<PAGE>
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 240.14a-11(c) or 240.14a-12
ENGELHARD CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
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):
-----------------------------------------------------------------------
(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.:
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(3) Filing Party:
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(4) Date Filed:
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<PAGE>
<TABLE>
<S> <C>
[LOGO] 101 WOOD AVENUE, ISELIN, NEW JERSEY 08830
</TABLE>
ORIN R. SMITH
Chairman and
Chief Executive Officer
March 31, 1997
Dear Shareholder:
You are cordially invited to attend the 1997 Annual Meeting of Shareholders,
which will be held at 10 a.m., Eastern Daylight Savings Time, on Thursday, May
1, at The Sheraton at Woodbridge Place, 515 Route 1 South, Iselin, N.J. 08830.
The enclosed Notice and Proxy Statement contain complete information about
matters to be considered at the Annual Meeting, at which the business and
operations of Engelhard will also be reviewed. Discussions at our Annual Meeting
have generally been interesting and useful, and we hope that you will be able to
attend. If you plan to attend, please check the box provided on the proxy card
and an admission ticket will be sent to you. Only shareholders and their proxies
will be permitted to attend the Annual Meeting.
Whether or not you plan to attend, we urge you to complete, sign and return
the enclosed proxy card, so that your shares will be represented and voted at
the Annual Meeting.
Sincerely yours,
[LOGO]
<PAGE>
ENGELHARD CORPORATION
101 WOOD AVENUE
ISELIN, NEW JERSEY 08830
-------------------
NOTICE OF THE 1997 ANNUAL MEETING OF SHAREHOLDERS
-------------------
To our Shareholders: March 31, 1997
The Annual Meeting of Shareholders of Engelhard Corporation, a Delaware
corporation, will be held on Thursday, May 1, 1997 at 10:00 a.m., Eastern
Daylight Savings time, at The Sheraton at Woodbridge Place, 515 Route 1 South,
Iselin, N.J. 08830 for the following purposes:
(1) To elect four Directors;
(2) To ratify the appointment of Coopers & Lybrand L.L.P. as independent
public accountants;
(3) To transact such other business as may properly come before the
meeting.
The record date for the determination of the shareholders entitled to vote
at the meeting or at any adjournment thereof is the close of business on March
14, 1997.
A list of shareholders entitled to vote at the Annual Meeting will be open
to the examination of any shareholder, for any purpose germane to the meeting,
at the offices of the Company's Transfer Agent and Registrar, ChaseMellon
Shareholder Services, L.L.C., 120 Broadway, New York, New York 10271, during
ordinary business hours for ten days prior to the meeting.
By Order of the Board of Directors
ARTHUR A. DORNBUSCH, II
VICE PRESIDENT, GENERAL COUNSEL
AND SECRETARY
SHAREHOLDERS ARE URGED TO MARK, SIGN AND RETURN PROMPTLY
THE ACCOMPANYING PROXY IN THE ENCLOSED RETURN ENVELOPE
<PAGE>
ENGELHARD CORPORATION
101 WOOD AVENUE
ISELIN, NEW JERSEY 08830
------------------------
PROXY STATEMENT FOR THE 1997
ANNUAL MEETING OF SHAREHOLDERS
------------------------
SOLICITATION AND REVOCATION OF PROXIES
The accompanying proxy, being mailed to shareholders on or about March 31,
1997, is solicited by the Board of Directors of Engelhard Corporation (the
"Company") for use at the Annual Meeting of Shareholders (the "Meeting") to be
held on Thursday, May 1, 1997. In case the Meeting is adjourned, the proxy will
be used at any adjournments thereof. If a proxy is received before the Meeting,
the shares represented by it will be voted unless the proxy is revoked by
written notice prior to the Meeting or by voting by ballot at the Meeting. If
matters other than those set forth in the accompanying Notice of Annual Meeting
are presented at the Meeting for action, which is not currently anticipated, the
proxy holders will vote the proxies in accordance with their best judgment.
Holders of Common Stock as of the close of business on March 14, 1997 will
be entitled to vote. On such date there were outstanding and entitled to vote
144,181,807 shares of Common Stock of the Company, each of which is entitled to
one vote with respect to each matter to be voted on at the Meeting. The presence
at the Meeting in person or by proxy of the holders of a majority of the
outstanding shares of Common Stock entitled to vote shall constitute a quorum
for the transaction of business. Proxies marked as abstaining (including proxies
containing broker non-votes) on any matter to be acted upon by stockholders will
be treated as present at the meeting for purposes of determining a quorom but
will not be counted as votes cast on such matters.
The cost of soliciting proxies in the form enclosed will be borne by the
Company. In addition to the solicitation by mail, proxies may be solicited
personally, or by telephone, by employees of the Company. The Company has also
engaged D.F. King & Co., Inc., 77 Water Street, New York, New York, to assist in
such solicitation at an estimated fee of $14,500 plus disbursements. The Company
may reimburse brokers holding Common Stock in their names or in the names of
their nominees for their expenses in sending proxy material to the beneficial
owners of such Common Stock.
<PAGE>
INFORMATION AS TO CERTAIN SHAREHOLDERS
Set forth below is certain information with respect to the only persons
known to the Company who owned beneficially more than five percent of the
Company's voting securities as of March 6, 1997.
<TABLE>
<CAPTION>
AMOUNT PERCENT
BENEFICIALLY OF
OWNED CLASS
------------- -------------
<S> <C> <C>
Minorco........................................................................ 45,960,180 31.9%(1)
9 rue Sainte Zithe, L-2763
Luxembourg City, Grand Duchy of Luxembourg
State Farm Mutual Automobile Insurance Company................................. 9,670,893 6.7%(2)
One State Farm Plaza,
Bloomington, Illinois 61710
</TABLE>
- ------------------------
(1) The Company is informed by Minorco, a company incorporated under the laws of
Luxembourg, as a societe anonyme, as follows:
Minorco, through a wholly-owned subsidiary, holds 45,960,180 shares of Common
Stock of the Company, representing approximately 31.9% of the outstanding
voting securities of the Company. Shares granted to Messrs. Lea and Slack
pursuant to each of the Company's Stock Bonus Plan for Non-Employee
Directors and the Company's Directors Stock Option Plan have been ceded to
Minorco pursuant to arrangements between Messrs. Lea and Slack,
respectively, and Minorco and are included in the above total.
