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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
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
American Pacific Corporation
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(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):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[_] 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:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
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AMERICAN PACIFIC CORPORATION
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held March 14, 2000
Notice is hereby given that the Annual Meeting of the Stockholders of
American Pacific Corporation (the "Company") will be held at the Las Vegas
Country Club, Rotunda Room, located at 3000 Joe W. Brown Drive, Las Vegas,
Nevada, on March 14, 2000, at 10:30 a.m. local time, for the following purposes:
1. To elect four Class C Directors to serve for a term of three years
expiring in 2003 and thereafter until their successors are duly elected and
qualified; and
2. To consider and act upon the stockholder proposals described in the
accompanying Proxy Statement, if presented at the meeting; and
3. To transact such other business as may properly come before the meeting
and any adjournment(s) or postponement(s) thereof.
Reference is made to the accompanying Proxy Statement for more complete
information concerning the foregoing matters. The Board of Directors has fixed
the close of business on Friday, February 4, 2000, as the date as of which the
stockholders who are entitled to notice of, and to vote at, said meeting and any
adjournment(s) or postponement(s) thereof, are to be identified. Only persons
who were stockholders of record as of the close of business on February 4, 2000
are entitled to notice of and to vote at the meeting and any adjournment(s) or
postponement(s) thereof.
All stockholders of the Company are cordially invited to attend the meeting
in person. However, to assure that each stockholder's vote is counted at the
meeting, stockholders are requested to mark, sign, date and return the enclosed
proxy as promptly as possible in the envelope provided. Stockholders who attend
the Annual Meeting may vote in person at the Annual Meeting even if they have
previously returned a proxy. If you receive more than one proxy because your
shares are registered in different names or at different addresses, please sign
and return each such proxy so that all of your shares may be represented at the
Annual Meeting.
By Order of the Board of Directors
David N. Keys, Secretary
February 7, 2000
<PAGE>
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
of
AMERICAN PACIFIC CORPORATION
3770 Howard Hughes Parkway, Suite 300
Las Vegas, Nevada 89109
(702) 735-2200
The enclosed proxy is solicited on behalf of the Board of Directors of
American Pacific Corporation, a Delaware Corporation (the "Company"), for use at
the Company's Annual Meeting of Stockholders (the "Annual Meeting") to be held
on Tuesday, March 14, 2000, at 10:30 a.m., local time, or at any adjournment(s)
or postponement(s) thereof. The Annual Meeting will be held at the Las Vegas
Country Club, Rotunda Room, located at 3000 Joe W. Brown Drive, Las Vegas,
Nevada. This Proxy Statement was first mailed to Stockholders of the Company on
or about February 7, 2000, accompanied by the Company's Annual Report to
Stockholders for the fiscal year ended September 30, 1999.
At the Annual Meeting, the following matters will be considered and voted
on:
1. Election of four Class C Directors to hold office until the 2003
Annual Meeting of Stockholders and thereafter until their successors
shall have been duly elected and qualified; and
2. The Stockholder proposals described in this Proxy Statement, if
presented at the meeting; and
3. Such other business as may properly come before the Annual Meeting and
any adjournment(s) or postponement(s) thereof.
The Board of Directors recommends that stockholders vote FOR election of
the directors proposed in Item No. 1 below and AGAINST the stockholder proposals
in Items No. 2 and 3 below, if presented at the meeting. Officers and Directors
of the Company, collectively owning, directly or indirectly, 518,072 shares, or
approximately 7.3 percent, of the Company's $.10 par value common stock (the
"Common Stock") as of February 4, 2000 (the "Record Date"), have indicated that
they intend to vote in favor of election of the directors proposed in Item No. 1
below and against the stockholder proposals in Items No. 2 and 3 below. The
Company's principal executive offices are located at 3770 Howard Hughes Parkway,
Suite 300, Las Vegas, Nevada 89109, and its telephone number at that address is
(702) 735-2200.
QUORUM AND VOTING RIGHTS
Stockholders of record as of the close of business on the Record Date are
entitled to notice of and to vote at the Annual Meeting. On February 4, 2000,
7,080,955 shares of Common Stock were issued and outstanding. The holder of
each share is entitled to cast one vote on all matters. The presence, in person
or by proxy, of the holders of a majority of the outstanding Common Stock
entitled to vote at the Annual Meeting is necessary to constitute a quorum at
the Annual Meeting.
<PAGE>
SOLICITATION OF PROXIES
The solicitation of Proxies pursuant to this Proxy Statement will be made
primarily by mail. In addition, officers, employees and other representatives
of the Company and its subsidiary corporations, without compensation, may
solicit proxies by telephone, telegraph, facsimile transmission, mail or
personal interview. Arrangements will also be made with banks, brokerage firms
and others to forward solicitation materials to the beneficial owners of shares
held of record by them. In addition, the Company has retained Beacon Hill
Partners, Inc. to assist in the proxy solicitation process at a cost of $12,500
plus expenses. The total cost of the solicitation process, including the
reimbursement of the expenses of brokers and nominees, will be borne by the
Company.
VOTING AND REVOCATION OF PROXIES; ADJOURNMENT
Shares represented by valid proxies received by the Company will be voted
in accordance with the specifications made therein by the stockholder. Any
valid proxy that does not specify otherwise will (unless the proxy is validly
revoked) be voted "for" election of the directors proposed in Item No. 1,
"against" the Stockholder proposals in Items No. 2 and 3 and, in the discretion
of the proxy holders, on such other matters as may properly come before the
Annual Meeting. The election of directors requires the affirmative vote of 80%
of the shares of Common Stock present and voting at the Annual Meeting.
According to the Bylaws of the Company, in the event that nominees for election
do not receive the affirmative vote of 80% of such shares present and voting,
the incumbent Directors will remain in office until the next annual meeting, at
which time both the Class C Directors and the Class A Directors will stand for
election. The affirmative vote of a majority of the shares present and voting
will be required to adopt the stockholder proposals and to take any other action
presented to the meeting. The Bylaws of the Company require that a quorum
consisting of a majority of the outstanding shares be present at the meeting,
either in person or by proxy, to conduct business.
The Board of Directors does not know of any matters to be considered at the
Annual Meeting other than the Proposal for election of Class C Directors
described above and the Stockholder proposals described below, if they are
presented to the meeting. A stockholder may revoke any proxy given pursuant to
this solicitation by attending the Annual Meeting and voting in person, or by
delivering to the Secretary of the Company at the Company's principal executive
offices identified above prior to the Annual Meeting a written notice of
revocation or a duly executed proxy bearing a later date than that of the
previous proxy. The mere presence of a stockholder at the Annual Meeting will
not revoke a proxy previously given.
In the event that sufficient votes in favor of election of the directors
proposed in Item No. 1 are not received by the date of the Annual Meeting, the
persons named as proxies may propose one or more adjournments of the Annual
Meeting to permit further solicitation of proxies. Any such adjournments will
require the affirmative vote of the holders of a majority of the Common Stock
present in person or by proxy at the Annual Meeting, whether or not a quorum is
present. The persons named as proxies will vote in favor of any such proposed
adjournments.
Votes cast by proxy or in person at the Annual Meeting will be counted by
the persons appointed by the Company to act as election inspectors for the
meeting. The election inspectors will treat shares represented by proxies that
"withhold authority to vote" as shares that are present and entitled to vote for
purposes of determining the presence of a quorum, the election of directors and
the outcome of certain other matters.
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Pursuant to Delaware law, shares voted by brokers as to discretionary
matters only and shares abstaining will be counted as present for the purpose of
determining whether there is a quorum. With respect to the election of
directors, votes that are withheld will be excluded entirely from the vote and
will have no effect. With respect to the stockholder proposals, abstentions
will have the effect of negative votes and shares with respect to which a broker
has physically indicated on the proxy that the broker does not have
discretionary authority to vote the shares will be treated as not present and
not entitled to vote with respect to that matter.
