. The address and convenient "800"
numbers are shown below.
<TABLE>
<S> <C> <C>
Direct Investment Program Existing shareholders: 800-519-3111
for Shareholders of Air Products and Chemicals, Inc. Non-shareholders inquiring
c/o First Chicago Trust Company of New York about the Program: 888-694-9458
P.O. Box 2598
Jersey City, New Jersey 07303-2598 Be sure to include a
reference to Air Products
and Chemicals, Inc.
</TABLE>
<PAGE> 30
AIR PRODUCTS AND CHEMICALS, INC.
7201 Hamilton Boulevard [LOGO]
Allentown, PA 18195-1501
PROXY SOLICITED BY THE
BOARD OF DIRECTORS FOR ANNUAL MEETING OF SHAREHOLDERS--JANUARY 23, 1997
The undersigned hereby appoints Harold A. Wagner, James H. Agger and Arnold H.
Kaplan, or any one of them, with full power of substitution, to represent the
undersigned at the annual meeting of shareholders of Air Products and Chemicals,
Inc. on Thursday, January 23, 1997, and at any adjournments thereof, and to vote
at such meeting the shares which the undersigned would be entitled to vote if
personally present in accordance with the following instructions and to vote in
their judgment upon all other matters which may properly come before the meeting
and any adjournments thereof.
SEE REVERSE
SIDE
- --------------------------------------------------------------------------------
* FOLD AND DETACH HERE *
[Air Products logo appears here]
ANNUAL MEETING
OF
AIR PRODUCTS AND CHEMICALS, INC.
THURSDAY - JANUARY 23, 1997
2:00 P.M.
TOMPKINS COLLEGE CENTER THEATER
CEDAR CREST COLLEGE, ALLENTOWN, PA.
<PAGE> 31
<TABLE>
<CAPTION>
[ X ] PLEASE MARK VOTES
AS IN THIS EXAMPLE
<S> <C> <C> <C> <C>
NO. 1 ELECTION OF DIRECTORS.
For All
Nominees are: For Withhold Except
J. J. Kaminski as a Class [ ] [ ] [ ]
I director for a two-year term; L. P.
Bremer III, E. E. Hagenlocker, T. R.
Lautenbach, and H. A. Wagner as Class II
directors for three-year terms; and T.
H. Barrett as a Class III director for a
one-year term.
If you do not wish your shares voted for
a particular nominee, mark the "For All
Except" box and strike a line through
that nominee(s) name. Your shares will
be voted for the remaining nominees.
RECORD DATE SHARES:
NO. 2 APPOINTMENT OF AUDITORS.
Ratification of appointment of Arthur For Against Abstain
Andersen LLP, as independent certified [ ] [ ] [ ]
public accountants for fiscal year 1997.
</TABLE>
STATE STREET BANK
AND TRUST COMPANY
THE BOARD OF DIRECTORS RECOMMENDS A
VOTE FOR NOS. 1 AND 2.
Please be sure to sign and date this Proxy.
[ ]
Date
Participant sign here
- --------------------------------------------------------------------------------
DETACH CARD
<PAGE> 32
STATE STREET BANK AND TRUST COMPANY
December 11, 1996
TO: ALL PARTICIPANTS IN THE AIR PRODUCTS AND CHEMICALS, INC.
RETIREMENT SAVINGS AND STOCK OWNERSHIP PLAN
We are pleased to enclose the Notice of Annual Meeting of Shareholders of Air
Products and Chemicals, Inc. scheduled for January 23, 1997 and the accompanying
proxy statement.
As a participant in a Company-sponsored employee benefit savings plan that
provides for pass-through voting to participants, you are entitled to vote the
shares credited to your account and held by us in our capacity as Trustee under
the Air Products and Chemicals, Inc. Retirement Savings and Stock Ownership
Plan. These shares will be voted in confidence as you direct if the enclosed
voting direction form is completed by you and received by us on or before
January 17, 1997.
We would appreciate your filling in and signing the voting direction form and
returning it promptly in the postage paid envelope.
Cordially yours,
STATE STREET BANK AND TRUST COMPANY, TRUSTEE
<PAGE> 33
1997 ANNUAL MEETING OF SHAREHOLDERS - AIR PRODUCTS AND CHEMICALS, INC.
STATE STREET BANK AND TRUST COMPANY BOSTON, MA
AS TRUSTEE FOR AIR PRODUCTS AND CHEMICALS, INC. RETIREMENT
SAVINGS AND STOCK OWNERSHIP
PLAN.
The Trustee is hereby directed to vote the shares of common stock of Air
Products and Chemicals, Inc. represented by units of interest (the "shares")
allocated to my account under the Retirement Savings and Stock Ownership Plan at
the annual meeting of shareholders of Air Products and Chemicals, Inc. to be
held on 23 January 1997 as directed on the reverse side with respect to
Proposals 1 and 2.
I understand that the whole shares allocated to my Plan account will be voted by
the Trustee in person or by proxy as so directed by me. If this form is signed
and returned without directions, the shares allocated to my account will be
voted by the Trustee for Proposals 1 and 2. Except as otherwise provided in the
Retirement Savings and Stock Ownership Plan, such shares will be voted in the
proxies' discretion upon such other business as may properly come before the
meeting. If this form is not returned or is returned unsigned, the shares
allocated to my account will be voted by the Trustee in the same proportions as
shares held under the Plan for which voting directions have been received.
[PLEASE MARK AND DATE THE PROXY, AND SIGN YOUR NAME AS IT APPEARS ON
THE OTHER SIDE.]
