<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
[X] Definitive Proxy Statement RULE 14C-5(D)(2))
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S)240.14a-11(c) or (S)240.14a-12
M.A.HannaCompany
------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
M.A.HannaCompany
------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
[_] $500 per each party to the controversy pursuant to Exchange Act Rule 14a-
6(i)(3).
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
Notes:
<PAGE>
[LOGO of M. A. HANNA COMPANY]
SUITE 36-5000, 200 PUBLIC SQUARE, CLEVELAND, OHIO 44114-2304
To Our Stockholders:
On behalf of the Board of Directors and management, I
cordially invite you to attend the 1995 annual meeting of
stockholders of the Company to be held on Wednesday, May 3,
1995, at 10:30 A.M. at the Forum Conference Center Auditorium,
1375 East Ninth Street, Cleveland, Ohio.
At the meeting, in addition to considering and acting on the
matters described in the Proxy Statement, there will be a
management report. Following the report, there will be an
opportunity for stockholders to ask questions about the
Company and its operations.
If you will need special assistance at the meeting because
of a disability, please contact the office of the Corporate
Secretary at the above address.
Whether or not you currently plan to attend the meeting, it
is important that you exercise your right to vote. Please
sign, date and return the proxy card promptly.
I look forward to seeing you on May 3.
Sincerely,
/s/ M. D. Walker
M. D. Walker
Chairman
<PAGE>
[LOGO OF M. A. HANNA COMPANY]
SUITE 36-5000, 200 PUBLIC SQUARE
CLEVELAND, OHIO 44114-2304
NOTICE OF ANNUAL MEETING
The annual meeting of stockholders of M. A. Hanna Company
will be held on Wednesday, May 3, 1995 at 10:30 A.M. at the
Forum Conference Center Auditorium, 1375 East Ninth Street,
Cleveland, Ohio, for the following purposes:
(1) Electing nine directors for the ensuing year;
(2) Ratifying the appointment of auditors;
(3) Ratifying and approving the Voluntary Non-Qualified
Deferred Compensation Plan;
(4) Ratifying and approving amendments to the Directors'
Deferred Fee Plan; and
(5) Transacting such other business as may properly come
before the meeting.
The Board of Directors has fixed the close of business on
March 6, 1995, as the record date for the determination of
stockholders entitled to notice of, and to vote at, the
meeting or any adjournment thereof.
John S. Pyke, Jr.
Vice President, General Counsel and Secretary
March 20, 1995
PLEASE FILL OUT, SIGN AND MAIL THE ENCLOSED FORM OF PROXY IF
YOU DO NOT EXPECT TO BE PRESENT AT THE ANNUAL MEETING. A SELF-
ADDRESSED ENVELOPE IS ENCLOSED FOR YOUR CONVENIENCE. NO
POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES.
<PAGE>
PROXY STATEMENT
This statement is furnished in connection with the solicitation by the Board
of Directors of M. A. Hanna Company of proxies to be used at the annual
meeting of stockholders of the Company to be held on Wednesday, May 3, 1995.
The meeting will be held at the Forum Conference Center Auditorium, 1375 East
Ninth Street, Cleveland, Ohio.
If the accompanying form of proxy is properly executed and returned, the
shares represented by it will be voted and, where a specification is made by
the stockholder, as provided therein, will be voted in accordance with such
specification. If no such specification is made, the shares will be voted in
accordance with the recommendations of the Company's management. The proxy
may, nevertheless, be revoked prior to its exercise by delivering written
notice of revocation to the Company, by executing a later dated proxy or by
attending the meeting and voting in person. For stockholders participating in
the Company's Dividend Reinvestment and Stock Purchase Plan, the administering
bank will only vote the shares that it holds for the participant's account in
accordance with the proxy returned by the participant and the procedures set
forth above. If a proxy is not returned or returned unsigned, none of the
shares represented by that proxy, whether held in the Dividend Reinvestment
and Stock Purchase Plan or otherwise, will be voted.
At the annual meeting, the results of stockholder voting will be tabulated
by the inspectors of election appointed for the annual meeting. The Company
intends to treat properly executed proxies that are marked "abstain" or that
are held in "street name" by brokers and are not voted on one or more
particular proposals (if otherwise voted on at least one proposal) as
"present" for purposes of determining whether a quorum has been achieved at
the annual meeting. Directors will be elected by a plurality vote. Votes
withheld in respect of the election of directors will not be counted in
determining the outcome of that vote. In respect of the proposals to ratify
the appointment of independent public accountants and ratify and approve the
Voluntary Non-Qualified Deferred Compensation Plan and amendments to the
Directors' Deferred Fee Plan, abstentions will be treated as votes against the
proposal and broker non-votes will be treated as having no effect on the
outcome of the vote.
At the close of business on March 6, 1995 the record date for the annual
meeting, the Company had outstanding and entitled to vote 35,687,183 shares of
Common Stock. Each share of Common Stock is entitled one vote on each matter
brought before the meeting.
The Company has retained Georgeson & Co. Inc., a proxy solicitation firm,
for a fee of $8,000 plus reimbursement of normal expenses, to assist employees
of the Company in the solicitation of proxies by personal interview, telephone
and other means. The cost of solicitation of proxies will be borne by the
Company.
The Notice of Annual Meeting, Proxy Statement and form of proxy are first
being mailed to stockholders on approximately March 20, 1994. The Annual
Report of the Company for the year ended December 31, 1994 was first mailed to
stockholders on February 24, 1995, but the Annual Report is not deemed to be
part of this Proxy Statement.
At the annual meeting of stockholders of the Company held on May 4, 1994,
approximately 86% of the then outstanding shares were present at the meeting
and voting.
1. ELECTION OF DIRECTORS
The Board has nominated for re-election to the Board at the 1995 annual
meeting the nine incumbent Directors, all of whom were elected at the 1994
annual meeting of stockholders.
It is intended that shares represented by the proxies in the accompanying
form will be voted for the election of the nine nominees listed below to serve
as directors for a term of one year and until their successors are elected and
qualified. If any nominee should be unable or unwilling to serve as a
director, which the Board of Directors does not anticipate, the proxies will
be voted for such other person as the Board of Directors may select or the
size of the Board may be reduced accordingly.
1
<PAGE>
The following table lists information as of January 31, 1995 as to each
nominee for director, his or her principal occupation or employment and
certain other directorships. Except as otherwise indicated each nominee has
had the same principal occupation or employment during the past five years.
<TABLE>
<CAPTION>
NOMINEE FOR DIRECTOR PRINCIPAL OCCUPATION AND OTHER DIRECTORSHIPS
- --------------------- --------------------------------------------
<S> <C>
B. C. AMES Partner, Clayton, Dubilier & Rice (investment bankers), May, 1990 to
Director since 1980 date. Chairman and Chief Executive Officer, The Uniroyal Goodrich
Age -- 69 Tire Company 1988 to May, 1990. Director of Diamond Shamrock R&M,
Inc., The Progressive Corporation and Warner-Lambert Company.
C. A. CARTWRIGHT President, Kent State University (public higher education
Ph.D. institution), 1991 to date. Vice Chancellor for Academic Affairs,
Director since 1994 University of California-Davis, 1988-1991. Director of Ohio Edison
Age -- 53 Company, Society National Bank and Republic Engineered Steels, Inc.
and Director of the American Cancer Society, American Association for
Higher Education and American Council on Education.
W. R. EMBRY Executive Vice President and General Manager, The Cleveland Cavaliers
Director since 1990 (professional basketball team), 1986 to date. Chairman of the Board
Age -- 57 of Michael Alan Lewis Company (supplier to automotive industry).
Director of Centerior Energy Corporation, Ohio Casualty Insurance
Company and Society National Bank.
J. T. EYTON, Chairman, Brascan Limited (natural resources, power generation and
O.C. financial services). Member of the Senate of Canada. Director of
Director since 1986 Brascan Limited, Edper Enterprises Ltd., Hees International Bancorp
Age -- 60 Inc., Noranda Inc. and Norcen Energy Resources Limited.
G. D. KIRKMAN Retired Senior Vice President, Kemper Securities Inc. (stockbrokers).
Director since 1975
Age -- 62
M. L. MANN Chairman and Chief Executive Officer, Lexmark International, Inc.
Director since 1991 (office machines), March 1991 to date. Vice President of
Age -- 61 International Business Machines Corporation ("IBM") and President and
General Manager of various IBM divisions and subsidiaries 1985-March
1991. Director of Infomart, a Trammell Crow Co., and member of the
Independent Board of Trustees, Fidelity Investments.
D. J. McGREGOR President and Chief Operating Officer of Hanna, May 3, 1989 to date.
Director since 1990 Director of Society Bank Corporation and Vulcan Materials
Age -- 54 Corporation.
R. W. POGUE Senior Advisor, Dix & Eaton (public relations firm), July 1, 1994 to
Director since 1988 date; Senior Partner, Jones, Day, Reavis & Pogue (attorneys) January
Age -- 66 1, 1993 to June 30, 1994; Managing Partner, 1989-1992. Director of
Continental Airlines, Derlan Industries Limited, KeyCorp, OHM
Corporation, Redland PLC, Rotek Incorporated, and TRW Inc.
M. D. WALKER Chairman and Chief Executive Officer of Hanna, September 1986 to
Director since 1986 date. Director of Comerica Inc., The Reynolds and Reynolds Company
Age -- 62 and Textron Inc.
</TABLE>
2
<PAGE>
The following table sets forth information as to the beneficial ownership of
the Company's Common Stock on January 31, 1995 by each director-nominee, the
chief executive officer and the four other most highly compensated executive
officers and, as a group, the foregoing persons and other executive officers.
Except as indicated in the footnotes, the director-nominees have sole voting
and investment power over the shares listed.