PRINCIPAL HOLDERS OF VOTING SECURITIES
The following table sets forth information as of the most recent
practicable date as to those persons known to the Company to own beneficially
five percent or more of the outstanding Common Stock of the Company.
<TABLE>
<CAPTION>
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Amount and Nature
Name and Address of Beneficial % of Class
Title of Class of Beneficial Owner Ownership /(1)/ Outstanding
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<S> <C> <C> <C>
Common Stock Public School Employees' Retirement 1,875,000/(2)/ 20.9%
System of the Commonwealth of
Pennsylvania
Five North 5th Street
Harrisburg, PA 17101
Common Stock Artisan Partners Limited Partnership 886,000/(3)/ 12.5%
1000 North Water Street, #1770
Milwaukee, WI 53202
Common Stock Franklin Advisory Services, Inc. 684,000/(4)/ 9.7%
One Parker Plaza, 16th Floor
Fort Lee, NJ 07024
Common Stock J. Ezra Merkin 610,697/(5)/ 8.6%
450 Park Avenue
New York, NY 10022
Common Stock Dimensional Fund Advisors, Inc. 528,200/(6)/ 7.5%
1099 Ocean Avenue
11th Floor
Santa Monica, CA 90401
Common Stock Fred D. Gibson, Jr. 455,312/(7)/ 6.4%
Common Stock State Street Research & Management Co. 439,200/(8)/ 6.2%
One Financial Center
Boston, MA 00211-2690
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</TABLE>
(1) Except as otherwise indicated, each stockholder in the table exercises sole
voting and investment power with respect to the Company's Common Stock
indicated as beneficially owned by such stockholder.
(2) This figure represents the number of shares that can be acquired upon the
exercise of a warrant that was issued to the Public School Employees'
Retirement System of the Commonwealth of Pennsylvania on February 21, 1992.
The exercise price of the warrant is $14.00 per share.
(3) Information with respect to this stockholder was obtained from a Schedule
13G filed with the Securities and Exchange Commission on January 5, 2000.
(4) Information with respect to this stockholder was obtained from a Schedule
13G/A filed with the Securities and Exchange Commission, as most recently
amended on January 18, 2000.
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(5) Information with respect to this stockholder was obtained from a Schedule
13D/A filed with the Securities and Exchange Commission, as most recently
amended on January 12, 2000.
(6) Information with respect to this stockholder was obtained from a Form 13F
filed with the Securities and Exchange Commission on October 27, 1999.
(7) Includes 80,000 shares of Common Stock subject to options granted to Mr.
Gibson pursuant to the Company's employee stock option plans, which options
are exercisable within 60 days after February 4, 2000.
(8) Information with respect to this stockholder was obtained from a Form 13F
filed with the Securities and Exchange Commission on November 12, 1999.
ITEM NO. 1 - ELECTION OF CLASS C DIRECTORS
On November 9, 1999, the Board of Directors nominated the following
persons, all of whom are presently Directors, for re-election to serve in the
class and for the term indicated below, and until their respective successors
have been elected and qualify:
<TABLE>
<CAPTION>
To Serve Until
Name Class of Director Annual Meeting in
---- ----------------- -----------------
<S> <C> <C>
Fred D. Gibson, Jr. C 2003
Berlyn D. Miller C 2003
Victor M. Rosenzweig C 2003
Dean M. Willard C 2003
</TABLE>
The Company's Certificate of Incorporation provides that the Company's
Board of Directors is divided into three classes of not less than one nor more
than four Directors. The Company's Board of Directors presently consists of
four Class A Directors, four Class B Directors, and four Class C Directors. One
Class of Directors is elected annually. Directors in a Class are elected for a
term of office of three years and thereafter until a successor is duly elected
and qualifies.
The Board of Directors recommends that the stockholders vote "for" the
above-named nominees. It is intended that the persons named in the accompanying
proxy will vote for the election of those persons, unless the stockholder giving
the proxy withholds authority to vote for one or more of them. The Board of
Directors believes that each of the nominees will be available and able to serve
as a Director, but if for any reason any of them is not, the persons named as
proxy may exercise discretionary authority to vote for a substitute nominee (or
substitute nominees) proposed by the Board of Directors. However, the Board of
Directors does not intend to make any such substitution. Proxies cannot be
voted for a number of persons greater than the number of Class C nominees named
herein.
Information concerning the Directors of the Company, including the
nominees, is set forth below. The table below indicates the number of shares of
Common Stock beneficially owned by each Director, or that such Director has the
right to vote or the right to acquire within 60 days after February 4, 2000, and
by all of the Directors and executive officers of the Company as a group, as of
February 4, 2000.
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<TABLE>
<CAPTION>
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Stock Ownership
Amount and Nature Percent
Director of Beneficial of
Name Age Since Title of Class Ownership/(1)/ Class
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NOMINEES FOR ELECTION
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Class C Directors (term of office expires in 2000)
<S> <C> <C> <C> <C> <C>
Fred D. Gibson, Jr. 72 1982 Common Stock 455,312/(2)/ 6.4%
Berlyn D. Miller 62 1993 Common Stock 18,655/(3)/ /(4)/
Victor M. Rosenzweig 61 1988 Common Stock 15,900/(3)/ /(4)/
Dean M. Willard 53 1997 Common Stock 27,000/(5)//(6)/ /(4)/
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CONTINUING MEMBERS OF THE BOARD
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Class A Directors (term of office expires in 2001)
Eugene A. Cafiero 73 1997 Common Stock 38,400/(5)/ /(4)/
John R. Gibson 62 1988 Common Stock 181,200/(7)/ 2.5%
David N. Keys 43 1997 Common Stock 152,871/(8)/ 2.1%
Thomas A. Turner 74 1986 Common Stock 39,633/(3)/ /(4)/
Class B Directors (term of office expires in 2002)
Jan H. Loeb 41 1997 Common Stock 17,000/(5)/ /(4)/
Norval F. Pohl 56 1986 Common Stock 17,000/(3)/ /(4)/
C. Keith Rooker 62 1988 Common Stock 38,256/(9)/ /(4)/
Jane L. Williams 61 1993 Common Stock 14,500/(3)/ /(4)/
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All Directors and executive officers Common Stock 1,148,572/(10)/ 14.9%
as a group (15 persons)
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</TABLE>
(1) Each Director and executive officer exercises sole voting and
investment power with respect to the Common Stock indicated as
beneficially owned by him.
(2) Includes, with respect to Mr. Fred D. Gibson, Jr., 80,000 shares
subject to options, which options are exercisable within 60 days after
February 4, 2000.
(3) Includes, with respect to each such Director, 14,500 shares of Common
Stock subject to options, which options are exercisable within 60 days
after February 4, 2000.
(4) Less than 1%.
(5) Includes, with respect to each such Director, 17,000 shares of Common
Stock subject to options, which options are exercisable within 60 days
after February 4, 2000.
(6) Mr. Willard disclaims beneficial ownership of 3,000 shares of Common
Stock which he holds for the benefit of family members except to the
extent of his pecuniary interest therein.
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(7) Includes, with respect to Mr. John R. Gibson, 145,000 shares subject
to options, which options are exercisable within 60 days after
February 4, 2000.
(8) Includes, with respect to Mr. Keys, 127,000 shares of Common Stock
subject to options, which options are exercisable within 60 days after
February 4, 2000.
(9) Includes, with respect to Mr. Rooker, 24,500 shares subject to
options, which options are exercisable within 60 days after February
4, 2000.
(10) Includes, with respect to all Directors and executive officers as a
group, an aggregate of 630,500 shares of Common Stock subject to
options, which options are exercisable by such persons within 60 days
after February 4, 2000.
THE DIRECTORS
Eugene A. Cafiero was elected a Director of the Company in January 1997.
