<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
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
/X/ Definitive proxy statement
/ / Definitive additional materials
/ / Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
Harsco Corporation
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
Harsco Corporation
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (Check the appropriate box):
/X/ $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).
/ / $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 transactions applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:1
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
/ / 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:
- --------------------------------------------------------------------------------
- ---------------
1Set forth the amount on which the filing fee is calculated and state how it
was determined.
<PAGE> 2
[HARSCO CORPORATION LOGO]
NOTICE OF
1995 MEETING
AND PROXY
STATEMENT
<PAGE> 3
[HARSCO CORPORATION LOGO]
HARSCO CORPORATION
P.O. Box 8888
Camp Hill, Pennsylvania 17001-8888
March 22, 1995
To Our Stockholders:
You are cordially invited to attend the 1995 Annual Meeting of Stockholders of
your Company, which will be held on Tuesday, April 25, 1995, beginning at 10
a.m. at the Radisson Penn Harris Hotel and Convention Center, Camp Hill,
Pennsylvania.
Information about the Annual Meeting, including a listing and discussion of the
various matters on which you, as our stockholders, will act, may be found in the
formal Notice of Annual Meeting of Stockholders and Proxy Statement which
follow. We look forward to greeting as many of our stockholders as possible.
Whether you plan to attend the Annual Meeting or not, we urge you to fill in,
sign, date and return the enclosed Proxy Card, in the postage-paid envelope
provided, in order that as many shares as possible may be represented at the
Annual Meeting. The vote of every stockholder is important and your cooperation
in returning your executed Proxy promptly will be appreciated.
Sincerely,
/s/ D. C. Hathaway
D. C. Hathaway
Chairman, President and
Chief Executive Officer
<PAGE> 4
HARSCO CORPORATION
P.O. Box 8888
Camp Hill, Pennsylvania 17001-8888
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
The Annual Meeting of Stockholders of Harsco Corporation will be held on
Tuesday, April 25, 1995, at 10 a.m. at the Radisson Penn Harris Hotel and
Convention Center, Camp Hill, Pennsylvania to consider and act upon the
following matters:
1. Election of three Directors to serve until the 1998 Annual Meeting of
Stockholders, and until their successors are elected and qualified;
2. Considering the approval of the 1995 Executive Incentive Compensation
Plan;
3. Considering the approval of the 1995 Non-Employee Directors' Stock Plan;
4. Considering the adoption of the appointment by the Board of Directors of
Coopers & Lybrand L.L.P. as independent accountants to audit the accounts
of the Company for the fiscal year ending December 31, 1995; and
5. Such other business as may properly come before the Annual Meeting.
The Board of Directors has fixed the close of business on March 6, 1995, as the
record date for the determination of stockholders who are entitled to notice of
and to vote at the Annual Meeting and at any adjournments thereof. The polls
will open at 9:30 a.m. on the date of the Annual Meeting and will close at
approximately 10:15 a.m. Proxies will be accepted continuously from the time of
mailing until the closing of the polls.
STOCKHOLDERS WHO DO NOT EXPECT TO ATTEND THE ANNUAL MEETING IN PERSON ARE
REQUESTED TO FILL IN, DATE, SIGN AND MAIL THE ENCLOSED FORM OF PROXY IN THE
ENVELOPE PROVIDED, TO WHICH NO POSTAGE NEED BE AFFIXED IF MAILED IN THE UNITED
STATES.
By Order of the Board of Directors,
/s/ Paul C. Coppock
Paul C. Coppock
Senior Vice President, Chief Administrative Officer,
General Counsel and Secretary
March 22, 1995
<PAGE> 5
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
This Proxy Statement has been prepared in connection with the solicitation
by the Board of Directors of Harsco Corporation, a Delaware corporation (the
"Company"), of Proxies in the accompanying form to be used at the Annual Meeting
of Stockholders of the Company, to be held April 25, 1995, or at any adjournment
or adjournments of such Annual Meeting.
The record date for stockholders of the Company entitled to notice of, and
to vote at, the Annual Meeting is the close of business on March 6, 1995. On the
record date, there were issued and outstanding 25,228,491 shares of the
Company's common stock, $1.25 par value (the "common stock"). This figure does
not include 7,173,098 shares reacquired and held by the Company as treasury
stock which will not be voted. All such shares are one class, with equal voting
rights, and each holder thereof is entitled to one vote on all matters voted on
at the Annual Meeting for each share registered in such holder's name. The
presence, in person or by proxy, of a majority of the issued and outstanding
shares of common stock is necessary to constitute a quorum at the Annual
Meeting. Assuming that a quorum is present, the affirmative vote by the holders
of a plurality of the shares cast at the Annual Meeting will be required to act
on the election of directors, and the affirmative vote by the holders of a
majority of the shares entitled to vote present in person or by proxy will be
required to act on all other matters to come before the Annual Meeting,
including the approval of the 1995 Executive Incentive Compensation Plan, the
1995 Non-Employee Directors' Stock Plan and the adoption of the appointment of
Coopers & Lybrand L.L.P. as independent accountants for the current fiscal year.
In certain circumstances, a stockholder will be considered to be present at
the Annual Meeting for quorum purposes but will not be deemed to have cast a
vote on a matter. Such circumstances exist when a stockholder is present but
specifically abstains from voting on a matter or when shares are represented at
the Annual Meeting by a proxy conferring authority to vote only on certain
matters ("broker non-votes"). In conformity with Delaware law, abstentions and
broker non-votes will not be treated as votes cast with respect to election of
directors, and therefore will not affect the outcome of such matter. However,
with respect to each other matter presented at the Annual Meeting, abstentions
will be treated as negative votes on such matters, while broker non-votes will
not be counted in determining the outcome.
The shares of common stock represented by each properly executed proxy
received by the Board of Directors will be voted at the Annual Meeting in
accordance with the instructions specified therein. If no instructions are
specified, such shares of common stock will be voted FOR the election of
nominees for Directors, FOR the approval of the 1995 Executive Incentive
Compensation Plan, FOR the approval of the 1995 Non-Employee Directors' Stock
Plan and FOR the adoption of the appointment of Coopers & Lybrand L.L.P. as
independent accountants. The Board of Directors knows of no other business to
come before the Annual Meeting. However, if any other matters are properly
presented at the Annual Meeting, or any adjournment thereof, the persons voting
the proxies will vote them in accordance with their best judgment. Any proxy may
be revoked by notifying the Secretary of the Company in writing at any time
prior to the voting of the proxy.
The principal executive offices of the Company are located at 350 Poplar
Church Road, Wormleysburg, Pennsylvania (mailing address: P.O. Box 8888, Camp
Hill, Pennsylvania 17001-8888). This Proxy Statement and accompanying Notice of
Meeting and form of Proxy are first being mailed to stockholders on or about
March 22, 1995.
1
<PAGE> 6
ELECTION OF DIRECTORS
The Company currently has twelve Directors, of which five have a term of
office which will expire with the forthcoming Annual Meeting. The Company's
By-laws authorize the Board of Directors to fix the number of Directors from
time to time, provided that such number will not be less than five nor more than
twelve. In accordance with the By-laws, the Board of Directors has fixed the
number of Directors at ten commencing with the forthcoming Annual Meeting.
At the 1986 Annual Meeting of Stockholders, a Classified Board was adopted
and elected by the Company's stockholders. Under this system, the Board of
Directors is divided into three classes. One class is elected each year for a
three-year term. The class whose term will expire at the 1995 Annual Meeting of
Stockholders consists of five Directors, three of whom are nominees and two of
whom are retiring from the Board at the end of their current term. The
stockholders are asked to vote FOR Messrs. Kirk, Marley and Scheiner, each of
whom has been duly nominated by the Board of Directors, to serve a term of
office until the 1998 Annual Meeting of Stockholders and their respective
successors have been elected and qualified. However, should any nominee become
unavailable or prove unable to serve for any reason, Proxies will be voted for
the election of such other person or persons as the Board of Directors may
select to replace such nominee. No circumstance is presently known which would
render any nominee named herein unavailable to serve.
Mr. F. E. ("Mike") Masland III and General DeWitt C. Smith, Jr. (U.S.
Army-Retired), Chairman of the Audit Committee and Vice Chairman of the
Management Development and Compensation Committee, respectively, are retiring
from the Board effective with the upcoming Annual Meeting. Their many years of
dedicated service are greatly appreciated.
Each person named as a nominee for Director has advised the Company of his
willingness to serve if elected. The information set forth below states the name
of each nominee for Director and of each Director continuing in office, his age,
a description of his present and previous positions, the year in which he first
became a Director of the Company, his business experience, other directorships
he holds and the Committees of the Board on which he serves.
The Board of Directors met seven times during the fiscal year ended
December 31, 1994.
2
<PAGE> 7
NOMINEES FOR TERMS EXPIRING IN 1998
<TABLE>
<CAPTION>
DIRECTOR
OF THE
POSITION WITH THE COMPANY COMPANY
NAME AGE AND PRIOR BUSINESS EXPERIENCE SINCE
- --------------------------------------------------------------------------------------
<C> <C> <S> <C>
66 Chairman of British Aerospace Holdings, 1990
[PHOTO] Inc.; former Chairman of CSX
R. L. Kirk Transportation Inc. Mr. Kirk served as
Chairman and Chief Executive Officer of
Allied-Signal Aerospace Company from 1986
to 1989. He was President and Chief
Operating Officer of LTV Aerospace and De-
fense Company from 1977 until 1986. He is
also a Director of British Aerospace PLC
of London, England and Reflectone, Inc. of
Tampa, Florida.
Member of the Nominating Committee and the
Defense Strategic Plan Committee.
59 Chairman of AMP Incorporated. Mr. Marley 1993
[PHOTO] joined AMP Incorporated in 1963 and was
J. E. Marley appointed Corporate Vice President,
Operations in 1983. He became the
company's President in 1986 and assumed
the position of President and Chief
Operating Officer in 1990. He is a
Director of AMP Incorporated, Armstrong
World Industries, Inc., and Dauphin
Deposit Corporation.
Member of the Management Development and
Compensation Committee.
