SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant (X)
Filed by a Party other than the Registrant ( )
Check the appropriate box:
( ) Preliminary Proxy Statement ( ) Confidential, for Use of the
Commission Only (as permitted
by Rule 14a-6(e)(2))
(X) Definitive Proxy Statement
( ) Definitive Additional Materials
( ) Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
Ethyl Corporation
(Name of Registrant as Specified in its Charter)
(Name of Person(s) Filing Proxy Statement, if other than Registrant)
Payment of Filing Fee (Check the appropriate box):
(X) No fee required
( ) Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
( ) Fee paid previously with preliminary materials.
( ) Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule, or Registration Statement No.:
3) Filing Party:
4) Date Filed:
<PAGE>
<PAGE>
E T H Y L C O R P O R A T I O N
330 SOUTH FOURTH STREET
P.O. BOX 2189
RICHMOND, VIRGINIA 23218
[LOGO]
Annual Meeting Of Shareholders
March 23, 1998
To the Shareholders:
Enclosed is our annual report describing Ethyl's operations during the
past year. You are encouraged to read this report, which summarizes major
corporate developments during the year.
You are cordially invited to attend the annual meeting of shareholders to
be held in the restored gun foundry building of the Tredegar Iron Works, 500
Tredegar Street, in Richmond, Virginia, on Thursday, April 23, 1998, at 11:00
A.M., Eastern Daylight Time. A formal notice of the meeting, together with a
proxy statement and proxy form, is enclosed with this letter. The notice points
out that you will be asked to elect a Board of Directors and approve the
designation of auditors for the coming year.
Please read the notice and proxy statement carefully, complete the proxy
form and mail it promptly.
Sincerely yours,
BRUCE C. GOTTWALD
Chairman of the Board
Chief Executive Officer
<PAGE>
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
NOTICE IS HEREBY GIVEN that the Annual Meeting of the holders of shares of
Common Stock, $1.00 par value ("Ethyl Common Stock"), of Ethyl Corporation (the
"Corporation") will be held in the restored gun foundry building of the
Tredegar Iron Works, 500 Tredegar Street, Richmond, Virginia, on Thursday,
April 23, 1998, at 11:00 A.M., Eastern Daylight Time, for the following
purposes:
1. To elect a Board of Directors to serve for the ensuing year;
2. To approve the designation by the Board of Coopers & Lybrand L.L.P. as
auditors for the fiscal year ending December 31, 1998; and
3. To transact such other business as may properly come before the meeting.
Holders of shares of Ethyl Common Stock of record at the close of business
on March 2, 1998, will be entitled to vote at the meeting.
You are requested to fill in, sign, date and return the enclosed proxy
promptly, regardless of whether you expect to attend the meeting. A
postage-paid return envelope is enclosed for your convenience.
If you are present at the meeting, you may vote in person even if you
already have sent in your proxy.
By Order of the Board of Directors
M. RUDOLPH WEST, Secretary
March 23, 1998
<PAGE>
PROXY STATEMENT
for
ANNUAL MEETING OF SHAREHOLDERS
ETHYL CORPORATION
To be held April 23, 1998
Approximate date of mailing -- March 23, 1998
Proxies in the form enclosed are solicited by the Board of Directors for
the Annual Meeting of Shareholders to be held on Thursday, April 23, 1998. Any
person giving a proxy may revoke it at any time before it is voted by
delivering another proxy, or written notice of revocation, to the Secretary of
the Corporation. A proxy, if executed and not revoked, will be voted, and, if
it contains any specific instructions, will be voted in accordance with such
instructions.
On March 2, 1998, the date for determining shareholders entitled to vote
at the meeting, there were outstanding 83,465,460 shares of Ethyl Common Stock.
Each share of Ethyl Common Stock is entitled to one vote.
The election of each nominee for director requires the affirmative vote of
the holders of a plurality of the shares of Ethyl Common Stock voted in the
election of directors. Votes that are withheld and shares held in street name
that are not voted in the election of directors will not be included in
determining the number of votes cast. Unless otherwise specified in the
accompanying form of proxy, it is intended that votes will be cast for the
election of all of the nominees as directors.
The cost of the solicitation of proxies will be borne by the Corporation.
In addition to the use of the mails, proxies may be solicited personally or by
telephone by regular employees of the Corporation. Corporate Investor
Communications, Inc. has been engaged to assist in the solicitation of proxies.
The Corporation will pay that firm $7,000 for its services and reimburse its
out-of-pocket expenses.
The Corporation's street address is 330 South Fourth Street, Richmond,
Virginia 23219.
ELECTION OF DIRECTORS
Proxies will be voted for the election as directors for the ensuing year
of the persons named below (or if for any reason unavailable, of such
substitutes as the Board of Directors may designate). Each of the nominees
presently is serving as a director. The Board has no reason to believe that any
of the nominees will be unavailable.