Mr. Cafiero is currently Chief Executive Officer of Liberty Fuels, Inc., a
producer of liquified natural gas for the automotive industry, and a principal
of Steep Rock Associates LLP, a management consulting firm. From October 1986
until December 1993, Mr. Cafiero was Chairman, Chief Executive Officer and
President of KD Holdings, Inc., a diversified manufacturing company specializing
in electronics. Mr. Cafiero was previously Chief Executive Officer of Ariadne
Australia, Ltd., a holding company with a diversified investment portfolio;
President and Chief Executive Officer of Mid-American Communications, a long
distance telephone company; and President and Chief Operating Officer, and Vice
Chairman of Chrysler Corporation. Mr. Cafiero also served as a member of the
National Highway Traffic Safety Board during the Nixon Administration.
Fred D. Gibson, Jr. has been a Director of the Company since 1982. Mr.
Gibson served as Chief Executive Officer, Chairman of the Board and President of
the Company and Chairman and Chief Executive Officer of each of the Company's
subsidiaries, from 1985 to July 1997, and Chairman of the Board until March
1998. Mr. Gibson has been a Director of Nevada Power Company (now Sierra
Pacific Resources) and Cashman Equipment Company for more than five years. Mr.
Gibson currently is a private consultant and serves as a consultant to the
Company on an "as needed" basis. Mr. Gibson is the brother of John R. Gibson.
John R. Gibson has been a Director of the Company since 1988, became Chief
Executive Officer and President of the Company in July 1997 and was appointed
Chairman of the Board in March 1998. Mr. Gibson has also served as the Chief
Executive Officer and President of each of the Company's subsidiary corporations
since July 1997. Mr. Gibson was the Company's Vice President-Engineering &
Operations from March 1992 to July 1997 and has been the President of American
Azide Corporation, a wholly-owned subsidiary of the Company, since 1993. Prior
to that time, Mr. Gibson was the Director of Modernization of USS-POSCO
Industries, a fabricator of steel products, a position Mr. Gibson held for more
than five years. Mr. Gibson is the brother of Fred D. Gibson, Jr.
David N. Keys was elected a Director of the Company in July 1997. Mr. Keys
is the Company's Executive Vice President, Chief Financial Officer, Secretary
and Treasurer and has been employed by the Company since 1989. Prior to that
time, Mr. Keys, a CPA, CMA and CFM, was with Deloitte, Haskins & Sells (now
Deloitte & Touche LLP) for more than five years. Mr. Keys has been a director
of ETI International, Inc., a direct marketing organization, since 1998. Mr.
Keys has been a director of Amfed Financial, Inc., a financial institution (now
Wells Fargo Nevada), for more than five years. In 1999, Mr.
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Keys was appointed to the West Coast Advisory Board of Directors of Factory
Mutual Insurance Company (FM Global).
Jan H. Loeb was elected a Director of the Company in January 1997. Mr.
Loeb is a Managing Director of Wasserstein Perella & Co., Inc., a New York-based
investment banking firm. He is a special situations analyst, and previously
provided analyst coverage of American Pacific Corporation to institutional
investors and retail brokers. Mr. Loeb was employed by Legg Mason Wood Walker,
Inc. from 1991 to 1994, and operated his own firm, Loeb Financial Services, from
1988 to 1991. In 1998, the Company engaged Wasserstein Perella & Co., Inc., to
perform certain financial advisory services.
Berlyn D. Miller was elected a Director of the Company in November 1993.
Mr. Miller was also a Director of Western Electrochemical Company, the Company's
former principal operating subsidiary, from 1989 until 1995. Mr. Miller was the
Chairman, President and Chief Executive Officer of ACME Electric of Las Vegas,
Nevada, a construction contractor, until 1997, a position he held for more than
five years. Mr. Miller is currently President of Berlyn Miller & Associates, a
Government relations and business consulting firm. He is also co-owner of Acme
Sand and Gravel Co., A-1 Rubber Stamp & Engraving, ASG Contracting and Southwest
Sign Systems.
Norval F. Pohl has been a Director of the Company since 1986. Dr. Pohl was
also a Director of Western Electrochemical Company from 1989 until 1995. In
January 1999, Dr. Pohl became the Provost and Executive Vice President of the
University of North Texas. Dr. Pohl was previously the Vice President of
Finance and Administration of the University of Nevada Las Vegas, and was
formerly the Dean of the College of Business at the University of Nevada Las
Vegas, a position he held for more than five years. Dr. Pohl is also a Director
of the Flagstaff Institute, in Flagstaff, Arizona.
C. Keith Rooker has been a Director of the Company since 1988. Mr. Rooker
was the Executive Vice President of the Company from 1988 to July 1997, and was
also a Vice President of the Company from 1985 to 1988 and the Company's
Secretary and General Counsel from 1985 to July 1997. Mr. Rooker is a Partner
in the Las Vegas, Nevada and Salt Lake City, Utah law firm of Rooker & Gibson.
The Company has retained this law firm in the past and during the current fiscal
year.
Victor M. Rosenzweig has been a Director of the Company since 1988. Mr.
Rosenzweig has been a Partner in the New York, New York law firm of Olshan
Grundman Frome Rosenzweig & Wolosky LLP for more than five years. The Company
has retained this law firm in the past and during the current fiscal year.
Thomas A. Turner has been a Director of the Company since 1986. Before his
retirement, Mr. Turner was an officer and director of JMA Architects &
Engineers, Inc., of Las Vegas, Nevada, for more than five years.
Dean M. Willard was elected a Director of the Company in January 1997. Mr.
Willard is an executive, business owner and investor. He is Chairman and Chief
Executive Officer of Permatex, Inc. and its parent company PBT Brands, Inc.
Permatex is a leading supplier of functional chemicals to the automotive
aftermarket. Mr. Willard is also Chairman and Chief Executive Officer of
Automotive Performance Group, a public company that holds a 22 1/2% interest in
the common stock of PBT Brands, Inc. Mr. Willard serves as a director of
Perfumania.com, a public company, which is focused on business to business
commerce conducted through the internet. From 1989 to 1993, Mr. Willard served
as Chief Executive Officer, and until 1995 as Vice Chairman, of Courtaulds
Aerospace, Inc., a provider of specialty chemical products to the aerospace
industry.
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Jane L. Williams was elected a Director of the Company in November 1993.
Ms. Williams was also a Director of Western Electrochemical Company from 1989
until 1995. Ms. Williams is the President, Chairman and Chief Executive Officer
of TechTrans International of Houston, Texas, a provider of technical language
support services, a position she has held since 1993. Before founding TechTrans
International, Ms. Williams was a consultant to businesses in the aerospace
industry for more than five years.
STANDING COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors of the Company has established several standing
committees, namely, the Executive Committee, the Audit Committee, the Management
and Compensation Committee, the Pension Plan Committee, the Environmental
Oversight Committee, the Nominating Committee and the Strategic Planning
Committee. The membership and functions of these committees are described
below.
Executive Committee. The Executive Committee consists of John R. Gibson,
Chairman, Fred D. Gibson, Jr., Norval F. Pohl, Thomas A. Turner, and Berlyn D.
Miller. The Executive Committee is authorized to exercise the power and
authority of the Board of Directors with respect to the business of the Company
to the extent permitted by the General Corporation Law of the State of Delaware.
The Executive Committee operates on a standby basis when it is impractical for
the Board of Directors to meet or to act by consent in the absence of a meeting.
The Executive Committee held two meetings during the Company's fiscal year ended
September 30, 1999.
Audit Committee. The Audit Committee consists of Berlyn D. Miller,
Chairman, Norval F. Pohl, Victor M. Rosenzweig, Jan H. Loeb, Dean M. Willard and
Jane L. Williams. David N. Keys acts as an ex officio member. The functions of
the Audit Committee include making recommendations to the full Board of
Directors concerning the engagement of the Company's independent public
accountants, reviewing with the independent public accountants the results of
the audit engagement, and reviewing the independence of the independent public
accountants. In addition, the Audit Committee may review and represent the
Board of Directors with respect to transactions involving management and related
parties. The Audit Committee held four meetings during the Company's fiscal
year ended September 30, 1999.