50 President and Chief Operating Officer of 1995
[PHOTO] Benatec Associates, Inc. He was President
J. I. Scheiner of Stoner Associates, Inc. from 1988 to
1991 and Vice President of Huth Engineers
from 1987 to 1988. Served as Secretary of
Revenue for the Commonwealth of
Pennsylvania from 1983 to 1987, and from
1979 to 1983, served as Deputy Secretary
for Administration, Pennsylvania De-
partment of Transportation. Member of the
Pennsylvania Chamber of Business and
Industry Board and a Trustee of Harrisburg
Area Community College.
</TABLE>
3
<PAGE> 8
DIRECTORS WHOSE TERMS EXPIRE IN 1997
<TABLE>
<CAPTION>
DIRECTOR
OF THE
POSITION WITH THE COMPANY COMPANY
NAME AGE AND PRIOR BUSINESS EXPERIENCE SINCE
- -------------------------------------------------------------------------------------
<C> <C> <S> <C>
50 Chairman since April 1, 1994. President 1991
[PHOTO] and Chief Executive Officer since January
D. C. Hathaway 1, 1994. Was President and Chief Operating
Officer of the Company from May 1, 1991 to
January 1, 1994. Served as Senior Vice
President-Operations from 1986 to May 1991
and as Group Vice President from 1984 to
1986. Prior to 1984, was Chairman and
Chief Executive Officer of Dartmouth
Investments Limited in the United Kingdom
which was acquired by the Company in 1979.
Mr. Hathaway is a Director of Dauphin
Deposit Corporation.
Chairman of the Special Project Review
Committee and the Defense Strategic Plan
Committee; member of the Executive
Committee.
69 President of Penn Harris Company (hotel) 1983
[PHOTO] since 1977. Mr. Nation is also a Director
R. F. Nation of Dauphin Deposit Corporation, and has
been involved in a variety of activities
in community, state and industrial areas.
Chairman of the Management Development and
Compensation Committee; member of the
Executive Committee, the Stock Repurchase
Committee, the Defense Strategic Plan
Committee and the Special Project Review
Committee.
67 Retired President and Chief Executive 1990
[PHOTO] Officer of Mobay Corporation. Mr. Prater
N. H. Prater is a Director of Koppers Industries, Inc.,
Calgon Carbon Corp. and Melamine Chemical
Corp. He serves as a trustee of the
University of Pittsburgh, Robert Morris
College and as a member of the Interna-
tional Advisory Board of Georgia Institute
of Technology. Presently a chaired
Visiting Professor at the University of
Virginia.
Member of the Audit Committee, the Manage-
ment Development and Compensation Commit-
tee and the Special Project Review
Committee.
51 Mr. Sordoni is Chairman of Sordoni 1988
[PHOTO] Construction Services, Inc. (construction
A. J. Sordoni, III management) and has been employed by that
company since 1967. Mr. Sordoni is the
former Chairman and Director of C-TEC
Corporation (telecommunications) and
Mercom, Inc. (cable television) and a past
Director of Pennsylvania Gas and Water Co.
and United Penn Bank.
Chairman of the Stock Repurchase
Committee; member of the Audit Committee,
the Management Development and
Compensation Committee and the Nominating
Committee.
</TABLE>
4
<PAGE> 9
DIRECTORS WHOSE TERMS EXPIRE IN 1996
<TABLE>
<CAPTION>
DIRECTOR
OF THE
POSITION WITH THE COMPANY COMPANY
NAME AGE AND PRIOR BUSINESS EXPERIENCE SINCE
- -------------------------------------------------------------------------------------
<C> <C> <S> <C>
72 Retired as Chairman of the Board of the 1972
[PHOTO] Company on April 30, 1991; served as
J. J. Burdge Chairman and Chief Executive Officer from
1983 through April, 1987. Mr. Burdge
served as President and Chief Executive
Officer from 1977 to 1983. Mr. Burdge is
also a Director of Pennsylvania Power &
Light Company.
Chairman of the Executive Committee;
member of the Nominating Committee and the
Special Project Review Committee.
56 Professor of Finance and International 1991
[PHOTO] Business at the Stern School of Business,
R. C. Smith New York University. Currently Limited
Partner, and until 1987 a General Partner,
of Goldman, Sachs & Co., an investment
banking firm. Mr. Smith is a specialist in
international investment banking and
corporate finance. He was President of
Goldman Sachs International Corporation
from 1980 to 1984. He became a General
Partner of Goldman, Sachs & Co. in 1977.
Member of the Stock Repurchase Committee,
Defense Strategic Plan Committee and the
Special Project Review Committee.
51 President and Chief Executive Officer of 1986
[PHOTO] the Colonial Williamsburg Foundation.
R. C. Wilburn Former President of Carnegie Institute and
Carnegie Library (educational and cultural
complex) located in Pittsburgh,
Pennsylvania. From 1983 to 1984, Mr.
Wilburn served as the Secretary of Educa-
tion for the Commonwealth of Pennsylvania.
From 1979 to 1983, Mr. Wilburn served as
the Secretary of Budget and Administration
for the Commonwealth of Pennsylvania. He
is also a Director of Dravo Corp.
Chairman of the Nominating Committee; mem-
ber of the Audit Committee, Executive
Committee and the Stock Repurchase
Committee.
</TABLE>
5
<PAGE> 10
SHARE OWNERSHIP OF MANAGEMENT
The following table sets forth, as of March 6, 1995, information with
respect to the beneficial ownership of the Company's outstanding voting
securities by (a) each Director, (b) the Company's chief executive officer and
the Company's four most highly compensated executive officers (the "Named
Executives") and (c) all Directors and executive officers as a group. All of the
Company's outstanding voting securities are common stock.
<TABLE>
<CAPTION>
NUMBER OF NUMBER OF
NAME SHARES(1) STOCK OPTIONS
-------------------------------------------------- ------------ -------------
<S> <C> <C>
J. J. Burdge...................................... 114,562(2) 4,000
L. A. Campanaro................................... 7,195 26,951
P. C. Coppock..................................... 11,098 33,050
W. D. Etzweiler................................... 22,538 21,154
D. C. Hathaway.................................... 27,151 33,510
R. L. Kirk........................................ 1,616 4,000
J. E. Marley...................................... 250 2,000
F. E. Masland III................................. 1,830(3) 5,000
R. F. Nation...................................... 12,000 4,000
N. H. Prater...................................... 1,000 4,000
J. I. Scheiner.................................... 513 0
D. C. Smith, Jr. ................................. 728 6,000
R. C. Smith....................................... 2,000 3,000
A. J. Sordoni, III................................ 7,000 6,000
B. W. Taussig..................................... 13,754 29,800
R. C. Wilburn..................................... 400 6,000
All Directors and Executive Officers as a Group
(17 persons in total, including those listed
above).......................................... 226,351 197,865
</TABLE>
- ------------
(1) Includes in the case of Messrs. Campanaro, Coppock, Etzweiler, Hathaway,
Taussig and all executive officers as a group, 5,095 shares, 4,379 shares,
8,322 shares, 7,536 shares, 2,667 shares and 30,614 shares, respectively,
pursuant to the Company's Savings Plan in respect of which such persons have
shared voting power.
(2) Includes 23,850 shares owned by his wife as to which Mr. Burdge disclaims
beneficial ownership.
(3) Includes 500 shares owned by his wife as to which Mr. Masland disclaims
beneficial ownership.
Except as otherwise stated, each individual has sole voting and investment
power over the shares set forth opposite his name. As of March 6, 1995, the
Directors and executive officers of the Company as a group beneficially owned
less than 1% of the Company's outstanding common stock. No Director or executive
officer beneficially owned as much as 1% of the outstanding common stock.
6
<PAGE> 11
SHARE OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
<TABLE>
<CAPTION>
NAME AMOUNT
AND ADDRESS AND NATURE OF
TITLE OF OF BENEFICIAL BENEFICIAL PERCENT
CLASS OWNER OWNERSHIP OF CLASS
- --------------------------- ----------------------- ----------------------- --------
<S> <C> <C> <C>
Common..................... The Capital Group 1,647,500 6.55
Companies, Inc. and Sole Dispositive Power
Capital Research and
Management Company
833 South Hope Street
Los Angeles, CA 90071
Common..................... Hotchkis and Wiley 1,332,000 6.10
800 West Sixth Street Sole Voting Power
Fifth Floor
Los Angeles, CA 90017
</TABLE>
As of March 6, 1995, except as set forth above, no persons or group was
known by the Board of Directors to own beneficially more than 5% of the
outstanding voting securities of the Company.
BOARD COMPENSATION COMMITTEE REPORT
ON EXECUTIVE COMPENSATION
The Company's executive compensation program is administered by the
Management Development & Compensation Committee ("Compensation Committee"), a
Committee of the Board of Directors composed of the non-employee Directors
listed below this Report. The Company considers all of the members of the
Compensation Committee to be independent and none of these Directors have any
interlocking or other relationships with the Company that are subject to
disclosure under the Securities Exchange Commission rules relating to proxy
statements. All decisions of the Compensation Committee relating to the salaries
and grade levels of the Company's executive officers are approved by the full
Board.
Set forth below is a report prepared by the members of the Compensation
Committee whose names appear below this report, addressing the Company's
compensation policies for 1994 as they affected the Company's executive
officers, including the Named Executives.
EXECUTIVE OFFICER COMPENSATION POLICIES
The Compensation Committee's executive compensation policies are designed
to:
- Provide incentives for achievement of the Company's annual and long-term
performance goals;
- Reinforce the common interest of management and the shareholders in
enhancing shareholder value;
- Reward individual initiative and achievement;
- Provide levels of compensation that are fair, reasonable and competitive
with comparable industrial companies; and
- Attract and retain qualified executives who are critical to the Company's
long-term success.
The Compensation Committee seeks to achieve these goals through a
compensation program applicable to all corporate and division officers of the
Company. The current compensation program is composed primarily of:
- Salary based upon grade levels that reflect the degree of responsibility
associated with the executive's position and the executive's past
achievement;
7
<PAGE> 12
- Annual incentive compensation paid in cash based upon achievement of
annual return on asset ("ROA") objectives and strategic goals established
for the relevant business unit;
- Long-term incentive compensation paid in cash based upon achievement of
rate of return objectives by the appropriate business unit over a three
year cycle;
- Incentive stock option grants under the 1986 Stock Option Plan made
annually by the Compensation Committee at its discretion with exercise
prices equal to the market price at the date of grant; and
- Various retirement and other benefits commonly found in similar
companies.