William W. Berry; age 65; director since 1983; Chairman of the Board of New
England Independent System Operator (regional manager of electric bulk
power generation and transmission systems) since June 1997, having served
as an independent consultant from 1992-1997. Prior to his becoming an
independent consultant, he served as Chairman of the Board of Dominion
Resources, Inc. (holding company for Virginia Electric and Power Company)
from 1990-1992, and Chairman of the Board of Virginia Power Company (public
utility) from 1986-1992 (retired). Other directorships: Scott &
Stringfellow Financial, Inc. and Universal Corporation.
1
<PAGE>
Phyllis L. Cothran; age 51; director since 1995; retired, having served as
President of Trigon Healthcare, Inc. and President and Chief Operating
Officer of Blue Cross and Blue Shield of Virginia (health insurance
company) from June 1995 to March 1997, and having previously served as
President and Chief Operating Officer of Blue Cross and Blue Shield of
Virginia. Other directorships: Tredegar Industries, Inc.
Bruce C. Gottwald; age 64; director since 1962; Chairman of the Board, Chairman
of the Executive Committee and Chief Executive Officer of the Corporation
since March 1, 1994, having served as President, Chief Executive Officer
and Chief Operating Officer of the Corporation from April 23, 1992, to
March 1, 1994, and having previously served as President and Chief
Operating Officer of the Corporation. Other directorships: CSX Corporation
and Fort James Corporation.
Thomas E. Gottwald; age 37; director since 1994; President and Chief Operating
Officer of the Corporation since March 1, 1994, having served as Vice
President of the Corporation from August 1, 1991, to March 1, 1994.
Gilbert M. Grosvenor; age 66; director since 1985; Chairman of the Board of
Trustees of the National Geographic Society (magazine publisher and
scientific society), having served as Chief Executive Officer of the
National Geographic Society from 1980-1996. Other directorships: Saul
Centers, Inc., Marriott International, Inc. and Chevy Chase Bank, F.S.B.
Sidney Buford Scott; age 65; director since 1959; Chairman of the Board of
Scott & Stringfellow Financial, Inc. and Scott & Stringfellow, Inc.
(investment bankers and brokers).
Charles B. Walker; age 59; director since 1989; Vice Chairman of the Board and
Chief Financial Officer of Albemarle Corporation (specialty chemicals
company) since 1994; Former Vice Chairman of the Board from March 1, 1994,
until January 31, 1998, and Chief Financial Officer and Treasurer of the
Corporation from March 1, 1994, until October 1, 1997, having served as
Executive Vice President and Chief Financial Officer of the Corporation
from August 1, 1989, to March 1, 1994, and Treasurer of the Corporation
since July 1, 1993. Other directorships: Albemarle Corporation and Nations
Fund Trust/Nations Fund, Inc.
In 1997, each director attended at least 75% of the aggregate of (i) the
total number of meetings of all committees of the Board on which the director
then served and (ii) the total number of meetings of the Board of Directors
held during 1997 while he or she was a member of the Board of Directors. Six
meetings of the Corporation's Board of Directors were held during 1997.
The Corporation's executive committee currently consists of Messrs. Bruce
C. Gottwald, Berry, Scott and Thomas E. Gottwald. During 1997, the executive
committee met on six occasions.
Ms. Cothran and Messrs. Berry, Grosvenor and Scott currently serve on the
Corporation's audit committee. During 1997, the audit committee met twice. The
audit committee reviews the Corporation's internal audit and financial
reporting functions and the scope and results of the audit performed by the
Corporation's independent accountants and matters relating thereto and reports
thereon to the Board of Directors. The audit committee also reviews audit fees
and recommends to the Board of Directors the engagement of the independent
accountants of the Corporation.
The Corporation's nominating committee currently consists of Messrs.
Grosvenor, Berry and Bruce C. Gottwald. The nominating committee did not meet
during 1997. The nominating committee recommends candidates for election as
directors and in some cases the election of officers. The Corporation's bylaws
provide that
2
<PAGE>
a shareholder of the Corporation entitled to vote for the election of directors
may nominate persons for election to the Board by mailing written notice to the
Secretary of the Corporation not later than (i) with respect to an election to
be held at an annual meeting of shareholders, 60 days prior to such meeting,
and (ii) with respect to an election to be held at a special meeting of
shareholders for the election of directors, the close of business on the
seventh day following the date on which notice of such meeting is first given
to shareholders. Such shareholder's notice shall include (i) the name and
address of the shareholder and of each person to be nominated, (ii) a
representation that the shareholder is a holder of record of stock of the
Corporation entitled to vote at such meeting and intends to appear in person or
by proxy at the meeting to nominate each person specified, (iii) a description
of all understandings between the shareholder and each nominee and any other
person (naming such person) pursuant to which the nomination is to be made by
the shareholder, (iv) such other information regarding each nominee as would be
required to be included in a proxy statement filed pursuant to the proxy rules
of the Securities and Exchange Commission had the nominee been nominated by the
Board of Directors and (v) the consent of each nominee to serve as a director
of the Corporation if so elected.