Minorco is an international natural resources company with operations in
gold, base metals, industrial minerals, paper and packaging and
agribusiness. The capital stock of Minorco is owned in part as follows:
approximately 45.8%, directly or through subsidiaries, by Anglo American
Corporation of South Africa Limited ("Anglo American"), a publicly held
mining and finance company, and approximately 22.6%, directly or through
subsidiaries, by De Beers Centenary AG ("Centenary"), a publicly held Swiss
diamond mining and investment company. Approximately 38.5% of the capital
stock of Anglo American is owned, directly or through subsidiaries, by De
Beers Consolidated Mines Limited ("De Beers"), a publicly held diamond
mining and investment company. Approximately 29.4% of the capital stock of
Centenary and approximately 32.5% of the capital stock of De Beers is owned,
directly or through subsidiaries, by Anglo American. De Beers owns
approximately 9.5% of Centenary.
Mr. Nicholas F. Oppenheimer, Deputy Chairman and a director of Anglo
American, Centenary and De Beers and a director of Minorco, and Mr. Slack, a
director of the Company, Chief Executive, President and a director of
Minorco and a director of Anglo American, have indirect partial interests in
approximately 7% of the outstanding shares of Minorco and approximately
2
<PAGE>
8% of the outstanding shares of Anglo American. Mr. Slack holds an
additional indirect interest in 23 Anglo American Ordinary Shares, and his
infant children hold a beneficial interest of 900 shares in Minorco. Mr. Lea
is a director of Anglo American and Minorco, and his infant son holds a
beneficial interest in 100 shares of Minorco.
Mr. Loomis, Mr. Richards and Mr. Smith are directors of Minorco. Mr. Richards
and Mr. Smith each beneficially owns 1,000 Minorco Ordinary Shares,
constituting less than one percent of the outstanding shares of Minorco.
(2) As reported by State Farm Mutual Automobile Insurance Company and related
entities on Schedule 13G filed with the Securities and Exchange Commission
and dated January 6, 1997.
1. ELECTION OF DIRECTORS
The Board of Directors of the Company consists of three classes, Class I,
Class II and Class III, each class serving for a full three-year term. Mr.
Antonini, Mr. Lea, and Mr. Watson all of whom are incumbent Class I Directors
are nominees for election as Class I Directors at the Annual Meeting. If
elected, the Class I Directors will serve three-year terms expiring in 2000. The
Class II Directors will be considered for reelection at the 1998 Annual Meeting.
The Class III Directors will be considered for reelection at the 1999 Annual
Meeting. Mr. LaTorre, a member of the Board of Directors since 1990, is retiring
from the Board of Directors effective May 1, 1997. Mr. Perry is being nominated
as a Class III Director to replace Mr. LaTorre.
Messrs. Slack and Smith have been members of the Board of Directors since
1981, Mr. Richards since 1983, Mr. Antonini since 1985, Mr. Napier since 1986,
Mrs. Pace since 1987, Mr. Watson since 1991, Mr. Lea since 1994, Ms. Alvarado
since 1995 and Mr. Loomis since 1996.
Directors will be elected by the affirmative vote of a majority of the votes
cast at the Meeting.
The persons named as proxies in the accompanying proxy who have been
designated by the Board of Directors intend to vote, unless otherwise instructed
in such proxy, FOR the election of Messrs. Antonini, Lea and Watson as Class I
Directors and Mr. Perry as a Class III Director.
3
<PAGE>
INFORMATION WITH RESPECT TO NOMINEES AND
DIRECTORS WHOSE TERMS CONTINUE
The following table sets forth the name and age of each nominee and
Director; all other positions and offices, if any, now held by him or her with
the Company and his or her principal occupation during the last five years.
DIRECTORS WITH TERMS EXPIRING MAY 1997 AND NOMINEES,
AGES, PRINCIPAL BUSINESS EXPERIENCE DURING THE PAST
FIVE YEARS, BOARD MEMBERSHIPS (CLASS I)
<TABLE>
<S> <C>
MARION H. ANTONINI
Age 66. President and Chief Executive Officer of Welbilt Corporation, a food service
equipment and consumer products company, since prior to 1992.
Mr. Antonini is also a director of Vulcan Materials Company, Scientific-Atlanta, Inc.
and Berisford PLC.
ANTHONY W. LEA
Age 48. Executive Director and Member of the Executive Committee of Minorco since
prior to 1992; Joint Managing Director thereof from prior to 1992 to December 1992;
Director of Anglo American Corporation of South Africa since November 1993.
Mr. Lea is also a director of Terra Industries Inc.
DOUGLAS G. WATSON
Age 52. President, CEO and Director of Novartis Corporation, a life sciences company,
since January 1997. President of the Pharmaceuticals Division of CIBA-GEIGY
Corporation from prior to 1992 to January 1997.
Mr. Watson is also a director of Summit Bancorp.
</TABLE>
4
<PAGE>
DIRECTORS WITH TERMS EXPIRING MAY 1998,
AGES, PRINCIPAL BUSINESS EXPERIENCE DURING THE
PAST FIVE YEARS, BOARD MEMBERSHIPS (CLASS II)
<TABLE>
<S> <C>
LINDA G. ALVARADO
Age 44. President and Chief Executive Officer of Alvarado Construction, Inc., since
prior to 1992.
Ms. Alvarado is also a director of Cyprus Amax Minerals Company and Pitney Bowes,
Inc.
WILLIAM R. LOOMIS, JR.
Age 48. Chairman of the Board of Terra Industries Inc. since April 1996; Managing
Director, Lazard Freres & Co. LLC, an investment bank, since prior to 1992; General
Partner in the Banking Group of Lazard Freres & Co. LLC from prior to 1992 to June
1995.
Mr. Loomis is also a director of Minorco.
JAMES V. NAPIER
Age 60. Chairman of Scientific-Atlanta, Inc., a communications manufacturing company,
since December 1992; Chairman and President of Commercial Telephone Group, Inc.
prior thereto.
Mr. Napier is also a director of Intelligent Systems Corporation, Vulcan Materials
Company, HBO & Company, Personnel Group of America, Inc. and Westinghouse Air Brake
Company.
NORMA T. PACE
Age 75. Partner, Paper Analytics Associates, a planning and consulting company since
1995; Senior Advisor and Director of WEFA Group, Inc., economic consultants and
forecasters since 1992.
Mrs. Pace is also a director of Hasbro, Inc.
</TABLE>
5
<PAGE>
DIRECTORS WITH TERMS EXPIRING MAY 1999 AND NOMINEE,
AGES, PRINCIPAL BUSINESS EXPERIENCE DURING THE PAST
FIVE YEARS, BOARD MEMBERSHIPS (CLASS III)
<TABLE>
<S> <C>
L. DONALD LATORRE
Age 59. President and Chief Operating Officer of the Company since January 1995;
Senior Vice President and Chief Operating Officer of the Company prior thereto. Mr.
LaTorre has announced his intention to retire from the Company effective April 1,
1997.
Mr. LaTorre is also a director of Harnischfeger Industries Inc.