<TABLE>
<CAPTION>
SHARES PERCENT OF
BENEFICIALLY OUTSTANDING
NAME OWNED SHARES
---- ------------ -----------
<S> <C> <C>
B. C. Ames................................... 27,137(1) *
C. A. Cartwright............................. 0 *
W. R. Embry.................................. 16,150(1) *
J. T. Eyton.................................. 18,045(1) *
G. D. Kirkham................................ 25,800(1)(2) *
M. L. Mann................................... 20,000(1) *
D. J. McGregor............................... 243,603(3) *
R. W. Pogue.................................. 27,000(1) *
M. D. Walker................................. 496,516(3)(4) 1.4%
G. W. Henry.................................. 59,265(3) *
J. S. Pyke, Jr............................... 86,271(3) *
D. R. Schrank................................ 27,612(3) *
All directors and executive officers
as a group................................... 1,149,886(3) 3.2%
</TABLE>
* The shares beneficially owned amount to less than one percent of the
outstanding shares of the Company's Common Stock.
(1) Includes 15,000 shares which may be acquired within 60 days through the
exercise of stock options granted under the Company's 1988 Long-Term
Incentive Plan.
(2) Includes 10,800 shares as to which Mr. Kirkham has shared investment and
voting power; the shares owned by a trust for which he serves as a co-
trustee; Mr. Kirkham disclaims any beneficial interest in such shares.
(3) Includes shares which may be acquired within 60 days through the exercise
of stock options as follows: 169,800, 277,875, 39,188, 62,625, 19,000 and
754,052 shares for Messrs. McGregor, Walker, Henry, Pyke, Schrank and the
group, respectively.
(4) Includes 37,500 shares owned by Mr. Walker's wife; Mr. Walker disclaims
any beneficial interest in such shares.
3
<PAGE>
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors held 9 meetings in 1994. All director-nominees
attended at least seventy-five percent of the meetings of the Board and
committees of the Board on which each served except for Mr. Eyton.
In addition to meeting as a group to review the Company's business, certain
members of the Board of Directors also devote their time and talents to the
Board's five standing committees. The committees and their principal functions
are as follows:
The Audit Committee, composed of directors who are not employees of the
Company, held 4 meetings in 1994 with the Company's Vice President and Chief
Financial Officer, Controller, Director of Internal Audit and independent
public accountants to review the plan and results of the audit by the
independent accountants, the Company's financial statements, the scope and
results of the Company's internal auditing procedures, the adequacy of the
Company's system of internal controls and the Company's environmental and
litigation exposures. The Committee also selects and appoints independent
public accountants to serve as the Company's auditors each year and devoted
significant time to this responsibility during the past year. Present members
are C.A. Cartwright, W. R. Embry, G. D. Kirkham (Chairman), and M. L. Mann.
The Board Composition and Governance Committee held one formal meeting in
1994. The Committee reviews and recommends changes in the policies and
operation of the Board and functions and responsibilities of the committees of
the Board. It also acts as a nominating committee of the Board and recommends
qualified candidates for election as directors. Stockholders wishing to
nominate candidates for consideration by the Committee can do so by writing to
the Corporate Secretary and providing the candidate's name, appropriate
biographical data and qualifications. Present members are C.A. Cartwright, W.
R. Embry (Chairman), R. W. Pogue and M. D. Walker.
The Compensation Committee, composed of directors who are not employees of
the Company, held 5 meetings in 1994. It approves remuneration arrangements
and succession plans for senior management and administers the Company's
executive compensation plans. Present members are B. C. Ames, J. T. Eyton, M.
L. Mann (Chairman) and R. W. Pogue.
The Executive Committee exercises all of the authority of the Board of
Directors during intervals between meetings of the Board except for those
powers to be exercised only by other committees of the Board, the declaration
of any dividend, the issuance of stock and the powers which pursuant to
Section 141(c) of the General Corporation Law of the State of Delaware, as
amended, may not be delegated to a Committee. It did not meet formally in
1994. Present members are B. C. Ames, J. T. Eyton, D. J. McGregor, R. W. Pogue
and M. D. Walker (Chairman).
The Pension Plan Committee, composed of directors who are not employees of
the Company, held 1 meeting in 1994. It is responsible for reviewing the
operation and performance of the Company's pension investment program and a
management committee which in turn is responsible for the operation and
administration of the retirement and welfare plans of the Company and its
subsidiaries. Present members are C.A. Cartwright (Chairperson), W. R. Embry
and G. D. Kirkham.
TRANSACTIONS WITH DIRECTORS
Jones, Day, Reavis & Pogue, of which Mr. Pogue was a Senior Partner to June
30, 1994, provided legal services to the Company in 1994.
HOLDINGS OF SHARES OF THE COMPANY'S COMMON STOCK
The only persons believed by the Company to be the beneficial owners of more
than five percent of the outstanding shares of Common Stock of the Company as
of December 31, 1994 were Wachovia Bank of North Carolina, N.A. and FMR Corp.
Wachovia Bank of North Carolina, N.A., 302 North Main Street, Winston-Salem,
NC 27102, acting in its capacity as Trustee of the M. A. Hanna Associates
Ownership Trust, on December 31, 1994 owned and had shared voting and
dispositive power over 4,671,885 shares, or 13.1% of the shares outstanding.
Shares of Common Stock are periodically allocated and released from the Trust
to satisfy funding requirements under certain of the Company's compensation
and benefit plans ("Plans"). Participants in and
4
<PAGE>
trustees of the Plans under confidential voting procedures have authority to
vote all shares allocated to them or to instruct that the shares not be voted.
Unallocated shares held in the Trust are voted in the same proportions as the
shares for which instructions have been received.
FMR Corp., 82 Devonshire Street, Boston, MA 02109, on December 31, 1994
beneficially owned, and had the sole power to dispose or direct the
disposition of, 4,200,910 shares of Common Stock, or 11.75% of the shares then
outstanding, according to a Schedule 13G Report filed with the Securities and
Exchange Commission.
EXECUTIVE COMPENSATION
The following table sets forth the compensation for the chief executive
officer and the other most highly compensated executive officers, for services
rendered in all capacities to the Company and its subsidiaries for the last
three years.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL LONG-TERM
COMPENSATION (1) COMPENSATION
----------------- -------------------------------------
AWARDS PAYOUTS
------------------------- -----------
RESTRICTED
NAME AND STOCK LTIP ALL OTHER
PRINCIPAL POSITION YEAR SALARY BONUS AWARDS ($)(2) OPTIONS (#) PAYOUTS (3) COMPENSATION
- ------------------ ---- -------- -------- ------------- ----------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
M. D. Walker 1994 $607,500 $525,000 22,521 99,200 $315,021 $254,534(4)
Chairman & Chief 1993 600,000 450,000 22,511 70,500 322,511 256,104
Executive Officer 1992 584,667 335,000 22,509 37,500 302,509 246,704
D. J. McGregor 1994 415,000 320,000 18,542 49,600 259,042 230,644(4)
President & Chief 1993 370,000 250,000 17,365 45,000 248,615 127,465
Operating Officer 1992 360,666 200,000 12,368 30,000 166,376 123,265
D. R. Schrank 1994 252,500 160,000 0 15,000 0 32,750(4)
Vice President 1993 66,346 35,000 0 51,750 0 0
& Chief Financial
Officer (5)
G. W. Henry 1994 181,250 125,000 4,015 7,000 56,015 43,984(4)
Vice President, 1993 175,000 85,000 3,757 6,750 53,766 39,055
International 1992 163,000 65,000 3,957 5,250 52,957 36,430
Operations
J. S. Pyke, Jr. 1994 186,250 110,000 5,512 7,000 77,012 69,346(4)
Vice President, 1993 185,000 110,000 5,175 7,500 73,020 55,372
General Counsel & 1992 178,334 80,000 5,645 6,000 75,645 54,122
Secretary
</TABLE>
(1) Other Annual Compensation for each executive did not exceed disclosure
thresholds established by the Securities and Exchange Commission.
(2) The column reports all of the grants of restricted stock to the named
individuals during the fiscal year. The value of the awards shown in the
table is determined by multiplying the number of shares awarded by the
closing market price for the stock on the award date. The total number of
restricted shares and the value of those shares at the end of the last
fiscal year, based on the year-end closing price for the stock, held by
Messrs. Walker, McGregor, Schrank, Henry and Pyke were 5,867/$139,341;
3,332/$79,135; 0; 991/$23,536 and 1,487/$35,316, respectively. Restricted
shares are issued at the same time LTIP payouts are made equal in value to
25% of the value of the common stock component of the LTIP payout; neither
the restricted shares or the other shares issued at the same time may be
transferred for four years, at which time the restrictions lapse.
Dividends are paid on restricted stock.
5
<PAGE>
(3) Payout in cash and market value of Common Stock paid under the Company's
1988 Long-Term Incentive Plan in the year following the three-year
performance periods ending December 31, 1993, 1992 and 1991.
(4) Consists of matching contributions made by the Company under defined
contribution savings and retirement plans of $107,943, $72,505, $16,875,
$24,570 and $28,695 for Messrs. Walker, McGregor, Schrank, Henry and Pyke,
respectively, and the dollar value of split dollar life insurance premiums
paid in the amounts of $146,591, $158,139, $18,500, $19,414 and $40,651
for Messrs. Walker, McGregor, Schrank, Henry and Pyke, respectively.
(5) Mr. Schrank joined the Company in September, 1993.
Mr. McGregor has an employment agreement with the Company which expires on
March 1, 1996, pursuant to which Mr. McGregor will receive a minimum base
annual salary and will be entitled to receive certain compensation if he is
not retained in at least the President and Chief Operating Officer capacity
during the term of the agreement.
Mr. Schrank has an employment agreement with the Company which expires on
September 26, 1996, pursuant to which Mr. Schrank will receive a minimum base
annual salary and will be entitled to receive certain compensation if he is
not retained in at least the Vice President and Chief Financial Officer
capacity during the term of the agreement.
