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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:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
[ ] Confidential, for the Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
</TABLE>
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):
[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:
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[Air Products Logo]
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AIR PRODUCTS AND CHEMICALS, INC.
7201 Hamilton Boulevard
Allentown, PA 18195-1501
December 14, 1998
Dear Shareholder:
On behalf of your Board of Directors, I am pleased to invite you to attend
the 1999 Annual Meeting of Shareholders of Air Products and Chemicals, Inc.
The meeting will be held on Thursday, January 28, 1999, 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 five
directors. The Board of Directors has nominated Ms. Ursula F. Fairbairn and
Messrs. Robert Cizik, John P. Jones III, Joseph J. Kaminski, and Ruud F.M.
Lubbers.
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 1999.
We look forward to seeing you at the meeting.
Cordially,
/s/ Harold A. Wagner
HAROLD A. WAGNER
Chairman of the Board and
Chief Executive Officer
<PAGE> 3
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD
JANUARY 28, 1999
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 28, 1999, at 2:00
p.m. for the following purposes:
1. To elect five directors each for a three-year term.
2. To ratify the appointment of independent certified
public accountants for the fiscal year ending September
30, 1999.
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 30,
1998, 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
Senior Vice President, General Counsel
and Secretary
December 14, 1998
<PAGE> 4
PROXY STATEMENT
TABLE OF CONTENTS
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PAGE
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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......................... 3
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.......................................... 16
Certain Agreements With Executive Officers............. 17
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT............................................. 18
Section 16(a) Beneficial Ownership Reporting
Compliance............................................ 21
INFORMATION ABOUT VOTING AND THE CONDUCT OF THE 1999
ANNUAL MEETING......................................... 21
Voting by Proxy........................................ 21
Quorum Requirements and Voting Procedures.............. 22
Proxy Solicitation..................................... 23
SHAREHOLDER PROPOSALS FOR THE 2000 ANNUAL MEETING......... 23
</TABLE>
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[Air Products Logo]
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AIR PRODUCTS AND CHEMICALS, INC.
7201 Hamilton Boulevard
Allentown, PA 18195-1501
ANNUAL MEETING OF SHAREHOLDERS
JANUARY 28, 1999
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 28, 1999, 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 14 positions. Due to the retirement of Dr.
Ruth M. Davis in accordance with the Company's term limitation and retirement
policy for directors and assuming the election by the shareholders of the five
persons standing for election as directors on January 28, 1999, the Board will
have 13 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, Ms. Ursula F. Fairbairn and Messrs. Robert Cizik, John
P. Jones III, Joseph J. Kaminski, and Ruud F. M. Lubbers, five incumbent Class I
directors whose terms are currently scheduled to expire at the 1999 Annual
Meeting, have been nominated for re-election for three-year terms as Class I
directors.
THE BOARD OF DIRECTORS AND MANAGEMENT RECOMMEND A VOTE "FOR" THE ELECTION TO THE
BOARD OF DIRECTORS OF MS. FAIRBAIRN AND MESSRS. CIZIK, JONES, KAMINSKI, AND
LUBBERS.
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 Ms.
Fairbairn, who was elected as a Class I director by the directors in July 1998
and Mr. Jones, who was elected as a Class I director by the directors in
September 1998.
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 five 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 matters when they have
not received instructions from their customers, the beneficial owners of the
shares. Under these rules, it is currently expected that brokers that do not
receive instructions will be entitled to vote on the
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election of the foregoing five 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, 1998 of the nominees for directors
and the directors continuing in office.
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NOMINEES FOR DIRECTOR:
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Class I -- To serve until the annual election of directors in 2002 or until
their successors are elected and qualified.
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[PHOTO OF ROBERT CIZIK]
ROBERT CIZIK, age 67. 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 in 1996. Mr.
Cizik is a director of Harris Corporation, Temple-Inland, Inc., and Stanadyne
Automotive Corp., where he also serves as non-executive Chairman.
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[PHOTO OF URSULA F. FAIRBAIRN]
URSULA F. FAIRBAIRN, age 55. Executive Vice President, Human
Resources and Quality of American Express Company. Director
of the Company since 1998. Ms. Fairbairn joined
American Express Company, a travel and financial services
company, in 1996 as Executive Vice President, Human Resources
and Quality. Prior to joining American Express, Ms. Fairbairn
was Senior Vice President, Human Resources at Union Pacific
Corporation, and had previously held several marketing and
human resources positions at IBM Corporation. She is a
director of VF Corporation.
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[PHOTO OF JOHN P. JONES III]
JOHN P. JONES III, age 48, President and Chief Operating
Officer of the Company. Director of the Company since 1998.
Mr. Jones joined the Company in 1972 and following various
commercial assignments in Company joint ventures and
subsidiaries, was appointed Vice President and General
Manager of the Company's Environmental/Energy Division in
1988. He was appointed Group Vice President of the Company's
Process System Group in 1992 and in 1993 was transferred to
Air Products Europe, Inc. where he was named President. In
1996, Mr. Jones returned to the U.S. where he was elected
Executive Vice President -- Gases and Equipment. He was elected to his
present position effective October 1, 1998.
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NOMINEES FOR DIRECTOR:
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Class I -- Continued
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[PHOTO OF JOSEPH J. KAMINSKI]
JOSEPH J. KAMINSKI, age 59. Corporate Executive Vice
President of the Company. Director of the Company since
1996. Member of the Environmental, Safety and Public
Policy Committee. 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 Chairman of the International Oxygen Manufacturers
Association, a director of 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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[PHOTO OF RUUD F. M. LUBBERS]
RUUD F. M. LUBBERS, age 59. A Minister of State and
the former Prime Minister of the Netherlands. Director of
the Company since 1995. Member of the Finance 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 chairs several entities sponsored by
the Dutch government, including the Advisory Council International Affairs,
the Mining Council, and the TNO Delft Technology Research Institute. He also
holds chair positions at the Institute of Foreign Relations in The Hague and
the Tinbergen Institute. Mr. Lubbers serves as a director of Content Beheer
B.V. and Mercon.