BARRY W. PERRY
Age 50. President and Chief Operating Officer of the Company replacing Mr. LaTorre
since 1997; Group Vice President and General Manager of the Pigments and Additives
Group prior thereto since August 1993; Group Vice President and General Manager of
the Latex & Specialty Polymers Division of Rhone-Poulenc prior thereto.
REUBEN F. RICHARDS
Age 67. Former Chairman of the Board of the Company, now retired; Recently retired
Chairman of the Board of Terra Industries, Inc. and Minorco (U.S.A.); Chairman of
the Board of Terra Industries Inc. from prior to 1992 until April 1996.
Mr. Richards is also a director of Santa Fe Energy Resources, Inc., Ecolab, Grupo
Financiero Banorte, Minorco and Potlatch Corporation.
HENRY R. SLACK
Age 47. Chief Executive of Minorco since December 1992; Member of the Executive
Committee of Minorco since prior to 1992, and President and a director thereof
since prior to 1992; director of Anglo American Corporation of South Africa Limited
since prior to 1992.
Mr. Slack is also a director of Terra Industries Inc.
ORIN R. SMITH
Age 61. Chairman and Chief Executive Officer of the Company since January 1995;
President and Chief Executive Officer of the Company prior thereto.
Mr. Smith is also a director of Ingersoll-Rand Company, The Louisiana Land and
Exploration Company, Minorco, Perkin-Elmer Corporation, Summit Bancorp, and Vulcan
Materials Company.
</TABLE>
6
<PAGE>
SHARE OWNERSHIP OF DIRECTORS AND OFFICERS
Set forth in the following table is the beneficial ownership of Common Stock
as of March 6, 1997 for all nominees, continuing Directors, each of the
Executive Officers listed on the Summary Compensation Table and all Directors
and Executive Officers as a group. No Director or Executive Officer owns more
than 1% of the total outstanding shares (including exercisable options) other
than Mr. Smith who owns 1.2%. All Directors and Executive Officers as a group
own approximately 2.8% of the total outstanding shares (including exercisable
options).
<TABLE>
<CAPTION>
NAME SHARES
- ----------------------------------------------------------------------------------------------- -----------
<S> <C>
Linda G. Alvarado.............................................................................. 8,343(1)
Marion H. Antonini............................................................................. 27,850(1)
L. Donald LaTorre.............................................................................. 1,007,519(2)
Anthony W. Lea................................................................................. 750(4)
William R. Loomis, Jr.......................................................................... 22,593
James V. Napier................................................................................ 15,545(1)
William E. Nettles............................................................................. 188,848(2)
Norma T. Pace.................................................................................. 26,154(1)
Barry W. Perry................................................................................. 81,983(2)
Reuben F. Richards............................................................................. 25,873(1)
Robert J. Schaffhauser......................................................................... 260,991(2)
Henry R. Slack................................................................................. 2,530(3)(4)
Orin R. Smith.................................................................................. 1,724,837(2)
Douglas G. Watson.............................................................................. 29,222(1)
All Directors and Executive Officers as a group................................................ 4,030,624(2)
</TABLE>
- ------------------------
(1) Includes 750 shares of Common Stock subject to options granted to Messrs.
Antonini, Napier, Richards and Watson and Mses. Alvarado and Pace under the
Company's Directors Stock Option Plan, which options may be exercised within
60 days from March 6, 1997.
(2) Includes 863,093, 554,000, 138,875, 59,050, 113,087 and 2,021,351 shares of
Common Stock subject to options granted to Messrs. Smith, LaTorre,
Schaffhauser, Perry, Nettles, and all Directors and Executive Officers as a
group, respectively, under the Company's Stock Option Plan of 1981 (the
"1981 Stock Option Plan"), the Company's Stock Option Plan of 1991 (the
"Stock Option Plan," together with the 1981 Stock Option Plan, the "Stock
Option Plans") and the Directors Stock Option Plan, which options may be
exercised within 60 days from March 6, 1997 and also includes 17,580 shares
owned by family members in which persons in the group disclaim any
beneficial interest.
(3) Excludes 410,433 shares of Common Stock in which Mr. Slack has an indirect
partial interest and in which he disclaims any beneficial interest.
7
<PAGE>
(4) Excludes 750 shares of Common Stock subject to options granted to each of
Messrs. Slack and Lea under the Company's Directors Stock Option Plan which
are ceded to Minorco and are reflected in the Amount Beneficially Owned by
Minorco in the Section "Information as to Certain Shareholders" on page 2.
BOARD OF DIRECTORS' MEETINGS, COMMITTEES AND FEES
The Board of Directors of the Company held a total of eleven meetings during
1996. Among the standing committees of the Board of Directors are the Audit
Committee, the Compensation Committee and the Stock Option/Stock Bonus
Committee. The Board does not have a nominating committee.
The members of the Audit Committee are Mrs. Pace (Chairman), Ms. Alvarado,
Messrs. Antonini, Lea and Loomis, all of whom are non-employee Directors. The
Audit Committee periodically reviews the Company's accounting policies, internal
accounting controls and the scope and results of the independent accountants'
audit of the Company's financial statements. The Audit Committee held three
meetings during 1996.
The members of the Compensation Committee are Messrs. Antonini (Chairman),
Napier, Richards, Slack and Watson and Mrs. Pace, all of whom are non-employee
Directors. The Compensation Committee determines the appropriate level of
compensation for the Officers and employees of the Company. The Compensation
Committee held seven meetings during 1996.
The members of the Stock Option/Stock Bonus Committee are Messrs. Antonini
(Chairman), Napier, Richards, Slack and Watson and Mrs. Pace, all of whom are
non-employee Directors. The Stock Option/Stock Bonus Committee administers the
Company's stock option and stock bonus plans and determines the terms and
conditions for the issuance of stock options and stock bonus awards to the
Officers and employees of the Company. The members of the Committee are not
eligible to participate in such plans. The Stock Option/Stock Bonus Committee
held five meetings during 1996.
During 1996 all of the Directors of the Company attended more than 75% of
the meetings of the Board and meetings of committees of the Board on which they
served, except for Messrs. Lea and Slack.
Directors who are not employees of the Company each received a retainer at
the annual rate of $30,000 in 1996. In addition, non-employee Directors received
a $1,350 attendance fee for each Board meeting attended in 1996. During 1996,
non-employee Directors also received a $1,000 attendance fee for each committee
meeting attended; a $5,000 annual retainer for each committee on which they
served; and an additional $5,000 annual retainer for each chairman of a
committee. Directors who are employees of the Company do not receive any
Directors' fees or retainers.
