<PAGE> 1
GREAT LAKES CHEMICAL CORPORATION
WEST LAFAYETTE, INDIANA
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
MAY 2, 1996
------------------------
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of GREAT
LAKES CHEMICAL CORPORATION (the "Corporation") will be held at the Radisson
Plaza and Suite Hotel, 8787 Keystone Crossing, Indianapolis, Indiana, on
Thursday, May 2, 1996, at 11:00 a.m. for the following purposes:
1. To elect two directors to serve until the 1999 Annual Meeting; and
2. To transact such other business as may properly come before the
meeting or any adjournment thereof.
The Board of Directors has fixed March 4, 1996, as the date of record for
the meeting, and only stockholders of record at the close of business on such
date shall be entitled to vote at the meeting or any adjournment thereof.
A proxy statement, form of proxy and a copy of the annual report of the
Corporation for the year 1995 are enclosed herewith.
By Order of the Board of Directors,
MARY P. MCCLANAHAN
Secretary
March 29, 1996
YOUR VOTE IS IMPORTANT
WHETHER OR NOT YOU EXPECT TO ATTEND THE ANNUAL MEETING, YOU ARE URGED TO SIGN,
DATE AND RETURN THE ACCOMPANYING PROXY AS PROMPTLY AS POSSIBLE IN THE ENCLOSED
REPLY ENVELOPE WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES.
<PAGE> 2
GREAT LAKES CHEMICAL CORPORATION
ONE GREAT LAKES BOULEVARD, P.O. BOX 2200, WEST LAFAYETTE, INDIANA 47906-0200
------------------------
PROXY STATEMENT
March 29, 1996
For
Annual Meeting of Stockholders
To be Held on May 2, 1996
------------------------
The enclosed proxy is solicited on behalf of the Board of Directors (the
"Board") of Great Lakes Chemical Corporation (the "Corporation"). It is for use
only at the Annual Meeting of the Stockholders to be held on May 2, 1996, and at
any adjournment thereof.
As of March 4, 1996, the record date of the meeting, 64,499,617 shares of
common stock of the Corporation were outstanding, and each share is entitled to
one vote. Only stockholders of record at the close of business on that date will
be entitled to vote at the meeting.
Any stockholder executing a proxy retains the right to revoke it at any
time prior to its use at the Annual Meeting. A proxy may be revoked by delivery
of written notice of revocation to the Corporate Secretary, by execution and
delivery of a later proxy, or by voting the shares in person at the Annual
Meeting. If not revoked, all shares represented by properly executed proxies
will be voted as specified therein.
The election of directors requires a majority of the shares present (in
person or by proxy) at the meeting and entitled to vote. Accordingly, a vote
which is withheld in the election of a director will have the effect of a vote
against the election of said director. Under the New York Stock Exchange rules,
brokers who hold street name shares can vote in their discretion in the election
of directors. A quorum will exist if the shares present, in person or by proxy,
(including broker non-votes) constitute a majority of the outstanding shares.
PROPOSAL ONE: ELECTION OF DIRECTORS
The Certificate of Incorporation of the Corporation provides that the
number of directors shall be not less than three nor more than eleven, and shall
be divided into three classes of equal size (to the extent possible), with one
class to be elected each year, in rotation, for a term of three years. The Board
is currently comprised of seven members, divided into one class of three
members, and two classes of two members. Unless otherwise instructed, the proxy
holders will vote the proxies received by them for the two nominees, Thomas M.
Fulton and Robert B. McDonald, for three-year terms to expire at the Annual
Meeting in 1999 and until their successors are duly elected and qualified.
Nominees Fulton and McDonald are currently serving as directors and have
consented to serve for the new term. Although the nominees are not expected to
decline or to be unable to serve as directors, in each such event the persons
named in the enclosed proxy will vote for another candidate nominated by the
Board, and discretionary authority to do so is included in the proxy.
Information in the biographies that follow is current as of March 1, 1996.
None of the business organizations, other than Great Lakes Chemical Corporation,
with which the named individuals maintain their principal occupation or
employment is a parent, subsidiary or affiliate of the Corporation.
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<PAGE> 3
NOMINEES TO SERVE UNTIL THE 1999 ANNUAL MEETING
THOMAS M. FULTON Director since 1995. (3), (5)
Mr. Fulton, 62, serves as president and chief executive officer of
Landauer, Inc., a provider of radiation monitoring services. Prior to joining
Landauer in 1978, his career included various management positions at Union
Carbide, BASF, and ICN Pharmaceuticals, Inc. Mr. Fulton also serves on the
boards of the Chicago Theological Seminary, South Suburban Hospital and the
Bethel Community Facility.
ROBERT B. MCDONALD Director since 1994. (3), (4), (5), (6)
Mr. McDonald, 59, was named chief executive officer and president of the
Corporation in 1994. During his 27-year career with Great Lakes, he has served
as assistant to the president; managing director of Great Lakes Chemical
(Europe), Limited; vice president - engineering; senior vice president;
executive vice president; and chief operating officer. He is involved with
several professional organizations, including the Chemical Manufacturers
Association, and serves on Purdue University's Advisory Board for the Institute
of Applied Neurology and the Dean's Advisory Council for the Krannert School of
Management. Mr. McDonald also serves as a director of the Lafayette Life
Insurance Company, is affiliated with the Cystic Fibrosis Foundation, and is
active in local civic and philanthropic organizations.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF THE ABOVE
NOMINEES.