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DIRECTORS CONTINUING IN OFFICE:
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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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[PHOTO OF L. PAUL BREMER III]
L. PAUL BREMER III, age 57. 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 Akzo Nobel N.V., Vivid Technologies, Inc., and
the Netherland-America Foundation.
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3
<PAGE> 8
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DIRECTORS CONTINUING IN OFFICE:
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Class II -- Continued
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[PHOTO OF EDWARD E. HAGENLOCKER]
EDWARD E. HAGENLOCKER, age 58. Vice Chairman of Ford Motor
Company and Chairman of Visteon Automotive Systems.
Director of the Company since 1997. Member of the Audit and
Nominating and Corporate Governance Committees.
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 positions of Vice Chairman of Ford Motor Company in 1996 and Chairman
of Visteon Automotive Systems in 1997. Mr. Hagenlocker will retire as Vice
Chairman of Ford Motor Company and as Chairman of Visteon Automotive Systems
effective January 1, 1999. Visteon Automotive Systems, formerly Ford's
Automotive Components Group, is an enterprise of Ford Motor Company.
Mr. Hagenlocker serves as a director of The Hertz Corporation, an affiliate
of Ford Motor Company, and as a director of Boise Cascade Corporation.
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[PHOTO OF TERRY R. LAUTENBACH]
TERRY R. LAUTENBACH, age 60. 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
Nominating and Corporate Governance Committee. Mr. Lautenbach
joined IBM 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., Footstar Corp., and Varian Associates, Inc.
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[PHOTO OF HAROLD A. WAGNER]
HAROLD A. WAGNER, age 63. Chairman of the Board and Chief
Executive Officer of the Company. Director of the Company
since 1991. Chairman of the Executive Committee and member
of the Finance Committee. 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, President and Chief
Operating Officer in 1991, and Chairman of the Board and Chief Executive Officer
in 1992. Mr. Wagner is a director of United Technologies Corporation, CIGNA
Corporation, Daido Hoxan, Inc., and the Chemical Manufacturers Association, and
a trustee of Lehigh University and the Eisenhower Exchange Fellowships, Inc.
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DIRECTORS CONTINUING IN OFFICE:
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Class III -- To serve until the annual election of directors in 2001 or until
their successors are elected and qualified.
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[PHOTO OF TOM H. BARRETT]
TOM H. BARRETT, age 68. 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 Executive 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, and Rubbermaid,
Inc.
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[PHOTO OF JAMES F. HARDYMON]
JAMES F. HARDYMON, age 64, Chairman of Textron Inc. Director
of the Company since 1997. Member of the Audit and
Management Development and Compensation Committees.
Mr. Hardymon joined Textron Inc., a global, multi-industry
company with core businesses of aircraft, automotive,
industrial and finance, in 1989 as President and Chief
Operating Officer. He became Chief Executive Officer in
1992, and assumed the title of Chairman in 1993. Prior to
joining Textron, Mr. Hardymon was President, Chief Operating
Officer and a director of Emerson Electric Co. He is a
director of Circuit City Stores, Inc., Lexmark International, Inc., Championship
Auto Racing Teams, Inc., Fleet Financial Group, Inc., and Schneider S.A.
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[PHOTO OF TAKEO SHIINA]
TAKEO SHIINA, age 69. 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. 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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[PHOTO OF LAWRASON D. THOMAS]
LAWRASON D. THOMAS, age 64. Former Vice Chairman of Amoco
Corporation. Director of the Company since 1994. Chairman of
the Audit Committee and member of the Finance Committee.
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 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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MEETINGS AND COMMITTEES OF THE BOARD
The Board of Directors of the Company met ten times during fiscal year 1998.
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 88%. Mr. Shiina, who resides in Tokyo, Japan, attended less than
75% of such meetings.
The Board has six standing committees. These committee memberships are indicated
in the preceding biographical information.
The Audit Committee consists of three directors, none of whom is an employee of
the Company. The Committee, which met three times in fiscal year 1998, 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 six
directors, met once 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 1998. 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 1998. 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 four
nonemployee directors, met six times in fiscal year 1998. 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 employees, and reviews the
actions of those responsible for the administration of the Company's pension and
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<PAGE> 11
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 five
nonemployee directors, met three times during the last fiscal year. The
Committee reviews possible director candidates and makes recommendations to the
Board concerning nominees to serve on the Board of Directors. 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.
The Company's By-Laws, as amended, provide that any shareholder of record who is
entitled to vote for the election of directors may nominate persons for election
as directors, but only if timely written notice in proper form of the intent to
make a nomination at a meeting of shareholders is received by the Secretary of
the Company. To be timely, the notice must be received within the time frame
discussed on page 23. To be in proper form, the notice must include each
nominee's written consent to be named as nominee and to serve, if elected, and
contain prescribed information about the proponent and each nominee, including
such information about each nominee as would have been required to be included
in a proxy statement filed pursuant to the rules of the Securities and Exchange
Commission had such nominee been nominated by the Board of Directors.