The Company has in effect employment agreements with its executive officers,
including the officers named in the compensation table on page 5, which become
operative only upon a "change in control" of the Company, as defined in the
agreements. The agreements provide that the officers will remain employed by
the Company in their customary positions from the occurrence of a "change in
control" (i) for an initial term of three years which, unless otherwise
elected by either party, is automatically extended for an additional one-year
period on the third anniversary and each anniversary thereafter or (ii) until
normal retirement date, if sooner. During this employment period the officer
will receive a base salary at least equal to the annual rate in effect at the
time of the "change in control", plus any increases as may be awarded
thereafter in accordance with the Company's regular administrative practices,
and a bonus under the Company's pay-for-performance plan at least equal to the
highest annual bonus paid to him under such plan during the three years
preceding the time of the "change in control". In addition, during this
employment period the officer shall be entitled to continue to participate in
all of the Company's benefit programs in which he was participating at the
time of the "change in control".
If the executive officer's employment is terminated for any reason other
than death, disability, retirement or cause during the employment term, the
officer is entitled to receive, as liquidated damages for the breach of
contract, a payment equal to the present value of the sum of the salary and
bonus(es) due to the officer for the remainder of his employment term and is
also entitled to benefits and service credits under the Company's benefit
plans for the remainder of his employment term. The Company is entitled to
offset against amounts due to the officer any compensation payments made to
the officer by another employer under certain conditions. Termination of
employment without cause is defined to include a good faith determination by
the officer that due to changed circumstances significantly affecting his
position with the Company after the "change in control" occurs, he is unable
to carry out his duties and responsibilities.
6
<PAGE>
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE VALUE
AT ASSUMED ANNUAL RATES
OF STOCK PRICE
APPRECIATION
INDIVIDUAL GRANTS FOR OPTION TERM
- --------------------------------------------------------------------- --------------------------
PERCENT OF
TOTAL OPTIONS
GRANTED TO
OPTIONS EMPLOYEES IN EXERCISE EXPIRATION
NAME GRANTED (#)(1) FISCAL YEAR PRICE ($/SH) DATE 5% ($) 10% ($)
---- -------------- ------------- ------------ ---------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
M. D. Walker 99,200 31.2% $22.125 1/1/2004 $1,210,055 $2,980,424
D. J. McGregor 49,600 15.6% 22.125 1/1/2004 605,028 1,490,212
D. R. Schrank 15,000 4.7% 22.125 1/1/2004 182,972 450,669
G. W. Henry 7,000 2.2% 22.125 1/1/2004 85,387 210,312
J. S. Pyke, Jr. 7,000 2.2% 22.125 1/1/2004 85,387 210,312
</TABLE>
(1) Each option granted becomes vested as to 25% of the award on the first
anniversary of the grant, and as to an additional 25% on each of the next
three January 1 dates.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION VALUES
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
NUMBER OF IN-THE-MONEY
UNEXERCISED OPTIONS OPTIONS AT
AT FY-END (#) FY-END ($)
SHARES ACQUIRED VALUE EXERCISABLE/ EXERCISABLE/
NAME ON EXERCISE (#) REALIZED UNEXERCISABLE UNEXERCISABLE (1)
---- --------------- -------- ------------------- --------------------
<S> <C> <C> <C> <C>
M. D. Walker 0 $0 241,500/ $2,453,736/
180,200 508,834
D. J. McGregor 0 0 139,500/ 1,722,818/
105,850 330,920
D. R. Schrank 0 0 12,938/ 48,927/
53,812 171,149
G. W. Henry 0 0 35,063/ 413,169/
15,812 50,765
J. S. Pyke, Jr. 0 0 57,750/ 707,490/
17,125 57,783
</TABLE>
(1) Based on market value of the Company's common stock on December 31, 1994
($23.75 per share) minus the strike price.
LONG-TERM INCENTIVE PLAN LTIP UNIT AWARDS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
PERFORMANCE ESTIMATED FUTURE PAYOUTS UNDER
OR OTHER NON-STOCK PRICE-BASED PLANS
NUMBER PERIOD UNTIL ------------------------------------
OF UNITS MATURATION
NAME (#) OR PAYOUT THRESHOLD ($) TARGET ($) MAXIMUM ($)
---- -------- ------------ ------------- ---------- -----------
<S> <C> <C> <C> <C> <C>
M. D. Walker 180,500 3 years $45,125 $180,500 $361,000
D. J. McGregor 154,600 3 years 38,650 154,600 309,200
D. R. Schrank 109,200 3 years 27,300 109,200 218,400
G. W. Henry 76,900 3 years 19,225 76,900 153,800
J. S. Pyke, Jr. 76,900 3 years 19,225 76,900 153,800
</TABLE>
Units shown in the table above represent performance units (LTIP Units)
granted pursuant to the Corporation's 1988 Long-Term Incentive Plan. LTIP
Units represent the right to receive payments in cash or common stock or a
combination thereof when predetermined performance objectives established by
the Compensation Committee of the Board of Directors, using compound annual
earnings per share growth rate and three-year average return on stockholders'
equity as measures, are achieved over a three-year period. The target payout
amount of the awards is $1.00 per unit.
7
<PAGE>
RETIREMENT BENEFITS
The Salaried Employees Retirement Income Plan ("SERIP") is a non-
contributory pension plan covering all officers and other salaried employees
of the Company. In general, employees become covered under SERIP when they
have completed one year of eligibility service and are at least 21 years of
age. Upon reaching the normal retirement date (age 65), each participant in
SERIP generally is entitled to receive monthly for life a basic benefit equal
to the greater of (i) the participant's highest average monthly compensation
(including bonuses and overtime) for 60 consecutive months out of the final
120 months of his or her employment or (ii) 1/12th of the average of his or
her annual compensation (including bonuses and overtime) during any 5 annual
periods in which he or she received the highest compensation included within
the final 10 annual periods of his or her employment, which is then multiplied
by 2% for the first 20 years of credited service and 1% for the next 20 years
of credited service. In addition, benefits are provided for early retirement
and to surviving spouses.
The Company has adopted an excess benefits plan to pay retirement benefits
which but for limitations under the Employee Retirement Income Security Act of
1974 and the Internal Revenue Code would have been paid under SERIP. These
benefits will be paid out of the general funds of the Company or trust funds
established for this purpose.
The following table shows estimated annual benefits payable upon retirement
to participants in specified remuneration and years-of-service classifications
under the Company's above-mentioned two pension plans for salaried employees.
Benefits payable under the qualified pension plans are not subject to any
deduction for Social Security benefits.
<TABLE>
<CAPTION>
AVERAGE ANNUAL
COMPENSATION YEARS OF SERVICE AT AGE 65
FOR LAST 5 YEARS --------------------------------------------
OF EMPLOYMENT 15 YEARS 20 YEARS 25 YEARS 30 YEARS 35 YEARS
- ---------------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
$ 300,000 $ 90,000 $120,000 $135,000 $150,000 $165,000
500,000 150,000 200,000 225,000 250,000 275,000
700,000 210,000 280,000 315,000 350,000 385,000
900,000 270,000 360,000 405,000 450,000 495,000
1,100,000 330,000 440,000 495,000 550,000 605,000
</TABLE>
The credited years of service for retirement benefits for Messrs. Henry,
McGregor, Pyke, Schrank and Walker are 19, 6, 26, 1 and 19 respectively.
BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee, as the delegate of the Board of Directors, has
furnished the following report on executive compensation.
During 1994 the Compensation Committee and management, with the assistance
of an independent compensation consultant, continued its review of Hanna's
total compensation philosophy and objectives and its executive compensation
program.
Hanna's executive compensation program is structured and administered to
drive and incent a level of performance necessary to achieve the Company's
vision, support Hanna's internal culture and operating environment and
reinforce its human resource management values. The objectives of the
executive compensation program are to:
. Establish a pay-for-performance philosophy and policy that places a
meaningful portion of each executive's compensation at risk with the
stockholders, commensurate with the executive's ability to impact bottom
line results, and which can significantly differentiate compensation
awards based on corporate, business unit and individual performance and
the ability of the executive to impact those results;
8
<PAGE>
. Motivate and incent executives to achieve a level of performance
consistent with the Company's strategic business objectives and reward
them for their achievement;
. Provide total compensation opportunities which are market competitive,
are subject to associated downside risk and offer significant upside
opportunities based on performance, thus allowing Hanna to compete for
and retain outstanding, talented and highly motivated executives who are
vital to Hanna's long-term success; and
. Align the interests of executives with the long-term interests of
stockholders through incentive award opportunities that are linked to the
long-term performance of the Company and that result in the ownership of
Hanna Common Stock.
Hanna's executive compensation program is comprised of three major
components: base salary, annual incentive compensation and long-term incentive
compensation. As an executive's level of responsibility increases, a greater
portion of his or her potential total compensation opportunity is based on
performance incentives (including stock-based awards), and less on salary;
this approach results in greater variability in the individual's actual total
cash compensation level from year to year in response to variations in the
Company's performance.
The executive total compensation program is designed to be competitive with
the total compensation programs of a broad base of industrial companies with
annual sales levels comparable to Hanna. In order to assess competitive total
compensation programs and establish total compensation opportunities for Hanna
executives, the Committee utilizes data contained in independent compensation
surveys such as the Wyatt Data Services' Top Management Report, the Towers
Perrin Compensation Data Bank (Cash Compensation and Long-Term Incentive Plan
Surveys) and the Conference Board report on Top Executive Compensation.
Hanna's total compensation program is structured to provide total
compensation opportunities that are commensurate with the Company's ability to
demonstrate consistently outstanding performance. In order to drive and reward
for a consistent high level of performance, Hanna's total compensation systems
are designed to deliver a total compensation opportunity that is above
average. Hanna targets executive total compensation opportunities for its
executives' outstanding performance at the 65th percentile of total
compensation opportunities afforded to executives performing similar
responsibilities in competitive companies. On the other hand, the total
compensation system is also designed to be responsive in the event the
Company's actual performance falls below expectations vis-a-vis the annual
operating plan and/or industry comparisons.