The Compensation Committee believes that the Company benefits from a broad
based executive compensation program that extends the program's incentives to
approximately 53 division officers in addition to the six executive officers and
five other corporate officers. However, as an executive's level of
responsibility increases, a greater portion of his or her potential total
compensation opportunity should be based on performance incentives and a lesser
portion on salary, causing greater variability in the individual's total
compensation from year to year. This is achieved under the Company's current
Incentive Compensation Plan by using the executive's numeric grade level and
annual salary as multipliers along with the proportion of target achievement
when computing annual and long-term incentive compensation awards. In addition,
as executives rise to positions that can have a greater impact on the Company's
performance, the compensation program should place more emphasis on the value of
the common stock. Therefore, the quantity of stock options granted to an
individual in any year is based upon the executive's grade level. The Company
has not reset the exercise price on any existing stock options in the past and,
as a matter of sound compensation policy, does not foresee doing so in the
future.
On August 10, 1993, the Omnibus Budget Reconciliation Act of 1993 was
signed into law, making significant revisions to the United States tax laws.
This Act added a new provision in Section 162(m) of the Internal Revenue Code
that, beginning in 1994, limits the deductibility of executive compensation for
individuals in excess of $1 million per year paid by publicly traded
corporations to the chief executive officer and the four other executives named
in the compensation table of this Proxy Statement. The Company has determined
that, given the rates of compensation currently in effect and the interim
exemption under proposed Internal Revenue Service regulations applicable to
income derived from stock options granted under the Harsco 1986 Stock Option
Plan, the Company should not be exposed to any nondeductibility of executive
compensation expense under Section 162(m) in the 1995 tax year. In connection
with the detailed review of the Company's executive compensation structure
conducted during this past year, the Compensation Committee considered and
approved changes in the structure and method of payment of annual incentive
awards to corporate and division officers beginning in 1995, with one of the
objectives being to preserve the deductibility, to the extent possible, of any
such executive compensation subject to Section 162(m) in the future. The 1995
Executive Incentive Compensation Plan, which is subject to Shareholder approval,
is described later in this Report.
RELATIONSHIP OF PERFORMANCE TO COMPENSATION
The Company currently ties executive pay to corporate performance primarily
through the Annual and Long-Term Incentive Compensation Plan awards that are
based upon achievement of objectives adopted by the Compensation Committee, and
stock option grants which only provide realizable compensation through increases
in the stock price.
Incentive Compensation Plans
The opportunity for compensation under the Annual and Long-Term Incentive
Compensation Plans in effect for 1994 is heavily dependent upon meeting ROA
objectives established by the
8
<PAGE> 13
Compensation Committee for the appropriate business unit. The entire long-term
incentive compensation award is based upon the degree of achievement of ROA
objectives over a three year cycle. The Annual Incentive Compensation Plan, in
each year, provides an opportunity for compensation equal to the opportunity
under the Long-Term Plan. Under the Annual Incentive Compensation Plan, 60% of
the total possible award is based on achievement of various strategic objectives
established by the Compensation Committee each year, and 40% is based on
reaching annual ROA objectives. Thus, taken together, the total potential award
under the Annual and Long-Term Plans is based 70% on ROA and 30% on strategic
goals.
Under the current Long-Term Incentive Compensation Plan, the Compensation
Committee each year establishes minimum, target and maximum ROA objectives for
the Corporate Office and each division for the three year Plan cycle that is
commencing. No award will be made for achievement of only the minimum target,
but awards will begin to be earned as ROA rises above the minimum. Achieving
target ROA results in an award that is two-thirds of the award for achieving the
maximum ROA objective and the award will continue to rise correspondingly as the
achieved ROA approaches the maximum ROA objective set by the Compensation
Committee. The ROA achieved during the last three year Plan cycle resulted from
two record years and one near-record year of earnings for the Company, thereby
exceeding the maximum return objective under the Plan, and the executive
officers all received 100% of the maximum award under the Long-Term Incentive
Compensation Plan for the three year cycle completed in 1994.
The strategic goals, which constitute 60% of the evaluation criteria under
the current Annual Incentive Compensation Plan, are established by the
Compensation Committee early in each year and are assigned various weights. The
strategic goals for 1994 involved achievement of earnings objectives for each
major segment of our business, from recurring operations as a whole and for the
Company on an overall basis; minimization of the dilutive effect on earnings
from the acquisition of MultiServ in the previous year; income objectives from
United Defense, L.P.; reduction in Corporate Office administrative expense;
reduction in the Company's overall effective tax rate; implementation of a new
executive incentive compensation program; and an earnings improvement in bus
operations. The Compensation Committee also establishes minimum, target and
maximum ROA objectives for the Corporate Office and each division for that year,
which will constitute the other 40% of the annual bonus criteria. These ROA
objectives operate in the same manner as under the Long-Term Incentive
Compensation Plan discussed above.
The executive officers attained 82.2% of maximum achievement with respect
to the strategic goals, yielding a payout of 63.7% of maximum. The income
performance yielded an ROA for 1994 which exceeded the target return, but was
slightly below the maximum return, yielding a payout return of 92.2% of maximum.
The combined achievement on strategic and ROA goals resulted in each of the
executive officers earning 75.11% of the maximum annual incentive compensation
for 1994.
Stock Options
As shown in the table that follows, the Compensation Committee granted
stock options to the executive officers in January 1994 under the 1986 Stock
Option Plan with an exercise price of $43.25 per share, which was the market
price on the date of grant. This Plan was approved by the stockholders and is
used to make grants to other corporate and division officers as well as the
executive officers. The number of options granted to each executive is
determined by grade level. Thus, the Chairman, President and Chief Executive
Officer, Mr. Hathaway, who has the highest grade level, received the largest
award.
The annual number of options granted for each grade level was originally
established in 1987 based upon a recommendation from a compensation consulting
firm and that firm's survey of the long-term incentive compensation practices of
130 major United States companies. Subsequently,
9
<PAGE> 14
the number of options granted for each grade level was increased 20% in 1988 and
20% in 1989 to enhance the competitiveness of the Company's program and to
reinforce the alignment of the officers' financial interests with those of the
stockholders. In determining the appropriateness of maintaining this grade level
structure for the January 1994 grants, the Committee considered the number of
options previously granted to participants under the 1986 Stock Option Plan and
the aggregate number that would be outstanding upon approval of the 1994 grants.
SALARIES
The Compensation Committee made its regular annual review of salaries of
all corporate and division officers, including the Named Executives, at its
April 1994 Committee meeting, and recommended salary increases which the Board
then approved. Subsequently, in considering and approving the new 1995 Executive
Incentive Compensation Plan for implementation effective January 1, 1995, the
Compensation Committee changed the annual review of base salaries of all
officers to January 1st of each year. In succeeding years, the annual review of
officer base salaries will take place on January 1.
Although the timing of the Committee's annual review of salaries of all
corporate and division officers, including the Named Executives, will change as
indicated above, the methodology remains essentially the same as in previous
years. Each year, the Compensation Committee establishes executive salary
budgets for corporate and division officers based upon survey data provided by a
number of major consulting firms. For 1994, the Committee approved a budget for
salary increases which was slightly below the range of planned salary budgets
indicated by the various surveys. The Committee then adjusts the salary of each
officer based upon the available salary budget, the performance of each officer,
comparison to other internal salaries and the Company's salary range structure
for various grade levels. The salary range structure for various grade levels is
also revised from time to time based upon industry survey data provided by a
number of major consulting firms. Based on this information, the Committee
approved a 5% increase in the salary range structure at its March 1994 meeting.
The last adjustment to the salary range structure had been made in 1991. The
various industry compensation surveys considered by the Committee are generally
broad based surveys of companies selected by the consulting firms which are not
limited to the companies within the Dow Jones Industrial-Diversified Index
referenced elsewhere in the Proxy Statement, though some of those companies may
have been included in the surveys.
Following the April 1994 Committee meeting, the Committee requested an
analysis of competitive compensation levels and total direct compensation
(defined as base salary, annual incentives and long-term incentives in the form
of cash and stock option awards) to be performed by an outside consultant.
Towers Perrin was selected, and the results of two detailed studies were
provided to the Committee for its review and use in adjusting the salary of each
officer as one of the elements in a total compensation package. The initial
analysis by Towers Perrin compared the Company's compensation program with their
database of 276 participating corporations. The second survey compared the
Company's total direct compensation levels for 41 specified officer positions,
including those of the Named Executives, with a competitive database comprised
of 95 companies with revenues between $900 million and $3 billion. At its
November 1994 meeting, the Committee then adjusted the salary of each corporate
and division officer, including the Named Executives, effective January 1, 1995,
based upon the available salary budget, the competitive survey information and a
review of the performance of each officer. The salary increases were reduced on
a prorated basis to take into account the less than one year interval between
salary reviews. The salary for the Chief Executive Officer was substantially
below the survey median. The compensation for the other executive officers,
including the Named Executives, was below the survey median.
In general, the Committee strives to maintain total compensation packages
which range from moderately below to moderately above the industry medians.
10
<PAGE> 15
OTHER COMPENSATION PLANS
The Company has certain other broad based employee benefit plans in which
the executive officers participate on the same terms as non-executive employees,
including health insurance, the Savings Plan and the term life insurance benefit
equal to two times the individual's salary. In addition, the executive officers
participate in the Supplemental Retirement Benefit Plan ("Basic Supplemental
Plan") as described in the section "Retirement Plans".
THE CHIEF EXECUTIVE OFFICER'S 1994 COMPENSATION
The incentive plan compensation, stock options and salary awarded or paid
to Mr. Hathaway with respect to 1994 are discussed above in this Report with
respect to amounts, and the factors considered by the Compensation Committee. Of
the total $722,330 in cash compensation paid to Mr. Hathaway in 1994 as
reflected in the Summary Compensation Table, 51.6% was dependent upon achieving
performance objectives under the Incentive Compensation Plan. This is consistent
with the Compensation Committee's view that those executives most able to affect
the performance of the Company should have a significant portion of their
potential total compensation opportunity at risk based upon Company performance.