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
Directors who are not employees of the Company are paid an annual retainer of
$48,000 ($51,000 for committee chairpersons). No meeting fees are paid for Board
or committee meetings. In order to more closely align the interests of the
directors with those of the shareholders, $12,000 of this retainer is paid in
deferred stock units under the deferred compensation plan for directors. At the
option of the director, the remaining retainer is paid either in cash, or
credited to the interest account or to additional deferred stock units under the
deferred compensation plan. Nonemployee directors receive a grant of 400
deferred stock units upon initial election to the Board and nonemployee
directors who are members of the Board immediately following the annual meeting
of shareholders receive an annual grant of 400 deferred stock units. 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
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<PAGE> 12
paid on Company common stock are deemed reinvested in further deferred stock
units. There are no 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. 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
2,000 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. Also, members of the Company's Japan Advisory Council,
including Mr. Shiina, and members of the Company's European Advisory Council,
including Mr. Lubbers, each receive an annual fee of $15,000 for serving on such
respective 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. 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 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 19, 1998, 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, 1999,
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
As of the date of delivery of the text of this Proxy Statement to the printer,
the Board of Directors and management of the Company knew of no business that
will be presented for action at the meeting other than referred to in the
foregoing Notice of Annual Meeting of Shareholders and this Proxy Statement.
However, if any other matter should properly come before the meeting or any
adjournment thereof, including proposals excluded from the Proxy Statement
pursuant to Securities and Exchange Commission Rule 14a-8, it is the intention
of the proxyholders named on the proxy card to take such action as shall be in
accordance with their best judgment.
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
four 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 paid on a variable basis predicated
upon specific performance standards (commonly referred to as "pay 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 intermediate and 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 ten billion dollars, and focuses on chemical and nondurable
manufacturing companies in particular.
Variable, performance-based components of compensation paid and awarded in
fiscal year 1998 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 65 to 80 percent variable
compensation for the five executives named in this Proxy Statement.
No compensation paid to the Company's executive officers for 1998 will exceed
the deduction limit under Section 162(m) of the Internal Revenue Code of 1986
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 may in the future authorize payment of compensation that is subject to
the deduction limit.
1998 ANNUAL CASH COMPENSATION -- BASE SALARY. Late in fiscal year 1997, the
Committee fixed the fiscal year 1998 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 1998, 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 net income, total return to shareholders, the
overall economic environment, and the performance of each of the other companies
besides Air Products included in the Standard & Poor's Chemicals Index or the
Dow Jones Specialty 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 1998 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 1998 meeting, the Committee completed its assessment of the
Company's and Mr. Wagner's performance and set 173% of the 1998 target bonus
guideline as the overall bonus award level for fiscal year 1998, including for
Mr. Wagner's award.
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. There have been two main forms of
awards -- stock options and performance-based deferred stock units known as
Performance Shares -- granted since shareholders approved the 1997 Long-Term
Incentive Plan in 1996. Stock option awards provide gains to executives only if
the stock price improves after grant and Performance Shares are earned and paid
out only if pre-established performance objectives are achieved. Ten-year
market-priced stock options have been granted annually, complemented in fiscal
year 1997 and again this fall in fiscal year 1999 by a two-year performance
program consisting of awards of five-year premium-priced options and Performance
Shares intended to emphasize the importance of intermediate-term financial
performance.
In the fall of 1997, all of the executive officers received the annual grant for
fiscal year 1998 of market-priced stock options made within the guideline award
range for their respective salary grade level, reflecting their position and
responsibilities at the time of grant. These options become exercisable in
one-third, annual increments beginning in October 1998. At the same time and for
the express purpose of securing Air Products' future leadership during the
transition of the Company's businesses and leadership into the next century, the
Committee granted Messrs. Jones and Gadomski a second award of market-priced
options with delayed exercisability beginning in one-third, annual increments in
January 2000.
Performance Shares granted under the first two-year performance program were
earned following the end of fiscal year 1998 based upon Air Products' 1998
earnings per share and operating group net income performance which exceeded the
goals set for the 1997 and 1998 performance period. The second two-year
performance program is intended to build on this profit growth momentum and to
link executive compensation more closely with asset management so as to improve
capital productivity, underscoring the importance of managing Air Products'
assets consistent with our capital plans while ensuring significant levels of
return on the growing asset base. Performance Shares have been granted with earn
out depending principally on the Company's operating return
10
<PAGE> 15
on net assets achieved by 2000, along with five-year premium-priced options
exercisable after two years at $40 per share.
CONCLUSION. The management compensation program is deliberately designed to
align the Air Products management team to drive for achievement of clear and
specific operating, business, and financial results and objectives in support of
the Company's long-term growth and other directional strategies to build
shareholder value.
Management Development and Compensation Committee
Terry R. Lautenbach, Chairman
Tom H. Barrett
Robert Cizik
James F. Hardymon
11
<PAGE> 16
COMPENSATION AND OPTION TABLES
TABLE 1 presents before-tax information concerning compensation earned, paid to,
awarded or accrued for services by the chief executive officer and four other
most highly compensated executive officers of the Company as of the end of
fiscal year 1998, during fiscal years 1996, 1997, and 1998 including Career
Share awards (referred to under the column "Restricted Stock Awards") granted
under the 1990 Deferred Stock Plan, stock options granted under the 1997
Long-Term Incentive Plan, and Performance Share awards earned under the 1997
Long-Term Incentive Plan (referred to under the column "LTIP Payouts"). TABLE 2
presents more detailed information concerning the foregoing stock option awards
granted in fiscal year 1998 to the individuals named in Table 1, and TABLE 3
presents information as to options exercised and held by such persons in fiscal
year 1998.