8
<PAGE>
Pursuant to the Company's Retirement Plan for Directors, a Director or
Director Emeritus will receive retirement benefits following his or her
retirement as a Director if at the time of such retirement either (i) he or she
has six or more years of service as a non-employee Director or (ii) his or her
age and years of service as a non-employee Director equal at least 65. Such
retirement benefits will be an annual amount equal to the annual Board retainer
fee (excluding meeting and committee fees) in effect on the date of the
Director's retirement and will be payable in equal monthly installments
commencing on the first day of the month coinciding with or next following the
Director's 65th birthday or, if later, the date of the Director's retirement and
continuing until the earlier of (i) the Director's death or (ii) the completion
of payments for a period equal to the period of the Director's service as a
non-employee Director.
Pursuant to the Company's Stock Bonus Plan for Non-Employee Directors (the
"Directors Stock Bonus Plan"), each person who becomes a non-employee Director
prior to June 30, 2006 shall be awarded 7,593 shares of the Company's Common
Stock effective as of such person's election to the Board of Directors. Such
shares will vest in equal increments over a ten-year period. Directors are
entitled to receive cash dividends on and to vote shares which are the subject
of an award prior to their distribution or forfeiture. Upon termination of the
Director's service as a non-employee Director, the Director (or, in the event of
his or her death, his or her beneficiary) shall be entitled, in the discretion
of the committee formed to administer the Directors Stock Bonus Plan, to receive
the shares awarded to such Director which have tentatively vested up to the date
of such termination of service; shares may be received prior to such date if
there has been a "change in control."
Pursuant to the Company's Directors Stock Option Plan each non-employee
Director in office on the date of the regular meeting of the Board in December
of each year will automatically be granted an option to purchase 3,000 shares of
Common Stock with an exercise price equal to 100 percent of the fair market
value at the date of grant. Each option becomes exercisable in four equal
installments, commencing on the first anniversary of the date of grant and
annually thereafter. Each option terminates on the tenth anniversary of the date
of grant. Each option held by a director which was granted more than one year
before his or her termination of service as a director shall become fully
exercisable upon termination if such termination is a result of disability,
death or retirement after attaining age 65; options may become exercisable prior
to such date if there has been an "acquisition of a control interest."
Pursuant to the Company's Deferred Compensation Plan for Directors and the
Company's Directors Stock Bonus Plan, non-employee Directors may elect to defer
payment of all or a designated portion of their compensation for services as a
Director.
9
<PAGE>
COMPENSATION COMMITTEE INTERLOCKS, INSIDER
PARTICIPATION AND CERTAIN TRANSACTIONS
The members of the Compensation Committee are Messrs. Antonini (Chairman),
Napier, Richards, Slack and Watson and Mrs. Pace, all of whom are non-employee
directors. Mr. Slack holds the positions with Minorco described in "Information
as to Certain Shareholders" on page 2. Messrs. Richards and Smith are directors
of Minorco. Minorco beneficially owns more than five percent of the Company's
voting securities. For additional information regarding Minorco, see
"Information as to Certain Shareholders" on page 2.
Among other businesses, the Company markets, fabricates and processes
various metals, minerals and ores acquired from numerous domestic and foreign
suppliers. The Company makes and will continue to make purchases, sales and
leases of such materials, in the ordinary course of its business, from and to
entities in which it is informed Anglo American and/or Minorco have a material
interest, upon terms which are no less favorable to the Company than those
obtainable from other sources. The Company's purchases and sales of such
materials from all sources during 1996 approximated $1.9 billion and $2.0
billion, respectively, including purchases of approximately $203.2 million from
and no sales to entities in which the Company is informed Anglo American has a
material interest; the Company also entered into metal leases of approximately
$37.7 million with such entities.
SECTION 16(A) BENEFICIAL OWNERSHIP
REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
Executive Officers and Directors and persons who own more than 10% of a
registered class of the Company's' equity securities to file initial reports of
ownership and changes in ownership with the Securities and Exchange Commission
("SEC") and the New York Stock Exchange. Such Officers, Directors and
stockholders are required by SEC regulations to furnish the Company with copies
of all Section 16(a) forms they file. Based solely on a review of the copies of
such forms furnished to the Company and written representations from the
Company's Executive Officers and Directors, all persons subject to the reporting
requirements of Section 16(a) filed the required reports on a timely basis for
1996.
10
<PAGE>
EXECUTIVE COMPENSATION AND OTHER INFORMATION
The following table sets forth the compensation paid by the Company for
services rendered in all capacities during each of the last three fiscal years
to the Chief Executive Officer and the other four most highly compensated
Executive Officers. All share and per share data have been restated to give
effect to all relevant stock splits, the last of which occurred in June, 1995.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS (1)(2)
----------------------------------- --------------------------
RESTRICTED ALL OTHER
NAME AND PRINCIPAL STOCK OPTIONS COMPENSATION
POSITION YEAR SALARY ($) BONUS ($) AWARD(S) ($)(3) (#) ($)(4)
- -------------------------------------- --------- ----------- ----------- --------------- --------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Orin R. Smith, Director,.............. 1996 774,996 800,000 326,000 353,000 --
Chairman and Chief 1995 735,000 925,000 412,250 368,000 --
Executive Officer 1994 699,996 630,000 422,925 436,875 --
L. Donald LaTorre,.................... 1996 439,716 390,000 196,965 207,000 4,102
Director, President and 1995 417,411 430,000 282,925 225,000 3,695
Chief Operating Officer(5) 1994 394,146 300,000 304,500 280,500 3,329
Robert J. Schaffhauser,............... 1996 306,000 160,000 108,660 82,500 --
Vice President and 1995 289,993 180,000 129,325 83,000 --
Chief Technical Officer 1994 262,656 125,000 126,875 112,500 --
Barry W. Perry,....................... 1996 282,216 150,000 101,875 81,000 --
President & Chief 1995 264,996 235,000 141,450 77,500 --
Operating Officer(5) 1994 237,943 80,000 52,440 45,600 --
William E. Nettles,................... 1996 255,996 160,000 73,004 76,000 --
Vice President and 1995 234,996 175,000 97,000 86,500 --
Chief Financial Officer 1994 199,920 65,000 50,750 40,500 --
</TABLE>
- ------------------------
(1) The Company's Key Employees Stock Bonus Plan and the Company's Stock Option
Plans provide for acceleration of vesting in the event of a "change in
control." For information on what constitutes a "change in control," see
"Employment Contracts, Termination of Employment and Change in Control
Arrangements" on page 16.
(2) Currently, the Company has no Long Term Incentive Plans which are required
to be reported pursuant to the General Rules and Regulations of the
Securities and Exchange Commission.
11
<PAGE>
(3) As of December 31, 1996, Messrs. Smith, LaTorre, Schaffhauser, Perry and
Nettles held 136,225, 96,942, 39,683, 13,713 and 19,855 unvested shares,
respectively, of stock which were awarded pursuant to the Company's Key
Employees Stock Bonus Plan having a market value of $2,605,303, $1,854,016,
$758,937, $262,261 and $379,727, respectively. The foregoing amounts do not
include the reported grants, which were made in February 1997 for services
rendered during 1996. Restricted stock awards of the Company's Common Stock
granted under the Key Employees Stock Bonus Plan vest in five equal annual
installments commencing on the first anniversary of the date of the grant.