Messrs. Berry, Grosvenor and Scott and Ms. Cothran currently serve as the
Corporation's Bonus, Salary and Stock Option Committee. During 1997, the Bonus,
Salary and Stock Option Committee met on seven occasions. This committee
approves the salaries of management-level employees. It also approves all bonus
awards, certain consultant agreements and initial salaries of new
management-level personnel and grants options under the Corporation's Incentive
Stock Option Plan.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Thomas E. Gottwald, President and director of the Corporation, is a son of
Bruce C. Gottwald. The members of the family of Bruce C. Gottwald may be deemed
to be control persons of the Corporation.
SECTION 16(a)
BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Based solely on its review of the forms required by Section 16(a) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), that have
been received by the Corporation, the Corporation believes that there has been
compliance with all filing requirements applicable to its officers, directors
and beneficial owners of greater than 10% of Ethyl Common Stock, except that
each of Ms. Cothran, Mr. Scott and Russell L. Gottwald, Jr., Vice
President-Product Supply, was late in reporting a transaction on Form 4 that
subsequently has been included on a timely filed Form 5.
3
<PAGE>
STOCK OWNERSHIP
The following table lists any person (including any "group" as that term
is used in Section 13(d)(3) of the Exchange Act) who, to the knowledge of the
Corporation, was the beneficial owner as of December 31, 1997, of more than 5%
of the outstanding voting shares of the Corporation.
<TABLE>
<CAPTION>
Name and Address of Number of
Title of Class Beneficial Owners Shares Percent of Class
- ---------------- ---------------------------- ------------------------- -----------------
<S> <C>
Common Stock Floyd D. Gottwald, Jr. and 21,326,222(b)(c) 25.53%
Bruce C. Gottwald (a)
330 South Fourth Street
P.O. Box 2189
Richmond, Virginia 23219
</TABLE>
- ----------
(a) Floyd D. Gottwald, Jr. and Bruce C. Gottwald, who are brothers, may be
deemed to be a "group" for purposes of Section 13(d)(3) of the Exchange
Act, although there is no agreement between them with respect to the
acquisition, retention, disposition or voting of Ethyl Common Stock.
(b) As of December 31, 1997, Floyd D. Gottwald, Jr. and Bruce C. Gottwald had
sole voting and investment power over all of the shares disclosed except
11,686,759 shares held by wives, adult sons and in certain trust
relationships as to which they disclaim beneficial ownership. This amount
includes an aggregate of 4,293,256 shares of Ethyl Common Stock
beneficially owned by the adult sons of Floyd D. Gottwald, Jr. and an
aggregate of 4,737,336 shares of Ethyl Common Stock beneficially owned by
the adult sons of Bruce C. Gottwald. Floyd D. Gottwald, Jr., Bruce C.
Gottwald and their adult sons have no agreement with respect to the
acquisition, retention, disposition or voting of Ethyl Common Stock.
(c) This amount includes any shares owned of record by the Trustees under
various employee savings plans for the benefit of Bruce C. Gottwald and
Thomas E. Gottwald. This amount does not include shares held by the
Trustees of such plans for the benefit of other employees. Shares held
under the Corporation's savings plan are voted by the Trustee in
accordance with instructions solicited from employees participating in the
plan. If a participating employee does not give the Trustee voting
instructions, his shares generally are voted by the Trustee in accordance
with the Board's recommendations to the shareholders. Because members of
the family of Bruce C. Gottwald are executive officers and directors of
the Corporation and are the largest shareholders of the Corporation, they
may be deemed to be control persons of the Corporation and to have the
capacity to control any such recommendation of the Board of Directors.
4
<PAGE>
The following table sets forth as of January 31, 1998, the beneficial
ownership of Ethyl Common Stock by all directors of the Corporation, the Chief
Executive Officer and the four next most highly compensated executive officers
and all directors and officers of the Corporation as a group. Unless otherwise
indicated, each person listed below has sole voting and investment power over
all shares beneficially owned by him or her.
<TABLE>
<CAPTION>
Number of Shares Number of Shares Total
Name of Beneficial Owner with Sole Voting with Shared Voting Number Percent
or Number Of Persons in Group and Investment Power(1) and Investment Power of Shares of Class(2)
- ------------------------------- ----------------------- ---------------------- ----------- ----------
<S> <C>
William W. Berry 2,752 2,041(3) 4,793
Phyllis L. Cothran 3,256 0 3,256
Bruce C. Gottwald 4,827,859 619,531(4) 5,447,390 6.52%
Thomas E. Gottwald 552,790 3,201,731(5) 3,754,521 4.49%
Gilbert M. Grosvenor 3,345 0 3,345
Alex McLean 10,666 0 10,666
Newton A. Perry 47,665 0 47,665
Sidney Buford Scott 65,645 19,000(6) 84,645
Charles B. Walker 202,798 0 202,798
Directors and officers as a
group (21 persons) 6,130,711 3,845,341 9,976,052 11.88%
</TABLE>
- ----------
(1) The amounts in this column include shares of Ethyl Common Stock with respect
to which certain persons had the right to acquire beneficial ownership
within 60 days of January 31, 1998, pursuant to the Corporation's Incentive
Stock Option Plan: Thomas E. Gottwald: 80,000 shares; Alex McLean: 10,000
shares; Newton A. Perry: 36,683 shares; Charles B. Walker: 144,055 shares;
and directors and officers as a group: 483,069 shares.