DIRECTORS SERVING UNTIL THE 1998 ANNUAL MEETING
WILLIAM H. CONGLETON Director since 1973. (1), (5), (6)
Mr. Congleton, 74, is a general partner of Palmer Partners L.P., a private
investment partnership. Mr. Congleton also serves as a director of Advanced
Circuit Technology, Inc., as a trustee of the Lahey-Hitchcock Medical
Foundation, and as an overseer of both the Boston Symphony Orchestra and the New
England Conservatory of Music.
JOHN S. DAY Director since 1975. (1), (2), (4), (6)
Dr. Day, 78, is vice president emeritus of Purdue University, having
previously been a Herman C. Krannert Professor of Management. Until 1983, he
served as vice president for Development of Purdue University and until 1979,
served as dean of the Krannert School of Management at Purdue University.
LOUIS E. LATAIF Director since 1995. (1), (2)
Mr. Lataif, 57, is dean of the School of Management at Boston University, a
position he assumed in 1991 after a distinguished 27-year career with Ford Motor
Company which included positions as vice president and general manager of Ford
Division, vice president North American Sales Operations, president of Ford of
Europe, and corporate vice president of Worldwide Quality and Marketing. Dean
Lataif also serves on the boards of Bank Audi USA, Autocraft Industries,
Unitrode Corporation and the Lahey-Hitchcock Clinic.
DIRECTORS SERVING UNTIL THE 1997 ANNUAL MEETING
MARTIN M. HALE Director since 1978. (1), (4), (5), (6)
Mr. Hale, 55, non-executive chairman of the Board, is executive vice
president and director of Hellman Jordan Management Company, Inc., a registered
investment advisor specializing in asset management and a wholly owned
subsidiary of United Asset Management Company. Prior to 1983, he was president
and chief executive officer of Marsh & McLennan Asset Management Company. He
also serves as a director of the Student Conservation Association, chairman of
the Board of Governors of the School of The Museum of Fine Arts, Boston, and as
a trustee of the Museum of Fine Arts.
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<PAGE> 4
RICHARD H. LEET Director since 1994. (2), (3), (4)
Dr. Leet, 69, retired as vice chairman and director of Amoco Corporation in
1991 following a lifelong career with Amoco which included service as president
of Amoco Chemicals Company. Dr. Leet serves as a director of Illinois Tool
Works, Landauer, Inc., and Vulcan Materials Company; vice chairman of the
Foundation Board of The Ohio State University; and as a trustee of Brenau
University, Gainesville, Georgia. He is also currently a member of the Executive
Board of the National Council of The Boy Scouts of America which he led as
president in 1990-1992. Previously he served as chairman of the board of both
The Industrial Health Council and The YMCA of Metropolitan Chicago.
- - -------------------------
(1) Member of the Audit Committee
(2) Member of the Compensation and Incentive Committee
(3) Member of the Environmental Safety and Health Committee
(4) Member of the Executive Committee
(5) Member of the Finance Committee
(6) Member of the Succession Planning Committee
DIRECTORS' COMPENSATION
All directors, except Mr. McDonald, receive an annual retainer of $26,000.
An additional $1,000 is paid annually to directors chairing one or more
committees. The non-executive chairman of the board also receives an annual
retainer of $100,000 in recognition of his expanded responsibilities. All
non-employee directors receive $1,000 per day for attendance at Board or
committee meetings and, with the exception of the chairman, for special
assignments. Non-employee directors also receive $500 per day for participating
in telephone conference meetings of the Board or of its committees. The
Corporation provides each non-employee director with a term life insurance
policy of $50,000 and an accidental death and dismemberment insurance benefit of
$200,000. In addition, each non-employee director serving on the Board for a
minimum of five years is eligible for retirement benefits, with payments
beginning at the later of age 70 or the director's retirement from the Board.
Annual retirement benefits are equal to the amount of the annual retainer in
effect at the time of retirement and are payable for the life of the director
adjusted for length of service. The fees paid to directors are reviewed each
year based on industry surveys of fees paid to directors in similarly sized
industrial and specialty chemical companies.
DIRECTORS' MEETINGS AND COMMITTEES
The Corporation has Audit, Compensation and Incentive, Environmental Safety
and Health, Executive, Finance, and Succession Planning Committees, the members
of which are indicated in a preceding presentation. During 1995, the Board met
six times. Leo H. Johnstone attended fewer than 75 percent of the combined total
number of meetings of the Board and committees on which he served while
contending with illness. Mr. Johnstone retired as a director, effective March 5,
1996. Each of the other directors attended more than 98.5 percent of the
aggregate of the total number of Board and committee meetings he was required to
attend.