TABLE 1
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION AWARDS
---------------------------------- ----------------------------------------
SECURITIES
OTHER ANNUAL RESTRICTED UNDERLYING LTIP
FISCAL SALARY BONUS COMPENSATION STOCK AWARD STOCK OPTIONS PAYOUTS
NAME AND PRINCIPAL POSITION YEAR ($)(1) ($)(1) ($)(2) ($)(3)(6) (#)(4) ($)(5)(6)
--------------------------- ------ -------- -------- ------------ ----------- ------------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Harold A. Wagner.............. 1998 $827,596 $986,965 $ 0 $ 0 110,000 $1,501,950
Chairman and 1997 $777,443 $874,000 $ 0 $ 0 220,000 $ 0
Chief Executive 1996 $738,077 $473,000 $ 0 $390,450 100,200 $ 0
Officer
James H. Agger................ 1998 $321,093 $246,785 $ 0 $ 0 25,000 $ 500,650
Senior Vice 1997 $309,000 $221,000 $ 0 $ 0 50,000 $ 0
President, 1996 $295,577 $119,000 $ 0 $130,150 24,200 $ 0
General Counsel and
Secretary
Robert E. Gadomski............ 1998 $400,962 $363,300 $ 0 $ 0 100,000 $ 750,975
Executive Vice 1997 $351,346 $326,000 $ 0 $ 0 100,000 $ 0
President, 1996 $311,538 $162,000 $ 0 $156,180 32,000 $ 0
Chemicals, Asia, and Latin
America
John P. Jones III............. 1998 $400,962 $363,300 $ 0 $ 0 100,000 $ 750,975
President and 1997 $351,346 $326,000 $ 44,222 $ 0 100,000 $ 0
Chief Operating 1996 $305,268 $139,000 $268,556 $156,180 32,000 $ 0
Officer
Joseph J. Kaminski............ 1998 $417,415 $363,300 $ 0 $ 0 50,000 $ 750,975
Corporate 1997 $401,308 $326,000 $ 0 $ 0 100,000 $ 0
Executive 1996 $384,423 $178,000 $ 0 $208,240 40,000 $ 0
Vice President
<CAPTION>
ALL OTHER
COMPENSATION
NAME AND PRINCIPAL POSITION (7)
--------------------------- ------------
<S> <C>
Harold A. Wagner.............. $24,694
Chairman and $23,211
Chief Executive $25,198
Officer
James H. Agger................ $ 9,602
Senior Vice $ 9,228
President, $ 8,908
General Counsel and
Secretary
Robert E. Gadomski............ $11,944
Executive Vice $10,480
President, $ 9,372
Chemicals, Asia, and Latin
America
John P. Jones III............. $11,955
President and $10,501
Chief Operating $ 9,166
Officer
Joseph J. Kaminski............ $12,463
Corporate $11,985
Executive $11,562
Vice President
</TABLE>
- ---------------
(1) Amounts shown include cash compensation earned for services performed
during each fiscal year, including amounts received by the executive as
well as 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 for Mr. Jones are comprised of payments made under the
Company's plans applicable to all employees who are U.S. citizens on
international assignments for foreign cost of living and exchange rate
adjustments, foreign housing costs and domestic housing management, and for
tax equalization relating to his overseas assignment. Mr. Jones' overseas
assignment concluded during fiscal year 1996.
(3) Deferred stock units referred to as "Career Shares" granted in fiscal year
1996 under the 1990 Deferred Stock Plan, payable the earlier of two years
following the executive's retirement, disability, or death. Amounts
reported in the Table are based on the October 2, 1995 grant date market
value of $26.03 per share (the mean of the high and low sale prices as
reported on
12
<PAGE> 17
NYSE -- Composite Transactions, for that date as adjusted for the stock
split effective June 15, 1998).
(4) During a thirty-day period following a change in control of the Company as
defined in the 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 units known as "Performance Shares" granted in fiscal year
1997 under the Long-Term Incentive Plan, which were earned out and will be
paid (or deferred) following the end of fiscal year 1998 because of
attainment of pre-established performance objectives measured for the
executive officers named in the Table by the corporate compound annual
earnings growth rate for the two-year period ending 30 September 1998.
Amounts reported in the Table are based on the market value of $40.3750 per
share on 18 November 1998, the date the Committee determined the level of
payout for the awards.
(6) As of September 30, 1998, Mr. Wagner held an aggregate of 68,000 deferred
stock units known as Career Shares and 37,200 deferred stock units known as
Performance Shares determined to be earned out after the end of fiscal year
1998, with an aggregate value of $3,192,168; Mr. Agger held 14,200 Career
Shares and 12,400 Performance Shares with an aggregate value of $807,145;
Mr. Gadomski held 19,800 Career Shares and 18,600 Performance Shares with
an aggregate value of $1,165,202; Mr. Jones held 18,800 Career Shares and
18,600 Performance Shares with an aggregate value of $1,134,858; and Mr.
Kaminski held 25,800 Career Shares and 18,600 Performance Shares with an
aggregate value of $1,347,265, such values determined in the same manner as
were the amounts in the Table but based on the 1998 fiscal year-end
$30.3438 market value of a share of Company common stock. Deferred stock
units entitle the recipient to receive from the Company a share of Air
Products stock and a cash payment equivalent to the dividends which would
have accrued on a share of stock since the date of grant of the award.
Payout of deferred stock units is subject to acceleration by the Committee
upon a change in control of the Company as defined in the plan, under which
circumstances the Committee may determine to pay any or all of the deferred
stock units in cash in an amount per unit prescribed by a plan formula
defining stock value. Deferred stock units 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.
(7) The amounts shown for fiscal years 1997 and 1998 are comprised solely and
the amount shown for fiscal year 1996 is comprised principally of Company
matching contributions and/or accruals (together, the "Company match")
under the Company's qualified 401(k) and nonqualified supplementary defined
contribution savings plans (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, for fiscal
year 1996 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 applicable period of compounding.
No such compensatory interest was earned for fiscal years 1997 and 1998.
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. The Savings Plan Company match for fiscal year 1996 for each of
the persons named in the order shown is $22,143, $8,869, $9,347, $9,159 and
$11,534, respectively.