(2) Except as indicated, each person or group owns less than 1% of Ethyl Common
Stock.
(3) Mr. Berry disclaims beneficial ownership of all 2,041 of such shares.
(4) Mr. Bruce C. Gottwald disclaims beneficial ownership of all 619,531 of such
shares.
(5) Mr. Thomas E. Gottwald disclaims beneficial ownership of all 3,201,731 of
such shares. This amount includes 3,186,101 shares of Ethyl Common Stock
that Mr. Gottwald may be deemed to own beneficially. Such shares constitute
Mr. Gottwald's interest as beneficiary of a trust of which he is a
co-trustee.
(6) Mr. Scott disclaims beneficial ownership of all 19,000 of such shares.
5
<PAGE>
COMPENSATION OF EXECUTIVE OFFICERS AND DIRECTORS
The following table presents information relating to total compensation of
the Chief Executive Officer and the four next most highly compensated executive
officers of the Corporation for the fiscal years ended December 31, 1997, 1996
and 1995.
<TABLE>
<CAPTION>
Annual Compensation Long-Term Compensation
-------------------------------------------------- ------------------------------
Other Annual All Other
Name and Principal Position Year Salary Bonus Compensation Options/SARs Compensation
- ---------------------------- ------ ----------- ---------- -------------- -------------- -------------
<S> <C>
Bruce C. Gottwald 1997 $ 770,000 $ 75,000 -- 0 $38,500(1)
Chairman of the Board and 1996 770,000 200,000 -- 0 38,500
Chief Executive Officer 1995 770,000 0 -- 0 38,500
Thomas E. Gottwald 1997 383,500 75,000 -- 0 19,175(2)
President and 1996 381,000 120,000 -- 0 19,050
Chief Operating Officer 1995 381,000 0 -- 0 19,050
Charles B. Walker 1997 230,000(3) 50,000 -- 0 11,500(4)
Former Vice Chairman of 1996 230,000 100,000 -- 100,000 11,500
the Board, Chief Financial 1995 230,000 0 -- 0 11,500
Officer and Treasurer
(as of February 1, 1998)
Newton A. Perry 1997 245,116 40,000 -- 0 12,256(5)
Senior Vice President 1996 218,575 75,000 -- 0 10,929
Antiknocks 1995 201,275 43,000 -- 0 10,064
Alex McLean 1997 234,900(6) 50,000 230,332(7) 0 4,203(8)
Senior Vice President 1996 175,177 60,000 106,585 75,000 9,506
Petroleum Additives 1995 117,211 25,000 95,873 0 5,369
</TABLE>
- ----------
(1) Includes contributions to the Corporation's savings plan ($7,500, $7,500 and
$7,500) and accruals in the Corporation's excess benefit plan ($31,000,
$31,000 and $31,000) for 1997, 1996 and 1995, respectively.
(2) Includes contributions to the Corporation's savings plan ($7,500, $7,500 and
$7,500) and accruals in the Corporation's excess benefit plan ($11,675,
$11,550 and $11,550) for 1997, 1996 and 1995, respectively.
(3) Mr. Walker also served as an officer of Albemarle Corporation during 1997
and is compensated separately by Albemarle Corporation for such service.
(4) Includes contributions to the Corporation's savings plan ($7,500, $7,500 and
$7,500) and accruals in the Corporation's excess benefit plan ($4,000,
$4,000 and $4,000) for 1997, 1996 and 1995, respectively.
(5) Includes contributions to the Corporation's savings plan ($7,500, $7,500 and
$7,500) for 1997, 1996 and 1995, respectively, and accruals in the
Corporation's excess benefit plan ($4,756, $3,429 and $2,564) for 1997, 1996
and 1995, respectively.
(6) Until May 1, 1997, Mr. McLean was compensated in pounds sterling. Amounts
listed prior to that date are based on the exchange rate in effect at the
time each payment was made.
(7) Includes payments for expatriate expenses and allowances ($47,651, $46,222
and $45,230) for 1997, 1996 and 1995, respectively, and tax subsidies
($182,681, $60,363 and $50,643) for 1997, 1996 and 1995, respectively.
(8) Includes accruals in the Ethyl Petroleum Additives Limited excess share
scheme. Each amount listed here in U.S. dollars is based on the exchange
rate in effect at the time of each accrual.
6
<PAGE>
OPTION/SAR GRANTS IN LAST FISCAL YEAR
There were no option or stock appreciation right ("SAR") grants to the
Chief Executive Officer and the four next most highly compensated executive
officers of the Corporation during the last fiscal year.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION/SAR VALUE
The following table presents information concerning option and SAR
exercises by the Chief Executive Officer and the four next most highly
compensated executive officers of the Corporation.