The Audit Committee, which met once during 1995, reviews the adequacy of
internal controls and the work of the independent public accountants and
internal auditors, consults with the independent public accountants concerning
the audit report and the related management letter, and makes recommendations to
the Board concerning the selection of independent public accountants.
The Compensation and Incentive Committee, which met six times during 1995,
makes recommendations to the Board with respect to compensation for the
Corporation's executives and administers the Corporation's Employee Stock Option
Plans.
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The Environmental Safety and Health Committee, which met once during 1995,
assesses the Corporation's environmental, safety and health policies and
performance, and makes recommendations to the Board and management regarding
promoting and maintaining standards of performance.
The Executive Committee, which convened once during 1995, is empowered to
act for the Board, with certain restrictions, on behalf of the Corporation.
The Finance Committee, which met once during 1995, and includes officers
Jeffares and Ferguson in addition to board members, reviews the financial
affairs of the Corporation and presents recommendations for action to the Board.
The Succession Planning Committee, which met twice during 1995, monitors
and evaluates the Corporation's management resources, structure, succession
planning, executive development and selection processes; recommends to the Board
criteria for board membership; and identifies candidates for election as a
director. It also considers candidates recommended by stockholders for election
as a director. Any such recommendation should be sent to the Corporate
Secretary.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information with respect to the
Corporation's common stock beneficially owned by: holders of more than five
percent of its common stock; the directors of the Corporation; the executive
officers of the Corporation included in the Summary Compensation Table set forth
under the caption "Executive Compensation and Other Information" who were
employed by the Corporation as of such date; and all directors and executive
officers of the Corporation as a group.
<TABLE>
<CAPTION>
AMOUNT AND NATURE PERCENT OF
NAME AND ADDRESS OF BENEFICIAL COMMON STOCK
OF BENEFICIAL OWNER OWNERSHIP (1)(2)(3)(4) OUTSTANDING
- - ----------------------------------------------------------- ---------------------- ------------
<S> <C> <C>
FMR Corp................................................... 7,175,741 11.1%
Investment Advisor and Related Entities(5)
82 Devonshire Street
Boston, MA 02109
State Farm Mutual Automobile Insurance Company............. 5,492,600 8.5%
and Related Entities(6)
One State Farm Plaza
Bloomington, IL 61710
Robert B. McDonald......................................... 102,772 *
Robert T. Jeffares(7)...................................... 166,488 *
John S. Little(8).......................................... 28,242 *
David A. Hall(9)........................................... 49,478 *
L. Donald Simpson(10)...................................... 24,579 *
Robert L. Hollier(11)...................................... 77,105 *
William H. Congleton(12)................................... 16,000 *
John S. Day(13)............................................ 4,100 *
Thomas M. Fulton........................................... 300 *
Martin M. Hale(14)......................................... 215,348 *
Leo H. Johnstone (15)...................................... 13,900 *
Louis E. Lataif............................................ 2,000 *
Richard H. Leet............................................ 1,000 *
Directors and executive officers as a group................ 933,736 1.4%
</TABLE>
- - -------------------------
* Less than 1%.
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(1) Information concerning persons known to the Corporation to be beneficial
owners of more than 5 percent of its common stock is based upon the most
recently available reports furnished by the companies on Schedule 13G as
filed with the Securities and Exchange Commission.
(2) Information concerning ownership of common stock by directors of the
Corporation, named executives, and directors and executive officers as a
group, as of March 1, 1996.
(3) Unless otherwise indicated, beneficial ownership is direct, and the person
indicated has sole voting and investment power.
(4) Ownership of executive officers includes stock option shares exercisable
within 60 days as disclosed in the table on options exercised and value of
options at end of fiscal year.
(5) Each of the following FMR Corp. entities has reported sole voting power to
vote or to redirect the vote of 289,587 shares, and sole disposition power
or power to redirect the disposition of 7,175,741 shares: Fidelity
Management & Research Company reported 6,773,454 shares; Fidelity
Management Trust Company reported 387,887 shares; and Fidelity
International Limited reported 14,400 shares. Fidelity Management &
Research Company and Fidelity Management Trust Company are both wholly
owned subsidiaries of FMR Corp. Fidelity International Limited operates as
an independent entity.
(6) Each of the following State Farm entities has reported sole voting power
and sole disposition power, and disclaims "beneficial ownership" as to all
shares as to which each has no right to receive the proceeds of sale of the
security and disclaims that it is part of a group: State Farm Mutual
Automobile Insurance Company reported 3,484,800 shares; State Farm Life
Insurance Company has 53,000 shares; State Farm Investment Management
Corporation has 897,300 shares; and State Farm Employees Incentive and
Thrift Plan reported 1,057,500 shares. State Farm Life Insurance Company is
a wholly owned subsidiary of State Farm Mutual Automobile Insurance
Company. State Farm Investment Management Corporation is a wholly owned
subsidiary of State Farm Fire and Casualty Company, which in turn is a
wholly owned subsidiary of State Farm Mutual Automobile Insurance Company.
(7) Includes 155 shares held indirectly by Mr. Jeffares in the Corporation's
401(k) plan, 4,966 shares through spousal ownership, and 200 shares owned
by his stepchildren, for which he disclaims beneficial ownership.