SALARIES
Hanna targets its executives' base salaries to the median, or 50th
percentile, of base salaries reported in the published surveys referenced
above by comparable industrial companies.
The Committee annually reviews the salaries of executive officers. Prior to
the meeting at which the annual review occurs, the Committee is furnished with
data on the current total compensation and total compensation history of each
executive officer, current survey data for comparable positions at comparable
industrial companies and individual performance appraisal ratings by the Chief
Executive Officer for each executive officer except himself. At the meeting
the Committee reviews all available data and considers adjustments; in 1994 it
made selective adjustments in executive officers' salaries.
ANNUAL INCENTIVE COMPENSATION FOR 1994
The Committee approved, in January 1995, annual incentive compensation
awards for the executive officers which took into account the fact that
Hanna's 1994 pre-tax operating earnings performance exceeded the annual
operating plan approved by the Board of Directors at its first meeting in 1994
by 21.6% and exceeded 1993 performance by 36.4%. The Committee also took into
account discretionary factors such as the accomplishment of strategic
objectives and operational improvements. The Committee adjusted individual
awards to reflect each executive's performance for the year and contribution
to Hanna's achievements in 1994.
9
<PAGE>
1994 LONG-TERM INCENTIVE PLAN AWARDS
Under Hanna's Long-Term Incentive Plan, which was approved by stockholders
in 1988, the Committee grants stock options and long-term incentive
performance units ("LTIP Units") annually. Awards are based on a pay grade
level formula which takes into account relevant long-term award data as
reported by a broad base of industrial companies in the Towers Perrin
Compensation Data Bank Long-Term Incentive Plan Survey, and the
recommendations of the independent compensation consultant.
In December 1994 the Committee made grants of non-qualified and incentive
stock options at a purchase price equal to 100% of the fair market value of
Hanna Common Stock on the grant date and awards of LTIP Units for a three-year
performance period starting on January 1, 1995. The Committee will establish
target performance measures for compound annual earnings per share growth and
three-year average return on stockholders' equity to be attained for the
performance period, with threshold and maximum achievement levels.
1994 LONG-TERM INCENTIVE PLAN PAYMENTS
The Committee applied the earnings per share and return on stockholders'
equity performance measures established for the three-year performance period
ending December 31, 1993 against actual performance and determined that
participants had earned a payout of LTIP Units for that performance period at
117% of the target amounts. Taking into account the accomplishment of
strategic objectives over the three-year period which were not reflected in
the financial measures of performance, the Committee exercised its discretion
and authorized a payout at 130% of the target amounts to be made in 1994. As
authorized by the Long-Term Incentive Plan, the Committee elected to make a
portion of the payment to each participant in cash and a portion in shares of
Hanna Common Stock, and awarded each participant shares of restricted Hanna
Common Stock equal in value to 25% of the Common Stock portion of the payment.
The terms of the restricted stock require the participant to hold the
restricted stock and the stock issued in partial payment of the LTIP Unit
award for four years, at which time the restrictions lapse.
CHIEF EXECUTIVE OFFICER COMPENSATION
In reviewing Mr.Walker's total compensation opportunity and each component
thereof, the Committee took into account the same Wyatt, Towers Perrin and
Conference Board compensation survey data for comparable companies and Hanna's
financial, strategic and operational performance that it considered in
connection with the other executive officers. The Committee also reviewed Mr.
Walker's total compensation opportunity and incentive compensation awards with
the independent compensation consultant.
In 1994 the Committee approved a salary increase for Mr. Walker in order to
move his base salary to the 50th percentile level of chief executive officers
at comparable companies. In determining Mr. Walker's 1994 annual incentive
compensation payment, the Committee took into account a number of factors the
sum total of which it believed demonstrated exceptionally successful
leadership. It noted that under Mr. Walker's leadership the Corporation in
1994 had substantially exceeded its prior year's financial performance and the
1994 annual operating plan, achieved record sales representing an increase of
22% over the prior year, improved its performance cash flow by $1.20 per share
over the prior year and increased its dividend by 8%, while splitting the
Common Stock 3-for-2. The Committee recognized Mr. Walker's development of an
effective management team and a vision and strategies for the Corporation
which position it for sustainable long-term growth.
Mr. Walker's 1994 Long-Term Incentive awards were made in accordance with
the program guidelines, except that the proportion of the total award
allocated to the stock option grant was increased and there was a
corresponding decrease in the value of the LTIP Units award. His 1994 Long-
Term Incentive Plan payouts were calculated in the same way as the payouts to
all other participants.
STOCK OWNERSHIP GUIDELINES
The Committee approved management's recommendation to adopt stock ownership
guidelines for participants in the Corporation's Long-Term Incentive Plan
which encourages them to acquire a guideline value
10
<PAGE>
of Hanna Common Stock. The guideline values are expressed as a multiple of
base salary and the multiples range
from three times base salary for the Chief Executive Officer and Chief
Operating Officer to .5 times salary for the non-officer, key manager
participants in the Plan. Under the policy there will be no penalty for
failure to achieve the expected levels of ownership but if a participant does
not hold the guideline value of Hanna Common Stock at the end of a three year
period, up to one-half of his or her annual incentive compensation award will
be paid in shares of Hanna Common Stock until the expected stock ownership
value is achieved.
DEDUCTIBILITY OF EXECUTIVE COMPENSATION
Internal Revenue Code Section 162 (m) and proposed regulations thereunder
respecting the non-deductibility of certain executive compensation payments in
excess of $1 million did not affect the deductibility of compensation payments
in 1994 and are not expected to affect the deductibility of compensation
payments in 1995 except possibly with respect to Mr. Walker. Mr. Walker has
entered into an agreement with the Corporation by which any compensation
which, if paid, would not be deductible under Section 162 (m), will be
deferred and paid to him after his retirement. In addition, if the Voluntary
Non-Qualified Deferred Compensation Plan is approved by stockholders, Mr.
Walker and the other executives to whom Section 162 (m) may apply may elect to
defer a portion of their compensation pursuant to the Plan and receive the
deferred amounts after retirement, at which time the deductibility of such
compensation will not be subject to Section 162 (m).
COMPENSATION COMMITTEE
M. L. Mann, Chairman
B. C. Ames
J. T. Eyton
R. W. Pogue
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee during 1994 was comprised entirely of non-
employee directors. Mr. R. W. Pogue to June 30, 1994 was a Senior Partner of
Jones, Day, Reavis & Pogue, which provided legal services to the Company in
1994.
11
<PAGE>
PERFORMANCE GRAPH
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN AMONG HANNA, S&P 500 INDEX AND
S&P SPECIALTY CHEMICALS INDEX
<TABLE>
COMPARISON OF FIVE YEAR CUMULATIVE RETURN
AMONG HANNA (MA) CO., S&P 500 INDEX AND CHEMICALS (SPECIALTY) INDEX
<CAPTION>
Measurement period S&P 500 CHEMICALS (SPECIALTY)
(Fiscal year Covered) HANNA (MA) CO. INDEX INDEX
- --------------------- -------------- ------- --------------------
<S> <C> <C> <C>
Measurement PT -
12/31/89 $100 $100 $100
FYE 12/31/90 $ 73.28 $ 96.89 $ 96.10
FYE 12/31/91 $ 78.18 $126.42 $135.66
FYE 12/31/92 $115.75 $136.05 $143.72
FYE 12/31/93 $133.88 $149.76 $163.87
FYE 12/31/94 $149.26 $157.74 $143.06
</TABLE>
This performance graph assumes that the value of the investment in Hanna and
each index was $100 on December 31, 1989 and that all dividends were
reinvested.
DIRECTORS' COMPENSATION
Directors who are not full-time employees of the Company are compensated for
their services by payment of a quarterly retainer fee of $6,000 and a fee of
$1,300 for each Board meeting attended. They also receive a fee of $1,100 for
each committee meeting attended when the meeting occurs on the same day as a
Board meeting and $1,300 when the meeting occurs on a day when no Board
meeting is held; Chairs of Board committees are paid an additional fee of $200
for each committee meeting attended. Executive Committee members who are not
full-time employees of the Company are paid an additional quarterly retainer
fee of $1,250. Directors who are also full-time employees of the Company are
not compensated for their services as directors and members of Board
committees.
The Company maintains a deferred fee plan for non-employee directors under
which they may defer all or part of their cash compensation, for payment after
retirement from the Board. A description of the Directors' Deferred Fee Plan
is set forth on page 15 of this proxy statement.
Pursuant to amendments to the 1988 Long Term Incentive Plan adopted in 1991,
one-time grants of options to purchase 15,000 shares of the Company's Common
Stock were granted in 1991 to all non-employee directors then in office and
thereafter to non-employee directors at the time of their election to the
Board at an option price equal to the closing sale price of the Common Stock
on the New York Stock Exchange on the date of grant. One-third of the grant
becomes exercisable after the director has served for one year from the date
of grant, an additional one-third after two years and the balance after three
years of service.
12
<PAGE>
The Company has established a non-qualified retirement plan for its non-
employee directors. The annual retirement benefit is an amount equal to the
highest annual retainer fee in effect during the director's final five years
of service. Each qualifying director is entitled to receive, upon retirement
as a director, a quarterly benefit for a period equal to his or her years of
service, ten years or his or her date of death, whichever first occurs. A
minimum of five years of service is required in order to receive a benefit
under this program.
2. RATIFICATION OF APPOINTMENT OF AUDITORS
The Board of Directors delegated its authority to select and appoint the
Company's independent public accountants to the Audit Committee of the Board,
which selected and appointed Price Waterhouse LLP to be the Company's
independent public accountants for the year 1995, subject to ratification by
the stockholders. The Audit Committee considers Price Waterhouse LLP to be
well qualified.