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Underlying Unexercised In-The-Money Options/
Options/SARs at FY-End (#)(1) SARs at FY-End ($)(2)
Shares Acquired Value ------------------------------- ------------------------------
Name On Exercise (#) Realized ($) Exercisable Unexercisable Exercisable Unexercisable
- -------------------- ----------------- ------------- ------------- --------------- ------------- --------------
<S> <C>
Bruce C. Gottwald 0 $ 0 0 0 $ 0 $ 0
Thomas E. Gottwald 0 0 80,000 320,000 0 0
Charles B. Walker 0 0 144,055 180,000 0 0
Newton A. Perry 0 0 36,683 80,000 0 0
Alex McLean 0 0 10,000 115,000 0 0
</TABLE>
- ----------
(1) Each of these options relates to Ethyl Common Stock and includes a tandem
SAR.
(2) These values are based on $7.6875, the closing price of Ethyl Common Stock
on The New York Stock Exchange on December 31, 1997.
7
<PAGE>
RETIREMENT BENEFITS
The following table illustrates under the Corporation's pension plan for
salaried employees the estimated benefits upon retirement at age 65, determined
as of December 31, 1997, to persons with specified earnings and years of
pension benefit service. To the extent benefits payable at retirement exceed
amounts that may be payable under applicable provisions of the Internal Revenue
Code of 1986, as amended (the "Code"), they will be paid under the
Corporation's excess benefit or supplemental retirement plans, as applicable.
This table includes the amounts that would be payable under such plans.
Pension Plan Table*
<TABLE>
<CAPTION>
Years of Pension Benefit Service and Estimated Annual Benefits
-----------------------------------------------------------------------------------------------
Final Average Earnings 10 15 20 25 30 35 40 45
- ----------------------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
<S> <C>
$ 300,000 $ 43,830 $ 65,745 $ 87,660 $109,570 $131,485 $153,400 $175,315 $197,230
$ 350,000 51,330 76,995 102,660 128,320 153,985 179,650 205,315 230,980
$ 400,000 58,830 88,245 117,660 147,070 176,485 205,900 235,315 264,730
$ 450,000 66,330 99,495 132,660 165,820 198,985 232,150 265,315 298,480
$ 500,000 73,830 110,745 147,660 184,570 221,485 258,400 295,315 332,230
$ 550,000 81,330 121,995 162,660 203,320 243,985 284,650 325,315 365,980
$ 600,000 88,830 133,245 177,660 222,070 266,485 310,900 355,315 399,730
$ 650,000 96,330 144,495 192,660 240,820 288,985 337,150 385,315 433,480
$ 700,000 103,830 155,745 207,660 259,570 311,485 363,400 415,315 467,230
$ 750,000 111,330 166,995 222,660 278,320 333,985 389,650 445,315 500,980
$ 800,000 118,830 178,245 237,660 297,070 356,485 415,900 475,315 534,730
$ 850,000 126,330 189,495 252,660 315,820 378,985 442,150 505,315 568,480
$ 900,000 133,830 200,745 267,660 334,570 401,485 468,400 535,315 602,230
$ 950,000 141,330 211,995 282,660 353,320 423,985 494,650 565,315 635,980
$ 1,000,000 148,830 223,245 297,660 372,070 446,485 520,900 595,315 669,730
</TABLE>
- ----------
* Assumes attainment of age 65 in 1997 and Social Security Covered Compensation
of $29,304.
The benefit formula under the pension plans is based on the participant's
final-average earnings, which are defined as the average of the highest three
consecutive calendar years' earnings (base pay plus 50% of incentive bonuses
paid in any fiscal year) during the ten consecutive calendar years immediately
preceding the date of determination. The years of pension benefit service for
each of the executive officers named in the above compensation table as of
December 31, 1997, are: Bruce C. Gottwald, 42; Thomas E. Gottwald, 6; Charles B.
Walker, 17; Newton A. Perry, 29; and Alex McLean, 9. Benefits under the pension
plans are computed on the basis of a life annuity with 60 months guaranteed
payments. The benefits listed in the above compensation table are not subject to
deduction for Social Security or other offset payments.
Mr. McLean also participated in the Ethyl Petroleum Additives Limited
Pension Plan. The formula under that plan is equal to 1.6667% times pensionable
salary times years of service. Mr. McLean has 7.833 years of service under the
plan. This accrued benefit as of April 30, 1997, is $51,936 per year, payable at
age 65. This amount is based on the exchange rate at December 31, 1997. The
amount payable under the plan is offset from the amount payable under the
pension plan described above.
8
<PAGE>
EXCESS BENEFIT PLANS
The Corporation maintains excess benefit plans (the "Excess Plans") in the
form of nonqualified pension plans that provide eligible individuals the
difference between the benefits they actually accrue under the qualified
employee pension and savings plans of the Corporation and the benefits they
would have accrued under such plans, but for the maximum benefit and annual
addition limitations and the limitation on compensation that may be recognized
thereunder, under the Code. Certain key employees may be granted additional
pension service benefits equal to 4% of final pay for each year of service to
the Corporation up to 15 years, net of certain other benefits received from the
Corporation, previous employers and Social Security. These benefits have been
granted to Mr. Walker. All benefits under the Excess Plans vest upon a Change in
Control of the Corporation, as defined in the Plans. Recipients of the
additional pension service benefits may elect to receive their benefits in a
single lump sum payment or a series of fixed payments.