(8) Includes 236 shares held indirectly by Dr. Little in the Corporation's
401(k) plan.
(9) Includes 400 shares held by Mr. Hall's minor children in Universal Gifts to
Minors Trusts in which Mr. Hall disclaims any beneficial ownership, and 828
shares held indirectly by Mr. Hall through the Corporation's 401(k) plan.
(10) Includes 768 shares held indirectly by Mr. Simpson through the
Corporation's 401(k) and supplemental savings plans, and 2,000 shares
through spousal ownership.
(11) Includes 1,366 shares held indirectly by Mr. Hollier through the
Corporation's 401(k) and supplemental savings plans.
(12) Includes 4,400 shares held indirectly by Mr. Congleton through a trust for
Mr. Congleton's grandchildren. Mr. Congleton disclaims beneficial ownership
of these shares.
(13) Includes 1,400 shares owned indirectly by Dr. Day's wife.
(14) Includes 190,840 shares held by Mr. Hale as co-trustee, and 1,000 shares
held by his wife as trustee for his children. Mr. Hale disclaims beneficial
ownership of these 191,840 shares.
(15) Includes 13,900 shares held indirectly by Mr. Johnstone as co-trustee of a
family limited partnership. Mr. Johnstone retired on March 5, 1996.
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EXECUTIVE COMPENSATION AND OTHER INFORMATION
SUMMARY COMPENSATION TABLE
The following table sets forth certain information regarding compensation
paid during each of the Corporation's last three years to Robert B. McDonald,
who served as chief executive officer and president of the Corporation during
1995, and to each of the Corporation's four other most highly compensated
executive officers and John S. Little, who served as an executive officer for
part of 1995 ("Named Officers").
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
AWARDS
------------
ANNUAL COMPENSATION (1) SECURITIES
-------------------------- ALL UNDERLYING ALL OTHER
NAME AND PRINCIPAL SALARY BONUS OTHER ANNUAL OPTIONS/ COMPENSATION
POSITION YEAR ($) ($) COMPENSATION ($)(2) SARS(#)(3) ($)(4)
- - -------------------------- ---- -------- -------- ------------------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Robert B. McDonald (5).... 1995 $608,846 $325,000 57,500 $ 7,961
president and chief 1994 350,900 250,000 10,000 1,125
executive officer 1993 253,031 95,000 7,000 2,358
Robert T. Jeffares........ 1995 376,769 142,000 19,500 4,523
executive vice president 1994 319,500 115,000 12,000 1,125
and chief financial 1993 261,115 105,000 10,000 2,358
officer
L. Donald Simpson......... 1995 267,861 146,000 10,400 1,850
vice president 1994 228,592 70,000 4,000 1,125
1993 210,662 35,000 4,000 1,123
David A. Hall............. 1995 292,577 86,000 13,000 2,457
senior vice president 1994 254,115 75,000 10,000 1,125
1993 217,615 90,000 8,000 2,358
John S. Little (6)........ 1995 337,577 29,000 $ 137,110 13,000 2,520
1994 282,808 95,000 138,590 11,000 1,125
Robert L. Hollier (7)..... 1995 262,500 67,000 9,750 2,417
vice president 1994 250,000 52,000 7,500 8,427
1993 223,517 60,000 7,000 18,134
</TABLE>
- - -------------------------
(1) The Corporation has a deferred compensation plan whereby certain named
executives can defer salary and bonus payments. For 1995, Mr. Simpson
deferred $110,000; Mr. Hall deferred $96,015; Dr. Little deferred $126,758;
and Mr. Hollier deferred $52,000.
(2) None of the executives listed other than Dr. Little received perquisites or
other personal benefits that exceeded the lesser of $50,000, or 10 percent
of the salary and bonus for such executive.
(3) Options to acquire shares of common stock. There were no restricted stock
option grants and the Corporation does not have a long-term incentive plan
(LTIP).
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(4) Includes employer matching contributions on behalf of Messrs. McDonald,
Jeffares, Simpson, Hall, Little and Hollier under the Corporation's 401(k)
and supplemental savings plans.
(5) Mr. McDonald assumed the position of chief executive officer and president
in 1994.
(6) Dr. Little served as a senior vice president of the Corporation until June
30, 1995. As a foreign service employee, Dr. Little was provided with
certain additional compensation, including $137,110 and $138,590 for 1995
and 1994, respectively, for taxes in excess of those that he would have
incurred in the United States, his base country.
(7) All Other Compensation includes employer matching contributions on behalf of
Mr. Hollier in the amount of $1,995 for 1995, $1,125 for 1994, and $2,358
for 1993 under the Corporation's 401(k) and supplemental savings plans. As
an employee of OSCA, Inc., a wholly owned subsidiary of the Corporation,
Mr. Hollier does not participate in the Great Lakes Chemical Pension Plan.
OSCA employees participate in a defined contribution plan. OSCA contributed
$7,679, $7,302, and $15,776 to this plan on behalf of Mr. Hollier in 1995,
1994, and 1993, respectively.