13
<PAGE> 18
TABLE 2
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
- ------------------------------------------------------------------------------- POTENTIAL REALIZABLE VALUE AT
NUMBER OF PERCENT(%) ASSUMED ANNUAL RATES OF
SECURITIES OF TOTAL STOCK PRICE APPRECIATION
UNDERLYING OPTIONS FOR TEN YEAR OPTION TERM(5)
OPTIONS GRANTED TO EXERCISE --------------------------------
GRANTED EMPLOYEES IN PRICE EXPIRATION 5% 10%
NAME (#)(1) FISCAL YEAR ($/SH)(4) DATE ($) ($)
---- ---------- ------------ --------- --------------- --------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Harold A. Wagner...... 110,000(2) 2.1% $41.31 October 2, 2007 $2,857,760 $7,242,125
James H. Agger........ 25,000(2) 0.5% $41.31 October 2, 2007 $ 649,491 $1,645,938
Robert E. Gadomski.... 50,000(2) 1.0% $41.31 October 2, 2007 $1,298,982 $3,291,875
50,000(3) 1.0% $41.31 October 2, 2007 $1,298,982 $3,291,875
John P. Jones III..... 50,000(2) 1.0% $41.31 October 2, 2007 $1,298,982 $3,291,875
50,000(3) 1.0% $41.31 October 2, 2007 $1,298,982 $3,291,875
Joseph J. Kaminski.... 50,000(2) 1.0% $41.31 October 2, 2007 $1,298,982 $3,291,875
</TABLE>
- ---------------
(1) Nonqualified stock options which are nonassignable and nontransferable
except to designated beneficiaries; or by will or by the laws of descent and
distribution; or by gift to family members or to trusts of which only family
members are beneficiaries. The option exercise price may be paid with
previously owned shares and/or tax withholding obligations relating to
exercise may be satisfied with previously 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 granted to executive
officers, including the chief executive officer, terminate when employment
ends except due to retirement, disability, or death.
(2) 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 1997 Long-Term Incentive Plan, there would be an automatic acceleration
of their exercisability. During a thirty-day period following such a change
in control, options can be canceled 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 Plan, and the option exercise price.
(3) One third become exercisable January 1, 2000, one third become exercisable
January 1, 2001, and one third become exercisable January 1, 2002, except
that upon a change in control of the Company, there would be an automatic
acceleration of their exercisability, as explained in footnote 2 above.
(4) Granted at market value (the mean of the high and low sale prices on the
October 1, 1997 grant date as reported on the NYSE -- Composite
Transactions).
(5) Figures shown under "Potential Realizable Value" are the pre-tax gains which
would be recognized at the end of the option terms if an executive exercised
all of his 1998 options on the last day of the option terms and Air Products
stock price had grown at the 5% and 10% assumed growth rates set by the SEC.
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.
14
<PAGE> 19
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
VALUE AT FISCAL YEAR END (#) AT FISCAL YEAR END ($)(2)
SHARES ACQUIRED REALIZED --------------------------- ---------------------------
NAME ON EXERCISE (#) ($)(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- --------------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Harold A. Wagner.................... 30,680 $984,046 475,766 326,734 $4,342,484 $238,227
James H. Agger...................... 15,640 $520,460 145,384 74,736 $1,632,318 $ 56,202
Robert E. Gadomski.................. 0 $ 0 187,878 194,002 $2,018,821 $ 88,814
John P. Jones III................... 4,840 $162,803 143,598 194,002 $1,379,431 $ 88,814
Joseph J. Kaminski.................. 17,800 $377,075 208,410 146,670 $2,160,075 $100,323
</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
1998 fiscal year-end market value for all shares underlying outstanding
in-the-money options granted for 1998 and earlier fiscal years. All such
options were in-the-money at September 30, 1998 -- that is, the September
30, 1998 market value, $30.3438, exceeded the option exercise
price -- except for premium-priced options granted in fiscal year 1997 and
market-priced stock options granted in fiscal year 1998.
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.
15
<PAGE> 20
STOCK PERFORMANCE INFORMATION
The following graph compares the cumulative total shareholder returns, at each
September 30 during the five-year period beginning September 30, 1993 and ending
September 30, 1998, of (a) the Company's common stock, (b) the Standard & Poor's
500 Stock Index, (c) the Standard & Poor's Chemicals Index, and (d) for the
first time this year, the Dow Jones Specialty Chemicals Index. The Dow Jones
Specialty Chemicals Index, which includes 17 companies in addition to Air
Products, is being added as a broader industry comparator since the S&P
Chemicals Index has declined to only six companies plus Air Products. The graph
assumes the investment of $100 on September 30, 1993 in Air Products common
stock and in the S&P 500, the S&P Chemicals, and the Dow Jones Specialty
Chemicals companies, and total shareholder return was calculated on the basis
that in each case all dividends were reinvested.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
COMPARISON OF FIVE-YEAR CUMULATIVE SHAREHOLDER RETURN
AIR PRODUCTS, S&P 500, S&P CHEMICALS, AND DOW JONES SPECIALTY CHEMICALS
COMPARATIVE GROWTH OF A $100 INVESTMENT
(ASSUMES REINVESTMENT OF ALL DIVIDENDS)
<TABLE>
<CAPTION>
S&P DJ SPEC
AIR PRODUCTS S&P 500 CHEMICALS CHEM
<S> <C> <C> <C> <C>
SEP-93 100 100 100 100
SEP-94 123 104 132 107
SEP-95 140 135 156 132
SEP-96 160 162 202 147
SEP-97 231 228 263 172
SEP-98 168 248 237 150
</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 made
under the Annual Incentive Plan 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 1998, 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.