Management and Compensation Committee. The Management and Compensation
Committee consists of Thomas A. Turner, Chairman, Norval F. Pohl, Berlyn D.
Miller, Jane L. Williams, Fred D. Gibson, Jr., Dean M. Willard and C. Keith
Rooker. John R. Gibson acts as an ex officio member. The functions of the
Management and Compensation Committee include providing independent review of
and making recommendations to the Board of Directors concerning the remuneration
arrangements for senior management, executive officers and Directors,
recommending compensation plans in which senior management and executive
officers are eligible to participate, and assuring the development of management
skills essential to the affairs of the Company. The Management and Compensation
Committee held two meetings during the Company's fiscal year ended September 30,
1999.
Pension Plan Committee. The Pension Plan Committee consists of Victor M.
Rosenzweig, Chairman, John R. Gibson, Fred D. Gibson, Jr., Eugene A. Cafiero,
David N. Keys, Dean M. Willard and Jan H. Loeb. The Pension Plan Committee
administers the Company's defined benefit pension and employee stock ownership
plans and oversees the performance of the managers of pension plan assets. The
Pension Plan Committee held one meeting during the Company's fiscal year ended
September 30, 1999.
Environmental Oversight Committee. The Environmental Oversight Committee
consists of Jane L. Williams, Chairman, Thomas A. Turner, Jan H. Loeb, Eugene A.
Cafiero, Victor M. Rosenzweig
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and C. Keith Rooker. The Environmental Oversight Committee oversees the
Company's compliance with applicable environmental standards, statutes and
regulations. The Environmental Oversight Committee held two meetings during the
Company's fiscal year ended September 30, 1999.
Nominating Committee. The Nominating Committee consists of Norval F. Pohl,
Chairman, Eugene A. Cafiero, Fred D. Gibson, Jr., Berlyn D. Miller, and C. Keith
Rooker. The function of the Nominating Committee is to identify and propose
candidates to serve as Directors of the Company. Proposed nominees for
membership on the Board of Directors submitted in writing by stockholders to the
Secretary of the Company will be brought to the attention of the Nominating
Committee. The Nominating Committee held one meeting during the Company's
fiscal year ended September 30, 1999.
Strategic Planning Committee. The Strategic Planning Committee consists of
Eugene A. Cafiero, Chairman, Fred D. Gibson, Jr., Berlyn D. Miller, John R.
Gibson, David N. Keys, and Dean M. Willard. The Strategic Planning Committee
oversees the Company's overall strategic direction and the Company's business
plans. The Strategic Planning Committee held four meetings during the Company's
fiscal year ended September 30, 1999.
A total of seven regularly scheduled and special meetings of the Company's
Board of Directors was held during the Company's fiscal year ended September 30,
1999. Each Director attended at least 75 percent of the total of such meetings
and of the meetings of all committees of the Board of Directors on which such
Director served that were held during the period of time he or she was a
Director.
MANAGEMENT
Executive Officers
The persons who were serving as executive officers of the Company as of
September 30, 1999 are John R. Gibson, David N. Keys, James J. Peveler, James P.
Dyar and Linda G. Ferguson. All officers are elected annually by the Board of
Directors and serve at the pleasure of the Board of Directors, or until their
respective successors have been duly elected and qualify.
For certain information concerning John R. Gibson and David N. Keys, see
"The Directors," above.
James J. Peveler, age 63, is the Company's Vice President and General
Manager-Utah Operations. From 1989 to July 1997, Mr. Peveler was the President
of Western Electrochemical Company. Mr. Peveler is the beneficial owner of
29,845 shares (less than 1%) of the Company's Common Stock (including 27,500
shares subject to options that are exercisable within 60 days after February 4,
2000), with respect to all of which shares he exercises sole investment and
voting power.
James P. Dyar, age 40, is the Company's Vice President-Finance, Marketing
and Contract Administration. Mr. Dyar is the beneficial owner of 89,000 shares,
or 1.2%, of the Company's Common Stock (consisting of 89,000 shares subject to
options that are exercisable within 60 days after February 4, 2000), with
respect to all of which shares he exercises sole investment and voting power.
Linda G. Ferguson, age 58, is the Company's Vice President-Administration.
Ms. Ferguson is the sister of Mr. John R. Gibson and Mr. Fred D. Gibson, Jr.
Ms. Ferguson is the beneficial owner of 14,000 shares (less than 1%) of the
Company's Common Stock (consisting of 14,000 shares subject to options that are
exercisable within 60 days after February 4, 2000), with respect to all of which
shares she exercises sole investment and voting power.
-9-
<PAGE>
Disclosure of Delinquent Filings
During the Company's fiscal year ended September 30, 1999, Eugene A.
Cafiero, a director of the Company, failed to file timely two reports on Form 4,
each with respect to the purchase of 4,000 shares of Common Stock.
EXECUTIVE COMPENSATION AND OTHER INFORMATION
Summary of Cash and Certain Other Compensation
The following table provides certain summary information concerning the
compensation paid or accrued by the Company and its subsidiaries to or on behalf
of the Company's Chief Executive Officer and its four most highly compensated
executive officers other than the Chief Executive Officer (the "Named Executive
Officers").
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
Long-Term
Compensation
Annual Compensation/(1)/ Awards
---------------------------------------------------------------------------
Name and Fiscal Other Annual Securities Underlying
Principal Position Year Salary ($) Bonus ($) Compensation ($) Options (#)
- ---------------------------------- ------ ---------- --------- ---------------- ---------------------
<S> <C> <C> <C> <C> <C>
John R. Gibson/(2)/ 1999 286,067 --- --- 45,000
Chairman of the Board, Chief 1998 273,400 --- --- ---
Executive Officer and President 1997 157,433 --- --- 140,000
David N. Keys 1999 235,067 --- --- 34,000
Executive Vice President, Chief 1998 223,400 --- --- ---
Financial Officer, Secretary and 1997 199,540 --- --- 120,000
Treasurer
James J. Peveler 1999 181,199 --- --- 5,000
Vice President and General 1998 170,600 --- --- 5,000
Manager - Utah Operations 1997 169,240 --- --- 15,000
James P. Dyar 1999 169,650 --- --- 5,000
Vice President - Finance, 1998 164,175 --- --- 35,000
Marketing & Contract 1997 132,350 --- --- 14,000
Administration
Linda G. Ferguson 1999 104,717 --- --- 5,000
Vice President - Administration 1998 101,871 --- --- 4,000
1997 80,209 --- --- 7,500
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) The Company provides automobiles for certain of its executive
officers. After reasonable inquiry, the Company has concluded that the aggregate
amount of such compensation for any Named Executive Officer does not exceed the
lesser of either $50,000 or 10 percent of the total of annual salary and bonus
reported for the Named Executive Officers.
(2) The cash compensation reported for Mr. John R. Gibson does not
include compensation paid to Mr. Gibson's sister, Ms. Ferguson or to Mr.
Gibson's son, Jeff Gibson, who is employed in an operating division of the
Company.
-10-
<PAGE>
Employment Agreements
Mr. John R. Gibson and Mr. Keys are employed under employment agreements
entered into in May 1999 and December 1994, respectively, providing for the
compensation disclosed above, as well as any future compensation increases.
Each agreement provides for a term of three years, extending automatically, in
the absence of notice to the contrary, from year to year up to age 70 for Mr.
Gibson and age 65 for Mr. Keys. Each agreement is terminable prior to the
expiration of its term upon the death or disability of the executive or, at the
Company's election, for "cause" (as defined in the agreement) or due to a
material breach by the executive of his obligations under the agreement. In the
event of certain Corporate Capital Transactions (as defined in the agreements),
Mr. Gibson and Mr. Keys are each entitled to receive all compensation that would
have been payable through the expiration dates of the agreements.