Mr. Walker, who retired as an officer and employee of the Corporation on
January 31, 1998, will receive a series of payments that are equivalent to the
present value of his accrued benefits under the Excess Plans plus any earnings
on the funds designated for such payments. This arrangement is in lieu of any
benefits under the Excess Plans.
COMPENSATION OF DIRECTORS
Each non-employee director is paid (i) $1,000 for attendance at each Board
meeting and (ii) $600 for attendance at each meeting of a committee of the Board
of which he or she is a member. In addition, each such director is paid a
quarterly fee of $5,000. Employee members of the Board of Directors are not paid
separately for their service on the Board or its committees.
Any director retiring from the Board after age 60 with at least five years'
service on the Board will receive $12,000 per year for life, payable in
quarterly installments. The service requirement for this benefit may be waived
under certain circumstances. Any director retiring under other circumstances
will receive $12,000 per year, payable in quarterly installments, commencing no
earlier than age 60, for a period not to exceed his years of service on the
Board. The payment period limitation on this benefit may be waived in certain
circumstances. Such retirement payments to former directors may be discontinued
under certain circumstances.
On each July 1, each non-employee director is awarded that number of whole
shares of Ethyl Common Stock when multiplied by the closing price of Ethyl
Common Stock on the immediately preceding business day, as reported in The Wall
Street Journal, as shall as nearly as possible equal but not exceed $2,000. The
shares of Ethyl Common Stock awarded under the Directors' Stock Plan are
nonforfeitable and the recipient directors immediately and fully vest in Ethyl
Common Stock issued under the Plan. Subject only to such limitations on transfer
as may be specified by applicable securities laws, directors may sell their
shares under the Directors' Stock Plan at any time. The Directors' Stock Plan
provides that no awards may be made after July 1, 2001.
Non-employee directors may defer, in ten percent increments, all or part of
their retainer fee and meeting fees into either a deferred cash account or a
deferred stock account, or a percentage of the fees into each of the accounts,
both of which are unfunded and maintained for recordkeeping purposes only.
Distributions under the Deferred Compensation Plan, paid in a single sum or in
up to ten annual installments, cannot begin within two years of the beginning of
the deferral year. The maximum aggregate number of shares of Ethyl Common Stock
that may be issued under the Deferred Compensation Plan is 100,000 shares.
9
<PAGE>
BONUS, SALARY AND STOCK OPTION COMMITTEE
REPORT ON EXECUTIVE COMPENSATION
The Bonus, Salary and Stock Option Committee of the Board of Directors (the
"Committee"), which performs the function of a compensation committee, consists
of Messrs. Berry (Chairman), Grosvenor and Scott and Ms. Cothran. The Committee
is delegated the power to administer the compensation program of the Corporation
applicable to its executive officers, including the Chief Executive Officer.
Accordingly, the Committee submits this report on executive compensation to the
shareholders.
Overall Objectives
The objectives of the Corporation's executive compensation program are to:
o Provide balanced, competitive total compensation that will enable the
Corporation to attract, motivate and retain highly qualified executives.
o Provide incentives for enhancing the profitability of the Corporation by
rewarding executives for meeting individual and corporate goals.
o Align the financial interests of the executives closely to those of the
shareholders by encouraging executive ownership of Ethyl Common Stock.
Elements of the Program
The Committee believes the interests of the shareholders will be best
served if the compensation program consists of cash compensation and equity
ownership, with a significant portion of compensation depending upon
performance. The program includes: base salary, annual bonuses in cash or cash
and stock, and stock options with performance vesting and SARs. The Committee
considers all elements of the program when setting appropriate compensation.
The Corporation seeks to maintain its executive compensation packages
around the mid-range of those offered generally in the job markets in which the
Corporation competes for talent and experience. The Corporation's stock option
program is administered likewise to achieve the goal of providing incentive to
the Corporation's executives to achieve long-term performance.
The Committee has met with each of the five officers included in the
compensation table on page 6 to review 1997 performance against goals and
objectives that had been set for the year.
Competitive Market
The Corporation uses various compensation surveys provided by compensation
consultants in determining the market for executive pay. The surveys include
companies that are larger and smaller than the Corporation. Some of the surveys
are limited to companies in the petroleum or chemical businesses, including, but
not limited to, companies shown on the Performance Graph. Others include
companies in other industries. References to the "market" in this Report refer
to the survey data.
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Base Salaries
Increases in base salaries are based on evaluations of past and current
Corporation operating profits and individual contribution to the Corporation's
success, market data for comparable positions and salary levels of the
Corporation's peer group companies and alignment of salary and organization
within the Corporation. The Committee considers each of the individual factors
but does not assign a specific value to each factor, and a subjective element is
acknowledged in evaluating each executive's contribution. Salary survey data
from the Corporation's peer group companies indicated the Corporation's
executive level compensation to be well within the ranges of compensation
offered by peer group companies.