Vesting will be accelerated upon the occurrence of a "change in control."
The Company pays dividends on restricted stock, if and to the extent paid on
Common Stock generally. For information on what constitutes a "change in
control," see "Employment Contracts, Termination of Employment and Change in
Control Arrangements" on page 16.
(4) Represents interest accrued during 1994, 1995 and 1996 in excess of 120% of
the applicable federal interest rate with respect to salary deferrals.
(5) Mr. Perry has been elected President and Chief Operating Officer and is
replacing Mr. LaTorre in that position.
12
<PAGE>
The following table sets forth information concerning individual grants of
stock options made under the Stock Option Plan in December 1996 and February
1997 for services rendered during 1996 by each of the named Executive Officers.
OPTION GRANTS FOR SERVICES RENDERED DURING 1996
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
- --------------------------------------------------------------------------------------------------
% OF TOTAL
NUMBER OF OPTIONS GRANT DATE
SECURITIES GRANTED TO VALUE
UNDERLYING EMPLOYEES EXERCISE ------------
OPTIONS FOR SERVICES OR BASE GRANT DATE
GRANTED RENDERED PRICE EXPIRATION PRESENT
NAME (#)(1) DURING 1996 ($/SH) DATE VALUE ($)(2)
- ---------------------------------------- ----------- --------------- ----------- ------------- ------------
<S> <C> <C> <C> <C> <C>
Orin R. Smith........................... 245,000 13% 19.00 12/19/2006 1,477,350
108,000 6% 20.25 2/6/2007 692,280
L. Donald LaTorre....................... 142,000 8% 19.00 12/19/2006 856,260
65,000 3% 20.25 2/6/2007 416,650
Robert J. Schaffhauser.................. 48,000 3% 19.00 12/19/2006 289,440
34,500 2% 20.25 2/6/2007 221,145
Barry W. Perry.......................... 50,000 3% 19.00 12/19/2006 301,500
31,000 2% 20.25 2/6/2007 198,710
William E. Nettles...................... 52,000 3% 19.00 12/19/2006 313,560
24,000 1% 20.25 2/6/2007 153,840
</TABLE>
- ------------------------
(1) Options have a ten-year term and vest in four equal annual installments
commencing on the first anniversary of the date of grant. Vesting will be
accelerated upon the occurrence of a "change in control." For information as
to what constitutes a "change in control," see "Employment Contracts,
Termination of Employment and Change in Control Arrangements" on page 16.
(2) Based on the Black-Scholes option pricing model. The model assumes: (a) an
option term of 4.8 years, which represents historic exercise trends for the
named Executive Officers; (b) an interest rate of 6.5% that represents the
current yield curves as of the grant dates; (c) an average volatility of
approximately 31% calculated using average weekly stock prices for the four
years prior to the grant date; and (d) dividends at the rate of $.36 per
share (the current annual dividend rate). The Company does not believe that
the values estimated by the model will necessarily be indicative of the
values to be realized by an executive.
13
<PAGE>
The following table sets forth information concerning each exercise of stock
options during 1996 by each of the named Executive Officers and the value of
unexercised options at December 31, 1996.
AGGREGATE OPTION EXERCISES IN 1996
AND VALUES AT DECEMBER 31, 1996
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS AT IN-THE-MONEY OPTIONS
SHARES VALUE DECEMBER 31, 1996(#) AT DECEMBER 31, 1996($)
ACQUIRED ON REALIZED ---------------------------- ----------------------------
NAME EXERCISE(#) ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ------------------------------ ------------- --------- ------------ -------------- ------------ --------------
<S> <C> <C> <C> <C> <C> <C>
Orin R. Smith................. 62,000 919,896 734,249 962,376 2,480,037 1,167,033
L. Donald LaTorre............. 25,000 425,513 457,625 590,500 1,633,174 731,683
Robert J. Schaffhauser........ 33,750 469,918 101,875 218,500 291,491 285,544
Barry W. Perry................ 0 0 39,400 156,200 90,627 118,193
William E. Nettles............ 32,062 619,069 93,725 162,225 476,986 106,620
</TABLE>
14
<PAGE>
PENSION PLANS
The following table shows estimated annual pension benefits payable to a
covered participant at normal retirement age under the Company's qualified
defined benefit pension plan, as well as non-qualified supplemental pension
plans that provide benefits that would otherwise be denied participants by
reason of certain Internal Revenue Code limitations on qualified plan benefits
and provide additional credited years of service, based on remuneration that is
covered under the plans and years of service with the Company and its
subsidiaries.
PENSION PLAN TABLE
<TABLE>
<CAPTION>
YEARS OF SERVICE
-------------------------------------------------------
ANNUAL REMUNERATION 15 YEARS 20 YEARS 25 YEARS 30 YEARS 35 YEARS
- --------------------------- --------- --------- --------- --------- -----------
<S> <C> <C> <C> <C> <C>
$ 200,000.................. 43,759 58,345 72,932 87,518 102,105
300,000.................. 66,259 88,345 110,432 132,518 154,605
400,000.................. 88,759 118,345 147,932 177,518 207,105
500,000.................. 111,259 148,345 185,432 222,518 259,605
600,000.................. 133,759 178,345 222,932 267,518 312,105
700,000.................. 156,259 208,345 260,432 312,518 364,605
800,000.................. 178,759 238,345 297,932 357,518 417,105
900,000.................. 201,259 268,345 335,432 402,518 469,605
1,000,000................. 223,759 298,345 372,932 447,518 522,105
1,100,000................. 246,259 328,345 410,432 492,518 574,605
1,200,000................. 268,759 358,345 447,932 537,518 627,105
1,300,000................. 291,259 388,345 485,432 582,518 679,605
1,400,000................. 313,759 418,345 522,932 627,518 732,105
1,500,000................. 336,259 448,345 560,432 672,518 784,605
1,600,000................. 358,759 478,345 597,932 717,518 837,105
1,700,000................. 381,259 508,345 635,432 762,518 889,605
1,800,000................. 403,759 538,345 672,932 807,518 942,105
1,900,000................. 426,259 568,345 710,432 852,518 994,605
2,000,000................. 448,759 598,345 747,932 897,518 1,047,105
</TABLE>
A participant's remuneration covered by the Company's pension plans is his
or her average monthly earnings, consisting of base salary and regular cash
bonuses, if any (as reported in the Summary Compensation Table, except as set
forth below), for the highest 60 consecutive calendar months out of the 120
completed calendar months next preceding termination of employment. With respect
to each of the individuals named in the Summary Compensation Table on page 11,
credited years of service under the plans as of December 31, 1996 are as
follows: Mr. Smith, 25 years; Mr. LaTorre, 12 years; Mr. Schaffhauser, 7 years;
Mr. Perry, 3 years; Mr. Nettles, 14 years. Messrs. Smith, LaTorre, Schaffhauser,
Perry and Nettles had $1,574,996, $829,716, $466,000,
15
<PAGE>
$432,216 and $415,996, respectively, of annual remuneration covered by the plans
during 1996. Benefits shown are computed as a straight line single life annuity
beginning at age 65 and the benefits listed in the Pension Plan Table are not
subject to any deduction for Social Security or other offset amounts.