Stock Options
The following tables provide information with respect to the Named
Executive Officers, concerning options granted and exercised during the
Company's fiscal year ended September 30, 1999, and unexercised options held as
of September 30, 1999:
OPTION GRANTS IN LAST FISCAL YEAR
---------------------------------
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Potential Realizable Value at
Assumed Annual Rates
of Stock Price Appreciation
Individual Grants for Option term
--------------------------------------------------------------------------------------------------------
Number of
Securities % of Total
Underlying Options Granted Exercise or
Name and Options Granted to Employees in Base Price
Principal Position (#) Fiscal Year ($/Sh) Expiration Date 5% ($) 10% ($)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
John R. Gibson 22,500 10.8% 7.781 9/13/04 48,369 106,884
Chairman of the Board, Chief 22,500 10.8% 7.781 9/13/05 59,541 135,079
Executive Officer
and President
David N. Keys 17,000 8.1% 7.781 09/13/04 36,546 80,756
Executive Vice President, Chief 17,000 8.1% 7.781 09/13/05 44,987 102,060
Financial Officer, Secretary and
Treasurer
James J. Peveler 2,500 1.2% 7.781 09/13/04 5,374 11,876
Vice President and General 2,500 1.2% 7.781 09/13/05 6,616 15,009
Manager - Utah Operations
James P. Dyar 2,500 1.2% 7.781 09/13/04 5,374 11,876
Vice President - Finance, 2,500 1.2% 7.781 09/13/05 6,616 15,009
Marketing & Contract
Administration
Linda G. Ferguson 2,500 1.2% 7.781 09/13/04 5,374 11,876
Vice President - Administration 2,500 1.2% 7.781 09/13/05 6,616 15,009
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
-11-
<PAGE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
---------------------------------
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Number of Unexercised Options Value of Unexercised
at Fiscal In-the-Money Options at Fiscal
Year-End Year-End/(1)/
(#) ($)
-----------------------------------------------------------------
Shares Acquired on Value Realized
Name Exercise (#) ($) Exercisable / Unexercisable Exercisable / Unexercisable
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
John R. Gibson --- --- 152,500 / 47,500 123,990 / 20,865
David N. Keys --- --- 137,000 / 37,000 114,098 / 16,598
James J. Peveler --- --- 33,500 / 2,500 30,423 / 235
James P. Dyar --- --- 101,500 / 2,500 82,798 / 235
Linda G. Ferguson --- --- 14,000 / 2,500 15,235 / 235
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) On September 30, 1999, the closing price of the Company's Common Stock
on the Nasdaq National Market was $7.875 per share.
Retirement Benefits
Under the Company's defined benefit pension plan, eligible employees,
including employees who are Directors and executive officers, are entitled to
receive a pension benefit based upon their years of service and their "average
compensation." The term "average compensation" is defined to be the average of
the employee's earnings for the five consecutive years of employment during
which the employee's compensation was the highest, subject to applicable
limitations provided by law. Prior to January 1, 1994, the applicable
limitation on compensation was $200,000, adjusted for inflation. During the
calendar year 1993, the $200,000 figure, adjusted for inflation, amounted to
$235,840. Tax legislation that became effective on January 1, 1994, reduced
this figure to $150,000, subject to adjustment for inflation in future years.
The 1999 limitation on compensation was $160,000. The annual retirement benefit
provided under the plan is two percent of each employee's "average
compensation," plus 0.65 percent of each employee's "average compensation" in
excess of the applicable covered compensation, for each year of service, up to
20. The covered compensation is derived from social security tables and depends
upon each individual's year of birth. The maximum benefit under the defined
benefit pension plan is limited to the lesser of 100 percent of average
compensation or the sum of $90,000, as adjusted for inflation. The $90,000
limitation, adjusted for inflation, amounted to $130,000 for the calendar year
1999. Employees become vested in their pension benefits as they complete years
of service in the employ of the Company or its subsidiary corporations, and are
fully vested after seven years of service with the Company and its subsidiary
corporations.
The following table presents the noncontributory annual benefits payable
for life under the Company's pension plan to employees, assuming normal
retirement at age 65 during the Company's current fiscal year under a single
life annuity. The amounts shown below represent the application of the pension
plan formula to the amounts of compensation and years of service shown. The
amounts shown below do not include social security benefits upon retirement.
Nor does the Company's pension plan give credit for years of service in excess
of 20. Benefits payable under the pension plan must be in compliance with the
applicable guidelines or maximums prescribed in the Employee Retirement Income
Security Act of 1974, as currently stated or as adjusted from time to time. The
amounts shown below do not anticipate future changes in salary levels or
inflation. All benefits shown are for an employee born in 1934 (age 65 in
1999). Benefits for employees born later may be lower.
-12-
<PAGE>
PENSION PLAN TABLE
------------------
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------
Years of Service
---------------------------------------------------------------------------
Average Compensation 15 20 25
- ------------------------------- ------- ------- -------
<S> <C> <C> <C>
$ 125,000 $47,055 $62,740 $62,740
150,000 56,993 75,990 75,990
175,000 60,968 81,290 81,290
200,000 60,968 81,290 81,290
- ----------------------------------------------------------------------------------------------------------
</TABLE>
The credited years of service under the pension plan as of September 30,
1999 for each of the Company's Named Executive Officers is as follows: John R.
Gibson, 8 years; David N. Keys, 10 years; James J. Peveler, 17 years; James P.
Dyar, 9 years; and Linda G. Ferguson, 14 years.
John R. Gibson and David N. Keys also participate in the American Pacific
Corporation Supplemental Executive Retirement Plan (the "SERP"). The SERP
provides total annual retirement benefits, including annual retirement benefits
provided under the Company's defined benefit pension plan, equal to 60 percent
of average compensation. The SERP defines average compensation as the average of
the employee's earnings for the three consecutive years of employment during
which the employee's compensation was the highest. Vesting in the SERP occurs
over a 10-year period subject to meeting certain age plus years of service
requirements.
Assuming ten years of service and meeting the age plus years of service
requirements, annual benefits payable in the form of a single life annuity under
the SERP at the age of 65 are approximately $107,000 to John R. Gibson and
$51,000 to David N. Keys. These annual SERP benefits are in addition to the
maximum annual benefits payable after 20 years of service reflected in the above
Pension Plan table and do not anticipate future changes in salary levels or
inflation. At September 30, 1999, Mr. Gibson and Mr. Keys were each 80 percent
vested in the above annual SERP benefits.
Certain Relationships and Related Transactions
For a description of certain transactions between the Company and certain
executive officers and Directors, see "Compensation Committee Interlocks and
Insider Participation," below.
REPORT OF THE MANAGEMENT AND COMPENSATION COMMITTEE
Executive Compensation Principles
The Company's executive compensation program is based upon guiding
principles designed to align executive compensation with the values, objectives,
and business and financial performance of the Company, and to motivate the
Company's officers and key employees to achieve the Company's goals of providing
the Company's stockholders with a competitive return on their investments, while
at the same time providing the Company's customers with quality products.
Toward that end, the executive compensation program is designed to achieve the
following objectives:
. Attract and retain highly qualified individuals who are capable of
making significant contributions to the long-term success of the Company.
-13-
<PAGE>
. Promote a performance oriented environment that encourages Company and
individual achievement.
. Reward executive officers for long-term strategic management and the
enhancement of stockholder value.
. Provide levels of total compensation that are competitive with those
provided by other companies with which the Company may compete for executive
talent.