In keeping with the objective of maximizing long-term performance by
putting a significant part of total compensation at risk, base salary for the
top two executive officers remained essentially unchanged in 1997.
Annual Bonuses
The annual bonus program is designed to motivate and reward performance
measured against individual, division, department and corporate objectives. A
bonus reserve is established to achieve the Corporation's compensation targets.
The maximum contribution to the bonus reserve is 4% of the amount by which
operating profits of the Corporation and its subsidiaries, determined by the
independent auditors, exceed $15,000,000. The auditors certified that the
maximum contribution for 1997 under the formula was $4,426,284, but the
Committee, as has been the practice in prior years, did not appropriate the
entire amount. Of this amount, a total of $1,808,000 was awarded in 1998 as 1997
bonuses.
Annual bonus awards are determined by the Committee in conjunction with
senior management, and are based on evaluation of the performance, level of
responsibility and leadership of the individual executive in relation to overall
corporate results. The Committee recognizes management's efforts to meet the
challenges of a highly competitive industry that has recently experienced slow
volume growth, excess production capacity and consolidation. Management's major
accomplishments for the year included continued growth in operating profits for
petroleum additives other than antiknocks, the repurchase of 35 million of the
Corporation's 118 million outstanding common shares, targeted growth among key
customers and significant improvements in safety, environmental and supply chain
performance. However, in light of the fact that overall operating profits for
1997 did not reach expected levels, bonus awards for 1997 were lower than 1996.
The bonus pool was reduced and individuals were awarded bonuses where their
performance merited it.
Stock Options
Under the Incentive Stock Option Plan approved by the shareholders, the
Committee, in its discretion, may grant options to purchase shares of Ethyl
Common Stock (with or without related SARs) to any executive of the Corporation
or any subsidiary who has contributed or can be expected to contribute to the
Corporation's profits and growth. The Committee determines the amount of the
grant, the term of the options and the requisite conditions for exercise.
On October 1, 1997, the Committee granted to J. Robert Mooney, in
connection with his employment as Senior Vice President and Chief Financial
Officer, options to purchase at $9.25 per share an aggregate of 200,000 shares
of Ethyl Common Stock.
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CEO Compensation
In keeping with the objective of improving long-term performance and
shareholder value, the Chief Executive Officer as a major shareholder strongly
advocates pay for performance. Consequently, greater emphasis is being placed on
compensation at risk. For the second year in a row the Chief Executive Officer
asked not to be considered for a salary increase. Compensation survey data
places the CEO's compensation for 1997 at approximately the size-adjusted median
of companies surveyed by the Corporation's compensation consultants.
The Committee believes that in the last several years the Chief Executive
Officer has taken steps to meet the challenges of an admittedly difficult market
environment. Despite these challenges, there have been significant
accomplishments, including continued growth in the operating profits for
petroleum additives other than antiknocks, improvements in supply chain
performance and targeted growth among key customers. In recognition of these
achievements, and acknowledging that overall operating profits for 1997 did not
reach expected levels, the Committee awarded the Chief Executive Officer a bonus
for 1997 of $75,000.
Section 162(m)
Section 162(m) of the Code provides certain criteria for the tax
deductibility of compensation in excess of $1 million paid to the Corporation's
executive officers. To meet the criteria applicable to performance-based
compensation (as defined in Section 162(m) of the Code), certain of the
Corporation's benefit plans would have to be amended to limit the Committee's
discretion to determine individual awards based on individual performance
factors and other factors as the Committee may determine, from time to time, to
be relevant.
The Committee believes that the flexibility on awards is an important
feature of the plans and one that serves the best interests of the Corporation
by allowing the Committee to recognize and motivate individual executive
officers as circumstances warrant. Further, the Committee currently does not
anticipate that there will be any compensation subject to the loss of tax
deductibility. Consequently, the Committee does not propose at the present time
to amend any plan to comply with the performance-based criteria.
THE BONUS, SALARY AND STOCK OPTION COMMITTEE
William W. Berry, Chairman March 5, 1998
Gilbert M. Grosvenor
Sidney Buford Scott
Phyllis L. Cothran
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PERFORMANCE GRAPH
Comparison of Five-Year Cumulative Total Return*
Performance through December 31, 1997
Ethyl Chemical The Lubrizol
Date Corporation S&P 500 Composite(1) Corporation
----- ----------- ------- ------------ ------------
December 1992 $100 $100 $100 $100
December 1993 $ 96 $110 $112 $129
December 1994 $ 86 $112 $123 $131
December 1995 $116 $153 $161 $110
December 1996 $ 94 $188 $201 $127
December 1997 $ 80 $251 $245 $156
* Assumes $100 invested on last day of December 1992. Dividends are
reinvested quarterly.
(1) The total return information for the Chemical Composite has been
weighted by market capitalization and includes the following companies
in all the chemical industry groups (basic chemicals, specialty
chemicals and diversified chemicals): Air Products and Chemicals, Inc.,
Avery Dennison Corporation, The Dow Chemical Company, E. I. du Pont de
Nemours and Company, Englehard Corp., Ethyl Corporation, FMC
Corporation, First Mississippi Corp., The B.F. Goodrich Company, W.R.