16
<PAGE> 21
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>
40$0,000..... $ 88,611 $118,148 $147,684 $177,221 $ 206,758 $ 236,758 $ 266,758
500,000..... $111,111 $148,148 $185,184 $222,221 $ 259,258 $ 296,758 $ 334,258
600,000..... $133,611 $178,148 $222,684 $267,221 $ 311,758 $ 356,758 $ 401,758
700,000..... $156,111 $208,148 $260,184 $312,221 $ 364,258 $ 416,758 $ 469,258
800,000..... $178,611 $238,148 $297,684 $357,221 $ 416,758 $ 476,758 $ 536,758
900,000..... $201,111 $268,148 $335,184 $402,221 $ 469,258 $ 536,758 $ 604,258
1,000,000... $223,611 $298,148 $372,684 $447,221 $ 521,758 $ 596,758 $ 671,758
1,100,000... $246,111 $328,148 $410,184 $492,221 $ 574,258 $ 656,758 $ 739,258
1,200,000... $268,611 $358,148 $447,684 $537,221 $ 626,758 $ 716,758 $ 806,758
1,300,000... $291,111 $388,148 $485,184 $582,221 $ 679,258 $ 776,758 $ 874,258
1,400,000... $313,611 $418,148 $522,684 $627,221 $ 731,758 $ 836,758 $ 941,758
1,500,000... $336,111 $448,148 $560,184 $672,221 $ 784,258 $ 896,758 $1,009,258
1,600,000... $358,611 $478,148 $597,684 $717,221 $ 836,758 $ 956,758 $1,076,758
1,700,000... $381,111 $508,148 $635,184 $762,221 $ 889,258 $1,016,758 $1,144,258
1,800,000... $403,611 $538,148 $672,684 $807,221 $ 941,758 $1,076,758 $1,211,758
1,900,000... $426,111 $568,148 $710,184 $852,221 $ 994,258 $1,136,758 $1,279,258
2,000,000... $448,611 $598,148 $747,684 $897,221 $1,046,758 $1,196,758 $1,346,758
2,100,000... $471,111 $628,148 $785,184 $942,221 $1,099,258 $1,256,758 $1,414,258
2,200,000... $493,611 $658,148 $822,684 $987,221 $1,151,758 $1,316,758 $1,481,758
</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, 1998 for the executive officers named in
the Summary Compensation Table are: Mr. Wagner, 35 years; Mr. Agger, 30 years;
Mr. Gadomski, 28 years; Mr. Jones, 26 years; and Mr. Kaminski, 33 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 7 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 executives named in the Summary
Compensation Table. The employ-
17
<PAGE> 22
ment 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 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, 1998.
<TABLE>
<CAPTION>
AMOUNT AND NATURE
OF BENEFICIAL
NAME AND ADDRESS OF BENEFICIAL OWNER OWNERSHIP PERCENT OF CLASS
------------------------------------ ----------------- ----------------
<S> <C> <C>
FMR Corp.(1)............................................... 16,348,086 6.8%
82 Devonshire Street
Boston, MA 02109-3614
Mellon Bank (DE) National Association...................... 18,454,673 7.6%
Trustee of the Air Products and Chemicals, Inc.
Flexible Employee Benefits Trust (the "Trust")(2)
Mellon Bank Center
10th and Market Streets, 2nd Floor
Wilmington, DE 19801
State Farm Mutual Automobile Insurance Company(3).......... 15,698,400 6.5%
One State Farm Plaza
Bloomington, IL 61710
State Street Bank and Trust Company, Trustee(4)............ 15,722,673 6.5%
P.O. Box 1389
Boston, MA 02104
</TABLE>
- ---------------
(1) Based upon information in a report on Schedule 13G for the period ending
December 31, 1997 filed by FMR Corp. with the Securities and Exchange
Commission ("SEC"). Of these shares, Fidelity Management & Research Company,
a wholly-owned subsidiary of FMR Corp., beneficially owns 14,721,668 shares,
representing 6.1% of the class. In the aggregate, FMR Corp. has sole voting
power over 1,095,418 shares and sole investment power over 16,348,086
shares. According to the 13G, Edward C. Johnson 3d, Chairman of FMR Corp.,
and Abigail P. Johnson, a
18
<PAGE> 23
director of FMR Corp., also have investment power over the shares
beneficially owned by FMR Corp.
(2) 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"). Shares held in the Trust are transferred from the Trust from time
to time to satisfy plan obligations specified by the Company. Both the Trust
and Trustee have disclaimed beneficial ownership of all 18,454,673 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, but 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 QUORUM REQUIREMENTS AND VOTING PROCEDURES at the top of
page 23, and, for tendering or exchanging, in footnote 1(d) on page 21. 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.
(3) Based upon information in a report on Schedule 13G for the period ending
December 31, 1997 filed by State Farm Mutual Automobile Insurance Company
("State Farm") with the SEC, as updated by State Farm through September 30,
1998. State Farm and related entities have sole voting power and sole
investment power as to all 15,698,400 shares.
(4) Based upon information in a report on Schedule 13G for the period ending
December 31, 1997 filed by State Street Bank and Trust Company ("State
Street") with the SEC, as updated by State Street through September 30,
1998. State Street holds 11,354,151 shares in trust 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 QUORUM REQUIREMENTS AND VOTING PROCEDURES at the top of page
23 and in footnote 1(d) on page 21. State Street holds the remainder of the
shares in trust as trustee or discretionary advisor for various collective
investment funds for employee benefit plan and other index accounts. In the
aggregate, State Street has sole voting power over 3,833,722 shares, shared
voting power over 11,546,453 shares, sole investment power over 4,046,591
shares, and shared investment power over 11,676,082 shares.