STOCK OPTION PLANS
The Corporation has two stock option plans which provide for grants of
options to key employees. Plan provisions allow grants of incentive stock
options, non-qualified stock options or other stock-based awards with terms not
to exceed 10 years, at an option price not less than the market value of the
Corporation's shares on the date of grant.
OPTION GRANTS DURING 1995 FISCAL YEAR
The following table provides information related to options granted to the
named executive officers during the year 1995:
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE VALUE
NUMBER OF % OF TOTAL AT ASSUMED ANNUAL RATES
SECURITIES OPTIONS/SARS OF STOCK PRICE APPRECIATION
UNDERLYING GRANTED TO EXERCISE OR FOR OPTION TERM(3)
OPTIONS/SARS EMPLOYEES IN BASE PRICE EXPIRATION ---------------------------
NAME GRANTED(1) 1995 ($/SH)(2) DATE 5%($) 10%($)
- - --------------------------- ------------ ------------ -------------- ---------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Robert B. McDonald......... 57,500 18.6% $ 59.625 2/19/05 $2,159,916 $5,451,216
Robert T. Jeffares......... 19,500 6.3% 59.625 2/19/05 732,493 1,848,673
L. Donald Simpson.......... 10,400 3.4% 59.625 2/19/05 390,663 985,959
David A. Hall.............. 13,000 4.2% 59.625 2/19/05 488,329 1,232,449
John S. Little............. 13,000 4.2% 59.625 2/19/05 488,329 1,232,449
Robert L. Hollier.......... 9,750 3.2% 59.625 2/19/05 366,247 924,337
Increase in Market Value to
Common Stockholders(4)... $2.5 Billion $6.2 Billion
</TABLE>
- - -------------------------
(1) All options were granted pursuant to the 1993 Employee Stock Compensation
Plan and have a term of 10 years. Each named executive officer received only
a single grant in 1995. These grants are exercisable in cumulative 33
percent installments commencing no less than one year from the date of
grant, with full vesting occurring by the fifth anniversary date or on the
retirement of an employee over 62 years of age. For additional information
regarding options, see "Employment and Change-of-Control Agreements."
(2) The option exercise price may be paid in shares of common stock owned by the
executive officer, in cash, or in a combination of the foregoing.
(3) The potential realizable value portion of the foregoing table indicates the
value that might be realized upon exercise of options immediately prior to
the expiration of their term, assuming the specified amount of compounded
rates of appreciation on the Corporation's common stock over the term of the
options.
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(4) Without an appreciation in the stock price, which will also benefit all
stockholders, the optionees will not realize any gain. Calculated by using a
common stock price of $59.625, the average shares outstanding for 1995, and
assuming 5 and 10 percent compounded growth rates, the increase in market
value to common stockholders is shown for comparative purposes only. It is
not a prediction of future stock performance.
OPTION EXERCISES IN FISCAL YEAR 1995 AND VALUE OF OPTIONS AT DECEMBER 31, 1995
The following table provides information related to options exercised by
the named executive officers during the 1995 fiscal year and the number and
value of options held at the fiscal year-end. The Corporation has not issued any
stock appreciation rights.
OPTION EXERCISES IN FISCAL YEAR 1995 AND VALUE OF OPTIONS AT END OF FISCAL YEAR
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
OPTIONS AT OPTIONS AT
SHARES DECEMBER 31, 1995 (#) DECEMBER 31, 1995 ($)(1)
ACQUIRED ON VALUE ---------------------------- ----------------------------
NAME EXERCISE (#) REALIZED ($)(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- - --------------------- ------------ --------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Robert B. McDonald... -- -- 57,960 66,500 $ 2,031,450 $ 711,563
Robert T. Jeffares... -- -- 117,666 30,834 5,351,375 241,313
L. Donald Simpson.... -- -- 14,001 14,399 53,750 128,700
David A. Hall........ -- -- 36,104 22,332 897,259 160,875
John S. Little....... -- -- 17,672 23,666 147,721 164,875
Robert L. Hollier.... 4,000 $ 200,000 64,166 17,084 2,609,250 120,559
</TABLE>
- - -------------------------
(1) Value based on market value of the Corporation's common stock at date of
exercise or end of fiscal year minus the exercise price multiplied by the
number of shares to which the exercise relates.
PENSION PLAN
The Corporation has a non-contributory defined benefit pension plan
covering substantially all U.S. employees. The Corporation also has
non-qualified supplemental retirement plans ("SERPs"). These SERPs provide for
benefits which, except for the application of the limits of Section 415 and
Section 401(a)(17) of the Internal Revenue Code, would have been payable to
employees under the pension plan, and gives an employee approximately the same
retirement benefits he would have received had he been with the Corporation 35
years at the time of his retirement. The retirement benefits are computed using
the average of the compensation for the highest three consecutive years.
Payments under the SERPs will be paid by the Corporation out of its general
assets. The table below shows the estimated annual straight life annuity
benefits payable to participants of both the defined benefit plan and SERPs upon
retirement at age 65. The benefits indicated in the table reflect a reduction
for Social Security benefits, as provided in the plan benefit formula.