Those Company performance objectives were heavily weighted toward ROA
objectives. The Compensation Committee believes that ROA is an important
determinant of total return to stockholders over the long-term and has the
advantage of not being subject to the period to period vagaries of the common
stock price. However, the Compensation Committee also believes that the Chief
Executive Officer and other officers should share in the gains or losses of
common stock value experienced by the stockholders in order to reinforce the
alignment of their respective interests. Therefore, the Compensation Committee
utilizes stock option grants as an important component of compensation. The
Compensation Committee believes that the combined effect of these compensation
elements is to establish strong incentives to achieve results which will provide
stockholders with the investment returns that they seek.
CHANGES IN EXECUTIVE COMPENSATION PROGRAMS FOR 1995
As mentioned earlier in this Report, the Compensation Committee conducted a
detailed study of the current compensation programs for corporate and division
officers, using both internal and external resources, to develop recommendations
for a total compensation approach that would meet the following objectives:
- Competitive and moderate base salaries.
- Enhanced variable, or "at risk" earnings opportunities tied to
Company/Division performance against pre-set and objectively measurable
goals.
- Increased use of Company stock-based incentive programs to facilitate
management ownership of Harsco common stock.
At regular intervals throughout 1994, the Committee was presented with
compensation studies which helped to establish a competitive baseline against
which to measure the total direct compensation paid to each corporate and
division officer, including the Named Executives. At meetings beginning in April
1994, the Committee conducted a review of compensation methodology and levels
which resulted in decisions to:
- Switch to a January 1 implementation date from the current May 1 schedule
for adjustments in the base salaries of all corporate and division
officers.
- Seek shareholder approval to replace the current Annual and Long-Term
Incentive Plans with the 1995 Executive Incentive Compensation Plan which
will consist of a succession of one-year performance periods with
objectives set prior to the January 1 start of a Plan Year. Performance
categories, weighting and quantifiable measurement criteria are subject
to the
11
<PAGE> 16
approval of the Compensation Committee. Awards under this Plan will be
paid to each participant in the form of 60% in a lump sum cash payment
and 40% in the form of Restricted Shares of Company common stock.
- Tie stock option awards more closely to the accomplishment of strategic
objectives. The award schedule utilized by the Committee specifies a
maximum number of stock options for each officer salary grade. All awards
will be discretionary, subject to the approval of the Compensation
Committee.
In summary, the Committee believes that the revised total compensation
program will achieve the objective of providing meaningful and appropriate
rewards, recognizing both current performance contributions and the attainment
of longer-term strategic business goals of critical importance to the future
growth of Harsco Corporation. The Compensation Committee has endorsed the 1995
Executive Incentive Compensation Plan and, subject to approval by the
Shareholders, will implement it on a retroactive basis effective January 1,
1995. The full text of this Plan is presented later in this Proxy Statement.
SUBMITTED BY THE MANAGEMENT DEVELOPMENT AND
COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS:
R. F. Nation, Chairman
D. C. Smith, Jr., Vice Chairman
J. E. Marley
F. E. Masland III
N. H. Prater
A. J. Sordoni, III
12
<PAGE> 17
EXECUTIVE COMPENSATION AND OTHER INFORMATION
SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION
The following table sets forth information concerning the compensation
awarded to, earned by or paid to the Named Executives for services rendered to
the Company in all capacities during each of the last three fiscal years.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
------------------------------------
ANNUAL COMPENSATION AWARDS PAYOUTS
----------------------------- ----------------------- --------
OTHER RESTRICTED SECURITIES ALL OTHER
NAME AND ANNUAL STOCK UNDERLYING LTIP COMPEN-
PRINCIPAL SALARY COMPENSA- AWARD(S) OPTIONS PAYOUTS SATION
POSITION YEAR ($) BONUS($) TION($) ($)(1) (#)(2) ($) ($)(3)
- ------------------ ---- -------- -------- --------- ----------- ---------- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
D. C. Hathaway.... 1994 350,000 159,705 -- -- 7,780 212,625 10,500
Chairman, 1993 270,834 148,282 -- -- 7,200 152,344 8,125
President & 1992 258,334 145,313 -- -- 7,200 145,313 16,578
Chief Executive
Officer
L. A. Campanaro... 1994 211,867 82,352 -- -- 6,620 109,641 12,199
Senior Vice 1993 190,734 96,073 -- -- 6,620 98,705 9,188
President & 1992(4) 114,498 56,291 -- -- 3,670 59,253 2,876
Chief Financial
Officer
P. C. Coppock..... 1994 180,000 69,966 -- -- 6,620 93,150 9,067
Senior Vice 1993 144,900 60,293 -- -- 4,100 61,945 7,899
President, Chief 1992 138,467 59,195 -- -- 4,100 59,195 8,284
Administrative
Officer, General
Counsel &
Secretary
W. D. Etzweiler... 1994 211,867 82,352 -- -- 6,620 109,641 12,352
Senior Vice 1993 195,734 98,591 -- -- 6,620 101,292 11,772
President & 1992 190,000 98,325 -- -- 6,620 98,325 9,339
Chief Operating
Officer
B. W. Taussig..... 1994 211,867 82,352 -- -- 6,620 109,641 12,352
Senior Vice 1993 195,734 98,591 -- -- 6,620 101,292 11,772
President & 1992 190,000 98,325 -- -- 6,620 98,325 10,147
Chief Operating
Officer
</TABLE>
- ---------------
(1) The aggregate holdings of restricted shares and market value as of December
31, 1994, for the Named Executives is as follows: Mr. Hathaway -- 3,509
shares with a value of $143,650; Mr. Campanaro -- -0- shares; Mr.
Coppock -- 3,049 shares with a value of $124,818; Mr. Etzweiler -- 2,906
shares with a value of $118,964; and Mr. Taussig -- 947 shares with a value
of $38,768. The market value at December 31, 1994, was $40.94 per share
which represents the average of the high and low price on that date.
Dividends on restricted holdings are paid at the normal common stock rate.
(2) Represents stock options granted in the respective years. The Company
granted these options, relating to shares of its common stock, to employees,
including executive officers, of the Company under its 1986 Stock Option
Plan. The Company's 1986 Stock Option Plan
13
<PAGE> 18
authorizes the Compensation Committee to grant stock options as well as
stock appreciation rights to certain officers and employees who in the
discretion of the Compensation Committee significantly impact the
profitability of the Company. Options granted during a particular year are
not exercisable for twelve months following the date of grant, unless a
change in control of the Company occurs, nor are they exercisable ten years
after the grant. The exercise price per share of options granted under the
Plan was one hundred percent (100%) of the fair market value of common stock
at the date of grant.
(3) For the respective years, represents Company Savings Plan contributions and
certain Supplemental Retirement Benefit Plan contributions made on behalf of
the Named Executives. The Company maintains the Harsco Corporation Savings
Plan which includes the "Salary Reduction" feature afforded by Section
401(k) of the Internal Revenue Code. Eligible employees may authorize the
Company to contribute from 1% to 16% of their pre-tax compensation to the
Savings Plan. The Company makes monthly contributions for the purchase of
common stock of the Company for the account of each participating employee
equal to 50% of such employee's first 1% to 6% contribution.
The Company also maintains the Harsco Corporation Supplemental Retirement
Benefit Plan (described under "Retirement Plans"). If the IRS-imposed
limitations on 401(k) savings plan contributions are reached, participating
Named Executives, upon retirement or other termination of employment,
receive in cash under this Plan the amount of Company matching
contributions to the Savings Plan that were disallowed for the account of
the Named Executive by operation of the IRS-imposed limitations, including
adjustments for changes in the market value of Company common stock that
would have been purchased by the Company matching contributions and
dividends that would have been payable on such Company common stock.
(4) Executive officer effective April 1, 1992. Includes compensation for the
full twelve month period.
14
<PAGE> 19
LONG-TERM INCENTIVE COMPENSATION PLAN
The following table provides information concerning contingent awards made
during the last fiscal year under the Company's Long-Term Incentive Compensation
Plan to the Named Executives. Awards received under this Plan will consist of
cash awards which are based on minimum, target and maximum return on assets
objectives over a three-year cycle as described in the Compensation Committee
Report above. Until the end of the three-year cycle, the amount of long-term
incentive compensation to which a participant is entitled could at any point be
reduced, increased or eliminated by the Compensation Committee. However, if the
stockholders approve the 1995 Executive Incentive Compensation Plan, the
existing Long-Term Incentive Compensation Plan will be discontinued and amounts
accrued for the incomplete three year Plan period ending in 1995 (relating to
performance in years 1993 and 1994) and the incomplete three year Plan period
ending in 1996 (relating to performance in 1994), will be paid to participants
promptly after stockholder approval.
POTENTIAL FUTURE LONG-TERM INCENTIVE PLAN AWARDS PAYABLE IN 1997
<TABLE>
<CAPTION>
ESTIMATED FUTURE PAYOUTS
UNDER NON-STOCK PRICE BASED
PERFORMANCE OR PLANS
OTHER PERIOD UNTIL -------------------------------
MATURATION OR MINIMUM TARGET MAXIMUM
NAME PAYOUT ($) ($)(1) ($)(1)
- ------------------------------------ ------------------- ------- ------- -------
<S> <C> <C> <C> <C>
D. C. Hathaway --................... 1/1/94 to 12/31/96 0 141,750 212,625
Chairman, President & Chief
Executive Officer
L. A. Campanaro --.................. 1/1/94 to 12/31/96 0 73,094 109,641
Senior Vice President & Chief
Financial Officer
P. C. Coppock --.................... 1/1/94 to 12/31/96 0 62,100 93,150
Senior Vice President, Chief
Administrative Officer, General
Counsel & Secretary
W. D. Etzweiler --.................. 1/1/94 to 12/31/96 0 73,094 109,641
Senior Vice President & Chief
Operating Officer
B. W. Taussig --.................... 1/1/94 to 12/31/96 0 73,094 109,641
Senior Vice President & Chief
Operating Officer
</TABLE>
- ---------------
(1) Estimated using 1994 salary levels.
15
<PAGE> 20
STOCK OPTIONS
The following table contains information concerning the number of stock
options granted to each Named Executive under the Company's 1986 Stock Option
Plan during the last fiscal year.