EMPLOYMENT CONTRACTS, TERMINATION OF EMPLOYMENT
AND CHANGE IN CONTROL ARRANGEMENTS
In October 1996, the Company entered into a three-year employment agreement
with Mr. Smith commencing May 21, 1996 and ending May 20, 1999. Commencing May
20, 1997 and on each May 20 thereafter, Mr. Smith's agreement shall
automatically be extended for another year unless notice of the Company's
intention not to extend shall have been given in writing no later than December
31st of the preceding year; provided, however, that Mr. Smith's employment
period shall not extend beyond August 31, 2000. The agreement provides for an
annual salary of not less than $775,000, an annual cash bonus of at least
$216,645 and an award of at least 22,500 shares of Common Stock of the Company;
provided, however, that an annual cash bonus of at least $581,250, equity pool
share awards with a value of at least $484,375 and stock option awards with a
value of at least $1,162,500 shall be awarded to Mr. Smith if the Company's
performance for any year is greater than or equal to a predictable level of
performance for such year, as determined by the Compensation Committee. In
addition, Mr. Smith is entitled to participate in the benefit plans of the
Company.
Mr. LaTorre will retire from the Company effective April 1, 1997 and will
retire as a director of the Company effective May 1, 1997. A consulting firm
owned by Mr. LaTorre will provide consulting services to the Company from April
1, 1997 through March 31, 1999 regarding (i) the Company's interest in certain
joint ventures; and (ii) other duties and activities for which Mr. LaTorre has
specific experience and expertise. The consulting firm will receive a monthly
fee of $20,000 for its services.
Pursuant to the Company's Change In Control Agreements, the Company provides
severance benefits in the event of a termination of an Executive (as defined),
except a termination (i) because of death, (ii) because of "Disability," (iii)
by the Company for "Cause," or (iv) by the Executive other than for "Good
Reason," within the period beginning on the date of a "Potential Change in
Control" (as such terms are defined in the Change In Control Agreement) or
"Change in Control" and ending on the third anniversary of the date on which a
"change in control" (as defined below) occurs. The severance benefits include:
(i) the payment of salary to the Executive through the date of termination of
employment together with salary in lieu of vacation accrued; (ii) an amount
equal to a pro-rated incentive pool award under the Company's Incentive
Compensation Plan, determined as set forth in the Agreement; (iii) an amount
equal to the sum of the highest annual salary and incentive pool award in effect
during any of the preceding 36 months, determined as set forth in the Agreement;
(iv) continued coverage under the Company's life, disability, health, dental and
other employee welfare benefit plans; (v) continued participation and benefit
accruals under the Company's Supplemental Retirement Program for one year
following the date of termination; and
16
<PAGE>
(vi) an amount sufficient, after taxes, to reimburse the Executive for any
excise tax under Section 4999 of the Internal Revenue Code of 1986, as amended.
Each of Messrs. Smith, LaTorre, Schaffhauser, Perry and Nettles is defined as an
Executive.
For purposes of the Company's Change In Control Agreement, a "change in
control" is triggered if one of the following occurs: (a) twenty-five percent or
more of the Company's outstanding securities entitled to vote in the election of
directors shall be beneficially owned, directly or indirectly, by any person or
group of Persons, other than the groups presently owning the same, or (b) a
majority of the Board of Directors of the Company ceases to consist of the
existing membership or successors nominated by the existing membership or their
similar successors, or (c) all or substantially all of the individuals and
entities who were the beneficial owners of the Company's outstanding securities
entitled to vote do not own more than 60% of such securities in substantially
the same proportions following a shareholder approved reorganization, merger, or
consolidation, or (d) shareholder approval of either (i) a complete liquidation
or dissolution of the Company or (ii) a sale or other disposition of all or
substantially all of the assets of the Company, other than to the Company, with
respect to which following such sale or other disposition, more than 60% of the
Company's outstanding securities entitled to vote generally in the election of
directors are thereafter beneficially owned, in substantially the same
proportions, by all or substantially all of the individuals and entities who
were the beneficial owners of such securities prior to such sale or other
disposition.
The Company's Key Employees Stock Bonus Plan and the Company's Stock Option
Plans, in which all of the Executive Officers participate, provide for the
acceleration of vesting of awards granted in the event of an acquisition of a
control interest. For purposes of the stock option and stock bonus awards
granted before March 7, 1996 under the Company's Stock Option Plan and the Key
Employees Stock Bonus Plan, an accelerated vesting is triggered if either (a) or
(b) in the above definition of "change in control" occurs. For awards made on or
after March 7, 1996, a participant under these plans will, subject to such other
conditions, if any, as the Committee may impose, receive accelerated vesting of
awards granted in the event of a "change in control," as defined above, except
that a "change in control" is triggered by twenty percent, rather than twenty
five percent, beneficial ownership of the Company's outstanding securities
entitled to vote in the election of directors, directly or indirectly, by any
person or group of persons, other than the groups presently owning the same.
REPORT ON EXECUTIVE COMPENSATION
Under the overall direction of the Compensation Committee and the Stock
Option/Stock Bonus Committee of the Board of Directors and in accordance with
the Company's Stock Option Plan and Stock Bonus Plan approved by its
shareholders, the Company has developed and implemented compensation programs
designed to:
- Attract and retain people who can build and continue to grow a successful
company;
17
<PAGE>
- Provide incentive to achieve high levels of company, business, and
individual performance; and
- Maintain and enhance alignment of employee and shareholder interests.
The Compensation and Stock Option/Stock Bonus Committees are composed
entirely of non-employee Directors individually noted as signatories to this
report.
The Compensation Committee is responsible for overseeing the development and
for review and approval of:
- Overall compensation policy;
- Salaries for the Chief Executive Officer and for approximately 45 other
senior managers worldwide; and
- Aggregate cash incentive awards for the Company and specific individual
cash awards under the annual plan for the Chief Executive Officer and
approximately 45 other senior managers worldwide.