The following table shows the estimated annual benefits payable upon normal
retirement under the pension plan as augmented by SERPs.
<TABLE>
<CAPTION>
ESTIMATED ANNUAL BENEFITS
NUMBER OF YEARS OF SERVICE
--------------------------------------------
ANNUAL COMPENSATION 15 20 25 30
- - ---------------------------------------------------- -------- -------- -------- --------
<S> <C> <C> <C> <C>
$ 200,000........................................... $ 46,811 $ 62,415 $ 78,019 $ 93,623
300,000.......................................... 71,561 95,415 119,269 143,123
400,000.......................................... 96,311 128,415 160,519 192,623
500,000.......................................... 121,061 161,415 201,769 242,123
600,000.......................................... 145,811 194,415 243,019 291,623
700,000.......................................... 170,561 227,415 284,269 341,123
800,000.......................................... 195,311 260,415 325,519 390,623
900,000.......................................... 220,061 293,415 366,769 440,123
</TABLE>
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Annual compensation covered by the plan is defined as gross pay which is
essentially identical to the total salary and bonus compensation reported for
the six named individuals listed in the Summary Compensation Table. Credited
years of service under the plans as of December 31, 1995, were: Mr. McDonald,
27; Mr. Jeffares, 12; Dr. Little, 14; Mr. Hall, 12; and Mr. Simpson, 4. Mr.
Hollier is not a participant in the Corporation's pension plan.
SAVINGS PLANS
Substantially all U.S. employees of the Corporation are eligible to
participate, upon employment, in the Great Lakes Savings Plan [401(k)].
Employees may elect to contribute up to 15 percent of their pay into the plan,
subject to certain limits prescribed by Section 402 (g) of the Internal Revenue
Code. The Corporation makes a matching contribution of $.50 for each dollar of
an employee's contribution of the first two percent of pay. An additional
matching contribution of $.50 for each dollar that an employee contributes on
the next two percent of pay is made if the Corporation's after-tax profits for
the year exceed 130 percent of the annual average after-tax profits for the two
preceding years. Employees determine how their salary deferrals and matching
contributions are invested by selecting from several investment options,
including the Corporation's common stock. All deferrals and contributions are
placed in individual accounts and held in trust.
A non-qualified supplemental savings plan provides participants with the
benefits which, except for the limitations of OBRA '93, they would have received
under the Great Lakes Savings Plan, as amended. Payments under this supplemental
plan are paid by the Corporation out of its general assets.
EMPLOYMENT AND CHANGE-IN-CONTROL AGREEMENTS
The Corporation recognizes that establishing and maintaining a strong
management team is essential to protecting and enhancing the interests of the
Corporation and its stockholders. In order to ensure management stability and
the continuity of key management personnel, the Corporation has entered into
agreements with each of the named individuals in the Summary Compensation Table
and with other executive officers of the Corporation. The material terms and
conditions of these agreements provide that if, following a Change-in-Control of
the Corporation, the Corporation or a successor terminates the employment of any
covered executive officer other than for cause or disability, or any such
executive officer terminates his employment with the Corporation for good
reason, then such executive officer will, with certain limitations, receive a
payment equal to three times the sum of his then annual salary and the highest
annual bonus paid or awarded to him in the year in which such termination occurs
or either of the two full calendar years immediately preceding the year of
termination. In addition, all stock options issued to such executive officer
will become immediately exercisable. The Corporation will also continue the
participation of such executive officer in the Corporation's or a successor's
life, disability, health and other benefit plans (or provide equivalent
benefits) for a maximum period of three years after termination. These
agreements may be terminated by the Corporation at any time except in the event
there is a Change-in-Control of the Corporation.
REPORT OF THE COMPENSATION AND INCENTIVE COMMITTEE
OF THE BOARD OF DIRECTORS ON EXECUTIVE COMPENSATION
The Compensation and Incentive Committee (the "Committee") of the Board is
responsible for approving and administering the programs which compensate the
executive officers of the Corporation. The Committee, comprised of four
independent non-employee directors, recognizes that the Corporation's future
success depends upon attracting and retaining superior performance-oriented key
executives, and it is committed to maintaining a strong, positive link between
business performance, strategic goals and employee compensation and benefit
programs.
All compensation programs are approved by the Committee which also reviews
corporate and individual performance in conjunction with the full Board. The
Committee administers and grants awards under all executive compensation plans
and ensures that compensation levels are externally competitive and internally
equitable. It is responsible for approving the overall compensation of the chief
executive officer and other key
9
<PAGE> 11
executives and providing them with the opportunity to earn total compensation
commensurate with their contributions to the success of the Corporation.
COMPENSATION COMPONENTS
Corporate and individual performances are recognized through both short-
and long-term incentive compensation plans designed to align and satisfy the
interests of executives and stockholders. The total compensation program
consists of three components: base salary, which reflects the executive's level
of responsibility and individual performance; annual incentive compensation
awards in the form of cash bonuses, which reflect both corporate and individual
performance; and long-term incentive compensation in the form of stock options,
which create value only if the price of the Corporation's shares appreciates.