Ernst & Young LLP served as the Company's independent public accountants for
the year 1994, following which they were dismissed. The reports of Ernst &
Young LLP on the financial statements of the Company for the past two fiscal
years contained no adverse opinion or disclaimer of opinion and were not
qualified or modified as to any uncertainty, audit scope or accounting
principle except for the change in method of accounting for post-retirement
benefits other than pensions and income taxes in 1992. In connection with the
audits for the two most recent fiscal years, there have been no disagreements
with Ernst & Young LLP on any matter of accounting principles or practices,
financial statement disclosure, or auditing scope or procedure, which
disagreements if not resolved to the satisfaction of Ernst & Young LLP would
have caused the firm to make reference thereto in its report on the financial
statements for such years. During the two most recent fiscal years and through
the date of dismissal, there have been no reportable events as defined in Item
304(a)(1)(v) of Regulation S-K issued by the Securities and Exchange
Commission pursuant to the Securities and Exchange Act of 1934 ("Regulation S-
K"). Ernst & Young LLP furnished the Company with a letter addressed to the
Securities and Exchange Commission, and filed with the Commission, in which it
stated that it agreed with the foregoing statements in this paragraph.
During the two most recent fiscal years and through the date of Ernst &
Young LLP's dismissal, the Company did not consult with Price Waterhouse LLP
on matters defined in Item 304 (a)(2) of Regulation S-K.
If the appointment is not ratified, the Audit Committee will reconsider its
decision but will not be bound by the refusal of the stockholders to ratify
the appointment of Price Waterhouse LLP. Representatives of Price Waterhouse
LLP and Ernst & Young LLP are expected to be present at the annual meeting,
will have an opportunity to make a statement if such representatives desire to
do so and are expected to be available to respond to appropriate questions.
THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS
VOTE FOR RATIFICATION OF THE APPOINTMENT OF PRICE WATERHOUSE LLP AS THE
COMPANY'S INDEPENDENT PUBLIC ACCOUNTANTS FOR THE FISCAL YEAR ENDING DECEMBER
31, 1995.
3. RATIFICATION AND APPROVAL OF THE
VOLUNTARY NON-QUALIFIED DEFERRED COMPENSATION PLAN
The Board of Directors has adopted, subject to the approval of the Company's
stockholders, the M. A. Hanna Company Voluntary Non-Qualified Deferred
Compensation Plan (the "Plan"). The Board believes the Plan will encourage
greater ownership of Hanna Common Stock by the Company's executives which will
more closely align their interests with those of the stockholders. It is also
intended that the Plan will assist in attracting and retaining qualified
individuals to serve as executives. If approved by the stockholders, the Plan
will afford eligible executives an opportunity to defer receipt and therefore
the recognition as income for income tax purposes, of all or a portion of
their cash compensation. Moreover the Plan encourages individual executives
whose income might otherwise be subject to the $1 million limitation of
Section 162 (m) of the Internal Revenue Code to defer compensation amounts
until the individual executive's employment with Hanna ends, at which time the
deductibility of such compensation will not be subject to Section 162 (m). A
summary of the Plan is set forth below; the full text of the Plan is annexed
to this proxy statement as Exhibit A and the summary is qualified in its
entirety by reference to Exhibit A.
13
<PAGE>
PRINCIPAL FEATURES
The Plan provides that any executive of the Company and its subsidiaries
whose total cash compensation (salary and annual incentive compensation)
exceeds $150,000 may elect to defer up to 25 percent of his or her salary and
up to 100 percent of his or her short-term incentive compensation by
delivering written notice of such election prior to the beginning of such
fiscal year (except in the year of adoption of the Plan, the election shall be
made prior to March 15 and shall apply only to salary earned after April 1, if
the Plan is approved by stockholders). It is expected that approximately 50
executives will be eligible to participate.
Under the Plan, the executive may elect to have his or her deferred
compensation allocated to a cash account or an account maintained in shares of
Hanna Common Stock (the "Stock Account"), but a minimum of 25 percent of each
deferral must be allocated to the Stock Account. An executive's account to
which compensation has been credited in cash will earn interest quarterly at a
rate equal to 125 percent of the Moody's Corporate Bond Yield Index or such
other rate as the Committee administering the Plan may establish (the "Bond
Rate"). Deferred compensation allocated to the Stock Account will be used to
acquire shares of Hanna Common Stock, which shall be held in a trust for the
benefit of the participating executive. All deferrals to the Stock Account
will be "matched" by a 25 percent premium in the form of additional shares of
Common Stock. In the event that a cash dividend is paid to stockholders, the
Company will credit the Stock Account with that number of additional shares of
Common Stock equivalent to the cash dividend divided by the per share price of
the Common Stock on the date the dividend is paid. Shares of Hanna Common
Stock allocated to the Stock Account will be acquired in open market purchases
or from the Company or allocated from the Associates Ownership Trust, and
transferred to the trust.
If a participating executive terminates employment by reason of (i)
retirement at or after age 62 in accordance with a Company retirement program,
(ii) death, (iii) total disability or (iv) under other circumstances approved
by the Committee, the full balance of the participant's accounts will be
distributed to him or her, as selected by the participant either in a lump sum
or in annual installments over a period not to exceed the life expectancy of
the participant or the participant's primary beneficiary. In the event that
the participant's employment is terminated for a reason other than recited in
the preceding sentence, the participant will receive a distribution of the
amounts deferred to the cash account plus interest calculated quarterly at the
Bond Rate (instead of 125% of the Bond Rate as would otherwise be payable) and
the balance in the Stock Account excluding the value of the 25 percent
premiums and dividends with respect thereto credited to the Stock Account. All
payments from the cash account will be in cash and all payments from the Stock
Account will be in shares of Hanna Common Stock.
A participating executive may periodically elect to take an early
distribution of amounts deferred in a given year. A participating executive
may also request a distribution of all or part of the amounts deferred to his
or her accounts because of a financial emergency, and the committee
administering the Plan will determine whether a distribution will be made.
Early distributions or distributions because of a financial emergency will be
limited to the amount deferred to the cash account plus interest calculated
quarterly at the Bond Rate and to the balance in the Stock Account excluding
the value of the 25 percent premiums and dividends with respect thereto
credited to the Stock Account. If a participating executive receives a
distribution because of a financial emergency, the participant's election to
defer currently shall terminate and the participant shall not be permitted to
defer any amounts for the subsequent calendar year.
In the event of a change in control of the Company, as defined in the Plan,
a participant can elect, within one year after the change in control, a
distribution of his or her accounts in full.
TAX CONSEQUENCES
No income will be recognized by a participating executive at the time that
cash or Stock is credited to his or her account. At the time of distribution,
the participating executive generally will be required to include as taxable
ordinary income an amount equal to the amount of cash received and the fair
market value of any Common Stock received.
14
<PAGE>
GENERAL
The maximum number of shares of Common Stock that may be allocated to the
Plan during its term is 500,000.
The Plan will be administered by the Committee for Employee Benefits
Administration established by the Board of Directors. The Committee will
supervise the administration of the Plan, may from time to time adopt
procedures governing the Plan and will have authority to give interpretative
rulings with respect to the Plan.
By its terms the Plan may be amended from time to time by the Company, but
no such amendment may affect the rights of participating executives to the
amounts of compensation allocated to the cash or Stock accounts and, without
further approval of the stockholders, no such amendment shall increase the
maximum number of shares available to be allocated to the Plan.
APPROVAL BY THE STOCKHOLDERS
The approval and ratification of the Voluntary Non-Qualified Deferred
Compensation Plan requires the affirmative vote of the holders of a majority
of the shares present or represented and entitled to vote on the matter at the
meeting.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE PROPOSAL.
4. RATIFICATION AND APPROVAL OF
AMENDMENTS TO THE DIRECTORS' DEFERRED FEE PLAN
The Company desires to continue its policy of encouraging greater ownership
of Hanna Common Stock by its directors. To this end the Board of Directors
amended the Directors' Deferred Fee Plan (the "Directors' Plan"), which was
approved by stockholders on May 4, 1994, to provide that a minimum of 25
percent of the quarterly retainer fee must be deferred and allocated to the
account denominated in Units (an accounting unit equal in value to one share
of Common Stock) and amounts allocated to the Units account shall be credited
with a Company contribution of 125%, which represents a form of compensation
in lieu of an increase in the cash amount of their fees and also recognizes an
element of risk inherent in stock-based compensation whose eventual payout is
dependent on the market price of a publicly-traded stock. These amendments,
which are subject to stockholder approval, include some of the features of the
proposed Voluntary Non-Qualified Deferred Compensation Plan. A summary of the
proposed amendments (the "Amendments") is set forth below, followed by a
description of the entire Directors' Plan. The full text of the Amendments is
annexed to this proxy statement as Exhibit B and the summary is qualified in
its entirety by reference to Exhibit B.
PROPOSED AMENDMENTS
The non-employee directors, except for any director who has waived his or
her right to receive a retainer fee, are required by the Amendments to defer a
minimum of 25% of each quarterly Board retainer fee into a Deferred Benefit
Account maintained in Units, which are equal in value to one share of Hanna's
Common Stock. The non-employee directors can elect to defer all or any portion
of the balance of the retainer fee and the meeting fees to a Deferred Benefit
Account maintained either in Units or dollar amounts. All amounts deferred to
the account maintained in Units, whether mandatorily or voluntarily deferred,
will be credited with a Company contribution of 125% of the amount deferred. A
participating director can change the amount of his or her fee deferral and
the allocation to Units or dollars prospectively on an annual basis, but only
as to the voluntary deferrals.
The Amendments also permit the funding of the Deferred Benefit Account
maintained in Units with shares of Hanna Common Stock acquired in the open
market or from treasury stock held by the Company or allocated from the
Associates Ownership Trust. If shares are acquired for this purpose, they will
be held in a trust for the benefit of the Director. Funds held in trust will
remain liable for the claims of the Company's general creditors.