Grace & Co., Great Lakes Chemical Corp., Hercules Incorporated, Monsanto
Company, Morton International, Inc., NL Industries, Inc., Nalco Chemical
Co., PPG Industries, Inc., Praxair, Inc., Rohm and Haas Company and
Union Carbide Corporation.
Because none of the corporations included in the Chemical Composite, other
than the Corporation, has lubricant additives as a primary business, the
Corporation included a comparison with The Lubrizol Corporation, which is the
only other corporation listed on The New York Stock Exchange with lubricant
additives as a primary business.
DESIGNATION OF AUDITORS
The Board of Directors has designated Coopers & Lybrand L.L.P., certified
public accountants, as the Corporation's independent auditors for the year
1998, subject to shareholder approval. This firm has audited the Corporation's
financial statements since 1962 and those of the former Ethyl Corporation
(Delaware) from 1947
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to 1962. A representative of Coopers & Lybrand L.L.P. is expected to be present
at the annual meeting with an opportunity to make a statement and to be
available to respond to appropriate questions.
Coopers & Lybrand L.L.P.'s principal function is to audit the consolidated
financial statements of the Corporation and its subsidiaries and, in connection
with that audit, to review certain related filings with the Securities and
Exchange Commission and to conduct limited reviews of the financial statements
included in the Corporation's quarterly reports.
FINANCIAL STATEMENTS
A copy of the Corporation's Annual Report on Form 10-K for the year 1997,
as required to be filed with the Securities and Exchange Commission, will be
provided on written request without charge to any shareholder whose proxy is
being solicited by the Board of Directors. The written request should be
directed to:
M. Rudolph West, Esq.
Secretary
Ethyl Corporation
330 South Fourth Street
P.O. Box 2189
Richmond, Virginia 23218
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PROPOSALS FOR 1999 ANNUAL MEETING
Under the regulations of the Securities and Exchange Commission, any
shareholder desiring to make a proposal to be acted upon at the 1999 annual
meeting of shareholders must present such proposal to the Corporation at its
principal office in Richmond, Virginia, not later than November 23, 1998, in
order for the proposal to be considered for inclusion in the Corporation's
proxy statement. The Corporation anticipates holding the 1999 annual meeting on
April 22, 1999.
The Corporation's bylaws provide that, in addition to any other applicable
requirements, for business to be properly brought before the annual meeting by
a shareholder, the shareholder must give timely notice in writing to the
Secretary of the Corporation not later than 60 days prior to the meeting. As to
each matter, the notice should contain (i) a brief description of the matter
and the reasons for addressing it at the annual meeting, (ii) the name, record
address of and number of shares beneficially owned by the shareholder proposing
such business and (iii) any material interest of the shareholder in such
business.
OTHER MATTERS
The Board of Directors is not aware of any matters to be presented for
action at the meeting other than as set forth herein. However, if any other
matters properly come before the meeting, or any adjournment thereof, the
person or persons voting the proxies will vote them in accordance with their
best judgment.
By Order of the Board of Directors
M. Rudolph West, Secretary
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NOTICE
and
PROXY STATEMENT
for
ANNUAL MEETING
of
SHAREHOLDERS
April 23, 1998
ETHYL CORPORATION
330 South Fourth Street
P.O. Box 2189
Richmond, Virginia 23218
[LOGO]
<PAGE>
ETHYL CORPORATION
Richmond, Virginia
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 23, 1998
The undersigned hereby appoints Bruce C. Gottwald and Sidney Buford
Scott, or either of them, with full power of substitution in each, proxies to
vote all shares of the undersigned in Ethyl Corporation, at the annual meeting
of shareholders to be held April 23, 1998, and at any and all adjournments
thereof:
1. ELECTION OF DIRECTORS: [ ] FOR all nominees [ ] WITHHOLD AUTHOIRTY
(except as indicated to vote for all nominees
to the contrary below) listed below
William W. Berry, Phyllis L. Cothran, Bruce C. Gottwald, Thomas E. Gottwald,
Gilbert M. Grosvenor, Sidney Buford Scott and Charles B. Walker.
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY SUCH NOMINEE(S),
WRITE THE NAME(S) OF THE NOMINEE(S) IN THE SPACE PROVIDED BELOW.)
- ------------------------------------------------------------------------------
2. The proposal to approve the appointment of Coopers & Lybrand L.L.P. as
the auditors for the Corporation for 1998.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. In their discretion, the Proxies are authorized to vote upon such other
business and matters incident to the conduct of the meeting as may
properly come before the meeting.
This Proxy is solicited on behalf of the Board of Directors. This Proxy when
properly executed will be voted as specified. If no specification is made, this
Proxy will be voted FOR all nominees and FOR Proposal 2.
Dated _____________________, 1998
------------------------------------
Please sign name exactly as
it appears on the stock
certificate. Only one of
several joint owners or
co-owners need sign.
Fiduciaries should give
full title.
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