Executive Compensation Program
The Company's executive compensation program consists of both cash and
equity-based compensation. The Management and Compensation Committee of the
Board of Directors is responsible for establishing and administering the
policies that govern both cash and equity-based compensation. The Management
and Compensation Committee is responsible for reviewing the executive
compensation program on at least an annual basis to ensure conformance to the
Company's executive compensation principles. Annual base salary increases
reflect an individual's performance and contribution to the Company over several
years.
Cash Compensation. The base salaries of the Company's Chief Executive
Officer and other executive officers as a group were established by the
Management and Compensation Committee after considering rates of compensation
then being paid by the Company, as well as salary trends and overall
performance. Salary levels were also influenced by the Company's continuing
focus on cost containment. Consequently, cash compensation paid to executive
officers during the September 30, 1999 fiscal year was influenced more by these
factors than by compensation levels for comparable positions in the industry.
The Company does not have an annual bonus plan. Except as provided in the
Company's 1997 Stock Option Plan, the Company has not established a policy with
regard to Section 162(m) of the Internal Revenue Code of 1986, as amended,
because the Company has not paid, and does not currently anticipate paying,
compensation in excess of $1 million per annum to any employee.
Equity-Based Compensation. The Company's stock option plans are designed
to advance the long-term interests of the Company by aligning the long-term
interests of the Company's executive officers with those of the Company's
stockholders by providing executive officers with an opportunity to build a
meaningful equity position in the Company. The Board of Directors or a
committee thereof has in the past made substantial grants of stock options to
its executive officers. The Management and Compensation Committee may recommend
additional grants of stock options in the future. In September 1999, options to
purchase Common Stock, each at an exercise price of $7.781 per share, were
granted by the Board of Directors with respect to 45,000 shares to John R.
Gibson, 34,000 shares to David N. Keys and 5,000 shares to each of James P.
Dyar, James J. Peveler and Linda Ferguson,. No outstanding stock options were
re-priced, amended or modified during the Company's fiscal year ended September
30, 1999.
Management and Compensation Committee
Thomas A. Turner, Chairman
Fred D. Gibson, Jr.
Norval F. Pohl
Berlyn D. Miller
Dean M. Willard
Jane L. Williams
C. Keith Rooker
-14-
<PAGE>
Compensation Of Directors
Directors of the Company (other than Messrs. John R. Gibson, Keys and
Rosenzweig) are compensated at the rate of $2,000 per quarter, plus $700 per
meeting of the Company's Board of Directors attended, and $500 per committee
meeting attended, and are reimbursed for expenses incurred in attending
Directors' meetings. Committee chairmen receive an additional $200 per committee
meeting attended and all non-employee members of the Executive Committee receive
an additional $250 per month. Mr. Rosenzweig bills the Company at his customary
rates for time spent on behalf of the Company (whether as a Director or in the
performance of legal services for the Company) and is reimbursed for expenses
incurred in attending Directors' meetings.
Compensation Committee Interlocks and Insider Participation
The Directors who served on the Management and Compensation Committee of
the Company during the fiscal year ended September 30, 1999 were John R. Gibson,
the Company's Chairman of the Board, Chief Executive Officer and President
(solely as an ex officio member), Fred D. Gibson, Jr., C. Keith Rooker, Thomas
A. Turner, Norval F. Pohl, Berlyn D. Miller, Jane L. Williams and Dean M.
Willard. (Mr. Fred D. Gibson, Jr. and Mr. C. Keith Rooker are former officers
of the Company.)
Indebtedness of Directors and Executive Officers
On September 28, 1994, Mr. C. Keith Rooker, then the Company's Executive
Vice President, borrowed the sum of $96,875 from the Company. Mr. Rooker used
the amount borrowed to pay the exercise price of 25,000 options previously
granted to him pursuant to the Company's 1988 Incentive Stock Option Plan. Mr.
Rooker's loan is evidenced by an unsecured promissory note that bears interest
at the prime rate and is payable under a schedule set forth in a settlement and
severance agreement with Mr. Rooker. As of December 31, 1999, the balance owing
by Mr. Rooker under the promissory note, including accrued interest, was
$68,253.
In 1994, the Company loaned an aggregate of $552,592 to Fred D. Gibson,
Jr., then the Company's Chairman, President and Chief Executive Officer. Mr.
Gibson's loan is evidenced by an unsecured promissory note that bears interest
at the prime rate and is payable on demand. As of December 31, 1999, the balance
owing by Mr. Gibson under the promissory note, including accrued interest, was
$295,309.41.
On June 16, 1993, James J. Peveler borrowed the sum of $100,000 from the
Company. On September 27, 1993, Mr. Peveler borrowed an additional $40,000. Mr.
Peveler's loans are evidenced by his unsecured promissory notes payable to the
Company, which bear interest at the prime rate and are payable upon demand. As
of December 31, 1999, the total balance owing by Mr. Peveler in respect of the
two loans, including accrued interest, was $200,276.
Transactions with Management and Others
The Company is the General Partner of Gibson Business Park Associates
1986-1, a Nevada limited partnership (the "Limited Partnership"). The Company
owns a 70 percent interest in the capital and profits of the Limited
Partnership. The remaining 30 percent is owned as follows: 10 percent by Fred D.
Gibson, Jr., 10 percent by C. Keith Rooker, five percent by the estate of the
late Audrey B. Gibson (the wife of deceased former officer and Director of the
Company James I. Gibson and sister-in-law to Fred D. Gibson, Jr. and John R.
Gibson), two percent by James B. Gibson (a nephew of Fred D. Gibson, Jr. and
John R. Gibson and former associate General Counsel of the Company), two percent
by Thomas A. Turner, and one percent by Thomas L. War (a former officer and
Director of the Company).
-15-
<PAGE>
On July 31, 1990, the Company entered into a lease agreement with 3770
Hughes Parkway Associates Limited Partnership, a Nevada limited partnership
("Hughes Parkway"), pursuant to which the Company leased the third floor of a
three-story building owned by Hughes Parkway. The Company presently utilizes the
third floor of this building as office facilities. Hughes Parkway is a limited
partnership of which Howard Hughes Properties, a Delaware limited partnership,
is the general partner, and of which the Limited Partnership is the sole limited
partner, owning a 33 percent interest in Hughes Parkway. Hughes Parkway financed
the cost of construction of the building through contributions from its partners
and through borrowing from an unrelated lender.
The Limited Partnership purchased its interest in Hughes Parkway in July
1990, by paying the sum of $1,040,490 in cash. The Company contributed 70
percent of this amount and, accordingly, acquired a 70 percent interest in the
Limited Partnership. The remaining 30 percent was contributed by the aforenamed
limited partners in the Limited Partnership. The Limited Partnership and the
limited partners are individually liable with respect to a portion of the
borrowing from the unrelated lender. The partnership agreement for Hughes
Parkway provides that if the lease agreement between the Company and Hughes
Parkway should be terminated due to a default by the Company, Howard Hughes
Properties can purchase the interest of the Limited Partnership in Hughes
Parkway at a discount of as much as 25 percent. The Company has agreed to
indemnify the Limited Partnership on account of any financial loss it may suffer
as a result of this provision. The lease agreement and participation in the
Hughes Parkway transaction were approved by the members of the Board of
Directors who are not limited partners in the Limited Partnership or related
parties.
In December 1998, the Company retained Wasserstein Perella & Co., Inc. to
provide financial advisory services. Under this engagement, the Company paid
such firm fees aggregating $100,000 plus out-of-pocket expenses totaling
approximately $27,000. Such engagement has been completed. Mr. Jan H. Loeb, a
director, is employed by Wasserstein Perella & Co., Inc.
PERFORMANCE GRAPH
The following graph shows a five-year comparison of cumulative total
returns for the Company's Common Stock, the Wilshire 5000 Index, and the
Wilshire Chemicals Index.