The latter two components provide at-risk compensation which is linked directly
to business results and stockholder returns. The Committee considers all
elements of compensation when determining an individual's total compensation.
BASE SALARIES
Each year the Committee reviews the base salary of the chief executive
officer and, in consultation with the chief executive officer, reviews the base
salaries of corporate officers. When evaluating the base salaries of the
executive officers, the Committee considers level and scope of responsibility,
experience, corporate and business unit performance and individual performance.
In addition, the Committee reviews various compensation surveys of similarly
sized industrial and specialty chemical companies to help establish competitive
base pay and total compensation. The specialty chemical compensation surveys are
prepared by consultants using information available to them and includes
primarily the same companies that are included in the following performance
graph.
ANNUAL AWARDS (BONUSES)
The purpose of the Corporation's Management Incentive Compensation Plan is
to provide incentive compensation in the form of cash bonuses to those
management employees who have a broad impact on performance. The plan which
includes executive officers, managers and other selected key employees provides
additional incentive for superior performance. The awards granted under the 1995
Management Incentive Compensation Plan were based on the degree of success in
achieving individual, as well as pre-determined corporate and business unit
goals. The corporate goal for 1995 was based on pre-tax earnings per share and
business unit goals were based on operating income.
LONG-TERM INCENTIVE COMPENSATION (STOCK OPTIONS)
Long-term incentive compensation is comprised of annual grants of stock
options which are designed to encourage key employees to remain with the
Corporation by providing them with a long-term interest in the Corporation's
overall performance and to motivate them to maximize long-term stockholder
value. Stock options are generally granted annually and cannot be exercised for
at least one year from the date of grant. Options expire after ten years.
A Stock Option Grant Guideline provides clear and consistent guidance for
the granting of stock options and direction on participation eligibility,
administration of the program, the timing of option grants and the size of
grants. Stock option awards are based on corporate and individual performance.
The grant ranges were developed based on competitive surveys. The Committee does
not take into consideration options already outstanding in determining the
number of stock options granted to a particular employee in any year.
CHIEF EXECUTIVE COMPENSATION
Consistent with all other executive officers, the chief executive's
compensation was based on a combination of individual performance and overall
corporate performance. Mr. McDonald's total compensation includes base salary,
incentive compensation and stock options.
10
<PAGE> 12
In 1995, Mr. McDonald's base compensation was increased to $625,000. The
Committee considers Mr. McDonald's leadership to be instrumental to the
continued success of the Corporation, and that his compensation is merited by
his performance and contributions. Based on the criteria established in the 1995
Management Incentive Compensation Plan for targeted earnings and individual
performance, Mr. McDonald was granted a bonus of $325,000 on February 20, 1996.
An option to purchase 57,500 shares of the Corporation's common stock was
granted to Mr. McDonald on February 20, 1995, based on achievement of corporate
and individual goals established for the 1995 Stock Option Grant Guidelines.
This option was granted at an exercise price equal to the fair market value of
the common stock on the date of grant and has a term of ten years with a
three-year vesting schedule.
DEDUCTIBILITY OF COMPENSATION
The Committee considered the effect of the Revenue Reconciliation Act of
1993 on executive compensation. None of the Corporation's officers received
covered compensation in excess of $1 million dollars in 1995. The Committee will
continue to review the deductibility of the Corporation's compensation programs
on a year-by-year basis.
SUMMARY
The strong leadership provided by the Corporation's senior executives has
positioned the Corporation for further expansion into global markets and will
enable it to capitalize on the opportunities that lie ahead. The Committee
believes that the objectives of the Corporation's executive compensation
programs closely align the long-term interests of the Corporation and are
consistent with those of other companies in its peer group.
This report is submitted by the members of the Compensation and Incentive
Committee.
Compensation and Incentive Committee
John S. Day
Leo H. Johnstone
Louis E. Lataif
Richard H. Leet
COMPENSATION COMMITTEE
INTERLOCKS AND INSIDER PARTICIPATION
The Compensation and Incentive Committee is composed of four members, none
of whom is or has been a former employee of the Corporation, and there are no
Compensation and Incentive Committee interlocks.
11
<PAGE> 13
STOCK PRICE PERFORMANCE GRAPH
The graph below compares the cumulative total return to stockholders on the
common stock of the Corporation for the last five years to the cumulative total
return on the S&P 500 Composite and S&P Specialty Chemical Indices over the same
period.
GREAT LAKES CHEMICAL CORPORATION VS. S&P EQUITY INDICES
TOTAL RETURN TO STOCKHOLDERS OVER FIVE YEARS
<TABLE>
<CAPTION>
Value of $100 Investment Made December 31, 1990**
-------------------------------------------------------------------------
12/31/90 12/31/91 12/31/92 12/31/93 12/31/94 12/31/95
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
S&P 500 Composite Index $100.00 130.47 140.41 154.56 156.60 215.45
S&P Chemicals (Specialty) Index $100.00 141.17 149.56 170.53 148.87 195.67
Great Lakes Chemical Corporation [GLK] $100.00 180.49 219.61 237.79 182.82 232.49
</TABLE>
**Year-end Total Return to Stockholders with dividends reinvested and no
purchase commissions.