15
<PAGE>
DESCRIPTION OF DIRECTORS' DEFERRED FEE PLAN
The Directors' Plan provides that any director who is not also an employee
of the Company may elect to defer all or a portion of the compensation payable
to him or her for services as a director during a fiscal year by delivering
written notice of such election prior to the beginning of such fiscal year.
The director may elect to have his or her director's fees credited to an
account in either cash or Units, which are accounting units equal in value to
one share of Hanna Common Stock. A director's account to which fees have been
credited in cash will earn interest annually at the rate of interest payable
on 1-year U.S. Treasury Bills or such other rate as the Committee
administering the Directors' Plan may establish. In no event, however, will
the rate of interest be more than 5 percent higher than the rate payable on
such U.S. Treasury Bills. Deferred fees allocated to Units will be credited to
a director's account at the end of the fiscal year on the basis of the average
of the market values of the Common Stock on the last trading day in each
calendar month during the year. Each account to which fees have been credited
in Units shall be credited annually after the end of the fiscal year with
additional Units equal in value to the amount of cash dividends paid by the
Company during such year on Common Stock equivalent to the average daily
balance of Units in such account during the year.
Distribution of a director's account may be made in a lump sum, in five
annual installments or a combination of the foregoing, as designated by the
director, upon: (i) the termination of service as a director of the Company or
(ii) if the director should so elect, only upon his or her death. Amounts
credited to a director's account in dollars are paid in cash, and amounts
credited in Units are paid in full shares of Hanna Common Stock.
APPROVAL BY THE STOCKHOLDERS
The approval and ratification of the amendments to the Directors' Deferred
Fee Plan requires the affirmative vote of the holders of a majority of the
shares present or represented and entitled to vote on the matter at the
meeting.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE PROPOSAL.
SECTION 16(A) REPORTING
As required by the Securities and Exchange Commission rules under Section 16
of the Securities and Exchange Act of 1934, the Company notes that since
January 1, 1994 two directors filed untimely reports on transactions in the
Company's Common Stock: Mr. J. T. Eyton filed one report regarding two
transactions 11 days after the due date and Mr. M. L. Mann filed one report
regarding one transaction 2 days after the due date.
SUBMISSION OF SHAREHOLDER PROPOSALS
If a holder of the Company's Common Stock wishes to present a proposal for
consideration at next year's annual meeting, any such proposal must be
received at the Company's offices at Suite 36-5000, 200 Public Square,
Cleveland, Ohio 44114, Attention: Corporate Secretary, on or before November
4, 1995.
The management knows of no other matters which are likely to be brought
before the meeting, but if any such matters properly come before the meeting
the persons named in the enclosed proxy, or their substitutes, will vote the
proxy in accordance with their best judgment.
John S. Pyke, Jr.
Vice President, General Counsel and Secretary
March 20, 1995
16
<PAGE>
EXHIBIT A
M. A. HANNA COMPANY
VOLUNTARY NON-QUALIFIED DEFERRED COMPENSATION PLAN
1. Purpose. The purpose of the Plan is to permit a select group of managers
of M.A. Hanna Company (the "Company") and its business units who wish to defer
a portion of their compensation for a fixed period of time, or until after
retirement or other termination of employment, the opportunity to do so.
2. Administration. The Plan shall be administered by the Committee for
Employee Benefits Administration established by the Board of Directors of the
Company (the "Committee"). The Committee's interpretation and construction of
the provisions of the Plan shall be conclusive. The Committee may engage such
advisors, actuaries, attorneys and administrators as it deems appropriate.
3. Right to Defer Compensation. Any member of the Company's corporate and
business unit management with a total cash compensation opportunity (annual
base salary plus short-term incentive compensation at target) of $150,000 or
greater for the current calendar year may, at any time prior to the
commencement of the next succeeding calendar year of the Company, elect to
defer under this Plan up to twenty-five percent (25%) of his current base
salary, and up to one hundred percent (100%) of his earned short-term
incentive award, to which he may thereafter be entitled for his services with
respect to such succeeding calendar year. The $150,000 floor for participation
may be indexed annually for inflation (or deflation) by the Committee. With
respect to the initial calendar year 1995, such election may be made at any
time prior to March 15, 1995 and, in the case of base salary, shall apply only
to base salary earned with respect to services rendered on or after April 1,
1995. Such election under this Plan shall be made by written notice delivered
to the Corporate Secretary of the Company, indicating the calendar year with
respect to which the election shall apply and the dollar amount or percentage
of base salary or incentive award to be deferred for such year, provided that
the minimum deferral shall be $2,000 per year. An election under this Plan
with respect to any calendar year shall be irrevocable after commencement of
such calendar year. Individuals filing such elections are hereafter referred
to as Participants.
4. Deferred Compensation Accounts. On the last calendar day of each calendar
month in which compensation deferred under this Plan would have become payable
to a Participant in the absence of an election to defer payment thereof, the
amount of such compensation shall be credited, at the Participant's option, to
either a Stock Account or an Interest Bearing Account, provided that a
Participant must elect to credit at least twenty-five percent (25%) of any
deferral into a Stock Account. The Participant's election of the percentage of
any deferral to be credited into either a Stock Account or an Interest Bearing
Account may be changed from time to time, but not more than two times in any
calendar year, by the Participant but any such change in the percentage
elected shall apply only to future deferrals by the Participant.
5. Amounts Credited to Stock Account.
(a) Any amounts credited to a Stock Account shall be used to acquire
shares of the Company's common stock ("Stock") through open market
purchases, purchases from the Company or allocations from the Associates
Ownership Trust. Such shares of Stock shall be held by the Company in a
"rabbi" trust of which the Participant shall be a beneficiary. The shares
of Stock shall at all times be subject to the claims of creditors of the
Company. The number of shares of Stock credited to a Participant's Stock
Account will be equal to the dollar amount deferred by the Participant into
such account, divided by the closing price of a share of Stock on the New
York Stock Exchange on the last business day of the month of such deferral.
No fractional shares shall be purchased and any additional money shall be
accumulated in the trust and used to acquire shares of Stock in the future.
(b) All deferrals to a Stock Account will be "matched" by a twenty-five
percent (25%) premium in the form of additional shares of Stock that the
Company will transfer into the trust described in paragraph
A-1
<PAGE>
(a). The amount of such additional Stock will be equal to the number of
shares of Stock credited under paragraph (a) above multiplied by .25.
Fractional shares will not be transferred but shall be calculated and
accumulated until equivalent to a whole share. The additional Stock
credited under this paragraph (b) (and any future dividend equivalents
credited to the account under paragraph (c) as a result of such additional
Stock) shall be subject to forfeiture pursuant to the provisions of section
8(e) hereof.
(c) In the event a cash dividend is paid to shareholders of common stock
of the Company, a Participant's Stock Account will be credited with that
number of additional shares of Stock, acquired through open market
purchases, purchases from the Company or allocations from the Associates
Ownership Trust, equivalent to (i) the cash dividend that would have been
received divided by (ii) the per share price of the Stock on the date the
dividend is paid. In the event of a stock dividend (or other distribution)
to the holders of Stock, an appropriate adjustment to the Stock Account
shall be made to reflect such dividend. Fractional shares shall not be
credited but shall be accumulated until equal to a whole share.
6. Amounts Credited to Interest Bearing Account.
(a) All deferrals by a Participant into an Interest Bearing Account shall
be maintained as book entries in two "alternative" accounts: (1) a
Separation Account and (2) a Termination Account. The total amount of any
deferral into an Interest Bearing Account shall be credited to both
accounts. However, under no circumstances is a Participant ever entitled to
distributions from both accounts.
(b The Separation Account will bear interest at a rate equal to one
hundred twenty-five percent (125%) of the Moody's Corporate Bond Yield
Index or such other rate as may from time to time be established by the
Committee (the "Bond Rate"). This interest rate will be adjusted quarterly,
using the Moody's Corporate Bond Yield Index (or the Bond Rate) in effect
at the end of the preceding quarter. Interest will be credited to the
account at the end of each quarter.
(c) The Termination Account will bear interest at a rate equal to the
Moody's Corporate Bond Yield Index or such other rate as may from time to
time be established by the Committee (the "Bond Rate"). This interest rate
will be adjusted quarterly, using the Moody's Corporate Bond Yield Index
(or the Bond Rate) in effect at the end of the preceding quarter. Interest
will be credited to the account at the end of each quarter.
7. Early Distribution of Deferred Compensation.
A Participant may elect to receive early distribution of amounts that
were deferred under the following conditions:
(a) On or about December 15 of the fourth full calendar year from the
date of initial deferral of an amount or a re-deferral as provided in
paragraph (b) below, the Participant will receive notice of the
availability to take an early distribution of the total amount originally
deferred. For instance, in the event of amounts originally deferred in
calendar year 1995, the Participant will receive notice on or about
December 15, 1999, of the right to take early distribution of the amounts
deferred in 1995.
(b) The Participant will have one week from the date of such notice to
respond to the opportunity to elect early distribution. If the Participant
elects to continue the deferral or fails to respond to the notice, the
amounts deferred will be automatically re-deferred for another five-year
period. If the Participant elects early distribution, the portion of the
account attributable to the amounts originally deferred will be paid on or
before January 31 of the calendar year following the date of the notice.
Any payments with respect to a Stock Account shall be in shares of Stock.
(c) In the event a Participant elects early distribution under paragraph
(b), (i) any premiums credited pursuant to section 5(b) to a Stock Account
with respect to the original amount deferred will be forfeited, plus any
dividend equivalents credited with respect thereto and (ii) any
distribution from an Interest Bearing Account shall be in an amount equal
only to the amount in the Termination Account, not the Separation Account.