OPTION GRANTS IN 1994
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
---------------------------------------------- POTENTIAL
% OF REALIZABLE VALUE
TOTAL AT ASSUMED ANNUAL
OPTIONS RATES OF STOCK
SECURITIES GRANTED PRICE
UNDERLYING TO EXERCISE APPRECIATION FOR
OPTIONS EMPLOYEES OR BASE OPTION TERM (1)
GRANTED IN FISCAL PRICE EXPIRATION -----------------
NAME (#)(2) YEAR ($/SH) DATE 5% ($) 10% ($)
- ----------------------------- ---------- --------- -------- ---------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
D. C. Hathaway -- 7,780 3.5 43.25 1/23/04 211,460 536,353
Chairman, President & Chief
Executive Officer
L. A. Campanaro -- 6,620 3.0 43.25 1/23/04 179,932 456,383
Senior Vice President &
Chief Financial Officer
P. C. Coppock -- 6,620 3.0 43.25 1/23/04 179,932 456,383
Senior Vice President,
Chief Administrative
Officer, General Counsel
& Secretary
W. D. Etzweiler -- 6,620 3.0 43.25 1/23/04 179,932 456,383
Senior Vice President &
Chief Operating Officer
B. W. Taussig -- 6,620 3.0 43.25 1/23/04 179,932 456,383
Senior Vice President &
Chief Operating Officer
</TABLE>
- ---------------
(1) Dollar amounts under these columns are the result of calculations of stock
price appreciation over 10 years at the 5% and 10% rates set by the
Securities and Exchange Commission and therefore are not intended to
forecast possible future appreciation, if any, of the Company's stock price.
The Company did not use an alternative formula for a grant date valuation,
as the Company is not aware of any formula which will determine with
reasonable accuracy a present value based on future unknown or volatile
factors.
(2) The Company granted these options, relating to shares of its common stock,
to employees, including executive officers, of the Company under its 1986
Stock Option Plan. The Company's 1986 Stock Option Plan authorizes the
Compensation Committee to grant stock options to purchase common stock, as
well as stock appreciation rights to certain officers and employees who in
the discretion of the Compensation Committee significantly impact the
profitability of the Company. Options granted during a particular year are
not exercisable for twelve months following the date of grant, unless a
change in control of the Company occurs, nor are they exercisable ten years
after the grant. The exercise price per share of options granted under the
1986 Stock Option Plan was one hundred percent (100%) of the fair market
value of common stock at the date of grant. There were no stock appreciation
rights granted in 1994.
16
<PAGE> 21
OPTION EXERCISES AND HOLDINGS
The following table sets forth information, with respect to the Named
Executives, concerning the exercise of options during fiscal year 1994 and
unexercised options at December 31, 1994.
AGGREGATED OPTION EXERCISES IN 1994
AND OPTION VALUES AT 12/31/94
<TABLE>
<CAPTION>
SHARES
ACQUIRED NUMBER OF SECURITIES VALUE OF UNEXERCISED
ON VALUE UNDERLYING UNEXERCISED IN-THE-MONEY
EXERCISE REALIZED OPTIONS AT OPTIONS AT
NAME (#) ($)(1) 12/31/94 (#)(2) 12/31/94 ($)(3)
- ------------------------------------- -------- -------- -------------------------- --------------------------
EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
D. C. Hathaway --
Chairman, President & Chief
Executive Officer................ 1,936 35,564 19,084 7,780 140,427 -0-
L. A. Campanaro --
Senior Vice President & Chief
Financial Officer................ 1,170 21,098 12,431 6,620 53,538 -0-
Paul C. Coppock --
Senior Vice President, Chief
Administrative Officer, General
Counsel & Secretary.............. 2,670 58,566 17,430 6,620 166,698 -0-
W. D. Etzweiler --
Senior Vice President & Chief
Operating Officer................ 9,795 148,028 10,906 6,620 38,159 -0-
B. W. Taussig --
Senior Vice President & Chief
Operating Officer................ -0- -0- 13,180 6,620 59,417 -0-
</TABLE>
- ---------------
(1) Represents the difference between the exercise (strike) and market price of
each stock option on the date of exercise.
(2) Options granted during a particular year are not exercisable for twelve
months following the date of grant unless a change in control of the Company
occurs or the Compensation Committee expressly authorizes earlier
exercisability.
(3) Represents the difference between the exercise (strike) and market price
multiplied by the number of in-the-money unexercised options contained in
the respective category. Average market price at December 31, 1994, was
$40.94 per share. Options are in-the-money when the market price of the
underlying securities exceeds the exercise price. No Named Executive
exercised any stock appreciation right during 1994.
17
<PAGE> 22
STOCK PERFORMANCE GRAPH
The following performance graph compares the yearly percentage change in
the cumulative total stockholder return (assuming the reinvestment of dividends)
on the Company's common stock against the cumulative total return of the
Standard & Poor's MidCap 400 Index and the Dow Jones Industrial-Diversified
Index for the past five years. The graph assumes an initial investment of $100
on December 31, 1989 in the Company's common stock or in the underlying
securities which comprise each of those market indices. The information
contained in the graph is not necessarily indicative of future Company
performance.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
AMONG HARSCO CORPORATION, S&P MIDCAP 400 INDEX AND DOW JONES
INDUSTRIAL-DIVERSIFIED INDEX(1)
FISCAL YEAR ENDING DECEMBER 31
<TABLE>
<CAPTION>
Dow Jones
Measurement Period Harsco S&P MidCap Industrial -
(Fiscal Year Covered) Corporation 400 Index Diversified
- ----------------------- ----------- ---------- -------------
<S> <C> <C> <C>
1989 100 100 100
1990 107 95 93
1991 128 142 115
1992 170 159 134
1993 189 182 164
1994 197 175 150
</TABLE>
- ---------------
(1) Peer companies included in the Dow Jones Industrial-Diversified Index are:
Allied-Signal Inc., CBI Industries Inc., Cooper Industries Inc., Crane
Company, Dexter Corporation, Dover Corporation, FMC Corporation, Illinois
Tool Works, Inc., Ingersoll-Rand Co., National Service Industries, Inc.,
Parker Hannifin Corp., PPG Industries Inc., Raychem Corp., Stanley Works,
Tenneco, Inc., Trinova Corporation and Tyco International Ltd.
RETIREMENT PLANS
The Company provides retirement benefits for each officer under one of two
supplemental plans. They are the Supplemental Retirement Benefit Plan ("Basic
Supplemental Plan") and the Supplemental Executive Retirement Plan ("Secular
Plan") which covers certain executive officers and division presidents who have
attained age 58, in lieu of participation in the Basic Supplemental
18
<PAGE> 23
Plan (collectively the "Supplemental Plans"). All executive officers are covered
by the Basic Supplemental Plan. All executive officers are also covered by the
qualified pension plan. Each plan is a defined benefit plan providing for normal
retirement at age 65. Early retirement may be taken commencing with the first
day of any month following the attainment of age 55, provided at least 15 years
of service have been completed (10 years in the case of the Supplemental Plans).
Early retirement benefits commencing prior to age 65 are reduced. The
Supplemental Plans also provide for unreduced pension benefits if retirement
occurs after age 62, provided at least 30 years of service have been completed.
The Supplemental Plans contain provisions providing for a preretirement death
benefit payable in a lump sum to a beneficiary designated by the participant for
participants who die after qualifying for benefits. The Supplemental Plans also
include provisions which fully vest participants upon termination of employment
following a "change in control" of the Company as defined in the Supplemental
Plans.
Total pension benefits are based on final average compensation and years of
service. The normal retirement benefit under the Supplemental Plans is equal to
a total of .8% of final average compensation up to the "Social Security Covered
Compensation" as defined in the Supplemental Plans plus 1.6% of the final
average compensation in excess of the "Social Security Covered Compensation"
multiplied by up to 33 years of service, reduced by the benefits under the
qualified plan. Final average compensation is defined as the aggregate
compensation (base salary plus nondiscretionary incentive compensation) for the
60 highest consecutive out of the last 120 months prior to date of retirement or
termination of employment for any reason prior to normal retirement date.
The following table shows estimated total annual pension benefits payable
to the executive officers of the Company under the qualified Basic Supplemental
Plan, including the Named Executives upon retirement at age 65, in various
remuneration and year-of-service classifications, assuming the total pension
benefit was payable as a straight life annuity guaranteed for ten years and
retirement took place on January 1, 1995. The annual pension benefit payable to
executive officers participating in the Secular Plan would be reduced from the
amounts shown below to account for previous distributions under that Plan.
PENSION PLAN TABLE
<TABLE>
<CAPTION>
YEARS OF SERVICE
-------------------------------------------------------------------
REMUNERATION(1) 10 15 20 25 30 35*
- --------------------------------------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
200,000............................. 29,926 44,890 59,853 74,816 89,779 98,757
300,000............................. 45,926 68,890 91,853 114,816 137,779 151,557
400,000............................. 61,926 92,890 123,853 154,816 185,779 204,357
500,000............................. 77,926 116,890 155,853 194,816 233,779 257,157
600,000............................. 93,926 140,890 187,853 234,816 281,779 309,957
700,000............................. 109,926 164,890 219,853 274,816 329,779 362,757
800,000............................. 125,926 188,890 251,853 314,816 377,779 415,557
900,000............................. 141,926 212,890 283,853 354,816 425,779 468,357
1,000,000............................. 157,926 236,890 315,853 394,816 473,779 521,157
</TABLE>
- ---------------
* Supplemental Plans have a 33 year service maximum.
(1) Final average compensation for the Named Executives as of the end of the
last calendar year is: Mr. Hathaway: $568,832; Mr. Campanaro: $268,930; Mr.
Coppock: $277,400; Mr. Etzweiler: $348,046; and Mr. Taussig: $355,710. The
estimated years of service for each Named Executive are as follows: Mr.
Hathaway: 28.5 years; Mr. Campanaro: 14.5 years; Mr. Coppock: 13.5 years;
Mr. Etzweiler: 28.5 years; and Mr. Taussig: 15 years.
The Company does not provide retiree medical benefits to its executive
officers.
19
<PAGE> 24
EMPLOYMENT AGREEMENTS WITH OFFICERS OF THE COMPANY
On September 25, 1989, the Board of Directors authorized the Company to
enter into employment agreements with certain officers, including the Named
Executives (the "Agreements"), pursuant to which authorization, the Company
entered into individual Agreements with certain officers.