12
<PAGE> 14
SECTION 16 (a) REQUIREMENTS
Section 16 (a) of the Securities Exchange Act of 1934, as amended, requires
the Corporation's directors and officers, and persons who own more than 10
percent of a registered class of the Corporation's equity securities, to file
initial reports of ownership and reports of changes in ownership of the
Corporation's equity securities with the Securities and Exchange Commission (the
"SEC") and the New York Stock Exchange. Such persons are required by SEC
regulations to furnish the Corporation with copies of all Section 16 (a) forms
they file.
Based upon a review of the copies of the forms furnished to the
Corporation, and written representations from certain reporting persons that no
Forms 5 were required, the Corporation believes that during the fiscal 1995 year
all filing requirements applicable to its officers and directors were met with
the exception of an initial ownership report, Form 3, which was filed late by
Mr. Fulton.
INFORMATION RESPECTING THE CORPORATION'S
INDEPENDENT PUBLIC ACCOUNTANTS
The principal independent public accountants of the Corporation, selected
by the Board for 1996, are Ernst & Young LLP, Indianapolis, Indiana.
Representatives of Ernst & Young LLP are expected to be present at the Annual
Meeting of Stockholders, and will have the opportunity to make a statement if
they should desire to do so. They are also expected to be available to respond
to appropriate questions.
STOCKHOLDER PROPOSALS AND DIRECTOR NOMINATIONS
FOR THE 1997 ANNUAL MEETING
The Corporation anticipates holding its 1997 Annual Meeting of Stockholders
on Thursday, May 1, 1997.
Under the regulations of the Securities and Exchange Commission, any
stockholder desiring to make a proposal to be acted upon at the 1997 Annual
Meeting of Stockholders must present such proposal to the Secretary of the
Corporation at its principal office in West Lafayette, Indiana, not later than
November 30, 1996, in order for the proposal to be considered for inclusion in
the Corporation's proxy statement.
Stockholder proposals or director nominations not included in a proxy
statement for an annual meeting must comply with the advance notice procedures
and information requirements set forth in the Bylaws of the Corporation in order
to be properly brought before that Annual Meeting of Stockholders.
OTHER MATTERS
As of the date of this proxy statement, management is not aware of any
matters to be presented at the meeting other than the matters specifically
stated in the Notice of Meeting and discussed in the proxy statement. If any
other matter or matters are properly brought before the meeting, the persons
named in the enclosed proxy have discretionary authority to vote the proxy on
each such matter in accordance with their judgment.
The cost of preparing, assembling, and mailing the proxy material and of
reimbursing brokers or other persons holding stock in their names or in the
names of their nominees for their expenses in sending proxies and proxy material
to the beneficial owners will be borne by the Corporation. Solicitations may
further be made by officers and regular employees of the Corporation, without
additional compensation, by use of the mails, telephone, facsimile, or personal
calls.
By order of the Board of Directors,
MARY P. MCCLANAHAN
Secretary
March 29, 1996
PLEASE SIGN, DATE AND RETURN YOUR PROXY CARD
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<PAGE> 15
PROXY PROXY
1996 1996
GREAT LAKES CHEMICAL CORPORATION
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints ROBERT B. MCDONALD, ROBERT T. JEFFARES,
AND MARY P. MCCLANAHAN, and each of them with full power of substitution, as
the proxy of the undersigned, to attend the Annual Meeting of Stockholders to
be held on Thursday, May 2, 1996, at 11:00 a.m. and any adjournment thereof,
and to vote the stock the undersigned would be entitled to vote, if present, on
the items listed on the reverse side of this proxy card.
THIS PROXY WILL BE VOTED AS SPECIFIED; OR IF NO CHOICE IS SPECIFIED,
IT WILL BE VOTED FOR BOTH NOMINEES FOR DIRECTORS.
/ /Mark here for address change
- - -------------------------------
NEW ADDRESS
- - -------------------------------
- - ------------------------------- (PLEASE SIGN ON THE REVERSE SIDE)
<PAGE> 16
GREAT LAKES CHEMICAL CORPORATION
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY. /x/
<TABLE>
<S> <C>
1996 The board recommends a VOTE FOR ITEM 1 For All
P For Withheld Except Nominee Exception
R 1.Election of Director Nominees: Thomas M. Fulton / / / /
O and Robert B. McDonald ---------------------------------
X
Y 2.In their discretion, the Proxies are authorized For Against Abstain
to vote upon any other matter which may properly / / / / / /
come before the meeting.
,1996
-----------------------------------------------
Signature Date
,1996
-----------------------------------------------
Signature Date
Please sign exactly as your name appears. Joint
owners should each sign personally. Where
applicable, indicate your official position or
representation capacity.
</TABLE>
STOCKHOLDERS ARE URGED TO MARK, DATE, SIGN AND RETURN THIS PROXY PROMPTLY USING
THE ENCLOSED ENVELOPE. NO POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES.