19
<PAGE> 24
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, 1998.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF BENEFICIAL
NAME OF BENEFICIAL OWNER OWNERSHIP(1) AND PERCENT OF CLASS(2)
------------------------ ------------------------------------
<S> <C> <C>
James H. Agger.................................. 245,902(3)
Tom H. Barrett.................................. 36,143(4)
L. Paul Bremer III.............................. 18,505(4)
Robert Cizik.................................... 24,392(4)
Ruth M. Davis................................... 12,219(4)
Ursula F. Fairbairn............................. 400
Robert E. Gadomski.............................. 358,759(3)
Edward E. Hagenlocker........................... 7,056(4)
James F. Hardymon............................... 3,314(4)
John P. Jones III............................... 308,862(3)
Joseph J. Kaminski.............................. 412,522(3)
Terry R. Lautenbach............................. 19,503(4)
Ruud F. M. Lubbers.............................. 7,874(4)
Takeo Shiina.................................... 13,651(4)
Lawrason D. Thomas.............................. 14,363(4)
Harold A. Wagner................................ 895,837(3)(5)
All directors and executive officers as a group,
comprised of 18 persons....................... 2,650,110 1.09%
</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 2,001,386 options granted under the Company's Long-Term
Incentive Plan and under the Company's Stock Option Plan for Directors,
an aggregate of 162,000 deferred stock units known as "Career Shares"
awarded under the Company's 1990 Deferred Stock Plan, an aggregate of
219,360 deferred stock units known as "Performance Shares" granted
under the 1997 Long-Term Incentive Plan (105,000 of 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
57,204 deferred stock units under the Deferred Compensation Plan for
Directors, as to which securities the recipient directors, nominees,
and executive officers have no voting or investment power;
(b) an aggregate of 8,265 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 8,265
shares;
(c) an aggregate of 8,152 shares owned jointly by certain of the directors,
nominees and executive officers with their spouses with whom they share
voting and investment power; and
20
<PAGE> 25
(d) shares represented by units of interest allocated to the account of the
current 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 QUORUM REQUIREMENTS AND
VOTING PROCEDURES at the top of 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 could be acquired in the following
amounts by exercise of stock options within 60 days of November 1, 1998,
granted under the Company's Long-Term Incentive Plan: Mr. Agger -- 195,116;
Mr. Gadomski -- 281,878; Mr. Jones -- 237,598; Mr. Kaminski -- 305,078; and
Mr. Wagner -- 692,498.
(4) These figures include shares which could be acquired in the following
amounts by each nonemployee director by exercise of stock options within 60
days of November 1, 1998, granted under the Company's Stock Option Plan for
Directors: Mr. Barrett -- 10,000; Mr. Bremer -- 10,000; Mr. Cizik -- 10,000;
Dr. Davis -- 6,000; Mr. Hagenlocker -- 4,000; Mr. Hardymon -- 2,000; Mr.
Lautenbach -- 10,000; Mr. Lubbers -- 6,000; Mr. Shiina -- 10,000; and Mr.
Thomas -- 8,000.
(5) This figure includes 25,524 shares owned by a charitable foundation, as to
which Mr. Wagner has shared voting and investment power.
SECTION 16(a) Beneficial Ownership Reporting Compliance
The Company believes that all of its directors and officers subject to Section
16(a) have complied with all Section 16 filing requirements.
INFORMATION ABOUT VOTING AND THE CONDUCT OF THE 1999 ANNUAL MEETING
VOTING BY PROXY
Only shareholders of record on November 30, 1998, the record date for the Annual
Meeting, are entitled to vote at the meeting. Each such shareholder including
Company employees and former employees who are registered shareholders, are
furnished a proxy card accompanying this Proxy Statement for voting the shares
registered in their name. The proxy card indicates on its face the number of
shares of common stock registered in the name of each such shareholder,
including full shares enrolled in the Direct Investment Program on the record
date. Shareholders whose shares are registered in the name of a bank, broker or
other holder of record will receive instructions from the holder of record on
how to instruct such holder to vote their shares. Each employee and former
employee who owns shares of common stock under the Company's Retirement Savings
and Stock Ownership Plan is furnished a separate voting instruction card by the
plan trustee for directing the plan trustee to vote the number of shares
credited to their plan account on the record date.
If you are a registered or beneficial owner of common stock described in the
preceding paragraph, to be sure that your vote is counted, you are urged to
complete and sign and date the proxy or voting instruction card enclosed in this
package and return it in the postage paid envelope that is provided whether or
not you plan to attend the meeting in person. Returning the proxy card does not
affect
21
<PAGE> 26
your right to vote in person if you attend the meeting. The prompt return of
your signed proxy or instruction card will aid the Company in reducing the
expense of additional proxy solicitation.
Employees and former employees who have stock options awarded to them by the
Company or an affiliate but who don't otherwise own any Company common stock on
the record date entitling them to vote or instruct a nominee to vote on their
behalf at the meeting, are not receiving a proxy card for voting. Such persons
are being furnished this Proxy Statement for their information as required by
law.
This Proxy Statement and the accompanying proxy card are first being mailed to
shareholders on or about December 14, 1998. Each registered and beneficial owner
of common stock or employee or former employee holding a stock option on
November 30, 1998, should have received a copy of the Company's Annual Report to
Shareholders including financial statements either with this Proxy Statement or
prior to its receipt, although the Annual Report to Shareholders is not
considered part of this proxy solicitation material. If, upon receipt of this
package, you have not received the Annual Report to Shareholders, please write
to the Secretary of the Company at 7201 Hamilton Boulevard, Allentown,
Pennsylvania 18195-1501, and a copy will be sent to you.
QUORUM REQUIREMENTS AND VOTING PROCEDURES
Each share of common stock entitles the holder of record on the record date to
one vote except as noted below. There were 229,304,441 issued and outstanding
shares of common stock as of the November 30, 1998 record date entitled to vote
at the 1999 Annual Meeting. Under applicable Delaware law and the Company's
By-Laws, as amended, the holders of a majority of the shares entitled to vote at
the meeting, 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 "non-votes" will be treated as present for purposes of determining a
quorum for the meeting.