The Agreements are designed as an inducement to retain the services of the
officers and provide for continuity of management during the course of any
threatened or attempted change in control of the Company. The Agreements are
also intended to ensure that if a possible change in control should arise and
the officer should be involved in deliberations or negotiations in connection
with the possible change in control, the officer would be in a position to
consider as objectively as possible whether the possible change in control
transaction is in the best interest of the Company and its stockholders without
concern for his position or financial well-being. Should a change in control
occur, the Agreements provide for continuity of management following the change
by imposing certain obligations of continued employment on the officers.
Under the Agreements, the Company and the officers agree that in the event
of a change in control, such officer will remain in the Company's employ for a
period of three years from the date of the change in control (or to such
officer's normal retirement date, if earlier), subject to such officer's right
to resign during a thirty-day period commencing one year from the date of the
change in control or for good reason, as defined in the Agreements. If such
officer's employment terminates within three years after a change in control for
any reason other than cause as defined in the Agreements, resignation without
good reason as defined in the Agreements, or disability or death, such officer
will be paid a lump sum amount equal to such officer's average annual gross
income reported on Form W-2 for the most recent five taxable years prior to the
change in control, multiplied by the lesser of 2.99 or the number of whole and
fractional years left to such executive officer's normal retirement date, plus
interest. The payment may be subject to reduction to avoid adverse tax
consequences.
For purposes of the Agreements, a "change in control" would be deemed to
have occurred if (i) any person or group acquires 20% or more of the Company's
issued and outstanding shares of common stock; (ii) the members of the Board as
of the date of the Agreements (the "Incumbent Board") including any person
subsequently becoming a Director whose election, or nomination for election by
the Company's shareholders, was approved by a majority of the Directors then
comprising the Incumbent Board, cease to constitute a majority of the Board of
the Company as a result of the election of Board members pursuant to a contested
election; (iii) the stockholders approve of a reorganization, merger or
consolidation that results in the stockholders of the Company immediately prior
to such reorganization, merger or consolidation owning less than 50% of the
combined voting power of the Company or (iv) the stockholders approve the
liquidation or dissolution of the Company or the sale of all or substantially
all of the Company's assets.
If such provisions under the applicable Agreements were to have become
operative on January 1, 1995, the Company would have been required to pay
Messrs. Hathaway, Campanaro, Coppock, Etzweiler and Taussig the following
termination payments based on compensation information available at December 31,
1994: $1,492,949, $651,794, $728,381, $971,423 and $927,825, respectively.
On September 26, 1988, the Company entered into an agreement with Mr.
Hathaway which provides that for purposes of calculating his retirement
benefits, his years of service will be deemed to have commenced June 20, 1966.
The Company entered into a Special Supplemental Retirement Benefit
Agreement and Severance Arrangement with Mr. Taussig effective January 1, 1994.
The Benefit Agreement provides that for purposes of calculating his retirement
benefits, his years of service will be deemed
20
<PAGE> 25
to have commenced October 27, 1979. The Arrangement provides for a capped cash
severance payout in the event that his employment with the Company terminates
within three years under certain circumstances. The combined value of the lump
sum dollar amount attributable to the extra years of service and the severance
would not exceed a cash amount of $600,000.
Except as set forth in "Directors' Compensation" herein, to the knowledge
of the Company, the only other transactions or proposed transactions since the
beginning of the last fiscal year to which the Company has been a party and in
which any Director, Named Executive or person nominated as a Director has had
any interest, direct or indirect, have been transactions in the ordinary course
of business consisting principally of the use of certain banks, as depositories
and trustees under several of the pension plans of the Company, and use of an
investment bank, in which certain Directors were interested as Directors,
stockholders or limited partners but did not receive any material benefit as a
result of the transactions. The terms and conditions of such transactions were
on a basis no less favorable than obtainable from other sources for the same
services rendered.
DIRECTORS' COMPENSATION
Directors of the Company currently receive compensation of $18,500 per year
plus $1,000 for participation at each meeting of the Board and $800 for each
committee meeting. Directors who are chairmen of Board committees receive
additional compensation of $2,000 per year. Certain Directors also received
compensation for special services at the rate of $800 per day.
Members of the Board who are not officers or employees of the Company or
its divisions or subsidiary companies ("Outside Directors") are eligible to
receive grants of nonqualified stock options. Individuals who are Outside
Directors on the first business day of May of each year will automatically be
granted on that date a nonqualified stock option to purchase 1,000 shares of the
Company's common stock at a price equal to the market value on the date of
grant. The Compensation Committee has no discretion as to the eligibility,
exercise price or size of awards to Outside Directors. On May 1, 1994, the
Company granted stock options in the amount of 1,000 each to the Outside
Directors. The options permit the holders to purchase shares at the price of
$42.00 per share, exercisable in whole or in part commencing one year after the
date of grant and expiring on April 30, 2004.
The Company also maintains a non-qualified pension plan for Directors
("Directors' Retirement Plan"). Pursuant to the terms of the Directors'
Retirement Plan, members of the Board who are not eligible for pension benefits
resulting from employment with the Company are eligible after completion of five
(5) years of service as a Director to receive pension benefits upon retirement
from the Board. A monthly pension benefit equal to 60% of the monthly director's
retainer in effect at the time of retirement will be paid to the Director for a
period of months equal to the number of whole months of his service as a
Director of the Company up to a maximum of one hundred twenty (120) months. The
monthly retainer does not include meeting fees, chairmanship increments and
consulting fees. Directors who are actively employed by the Company receive no
additional compensation for serving as Directors.
NOMINATING COMMITTEE
The Nominating Committee recommends periodically to the Board prospective
Director candidates in light of resignations, retirements, or other changes in
the composition of the Board; proposes to the Board by January of each year a
slate of Directors for submission to the stockholders at the Annual Meeting; and
represents the Board in discussions with prospective Director candidates. At the
present time, the Nominating Committee will accept nominations only from
Directors and Officers of the Company. The Nominating Committee met three times
in 1994.
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<PAGE> 26
MANAGEMENT DEVELOPMENT AND COMPENSATION COMMITTEE
The Management Development and Compensation Committee administers the
Company's executive compensation policies and programs. The Committee also
advises the Board concerning election of officers and executive salaries, and
reviews and consults with appropriate members of management with respect to
organizational matters. Areas of responsibility include, but are not necessarily
limited to, planning for management succession at the corporate and division
level, particularly in senior executive ranks, recommending to the Board the
annual base salary of corporate officers and division presidents, authorizing
awards under the Incentive Compensation Plans and advising the Board regarding
the institution or amendment of any incentive or contingent compensation plan
applicable to officers of the Company. The Management Development and
Compensation Committee met ten times in 1994. For additional information
regarding the policies and mission of the Compensation Committee see the "Board
Compensation Committee Report on Executive Compensation" which appears on page 7
of this Proxy Statement.
AUDIT COMMITTEE
The Audit Committee meets with members of management, the independent
accountants and internal auditors and reviews and approves the scope of audit
and non-audit services, reviews the results of the annual audit and any
accounting or disclosure questions, if any, encountered in the course of the
annual audit and reviews the adequacy of internal controls. The Audit Committee
met two times in 1994.
APPROVAL OF THE 1995 EXECUTIVE INCENTIVE COMPENSATION PLAN
The Company's Board of Directors believes that attracting and retaining
executives and other key employees of high quality is essential to the Company's
growth and success. In addition, the long-term success of the Company will be
enhanced by a comprehensive compensation program which may include different
types of incentives for motivating executives and rewards for outstanding
service, including awards that link compensation to measures of the Company's
performance. In this regard, stock options and other stock-related awards have
been and will continue to be an important element of compensation for executives
because such awards enable executives to increase their proprietary interest in
the Company and thereby promote a closer identity of interests between
executives and the Company's stockholders. The Board has concluded also that a
greater portion of an executive's total compensation should be linked to
measures of the performance, and that payment of a portion of such compensation
in the form of restricted stock would provide an additional stock-based
incentive for the creation of stockholder value. Such awards would provide an
increased incentive for executives to expend their maximum efforts for the
success of the Company's business.
Accordingly, on November 15, 1994, the Company's Management Development and
Compensation Committee established and the Board of Directors adopted, subject
to stockholder approval, the 1995 Executive Incentive Compensation Plan (the
"1995 EICP"). The flexible terms of the 1995 EICP provide for grants of options
and stock appreciation rights ("SARs"), a variety of other stock-related awards,
and annual incentive awards that will be settled in part in cash and in part by
the grant of restricted stock ("Awards"). The 1995 EICP is intended to provide
flexible terms to permit such Committee (or other Board committee that may
administer the 1995 EICP) (the "Committee") to enter into compensatory
arrangements that promote the compensation goals and policies discussed above in
the "Board Compensation Committee Report on Executive Compensation."
The Board of Directors is requesting stockholder approval of the 1995 EICP
in order to comply with requirements of the New York Stock Exchange, to qualify
certain stock options as incentive stock options ("ISOs") under Section 422 of
the Internal Revenue Code of 1986, as amended (the
22
<PAGE> 27
"Code"), to qualify certain transactions under the 1995 EICP for exemptions from
liability under Section 16(b) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), by virtue of Rule 16b-3, and to comply with other
applicable federal and state laws. In addition, stockholder approval of the 1995
EICP, including the performance goals relating to options and SARs that
implicitly incorporate a performance goal based on appreciation in market price
of shares and performance goals relating to annual incentive awards (described
below under the heading "Annual Incentive Awards"), is being sought to comply
with requirements relating to "performance-based compensation" under Section
162(m) of the Code. Compliance with such requirements is intended to ensure that
certain compensation under the 1995 EICP paid to persons who at the end of the
year of payment may be the chief executive officer or one of the four other most
highly compensated executive officers (the "Named Executives") will be
deductible by the Company without being limited by Code Section 162(m)'s $1
million deductibility cap. See "Board Compensation Committee Report on Executive
Compensation."