<TABLE>
<CAPTION>
FIVE YEAR CUMULATIVE TOTAL RETURNS
-------------------------------------------------------------------------------------
9/30/94 9/30/95 9/30/96 9/30/97 9/30/98 9/30/99
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
- -[_]- American Pac Corporation $ 100 $ 57 $ 70 $ 80 $ 84 $ 83
- -----------------------------------------------------------------------------------------------------------------------
- -o- Wilshire Chemicals $ 100 $115 $141 $179 $161 $178
- -----------------------------------------------------------------------------------------------------------------------
- -.- Wilshire 5000 $ 100 $100 $136 $165 $217 $268
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
Total returns assume dividends reinvested on ex-date
Fiscal year ending September 30
-16-
<PAGE>
STOCKHOLDER PROPOSALS
Following are two proposals submitted by stockholders of the Company. The
names and addresses of the stockholder proponents, and information regarding
their holdings of the Company's Common Stock, will be furnished promptly upon
receipt of any telephone or written request to the Secretary of the Company.
According to a Schedule 13D filed with the Securities and Exchange Commission,
as recently amended, the stockholder proponents are under common control and
sold (net of a small contemporaneous purchase) an aggregate of 818,000 shares of
the Company's Common Stock on January 4 and 5, 2000, which represented over 55%
of their total holdings of Common Stock at that time.
ITEM NO. 2 - STOCKHOLDER PROPOSAL
A stockholder has proposed the following resolution for inclusion in this
Proxy Statement, and the Company anticipates that such proposal will be
presented at the meeting.
RESOLVED that the Board of Directors is requested to approve and
recommend for approval by the Company's stockholders amendments to the
Company's Certificate of Incorporation and By-laws eliminating the
requirement that directors be elected by a vote of 80% of the outstanding
shares.
Supporting Statement:
The Company's Certificate of Incorporation and By-laws contain
provisions that directors must be elected by 80% of the outstanding shares,
and if at any election this vote is not achieved, the directors of the
class standing for election who are then in office continue in office until
the next annual meeting of stockholders. These provisions, which are
nearly unprecedented, perpetuate the board, entrench management, put
control of the Company in the hands of a small minority of stockholders,
and deprive the vast majority of stockholders of the most basic rights of
corporate democracy.
We urge you to support this proposal and to send a strong message to
the Company's board of your desire to reclaim your basic corporate
democracy rights to elect the directors of your Company.
BOARD OF DIRECTORS' RECOMMENDATION
The Board of Directors recommends that the Stockholders vote against this
proposal for the following reasons:
Most proposals submitted to a vote of the Company's stockholders, whether
by management or the stockholders, currently require a vote of a majority of the
shares represented at a meeting, whether in person or by proxy. Consistent with
applicable Delaware law, in 1981 the Company's Board and stockholders approved a
Certificate of Incorporation and By-laws that contained provisions requiring the
affirmative vote of 80% of the total votes cast for the election of Directors.
-----------------------
This so-called `super-majority' vote provision of the Company's Certificate
of Incorporation and By-laws relating to the election of Directors is intended
to provide protection for all stockholders against self-interested actions by
one or a few large stockholders. Super-majority voting provisions of various
kinds are often included in the governing documents of public corporations.
Provisions of this kind are intended to encourage a person making an unsolicited
bid for the Company to negotiate with the Board of
-17-
<PAGE>
Directors to reach terms that are fair and provide the best results for all
stockholders. Without such provisions, it may be possible for the holders of a
majority of the shares represented at a meeting to take actions that would give
them effective control of the Company without negotiating with the Board to
achieve the best results for the other stockholders.
Furthermore, the Proposal is misleading and is based on an erroneous
factual assumption, since the Company's Certificate of Incorporation and By-Laws
do not require 80% of the outstanding shares to elect Directors. Rather, as
--- -----------------------------
indicated above, they require 80% of the total votes cast to elect Directors.
----------------
The existing provisions also provide that in the event that nominees for
election as Directors fail to receive the requisite vote, the Directors then in
office would continue to hold office until the next succeeding annual
stockholders' meeting, at which time they would stand for election (i.e., they
would not hold office for the normal three year term under the existing
classified/staggered Board provisions).
Adoption of this Proposal would not in itself effectuate the changes
contemplated by the Proposal. Further action by the stockholders would be
required to amend the By-laws and the Certificate of Incorporation. Under our
charter documents, an affirmative vote of 80% of the total votes cast by
stockholders would be required for approval. Under Delaware law, amendments to
the Certificate of Incorporation generally require a recommendation from the
Board of Directors prior to submission to stockholders. Although the Board
would consider such amendments, it would do so consistent with its fiduciary
duty to act in a manner it believes to be in the best interests of the Company
and its stockholders.
The Board of Directors recommends that you vote "AGAINST" this Proposal.
Your proxy will be voted against this proposal unless you specify otherwise.
The affirmative vote of a majority of the shares present in person or by
proxy, and entitled to vote on this item, is required for approval of this
proposal.
ITEM NO. 3 - STOCKHOLDER PROPOSAL
A stockholder has proposed the following resolution for inclusion in this
Proxy Statement, and the Company anticipates that such proposal will be
presented at the meeting.
RESOLVED that the Board of Directors is requested to refrain from
adopting any future rights plan, commonly known as a "poison pill" without
conditioning it upon the approval of stockholders within a period of sixty
(60) days, and to take all action necessary to terminate or redeem the
Company's rights plan currently in effect.
Supporting Statement:
Stockholder value is maximized when there is an unrestricted market in
the Company's shares, and the Company's stockholders may freely exercise
their rights as owners of the Company. A rights plan or "poison pill,"
which prevents stockholders from acquiring more than a specified percentage
of the Company's shares without board approval, interferes with the normal
functioning of the market and deprives stockholders of value in their
investment in the Company. A rights plan may also dissuade potential
acquirors from attempting to acquire the Company in a transaction that
stockholders believe offers fair value for their shares. By decreasing the
ability of potential acquirors to obtain a control position in the Company,
a rights plan tends to entrench management, insulate it from
accountability, and make management less responsive to the views and
-18-
<PAGE>
concerns of stockholders. Stockholders should have the opportunity to
decide whether the negative consequences of a rights plan, as described
above, are outweighed by particular circumstances that might make it
appropriate to adopt such a plan.
Proposals similar to this one have been approved by stockholders of
other public companies over the past several years, according to the
Investor Responsibility Research Center. Other public companies have
voluntarily terminated or redeemed their rights plans.
We urge you to vote FOR this proposal.
BOARD OF DIRECTORS' RECOMMENDATION
The Board of Directors recommends that the Stockholders vote against this
proposal for the following reasons:
American Pacific is one of more than 2,200 public companies that have a
stockholder rights plan (i.e., a "poison pill") in place. The Board of Directors
of American Pacific adopted a stockholder rights plan in August 1999 (the
"Rights Plan") to preserve and maximize value for the Company's stockholders.
The Company believes that potential acquirers will be encouraged by the Rights
Plan to negotiate directly with the Board of Directors. In the Board's view, the
Rights Plan will provide the Board with adequate flexibility in any negotiations
and will enhance the Board's ability to negotiate the highest possible bid from
a potential acquirer. The Company believes the Board is in the best position to
evaluate and negotiate any potential offer, and to develop alternatives to
maximize stockholder value.
The Rights Plan is also intended to protect stockholders against tactics
that do not treat all stockholders fairly. It is designed to protect
stockholders against potential abuses during the takeover process, such as
"creeping" acquisitions of the Company's stock in the open market, hostile
tender offers made at less than a full and fair price, partial and two-tiered
tender offers that discriminate among stockholders, and other abusive practices
that can be used to deprive stockholders of the ability to get a full and fair
price for all of their shares. The Rights Plan is not intended to prevent, nor
does it prevent, bidders from making offers to acquire the Company at a price
and on terms that would be in the best interests of all stockholders.