A broker non-vote will occur when a registered holder or nominee holding shares
for a beneficial owner does not have the authority under the rules of the New
York Stock Exchange ("NYSE") to cast a vote on a particular matter and the
beneficial owner has not furnished voting instructions on the matter. Under the
circumstances currently known to management the NYSE rules would permit nominees
to vote without instruction on the type of proposals described in this Proxy
Statement, so it is not expected that broker non-votes will occur. Broker
non-votes would not be counted for any purpose as to any matter for which
non-vote is indicated on the broker's proxy and, thus, would have no effect on
the outcome of the vote on such matter.
When a proxy card is properly executed and returned, the shares represented will
be voted by the proxyholders named on the card in accordance with the
shareholder directions. Shareholders may vote on a matter by marking the
appropriate box on the card. If the card is executed and returned and no choice
is specified for a matter, the shares will be voted as recommended by the Board
of Directors and management on that matter.
Any shareholder executing a proxy may revoke that proxy or submit a revised one
at any time before it is voted. A shareholder may also vote by ballot at the
Annual Meeting, thereby canceling any proxy previously returned as to any matter
voted on by ballot.
Management knows of no matters other than those set forth on the proxy card that
may properly be presented for action at the 1999 Annual Meeting. Execution of a
proxy, however, confers on the designated proxyholders discretionary authority
to vote the shares represented in accordance with their best judgment on any
other business that may come before the meeting.
Full shares of common stock held for the account of shareholders participating
in the Direct Investment 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 card, the shares held in their
Direct Investment Program accounts will likewise not be voted.
22
<PAGE> 27
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.
PROXY SOLICITATION
The entire cost of soliciting proxies will be borne by the Company including the
cost of preparing, mailing, and printing this Proxy Statement. Solicitation
costs include payments to brokerage firms and others for forwarding solicitation
materials regarding the meeting to beneficial owners. The Company has also
retained Morrow & Co. to assist in the solicitation of proxies from shareholders
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 for soliciting
proxies.
SHAREHOLDER PROPOSALS FOR THE 2000 ANNUAL MEETING
Certain matters are required to be considered at the annual meeting of
shareholders, such as the election of directors. From time to time, the Board of
Directors may wish to submit to the shareholders other matters for
consideration, such as the ratification of the selection of auditors, management
proposals regarding incentive programs, and most changes in the Certificate of
Incorporation. Additionally, shareholders may be asked to consider and take
action on proposals submitted by shareholders who are not members of management
that cover matters deemed proper under regulations of the Securities and
Exchange Commission and applicable state laws.
Shareholders' eligibility to submit proposals for inclusion in the Company's
Proxy Statement, proper subjects for such proposals, and the form of shareholder
proposals are regulated by Rule 14a-8 under Section 14(a) of the Securities
Exchange Act of 1934. For shareholder proposals to be considered for inclusion
in the proxy statement and form of proxy relating to the 2000 Annual Meeting,
the proposal must be received at the Company's principal executive office on or
before August 16, 1999. The Company's By-Laws, as amended, require shareholders
who intend to propose the nominations of persons for election as directors or
other business to be considered by shareholders at an annual meeting (other than
shareholder proposals included in the proxy statement pursuant to Rule 14a-8),
to give written notice to the Secretary of the Company at least 90 days but no
more than 120 days prior to the anniversary date of the previous year's annual
meeting. Therefore, matters to be raised by a shareholder at the 2000 Annual
Meeting must be received at the Company's principal executive offices on or
after September 30, 1999 but no later than October 30, 1999. The written notice
must contain specified information concerning the matters to be brought before
such meeting and concerning the shareholder proposing such matters. Copies of
the By-Law provisions setting forth the specific notice requirements will be
forwarded to any shareholder of record upon written request.
All proposals or notices of proposals by shareholders, whether or not to be
included in the Company's proxy materials, should be sent to the Secretary of
the Company at 7201 Hamilton Boulevard, Allentown, Pennsylvania 18195-1501.
23
<PAGE> 28
(LOGO)
AIR PRODUCTS AND CHEMICALS, INC.
7201 Hamilton Boulevard
Allentown, PA 18195-1501
PROXY SOLICITED BY THE
BOARD OF DIRECTORS FOR ANNUAL MEETING OF SHAREHOLDERS--JANUARY 28, 1999
The undersigned hereby appoints Harold A. Wagner, James H. Agger, and Leo J.
Daley, 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 28, 1999, 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 judgement 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 28, 1999
2:00 P.M.
TOMPKINS COLLEGE CENTER THEATER
CEDAR CREST COLLEGE, ALLENTOWN, PA
<PAGE> 29
[X] Please mark your
votes as in this
example.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSALS 1 AND 2.
<TABLE>
<S> <C>
FOR WITHHELD Nominees are:
1. To elect all [ ] [ ] R. Cizik, U.F. Fairbairn, J.P. Jones III, J.J. Kaminski, and
nominees R.F.M. Lubbers as Class I directors for three-year terms.
For all nominees except those named below:
- --------------------------------------------------------------------------------------
</TABLE>
FOR AGAINST ABSTAIN
2. APPOINTMENT OF AUDITORS. [ ] [ ] [ ]
Ratification of appointment of Arthur Andersen LLP,
as independent certified public accountants for
fiscal year 1999.
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
AIR PRODUCTS AND CHEMICALS, INC.
SHAREHOLDER SERVICES
DIRECT INVESTMENT PROGRAM FOR SHAREHOLDERS
The Direct Investment 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.
Direct Investment Program
for Shareholders of Air Products and Chemicals, Inc.
c/o First Chicago Trust Company of New York
P.O. Box 2598
Jersey City, New Jersey 07303-2598
Existing shareholders: 800-519-3111
Non-shareholders inquiring
about the Program: 888-694-9458
Be sure to include a reference to
Air Products and Chemicals, Inc.