Upon approval by stockholders of the 1995 EICP, the authorization of
further grants of options and awards to employees under the Company's 1986 Stock
Option Plan will be terminated, although outstanding awards under that plan will
remain in effect. However, if the stockholders approve the 1995 EICP, the
existing Long-Term Incentive Compensation Plan will be discontinued and amounts
accrued for the incomplete three year Plan period ending in 1995 (relating to
performance in years 1993 and 1994) and the incomplete three year Plan period
ending in 1996 (relating to performance in 1994), will be paid to participants
promptly after stockholder approval. See also "APPROVAL OF THE 1995 NON-EMPLOYEE
DIRECTORS' STOCK PLAN."
The following is a brief description of the material features of the 1995
EICP. Such description is qualified in its entirety by reference to the full
text of the 1995 EICP, a copy of which is attached as Exhibit A to this Proxy
Statement.
SHARES SUBJECT TO THE 1995 EICP; ANNUAL PER-PERSON LIMITATIONS. Under the
1995 EICP, a total of 2,000,000 shares of the Company's common stock ("Shares")
are reserved and available for issuance to participants in connection with
Awards. Shares subject to a forfeited or expired Award or to an Award that is
settled in cash or otherwise terminated without issuance of Shares to the
participant again become available under these limitations, but Shares withheld
by the Company to satisfy withholding tax obligations are treated as issued to
the participant under the 1995 EICP. Shares issued under the 1995 EICP may be
either newly issued Shares or treasury Shares. On March 6, 1995, the last
reported sale price of Shares in New York Stock Exchange Composite Transactions
was $42.50 per Share.
In addition, during any calendar year, no participant may be granted
options and SARs under the 1995 EICP with respect to more than 25,000 Shares,
and the maximum value of any annual incentive award settled during any calendar
year (including the value of any restricted stock granted in settlement thereof)
shall not exceed $800,000.
The Committee is authorized to adjust the number and kind of Shares subject
to the aggregate Share limitations and annual limitations under the 1995 EICP
and subject to outstanding Awards (including adjustments to exercise prices of
options and other affected terms of Awards) in the event that a dividend or
other distribution (whether in cash, Shares, or other property),
recapitalization, forward or reverse split, reorganization, merger,
consolidation, spin-off, combination, repurchase, or Share exchange, or other
similar corporate transaction or event affects the Shares such that an
adjustment is appropriate in order to prevent dilution or enlargement of the
rights of participants under the 1995 EICP. The Committee is also authorized to
adjust performance conditions and other terms of Awards in response to these
kinds of events or to changes in applicable laws, regulations, or accounting
principles, except that adjustments to performance
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<PAGE> 28
conditions relating to annual incentive awards must conform to the requirements
of Code Section 162(m).
ELIGIBILITY. Executive officers and other key employees of the Company and
its subsidiaries, including any director or officer who is also an employee, are
eligible to be granted Awards under the 1995 EICP. At present, approximately 64
persons would be considered to be eligible for Awards under the 1995 EICP.
ADMINISTRATION. The 1995 EICP is administered by the Committee, the
members of which must each be a "disinterested person" as defined under Rule
16b-3 under the Exchange Act. Subject to the terms and conditions of the 1995
EICP, the Committee is authorized to select participants, determine the type and
number of Awards to be granted and the number of Shares to which Awards will
relate, specify times at which Awards will be exercisable or settled (including
performance conditions that may be required as a condition thereof), set other
terms and conditions of such Awards, prescribe forms of Award agreements,
interpret and specify rules and regulations relating to the 1995 EICP, and make
all other determinations which may be necessary or advisable for the
administration of the 1995 EICP. The 1995 EICP provides that Committee members
shall not be personally liable, and shall be fully indemnified, in connection
with any action, determination, or interpretation taken or made in good faith
under the 1995 EICP.
STOCK OPTIONS AND SARS. The Committee is authorized to grant stock
options, including both ISOs which can result in potentially favorable tax
treatment to the participant and nonqualified stock options (i.e., options not
qualifying as ISOs), and SARs entitling the participant to receive the excess of
the fair market value of a Share on the date of exercise over the grant price of
the SAR. The exercise price per Share subject to an option and the grant price
of an SAR is determined by the Committee, but must not be less than the fair
market value of a Share on the date of grant. The maximum term of each option or
SAR, the times at which each option or SAR will be exercisable, and provisions
requiring forfeiture of unexercised options at or following termination of
employment, generally is fixed by the Committee, except no option or SAR may
have a term exceeding ten years. Options may be exercised by payment of the
exercise price in cash, Shares, outstanding Awards, or other property (possibly
including notes or obligations to make payment on a deferred basis, such as
through "cashless exercises") having a fair market value equal to the exercise
price, as the Committee may determine from time to time. Methods of exercise and
settlement and other terms of the SARs are determined by the Committee. SARs
granted under the 1995 EICP may include "limited SARs" exercisable for a stated
period of time following a "change in control" of the Company, as discussed
below.
RESTRICTED AND DEFERRED STOCK. The Committee is authorized to grant
restricted stock and deferred stock. Restricted stock is a grant of Shares which
may not be sold or disposed of, and which may be forfeited in the event of
certain terminations of employment, prior to the end of the specified restricted
period. The restricted period generally is established by the Committee, but
restricted stock must be forfeitable for at least three years, in the event of
voluntary termination of employment by the participant or involuntary
termination by the Company for cause, if the grant or lapse of restrictions is
not conditioned upon achievement of a performance objective. A participant
granted restricted stock generally has all of the rights of a stockholder of the
Company, including the right to vote the Shares and to receive dividends
thereon, unless otherwise determined by the Committee. An Award of deferred
stock confers upon a participant the right to receive Shares at the end of a
specified deferral period, subject to possible forfeiture of the Award in the
event of certain terminations of employment prior to the end of a specified
restricted period (which restricted period need not extend for the entire
duration of the deferral period). Prior to settlement, an Award of deferred
stock carries no voting or dividend rights or other rights associated with Share
ownership (although dividend equivalents may be granted, as discussed below).
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<PAGE> 29
ANNUAL INCENTIVE AWARDS. The Committee is authorized to grant annual
incentive awards, in the form of cash and/or restricted stock, upon achievement
of preestablished performance objectives during a specified one-year period. As
stated above, annual incentive awards granted to Named Executives are intended
to constitute "performance-based compensation" not subject to the limitation on
deductibility under Code Section 162(m). The Committee generally must establish
the performance objectives, amounts payable, other terms of settlement, and all
other terms of such Awards not later than the first quarter of the Company's
fiscal year.
The performance objectives to be achieved as a condition of settlement of
annual incentive awards will consist of (i) two or more business criteria, (ii)
minimum, targeted and maximum levels of performance with respect to each such
business criteria, and (iii) amounts payable upon achievement of such levels of
performance and at other levels of performance between the specified minimum and
maximum levels. In the case of participants expected to be Named Executives, the
business criteria used must be two or more of those specified in the 1995 EICP,
although for other participants the Committee may specify other business
criteria. The business criteria specified in the 1995 EICP are annual return on
capital, annual earnings per share, annual cash flow provided by operations,
annual sales, and strategic business criteria such as specified sales, market
penetration, geographic business expansion goals, cost targets, safety goals,
goals relating to acquisitions or divestitures, research and development and
product development. Subject to the requirements of the 1995 EICP (including as
to the use of such specified business criteria and maximum annual amounts
payable), the Committee will determine other annual incentive award terms,
including the required levels of performance with respect to the business
criteria, the corresponding amounts payable upon achievement of such levels or
performance, and the extent to which such Awards will be settled in cash and in
restricted stock.
If restricted stock is granted in settlement of an annual incentive award
in respect of a given performance year, 50% of such restricted stock shall have
a restricted period ending not earlier than the end of the year following such
performance year and 50% of such restricted stock shall have a restricted period
ending not earlier than the end of the third year following such performance
year. In the event of the participant's voluntary termination of employment or
involuntary termination by the Company for "cause" prior to the end of the
restricted period, such restricted stock will be forfeited.
DIVIDEND EQUIVALENTS. The Committee is authorized to grant dividend
equivalents conferring on participants the right to receive, currently or on a
deferred basis, cash, Shares, other Awards, or other property equal in value to
dividends paid on a specific number of Shares. Dividend equivalents may be
granted on a free-standing basis or in connection with another Award, may be
paid currently or on a deferred basis, and, if deferred, may be deemed to have
been reinvested in additional Shares, Awards, or other investment vehicles
specified by the Committee.
BONUS STOCK AND AWARDS IN LIEU OF CASH OBLIGATIONS. The Committee is
authorized to grant Shares as a bonus free of restrictions, or to grant Shares
or other Awards in lieu of Company obligations to pay cash under other plans or
compensatory arrangements, subject to such terms as the Committee may specify.
OTHER TERMS OF AWARDS. Awards may be settled in cash, Shares, other
Awards, or other property, in the discretion of the Committee. The Committee may
require or permit participants to defer the settlement of all or part of an
Award in accordance with such terms and conditions as the Committee may
establish, including payment or crediting of interest or dividend equivalents on
deferred amounts, and the crediting of earnings, gains, and losses based on
deemed investment of deferred amounts in specified investment vehicles. The
Committee is authorized to place cash, Shares, or other property in trusts or
make other arrangements to provide for payment of the Company's obligations
under the 1995 EICP. The Committee may condition any payment relating to an
Award on the withholding of taxes and may provide that a portion of any Shares
or other property to be distributed will be withheld (or previously acquired
Shares or other property
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<PAGE> 30
surrendered by the participant) to satisfy withholding and other tax
obligations. Awards granted under the 1995 EICP generally may not be pledged or
otherwise encumbered and are not transferable except by will or by the laws of
descent and distribution, or to a designated beneficiary upon the participant's
death, except that the Committee may in the future permit transfers if and to
the extent that SEC rules are modified to allow transfers for estate planning
purposes (as currently proposed).
Awards under the 1995 EICP are generally granted without a requirement that
the participant pay consideration in the form of cash or property for the grant
(as distinguished from the exercise), except to the extent required by law. The
Committee may, however, grant Awards in substitution for other Awards under the
1995 EICP, awards under other Company plans, or other rights to payment from the
Company, and may grant Awards in addition to and in tandem with such other
Awards, awards, or rights as well.