8. Normal Distribution of Deferred Compensation.
(a) Upon termination of a Participant's employment, all amounts
maintained in a Participant's accounts will be distributed to the
Participant in the manner provided for in this section 8.
A-2
<PAGE>
(b) In the event a Participant's employment is terminated by reason of
(i) retirement at or after age 62 in accordance with the terms of one or
more of the Company's retirement programs at such time, (ii) total
disability as defined in the Company's qualified pension plan, or (iii) any
other termination approved by the Committee (each of (i), (ii), or (iii) is
defined as a "Separation"), distribution of the balances in a Participant's
accounts will be made in the manner elected by the Participant, subject to
paragraph (e) below. Such election will be made at the time of the original
election to defer and such election shall reflect either a distribution in
the form of a lump sum or a distribution in annual installments over a
period not to exceed the life expectancy of the Participant or the
Participant's primary beneficiary (whichever life expectancy is greater). A
Participant (i) may elect one method of distribution for his Stock Account
and a different method of distribution for his Interest Bearing Account and
(ii) may elect one method of distribution for a portion of either or both
Accounts and a different method of distribution for the remainder of such
Account or Accounts. A Participant's election as to the method of
distribution may be modified (subject to paragraph (e) below), provided
that any such modification must be made by written election filed with the
Company no more than 90 days and no less than 30 days prior to an event
requiring distribution. Any distributions on account of Separation shall
reflect the amounts maintained in the Separation Account and the Stock
Account (including any premium credited to the Stock Unit Account pursuant
to section 5(b)).
(c) In the event of a lump sum distribution under paragraph (b), the
amount to be distributed pursuant to the Stock Account shall be paid in
shares of Stock.
(d) In the event of an installment distribution under paragraph (b), (i)
any amounts in the Separation Account shall continue to bear interest until
distributed at the rate specified under section 6(b) hereof and (ii) the
Stock Account shall continue to be credited with additions as a result of
dividends pursuant to the provisions of section 5(c) hereof and any
distributions pursuant to the Stock Account shall be paid in shares of
Stock.
(e) In the event a Participant's employment is terminated in a manner
that does not constitute a Separation, the Participant will receive in a
lump sum at the end of the month following the month of termination of
employment (notwithstanding any election as to method of distribution made
by such Participant) (i) the balance in the Termination Account and (ii)
the balance in the Stock Account (payable in shares of Stock that is
attributable to the Participant's deferral, excluding any value of the
premiums credited to such account under section 5(b) hereof (and any
dividend equivalents attributable thereto)).
9. Special Distribution in the Case of Death.
(a) In the event of a Participant's death, the Participant's beneficiary
will receive (in a lump sum) the amounts credited to the Separation Account
and the Stock Account (paid in shares of Stock) after the month in which
the Participant's death occurred.
(b) Any amounts due under section 9(a) shall be paid to such beneficiary
as the Participant may have designated in writing to the Corporate
Secretary of the Company as the beneficiary to receive any such post-death
distribution under this Plan or, in the absence of such written
designation, to the estate of the Participant.
10. Financial Emergencies.
(a) At any time before payment in full of his accounts, a Participant may
submit a written request to the Committee that any part or all of the
amounts deferred to his Stock Account or his Termination Account be paid to
him because of a financial emergency. The request shall describe the nature
of such emergency and the amount required therefor. The Committee in its
sole discretion shall determine whether or not payment of the amount
requested should be made. In the event a distribution from the Stock
Account is made, any premiums credited pursuant to section 5(b) with
respect to the amount deferred will be forfeited, plus any dividend
equivalents credited with respect thereto. In the event the Participant is
a member of the Committee, he shall not participate in the decision by the
Committee on his request.
A-3
<PAGE>
(b) In the event any Participant receives a distribution on account of a
financial emergency, said Participant's election to defer any further
amounts for the calendar year of the distribution shall terminate, and said
Participant shall not be permitted to elect to defer any amounts under this
Plan for the subsequent calendar year.
(c) For purposes of this Section 10, financial emergency shall be defined
in a manner consistent with the definition of "unforeseeable emergency"
under section 457 of the Internal Revenue Code.
11. Change in Control Distribution. In the event of a Change in Control, as
defined below, a Participant may elect at any time within one year after the
Change in Control to receive the amounts credited to his Stock Account, paid
in shares of Stock, and Separation Account at the end of the month after the
month in which he makes such election. For the purposes of this Plan, a
"Change in Control" shall have occurred if, at any time after the Plan takes
effect, any of the following events shall occur:
(i) The Company enters into an agreement to merge, consolidate or
reorganize into or with another corporation or other legal person, and as
a result of such merger, consolidation or reorganization less than 75% of
the combined voting power of the then-outstanding securities of such
corporation or person immediately after such transaction will be held in
the aggregate by the holders of Voting Stock (as that term is hereafter
defined) of the Company immediately prior to such transaction;
(ii) The Company enters into an agreement to sell or otherwise transfer
all or substantially all of its assets to any other corporation or other
legal person, and as a result of such sale or transfer less than 75% of
the combined voting power of the then-outstanding securities of such
corporation or person immediately after such sale or transfer is held in
the aggregate by the holders of Voting Stock of the Company immediately
prior to such sale or transfer;
(iii) The filing on Schedule 13D or Schedule 14D-1 (or any successor
schedule, form or report), each as promulgated pursuant to the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), disclosing that
any person (as the term "person" is used in Section 13(d)(3) or Section
14(d)(2) of the Exchange Act) has become the beneficial owner (as the
term "beneficial owner" is defined under Rule 13d-3 or any successor rule
or regulation promulgated under the Exchange Act) or securities
representing 15% or more of the combined voting power of the then-
outstanding securities entitled to vote generally in the election of
directors of the Company ("Voting Stock");
(iv) The Company files a report or proxy statement with the Securities
and Exchange Commission pursuant to the Exchange Act disclosing in
response to Form 8-K or Schedule 14A (or any successor schedule, form or
report or item therein) that a change in control of the Company has or
may have occurred or will or may occur in the future pursuant to any
then-existing contract or transaction;
(v) During any period of two consecutive years, individuals who
constitute the Directors of the Company at the beginning of any such
period cease for any reason to constitute at least a majority thereof,
unless the election, or the nomination for election by the Company's
stockholders, of each new Director was approved by a vote of at least
two-thirds of the Directors of the Company then still in office who were
Directors of the Company at the beginning of such period; or
(vi) The Company consummates the sale of a business unit, either by a
sale of all of its capital stock or the sale of substantially all its
assets, provided, however, that the only Participants who may make the
election under this Change in Control event are those Participants who
are employed by the business unit being sold.
Notwithstanding the foregoing provisions of (iii) or (iv) hereof, a "Change
in Control" shall not be deemed to have occurred for purposes of this
Agreement solely because (i) the Company, (ii) an entity in which the Company
directly or indirectly beneficially owns 50% or more of the voting securities,
or (iii) any Company-sponsored employee stock ownership plan or any other
employee benefit plan of the Company, either files or becomes obligated to
file a report or a proxy statement under or in response to Schedule 13D,
Schedule 14D-1, Form 8-K or Schedule 14A (or any successor schedule, form or
report or item therein) under the Exchange Act,
A-4
<PAGE>
disclosing beneficial ownership by it of shares of Voting Stock, whether in
excess of 15% or otherwise, or because the Company reports that a change in
control of the Company has or may have occurred or will or may occur in the
future by reason of such beneficial ownership.
In the event that any such agreement to merge, consolidate or reorganize or
sell or otherwise transfer assets referred to in (i) or (ii) above is
terminated without such merger, consolidation or reorganization or sale or
transfer having been consummated, or the person filing such Schedule 13D or
Schedule 14D-1 referred to in (iii) above files an amendment to such Schedules
disclosing that it no longer is the beneficial owner of securities
representing 15% or more of the Voting Stock of the Company, or the Company
reports that the change in control which it reported in the filing referred to
in (iv) above will not in fact occur, the Committee may notice to the
Participant nullify the availability of the option to make the election
referred to in this section by reason of such Change in Control, without
prejudice to any prior exercise by the Participant of his rights to make an
election and receive a distribution under this section that may have occurred
prior to such nullification.
12. Non-assignability. None of the rights or interests of any Participant in
his accounts shall, prior to actual payment or distribution to him, be
assignable or transferable in whole or in part, either voluntarily or by
operation of law or otherwise, and shall not be subject to payment of debts by
execution, levy, garnishment, attachment, pledge, bankruptcy or in any other
manner, except with respect to domestic relations orders that are deemed to be
"qualified domestic relations orders" under section 414(p) of the Internal
Revenue Code.
13. Plan to be Unfunded. Except as contemplated by section 5 hereof with
respect to the establishment of a "rabbi" trust to hold Stock credited to a
Participant's Stock Account, the Company shall be under no obligation to
segregate or reserve any funds or other assets for purposes relating to this
Plan and no Participant shall have any rights whatsoever in or with respect to
any funds or other assets held by the Company for purposes of this Plan or
otherwise. Accounts maintained for purposes of this Plan shall merely
constitute bookkeeping records of the Company and shall not constitute any
allocation whatsoever of any assets of the Company or be deemed to create any
trust (other than the "rabbi" trust referred to above) or special deposit with
respect to any of the Company's assets.
14. Amendment. The Company may from time to time amend or terminate the
Plan, provided that no amendment or termination of the Plan shall adversely
affect the account balances of any Participant as they existed immediately
before such amendment or termination or the manner of distribution thereof,
unless such Participant shall have consented thereto in writing.
15. Miscellaneous.
(a) All references to the masculine pronoun shall include the feminine
pronoun and all references to a singular noun shall include the plural
where appropriate.
(b) Except to the extent that Federal law provides otherwise, all
questions pertaining to the construction, validity, and effect of the
provisions hereof are to be determined in accordance with the laws of the
State of Ohio.