The Stock Option/Stock Bonus Committee is responsible for overseeing the
development and for review and approval of:
- Plan design and policies related to senior management and employee awards
of options and restricted stock; and
- Individual grants under the Stock Option Plan and restricted stock awards
under the Key Employees Stock Bonus Plan to the Chief Executive Officer
and approximately 320 employees worldwide.
In exercising those responsibilities and in determining the compensation in
particular of Mr. Smith and in general of other senior managers individually
reviewed, the Committees examine and set:
1. BASE SALARY
The Compensation Committee reviews salaries annually against industry
practices as determined by professional outside consultants who conduct
annual surveys. The Company's current competitive target is to pay base
salaries somewhat above the median for positions of comparable level. This
target is being achieved on average for the professional, technical, and
managerial salaried work force. Salary structures are set each year based on
the Company's target and its actual competitive position. There was a 3%
structure increase for 1996 for the US professional, technical and
managerial group and an equivalent adjustment for 1997. Likewise merit
budgets are established based on a competitive target, actual competitive
position, and the Company's desire to recognize and reward individual
contribution. For international employees and non-exempt salaried employees
in the United States, structure adjustments and merit budgets are determined
based on local market conditions.
18
<PAGE>
Individual merit adjustments are based upon the managers' quantitative
and qualitative evaluation of individual performance, including feedback
from customers served, against business objectives such as earnings, return
on capital, market share, new customers, and development of new commercial
products. Performance is also considered in the context of expectations for
behavior and the individuals' positions in their respective salary ranges --
the better the performance and the lower the position in range, the greater
the percentage base salary increase. Conversely, the lower the performance
is evaluated and the higher the position in range, the lower the percentage
base salary increase.
Mr. Smith's salary was increased 5.2% for 1997 based on business
results, which included substantial earnings growth while funding
significant investments in capital expansion, research and development,
joint ventures, and acquisitions. Base salary continues to be less than
one-fourth of total compensation for Mr. Smith and generally less than
one-half of total compensation for other senior management. This reflects
the Company's emphasis on non-fixed compensation which varies with Company
performance and on equity vehicles which are closely aligned with
shareholder interests.
2. ANNUAL CASH AND LONG TERM EQUITY INCENTIVE COMPENSATION
The Company's Management Incentive Plan integrates all incentive
compensation vehicles (including cash bonus award, restricted stock and
stock options) to link total compensation for the participant with the
performance of the Company and/or applicable business unit and the
individual. The plan facilitates clarity of performance expectations and
encourages the identification and commitment to "breakthrough" results.
Overall incentive pools are established for cash, restricted stock equity,
and stock options. The pools are determined by a formula based on
competitive total compensation for comparable performance; desired
compensation mix among cash, restricted stock and options; and on the actual
performance of the Company and its business units against specific
predetermined levels of earnings targets. A threshold level is established
below which incentives will not normally be paid. The Committees may adjust
these pools up or down based on the economic climate or other special
circumstances, but did not factor any pools up or down for 1996. Individual
awards are determined based on performance against specific objectives
within the limits of the pools.
The Company achieved a 9.4% earnings per share growth in 1996 over a
very good 1995, and certain of its businesses achieved a still higher level
of earnings results. Certain other business groups generated less
performance improvement but in no case failed to better the prior year.
These results generated the overall pools within which the individual
performance based awards were made as described below.
19
<PAGE>
a. ANNUAL CASH INCENTIVE PROGRAM
This program is designed to provide focus on expected annual results and
recognition of accomplishment for the year. Approximately 270 employees
worldwide received awards under the Company's program.
In 1996, actual cash payouts were 97% of the competitively defined pool
as factored for performance.
For the year 1996, Mr. Smith received a cash incentive award of $800,000
compared with $925,000 in 1995. This was consistent with the plan design
considering performance and targets and the payout for the overall Company.
Total cash compensation paid to eligible participants reflects the
excellent results achieved and is projected to be around the 60th percentile
of competitive practice -- higher in lower level positions and lower in
higher level positions.
b. RESTRICTED STOCK
Providing for vesting of shares in equal amounts over a period of five
years, the Key Employees Stock Bonus Plan is designed to align key employee
and shareholder long-term interests by providing designated employees an
equity interest in the Company. Approximately 320 employees are eligible to
participate in the Company's plan worldwide. Eligible employees are reviewed
annually for award grants determined in the manner previously described.
The total equity shares awarded for 1996 was slightly under the plan
generated pool. The Committee approved modifying the form of payout to
decrease the number of shares approved for grant by two-thirds and provide
an equivalent value (as determined by actuarial and financial models) in the
form of stock options. The intent of this shift to options is to increase
the alignment of employee total compensation with shareholder interests by
providing a greater proportion in the form of options which increase
employee compensation only when shareholders profit through stock
appreciation. This resulted in 193,369 restricted shares awarded compared
with 175,094 in 1995 but a lower overall value than in 1995.
For the year 1996, Mr. Smith received a grant of 16,000 shares plus
options noted below. This compares with 17,000 shares in 1995, and 25,000
shares in 1994, and 70,875 shares in 1993 (adjusted for stock splits). Mr.
Smith's equity share award, prior to splitting the form of grant into share
awards and options as described earlier, was 48,000 which was consistent
with the plan and the overall awards for the Company.
c. STOCK OPTIONS
The Stock Option Plan has been designed to link employee compensation
growth directly to growth in share price. In conjunction with restricted
stock, options are a major driver of senior management compensation aligning
their reward with shareholder interests. As noted
20
<PAGE>
above, over two-thirds of the compensation value of restricted stock equity
was paid in the form of options. Utilizing actuarial and financial models,
the value of an option was calculated to be approximately one-third of the
value of a restricted share award.
In addition, approximately 65 senior managers worldwide are reviewed for
annual stock option grants determined in the manner previously described.
Options vest in equal increments over four years and normally have a
ten-year life.
Options granted for 1996 (excluding 921,152 options from the conversion
of restricted stock as noted above) totalled 947,525 which was within the
pool generated. This compares with 927,025 granted for 1995 but represents a
lower overall value than in 1995.
For the year 1996, Mr. Smith was awarded 257,000 options plus an
additional 96,000 options representing value paid in the form of options
instead of restricted stock. The 257,000 is consistent with the plan design
and the overall awards for the Company.
The Committees direct the purchase of compensation survey information from
several independent professional consultants in order to review the base, annual
cash incentive, and total compensation of Mr. Smith and other individual senior
managers and employee groups. Although there is some overlap in the compensation
comparison groups with the Dow Jones Chemicals Group used in the Performance
Graph below, for the most part they are different companies. There are two key
reasons for the divergence in samples: (1) the Company generally utilizes
standard surveys in the belief that the general lack of precision inherent in
survey methodology and compensation decision making does not normally warrant
the additional cost of specialized surveys (most of the Dow Jones Chemicals
Group do not participate in the standard surveys purchased); (2) the predominant
labor markets in which the Company competes for people differ from the Dow Jones
Chemicals Group in that they also include firms in other business line
industries, e.g., petroleum and in geographic concentrations, e.g., New Jersey.