The Company's Rights Plan also includes features believed to be
particularly beneficial to all of its stockholders and which are most often not
included in such plans. It provides that a "TIDE" Committee composed of the non-
management Directors will reevaluate the terms of the Plan every three years to
consider whether the Plan continues to be in the interests of the Company and
its stockholders. The Rights Plan also has a "Chewable" feature, which provides
that certain "Qualifying Offers," as defined in the Plan (i.e., a cash tender
offer for all shares which includes at least a 30% premium, as defined in the
Plan) do not trigger the so-called "poison pill" aspect of the Rights, as it
otherwise would when a person acquires beneficial ownership of 20% of the
Company's outstanding shares. (Indeed, even the 20% threshold for triggering the
Rights specified in the Company's Plan is at the higher end of the spectrum for
Rights Plans).
The terms of the Rights Plan allow the Board to redeem the rights to permit
an acquisition that it determines, in the exercise of its fiduciary duties,
adequately reflects the value of the Company and is in the best interests of the
stockholders. In fact, a number of target companies with rights plans in place
have redeemed the rights after their directors were satisfied that an offer, as
negotiated by them, was in the best interests of the target's stockholders.
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<PAGE>
A study released by Georgeson and Co. in November 1997 found that rights
plans did not reduce the likelihood that a company would become a takeover
target. The study further found that a target company with a rights plan
commanded a higher price than one without such a plan.
Delaware law imposes a fiduciary duty on the Board to act in the best
interests of the Company's stockholders and to oppose unfair takeover offers.
Courts have recognized that rights plans are a useful and legitimate tool
available to directors in fulfilling these fiduciary responsibilities to
stockholders. The Company's directors are well aware of their fiduciary duties
and responsibilities to the Company's stockholders when evaluating the merits of
any acquisition proposal.
The Board believes that the extension or adoption of a stockholder rights
plan is appropriately within the scope of responsibilities of the Board, acting
on behalf of the stockholders.
The Board of Directors recommends that you vote "AGAINST" this Proposal.
Your proxy will be voted against this proposal unless you specify otherwise.
The affirmative vote of a majority of the shares present in person or by
proxy, and entitled to vote on this item, is required for approval of this
proposal.
INDEPENDENT PUBLIC ACCOUNTANTS
The accounting firm of Deloitte & Touche LLP served as the Company's
independent public accountants for the fiscal year ended September 30, 1999. It
is expected that this firm will serve as such during the current fiscal year.
The Audit Committee met and evaluated the performance of the independent public
accountants and recommended that the Board of Directors approve the audit for
fiscal year ended September 30, 1999. A representative of Deloitte & Touche LLP
is expected to attend the Annual Meeting and to have the opportunity to make a
statement if he so desires, and will be available to respond to appropriate
questions from stockholders.
STOCKHOLDER PROPOSALS FOR 2001 ANNUAL MEETING
If a stockholder wishes to have a proposal considered for inclusion in the
Company's 2001 Annual Meeting of Stockholders and accompanying proxy
solicitation materials, the proposal must be stated in writing and must be filed
with the Secretary of the Corporation on or before October 10, 2000. The Board
of Directors will review any proposal that is received by that date and will
determine whether it should be included in the Company's 2001 Annual Meeting of
Stockholders and proxy solicitation materials.
On May 21, 1998 the Securities and Exchange Commission adopted an amendment
to Rule 14a-4, as promulgated under the Securities Exchange Act of 1934, as
amended. The amendment to Rule 14a-4(c)(1) governs the Company's use of its
discretionary proxy voting authority with respect to a stockholder proposal that
is not addressed in the Company's proxy statement. The amendment provides that
if the Company does not receive notice of the proposal at least 45 days prior to
the first anniversary date of the date of mailing of the prior year's proxy
statement, then the Company will be permitted to use its discretionary voting
authority when the proposal is raised at the annual meeting, without any
discussion of the matter in the proxy statement.
With respect to the Company's 2001 Annual Meeting of Stockholders, if the
Company is not provided notice of a stockholder proposal, which has not been
timely submitted for inclusion in the
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<PAGE>
Company's proxy statement, by December 24, 2000, the Company will be permitted
to use its discretionary voting authority as outlined above.
OTHER BUSINESS
As of the date of this proxy statement, the Board of Directors does not
intend to present, and has not been informed that any other person intends to
present, any matter for action at the Annual Meeting, other than as set forth
herein and in the Notice of Annual Meeting. If any other matters properly come
before the meeting, it is intended that the holders of the proxies will act in
accordance with their best judgment.
By Order of the Board of Directors
David N. Keys, Secretary
Dated: February 7, 2000
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<PAGE>
AMERICAN PACIFIC CORPORATION
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS IN CONNECTION WITH
THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD MARCH 14, 2000
The undersigned hereby appoints John R. Gibson and David N. Keys, and each of
them, with full power of substitution and revocation, the attorneys and proxies
of the undersigned to attend and vote all shares of Common Stock of American
Pacific Corporation that the undersigned would be entitled to vote if then
personally present at the Annual Meeting of Stockholders of American Pacific
Corporation, a Delaware corporation, to be held on March 14, 2000 at 10:30
a.m., local time, at the Las Vegas Country Club, Rotunda Room, located at 3000
Joe W. Brown Drive, Las Vegas, Nevada, and at any adjournment(s) or
postponement(s) thereof, hereby revoking any proxy heretofore given. The
undersigned hereby acknowledges receipt of the Notice of Annual Meeting and
Proxy Statement, each dated February 7, 2000.
THIS PROXY WILL BE VOTED AS SPECIFIED OR, IF NO CHOICE IS SPECIFIED, WILL BE
VOTED FOR THE NOMINEES FOR DIRECTOR PROPOSED IN ITEM NO. 1, AGAINST THE
PROPOSALS IN ITEMS NO. 2 AND NO. 3 AND IN ACCORDANCE WITH THE DETERMINATION OF
A MAJORITY OF THE BOARD OF DIRECTORS ON SUCH OTHER BUSINESS AS MAY COME BEFORE
THE MEETING OR ANY ADJOURNMENT(S) OR POSTPONEMENT(S) THEREOF.
(Continued and to be signed on other side)
<PAGE>
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[X] Please mark
your votes
as in this
example
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE NOMINEES IN ITEM NO. 1.
Item No. 1:
To elect Fred D. Gibson, Jr., Berlyn D. Miller, Victor M. Rosenzweig and Dean
M. Willard, each to hold office until the 2003 Annual Meeting of Stockholders
and thereafter until their successors have been duly elected and qualified.
WITHHOLD
FOR AUTHORITY
[_] [_]
Nominees: Fred D. Gibson, Jr. Victor M. Rosenzweig
Berlyn D. Miller Dean M. Willard
For, all nominees except as noted below:
- --------------------------------------------------------------------------------
THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST THE PROPOSALS IN ITEMS NO. 2
AND NO. 3.
Item No. 2:
Stockholder proposal concerning elimination of 80% vote requirement for
election of directors.
FOR AGAINST ABSTAIN
[_] [_] [_]
Item No. 3:
Stockholder proposal concerning (i) elimination of current rights plan and (ii)
stockholder vote to adopt any future rights plan.
FOR AGAINST ABSTAIN
[_] [_] [_]
Mark box at right if address change has been noted below. [_]
New Address: ___________________________________________________________________
YOUR VOTE IS IMPORTANT TO US. PLEASE COMPLETE, DATE AND SIGN THIS PROXY CARD
AND RETURN IT PROMPTLY IN THE ACCOMPANYING ENVELOPE.
Signature(s) of Stockholder(s) __________ Date ________________________________
Note: Please insert the date and sign your name exactly as it appears hereon.
If shares are held jointly, each joint owner should sign. Executors,
administrators, trustees, guardians, etc., should so indicate when signing.
Corporations should sign full corporate name by an authorized officer.
Partnerships should sign partnership name by an authorized person.
THIS PROXY CARD IS SOLICITED BY THE BOARD OF DIRECTORS.
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