(c) The Company is authorized to make such arrangements as it deems
necessary to satisfy any federal, state, and local tax withholding
requirements on any distribution or deemed distribution to a Participant,
including withholding of either cash or Stock (as determined by the
Company).
(d) All valuations of Stock hereunder shall be valued at the closing
price of the Stock on the New York Stock Exchange on the prescribed date.
16. Effective Date.
The Plan shall take effect as of March 1, 1995.
A-5
<PAGE>
EXHIBIT B
TEXT OF 1995 AMENDMENTS TO DIRECTORS' DEFERRED FEE PLAN
The Company's Directors' Deferred Fee Plan (the "Directors' Plan") has been
amended in the following respects:*
A. Section 2.14 of the Directors' Plan has been amended as follows:
2.14 Participation Agreement. Participation Agreement means the agreement
filed by a Participant, in the form prescribed by the Committee, pursuant to
Section 3.3 3.2, hereof.
B. Article IV of the Directors' Plan has been amended to add a new Section
3.2 as follows:
3.2 MANDATORY PARTICIPATION. DIRECTORS ELIGIBLE TO PARTICIPATE IN THE PLAN,
EXCEPT FOR A DIRECTOR WHO HAS WAIVED HIS OR HER RIGHT TO A QUARTERLY BOARD
RETAINER FEE, MUST DEFER A MINIMUM OF TWENTY-FIVE PERCENT (25%) OF THE
QUARTERLY BOARD RETAINER FEE INTO A DEFERRED BENEFIT ACCOUNT MAINTAINED IN
UNITS.
C. Section 3.2 of the Directors' Plan has been amended as follows:
3.3 [3.2] VOLUNTARY PARTICIPATION. [PARTICIPATION.] ELIGIBLE DIRECTORS MAY
VOLUNTARILY PARTICIPATE IN THE PLAN, AS PROVIDED IN SECTION 4.1 HEREOF,
[Participation in the Plan shall be limited to eligible Directors who elect to
participation in the Plan] by filing a Participation Agreement with the
Company. A properly completed and executed Participation Agreement must be
filed on or prior to the December 31 immediately preceding the Plan Year in
which the Participant's VOLUNTARY participation in the Plan will commence, and
the election to participate shall be effective on the first day of the Plan
Year following receipt by the Company of the Participation Agreement,
provided, however, that, in the case of the first Plan Year, such a
Participation Agreement must be filed by April 15, 1995 and shall be effective
as of THE DATE OF APPROVAL OF THE PLAN BY STOCKHOLDERS [the first day of the
Plan Year]. In the event that a Director first becomes eligible to participate
during the course of the Plan Year, such VOLUNTARY PARTICIPATION [Participation
Agreement] shall be effective only with regard to Fees earned or payable
following the filing of the Participation Agreement with the Committee.
D. Section 3.3 of the Directors' Plan has been amended as follows:
3.4 Termination of VOLUNTARY Participation. A Participant may elect to
terminate his or her VOLUNTARY participation in the Plan by filing a written
notice thereof with the Committee, which termination shall be effective at any
time specified by the Participant in the notice, but not earlier than the
first day of the Plan Year immediately succeeding the Plan Year in which such
notice is filed with the Committee. Amounts credited to such Participant's
Deferred Benefit Account with respect to periods prior to the effective date
of such termination shall continue to be payable pursuant to, and otherwise
governed by, the terms of the Plan.
E. Section 4.1 of the Directors' Plan has been amended as follows:
4.1 VOLUNTARY Deferral. IN ADDITION TO THE MANDATORY DEFERRAL REQUIRED
PURSUANT TO SECTION 3.2 HEREOF, a Participant may elect to defer all, or a
specified percentage, of his or her Fees, and a Participant may elect to have
his or her deferred Fees credited to his OR HER Deferred Benefit Account
either in dollar amounts or Units. A Participant may not change the percentage
of his or her Fees to be deferred, or the form in which Fees are to be
credited DURING A PLAN YEAR OR AFTER THE CREDITING OF A DEFERRAL, BUT MAY
ELECT A DIFFERENT PERCENTAGE AND/OR A DIFFERENT FORM IN WHICH THE FEES ARE TO
BE CREDITED PROSPECTIVELY BY FILING A NEW PARTICIPATION AGREEMENT WITH THE
COMMITTEE ON OR PRIOR TO THE DECEMBER 31 IMMEDIATELY PRECEDING THE NEXT PLAN
YEAR, WHICH NEW PARTICIPATION AGREEMENT SHALL SUPERSEDE THE PREVIOUSLY FILED
PARTICIPATION AGREEMENT EFFECTIVE AS OF THE FIRST DAY OF THE PLAN YEAR
FOLLOWING THE FILING OF SUCH NEW PARTICIPATION AGREEMENT AND EFFECTIVE AS TO
ALL DEFERRALS THEREAFTER.
- --------
*Note: Bold-face text reflects additions and line-out text reflects deletions.
B-1
<PAGE>
F. Section 4.2 of the Directors' Plan has been amended as follows:
4.2 Crediting of Deferred Fees. Deferred Fees that a Participant elects to
have credited in dollar amounts shall be credited to the Participant's
Deferred Benefit Account as they become payable to the Director.
Deferred fees payable to a Director during a Plan Year that ARE MANDATORILY
DEFERRED PURSUANT TO SECTION 3.2 HEREOF OR THAT a Participant elects to have
credited in Units shall be credited to the Participant's Deferred Benefit
Account annually after the end of such Plan Year on the basis of the average
of the Market Values of the Common Stock on the last trading day in each
calendar month during such Plan Year.
G. Article V of the Directors' Plan has been amended to add a new Section
5.6 as follows:
5.6 COMPANY CONTRIBUTION. EACH DEFERRED BENEFIT ACCOUNT TO WHICH FEES HAVE
BEEN CREDITED IN UNITS SHALL BE CREDITED ANNUALLY AFTER THE END OF EACH PLAN
YEAR WITH ADDITIONAL UNITS EQUAL IN VALUE TO ONE HUNDRED AND TWENTY-FIVE
PERCENT (125%) OF THE NUMBER OF UNITS CREDITED TO SUCH DEFERRED BENEFIT
ACCOUNT PURSUANT TO SECTIONS 3.2, 4.1 AND 5.3 HEREOF.
H. Article 10.1 of the Directors' Plan has been amended as follows:
10.1 Funding. Neither Participants, nor their Beneficiaries, nor their
heirs, successor or assigns, shall have any secured interest or claim in any
property or assets of the Company. The Company's obligation under the Plan
shall be merely that of an unfunded and unsecured promise of the Company to
pay money in the future. It is the intention of the Company that the Plan be
unfunded for tax purposes and for purposes of Title I of ERISA. The Company
may create a trust to hold funds, Common Stock or other securities to be used
in payment of its obligations under the Plan, and may fund such trust WITH
CASH, COMMON STOCK ACQUIRED IN THE OPEN MARKET OR HELD IN THE TREASURY OR
ALLOCATED FROM THE ASSOCIATES OWNERSHIP TRUST, OR OTHER SECURITIES; provided,
however, that any funds OR SECURITIES contained therein shall remain liable
for the claims of the Company's general creditors.
B-2
<PAGE>
[RECYCLED PAPER LOGO]
<PAGE>
M.A. HANNA COMPANY
200 Public Square--Suite 36-5000
Cleveland, Ohio 44114-2304
Annual Meeting--May 3, 1995
The undersigned hereby appoints M. D. Walker, D. J. McGregor, and J. S. Pyke,
P Jr. as Proxies, each with the power to appoint his substitute, and hereby
R authorizes them to represent and to vote, as designated below, all the shares
O of Common Stock of M. A. Hanna Company held on record by the undersigned on
X March 6, 1995 at the annual meeting of stockholders to be held on May 3, 1995
Y and any adjournment thereof.
Election of Directors, Nominees: (change of address)
Nominees: B. C. Ames, C. A. Cartwright,
W. R. Embry, --------------------------
J. T. Eyton, G. D. Kirkham,
M. L. Mann, --------------------------
D. J. McGregor, R. W. Pogue,
M. D. Walker --------------------------
This proxy when properly executed will be voted in the manner directed herein
by the undersigned stockholder. If no direction is made, this proxy will be
voted for the election of directors nominated by the Board of Directors,
ratification of the appointment of auditors, approval of the Voluntary Non-
Qualified Deferred Compensation Plan and approval of amendments to the
Directors' Deferred Fee Plan.
Please sign exactly as the name appears on reverse side. When shares are held
by joint tenants, both should sign. When signing as an attorney, executor,
administrator, trustee or guardian, please give full title as such. If a
corporation, please sign in full corporate name by President or other
authorized officer. If a partnership, please sign in partnership name by
authorized person.
This proxy is solicited on behalf of the Board of Directors.
SEE REVERSE
NO. PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY SIDE
<PAGE>
[_] Please mark your SHARES IN YOUR NAME REINVESTMENT SHARES
votes as in this
example.
FOR WITHHELD
1 Election of [_] [_]
Directors
(see reverse)
For, except vote withheld from the following nominee(s):
--------------------------------------------------------
FOR AGAINST ABSTAIN
2 Ratification of [_] [_] [_]
appointment of
auditors.
3 Ratification and approval [_] [_] [_]
of Voluntary Non-Qualified
Deferred Compensation
Plan.
FOR AGAINST ABSTAIN
4 Ratification and approval [_] [_] [_]
of amendments to
Directors'
Deferred Fee Plan.
5 Upon such other [_] [_] [_]
business as may properly
come before the meeting.
Change
of [_]
Address
SIGNATURE(S) DATE
------------------------------ -------------
SIGNATURE(S) DATE
------------------------------ -------------
NOTE: Please sign exactly as name appears hereon. Joint owners should each sign.
When signing as attorney, executor, administrator, trustee or guardian,
please give full title as such.