Based on the surveys and the achievements of the Company against its targets
in the context of the economic and competitive climate, the Committees are
satisfied the Company's compensation plans meet the objectives of attracting and
retaining talent, providing incentives for superior performance, and aligning
employee and shareholder interests.
Section 162(m) of the Internal Revenue Code generally limits the deductible
amount of annual compensation paid to certain individual executive officers
(i.e., the chief executive officer and the four other most highly compensated
executive officers of the Company) to no more than $1 million. However,
qualifying performance-based compensation will be excluded from the $1 million
cap on deductibility, and the Committee believes, based on information currently
available, that the Company's stock options issued to its executive officers
qualify for this exclusion. Considering the current structure of executive
officer compensation and the availability of deferral opportunities, the
Committee believes that the Company will not be denied any significant tax
deductions for 1997. The Committee will continue to review tax consequences as
well as other relevant considerations in connection with compensation decisions.
21
<PAGE>
COMPENSATION COMMITTEE
STOCK OPTION/STOCK BONUS COMMITTEE
<TABLE>
<S> <C> <C>
Marion H. Antonini James V. Napier Norma T. Pace
Reuben F. Richards Henry R. Slack Douglas G. Watson
</TABLE>
PERFORMANCE GRAPH
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN*
AMONG ENGELHARD CORPORATION, S&P 500 INDEX AND
DOW JONES CHEMICAL SECTOR
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
ENGELHARD CORPORATION S&P 500 DOW JONES (CHEMICAL)
<S> <C> <C> <C>
1991 100.00 100.00 100.00
1992 161.78 107.62 109.13
1993 174.88 118.46 120.79
1994 161.64 120.03 131.56
1995 241.92 165.13 172.26
1996 216.23 203.05 214.73
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31,
----------------------------------------------------------------
1991 1992 1993 1994 1995 1996
--------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Engelhard Corporation................................. 100.00 161.78 174.88 161.64 241.92 216.23
S&P 500............................................... 100.00 107.62 118.46 120.03 165.13 203.05
Dow Jones (Chemical).................................. 100.00 109.13 120.79 131.56 172.26 214.73
</TABLE>
- ------------------------
* Assumes $100 invested on December 31, 1991 in each referenced group with
reinvestment of dividends.
22
<PAGE>
2. APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors, based on the recommendation of the Audit Committee,
voted to retain Coopers & Lybrand L.L.P. to serve as independent public
accountants for the year 1997. Coopers & Lybrand L.L.P. expects to have a
representative at the meeting who will have the opportunity to make a statement
and who will be available to answer appropriate questions.
It is understood that even if the appointment is ratified, the Board of
Directors, in its discretion, may direct the appointment of a new independent
accounting firm at any time during the year if the Board of Directors believes
that such a change would be in the best interests of the Company and its
shareholders.
The Board of Directors recommends that you vote FOR the ratification of the
appointment of Coopers & Lybrand L.L.P. as the Company's independent public
accountants for the year 1997.
FUTURE SHAREHOLDER PROPOSALS
The Company will not consider any shareholder proposal for inclusion in the
1998 Annual Meeting of Shareholders' proxy material unless received by the
Company not later than November 28, 1997.
OTHER MATTERS
At the date of this Proxy Statement, the Board of Directors has no knowledge
of any business other than that described herein which will be presented for
consideration at the meeting. In the event any other business is presented at
the meeting, the persons named in the enclosed proxy will vote such proxy
thereon in accordance with their judgment in the best interests of the Company.
By Order of the Board of Directors
ARTHUR A. DORNBUSCH, II
VICE PRESIDENT, GENERAL COUNSEL
AND SECRETARY
March 31, 1997
23
<PAGE>
[LOGO]
NOTICE OF
ANNUAL MEETING
OF
SHAREHOLDERS
AND PROXY
STATEMENT
May 1, 1997
<PAGE>
ENGELHARD CORPORATION
101 WOOD AVENUE, ISELIN, NEW JERSEY 08830
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE COMPANY
FOR THE ANNUAL MEETING OF SHAREHOLDERS--MAY 1, 1997
P
The undersigned hereby constitutes and appoints Orin R. Smith, Reuben F.
R Richards and Arthur A. Dornbusch, II, and each of them, his true and lawful
agents and proxies with full power of substitution in each, to represent the
O undersigned at the Annual Meeting of Shareholders of ENGELHARD CORPORATION to
be held at The Sheraton at Woodbridge Place, 515 Route 1 South, Iselin, NJ
X 08830 on Thursday, May 1, 1997 at 10:00 A.M. Eastern Daylight Savings Time
and at any adjournments thereof, on all matters coming before said meeting.
Y
(Change of Address/Comments)
ELECTION OF DIRECTORS, NOMINEES:
Marion H. Antonini, Anthony W. Lea,
Douglas G. Watson and Barry W. Perry _________________________________
_________________________________
_________________________________
_________________________________
You are encouraged to specify your choices by marking the appropriate boxes.
SEE REVERSE SIDE, but you need not mark any boxes if you wish to vote in
accordance with the Board of Directors' recommendations. The Proxy Committee
cannot vote your shares unless you sign and return this card.
SEE REVERSE
SIDE
FOLD AND DETACH HERE
<PAGE>
<TABLE>
<S> <C>
1. Election of Directors (see reverse) (To withhold vote for any individual nominee write that name below.)
FOR WITHHELD ________________________________________________________________________
/ / / /
2. Ratification of appointment of Coopers & Lybrand L.L.P. 3. In their discretion, upon other matters as they
as independent public accountants. may properly come before the meeting.
FOR AGAINST ABSTAIN I PLAN TO ATTEND
/ / / / / / THE MEETING. / /
Please mark, sign and return promptly using
enclosed envelope. Executors, administrators, the trustees,
etc. should give full title as such. If the signed
corporation, please sign full corporate name by
authorized officer.
_________________________________________________________
_________________________________________________________
SIGNATURE(S) DATED 1997
- -----------------------------------------------------------------------------------------------------------------------------------
FOLD AND DETACH HERE
</TABLE>
Dear Shareholder(s):
Enclosed you will find material relative to the Company's 1997 Annual Meeting
of shareholders. The notice of the annual meeting and proxy statement
describe the formal business to be transacted at the meeting, as summarized
on the attached proxy card.
Whether or not you expect to attend the Annual Meeting, please complete and
return promptly the attached proxy card in the accompanying envelope, which
requires no postage if mailed in the United States. As a shareholder, please
remember that your vote is important to us.
ENGELHARD CORPORATION