ACCELERATION OF VESTING. The Committee may, in its discretion, accelerate
the exercisability, the lapsing of restrictions, or the expiration of deferral
periods of any Award, and such accelerated exercisability, lapse, and expiration
shall occur automatically in the case of a "change in control" of the Company
(including cash settlements of SARs and "limited SARs" which may be exercisable
only in the event of a change in control). Subject to certain exceptions, the
1995 EICP defines a "change in control" as (i) any person becoming a beneficial
owner of securities representing 20% or more of the outstanding voting power of
the company's voting securities, (ii) members of the Board serving at the
beginning of any two-year period, together with members first elected in such
period with the approval of two-thirds of the original members and new members
previously so approved, ceasing to constitute at least a majority of the Board,
or (iii) a transaction occurring which would be required to be reported as a
"change in control" under specified SEC disclosure rules.
AMENDMENT AND TERMINATION OF THE 1995 EICP. The Board of Directors may
amend, alter, suspend, discontinue, or terminate the 1995 EICP or the
Committee's authority to grant Awards without further stockholder approval,
except stockholder approval must be obtained if required by law or regulation or
under the rules of any stock exchange or automated quotation system on which the
Shares are then listed or quoted. Thus, stockholder approval, for example, will
be required for any material increase in the number of Shares available for
award to executive officers under the 1995 EICP, but will not necessarily be
required for amendments which might increase the cost of the 1995 EICP or
broaden eligibility. Stockholder approval will not be deemed to be required
under laws or regulations, such as those relating to ISOs, that condition
favorable treatment of participants on such approval, although the Board may, in
its discretion, seek stockholder approval in any circumstance in which it deems
such approval advisable. Unless earlier terminated by the Board, the 1995 EICP
will terminate at such time as no Shares remain available for issuance under the
1995 EICP and the Company has no further rights or obligations with respect to
outstanding Awards under the 1995 EICP.
INITIAL AWARDS. The Committee established various performance objectives
for 1995 for determination of annual incentive awards under the 1995 EICP which,
subject to stockholder approval of the Plan, will be paid following the 1995
Plan year. The annual incentive award authorization provides for awards with a
potential value ranging from zero to a maximum amount equal to the participant's
base salary multiplied by .06 times his or her assigned salary level at the end
of the performance year (such salary levels range from 13 to 27 for participants
to be granted annual incentive awards), with the amount payable for achievement
of the targeted level of performance equal to 67% of such maximum amount. The
annual incentive awards will be settled by payment in cash equal to 60% of the
total payout under the Award and a grant of restricted stock having a fair
market value, based on the fair market value of Shares at the date of the
Committee's determination of the extent to which performance goals were
achieved, equal to 40% of the total payout. For annual incentive awards in
respect of 1995 (and for 1996 as well) such restricted
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<PAGE> 31
stock will be subject to a restricted period ending, as to 50% of the restricted
stock, on the first anniversary date of the Committee's determination of the
extent to which performance goals were achieved and, as to the other 50% of the
restricted stock, on the third anniversary of the date of such Committee
determination. Dividends on such restricted stock will be reinvested in
additional restricted stock.
The following table sets forth the maximum dollar value of annual incentive
awards authorized under the 1995 EICP in respect of the 1995 performance year to
be awarded to the persons who were Named Executives and specified groups of
executive officers and employees, subject to stockholder approval:
NEW PLAN BENEFITS
1995 EXECUTIVE INCENTIVE COMPENSATION PLAN
<TABLE>
<CAPTION>
MAXIMUM DOLLAR VALUE OF
NAME AND POSITION ANNUAL INCENTIVE AWARDS*
------------------------------------------------------- ------------------------
<S> <C>
D. C. Hathaway --
Chairman, President & Chief
Executive Officer.................................. 648,000
L. A. Campanaro --
Senior Vice President & Chief
Financial Officer.................................. 309,534
P. C. Coppock --
Senior Vice President, Chief
Administrative Officer, General
Counsel & Secretary................................ 276,000
W. D. Etzweiler --
Senior Vice President & Chief
Operating Officer.................................. 309,534
B. W. Taussig --
Senior Vice President & Chief
Operating Officer.................................. 309,534
All Executive Officers as a Group (6 in number)........ 1,973,064
All Other Employees (including current officers who are
not executive officers).............................. 5,639,062
</TABLE>
- ---------------
* Represents dollar value of payout in the event of achievement of performance
objectives required for maximum payout. Achievement of targeted performance
levels will result in payout of 67% of maximum dollar value, and performance
that fails to meet minimum performance levels will result in no payout. As
described above, payouts will be 60% in cash and 40% in restricted stock.
In the event that stockholders do not approve the 1995 EICP, the previously
contemplated annual incentive awards under the 1995 EICP will not be made.
FEDERAL INCOME TAX IMPLICATIONS OF THE 1995 EICP. The following is a brief
description of the Federal income tax consequences generally arising with
respect to Awards under the 1995 EICP.
The grant of an option or SAR will create no tax consequences for the
participant or the Company. A participant will not have taxable income upon
exercising an ISO (except that the alternative minimum tax may apply). Upon
exercising an option other than an ISO, the participant must generally recognize
ordinary income equal to the difference between the exercise price and fair
market value of the freely transferable and nonforfeitable Shares acquired on
the date of exercise, and upon exercising an SAR, the participant must generally
recognize ordinary income
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<PAGE> 32
equal to the cash or the fair market value of the freely transferable and
nonforfeitable Shares received.
Upon a disposition of Shares acquired upon exercise of an ISO before the
end of the applicable ISO holding periods, the participant must generally
recognize ordinary income equal to the lesser of (i) the fair market value of
the Shares at the date of exercise of the ISO minus the exercise price or (ii)
the amount realized upon the disposition of the ISO shares minus the exercise
price. Otherwise, a participant's disposition of Shares acquired upon the
exercise of an option or SAR generally will result in short-term or long-term
capital gain or loss measured by the difference between the sale price and the
participant's tax basis in such Shares (generally, the exercise price plus any
amount previously recognized as ordinary income in connection with the exercise
of the option or SAR).
The Company generally will be entitled to a tax deduction equal to the
amount recognized as ordinary income by the participant in connection with
options and SARs. The Company generally is not entitled to a tax deduction
relating to amounts that represent a capital gain to a participant. Accordingly,
the Company will not be entitled to any tax deduction with respect to an ISO if
the participant holds the shares for the applicable ISO holding periods prior to
disposition of the shares.
With respect to Awards granted under the 1995 EICP that may be settled
either in cash or in Shares or other property that is either not restricted as
to transferability or not subject to a substantial risk of forfeiture, the
participant must generally recognize ordinary income equal to the cash or the
fair market value of Shares or other property received. The Company generally
will be entitled to a deduction for the same amount. With respect to Awards
involving Shares or other property that is restricted as to transferability and
subject to a substantial risk of forfeiture, the participant must generally
recognize ordinary income equal to the fair market value of the Shares or other
property received at the first time the Shares or other property becomes
transferable or not subject to a substantial risk of forfeiture, whichever
occurs earlier. The Company will be entitled to a deduction in an amount equal
to the ordinary income recognized by the participant. A participant may elect to
be taxed at the time of receipt of Shares or other property rather than upon
lapse of restrictions on transferability or the substantial risk of forfeiture,
but if the participant subsequently forfeits such Shares or other property he
would not be entitled to any tax deduction, including as a capital loss, for the
value of the Shares or property on which he previously paid tax. The participant
must file such election with the Internal Revenue Service within 30 days of the
receipt of the Shares of other property.
The foregoing discussion, which is general in nature, is intended for the
information of stockholders considering how to vote at the Annual Meeting and
not as tax guidance to participants in the 1995 EICP. Different tax rules may
apply, including in the case of variations in transactions that are permitted
under the 1995 EICP (such as payment of the exercise price of an option by
surrender of previously acquired Shares), and with respect to a participant who
is subject to Section 16 of the Exchange Act when he or she acquires Shares in a
transaction that would otherwise result in taxation within six months after the
grant of the Award. This discussion does not address the effects of other
federal taxes (including possible "golden parachute" excise taxes) or taxes
imposed under state, local, or foreign tax laws. Accordingly, participants are
urged to consult a tax advisor as to their individual circumstances.
The Omnibus Budget Reconciliation Act of 1993 added Section 162(m) to the
Code, which generally disallows a public company's tax deduction for
compensation to the chief executive officers in excess of $1 million in any tax
year beginning on or after January 1, 1994. Compensation that qualifies as
"performance-based compensation" is excluded from the $1 million deductibility
cap, and therefore, remains fully deductible by the company that pays it.
As discussed above, the Company intends that options and SARs granted with
an exercise price or grant price at least equal to 100% of fair market value of
the underlying Shares at the date
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<PAGE> 33
of grant, annual incentive awards to employees the Committee expects to be Named
Executives at the time compensation is received under such Awards and restricted
stock granted as a payout for such annual incentive awards qualify as such
"performance-based compensation," so that such Awards will not be subject to
Code Section 162(m)'s $1 million deductibility cap. Final regulations under
Section 162(m), which have not yet been adopted by the Internal Revenue Service,
and interpretations may adversely affect the ability of the Company to ensure
that options, SARs, and annual incentive awards under the 1995 EICP will qualify
as "performance-based compensation" that is fully deductible by the Company
under Section 162(m). Other Awards under the 1995 EICP will not so qualify, so
that compensation paid to persons who are Named Executives in connection with
such Awards may, to the extent such compensation and other compensation subject
to Section 162(m)'s deductibility cap exceeds $1 million in a given year, be
subject to Section 162(m)'s deductibility cap.
VOTE REQUIRED. Adoption of the proposal to approve the 1995 EICP requires
the affirmative vote of holders of a majority of the Shares present in person or
by proxy and entitled to vote at the Annual Meeting.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR APPROVAL OF THE
1995 EXECUTIVE INCENTIVE COMPENSATION PLAN.
APPROVAL OF THE 1995 NON-EMPLOYEE DIRECTORS' STOCK PLAN
On November 15, 1994, the Board of Directors of the Company adopted,
subject to stockholder approval, the 1995 Non-Employee Directors' Stock Plan
(the "Directors' Plan"). The Directors' Plan is intended to promote ownership by
non-employee Directors of a greater proprietary interest in the Company, thereby
aligning such Directors' interests more closely with the interests of
stockholders of the Company, and to assist the Company in attracting and
retaining highly qualified persons to serve as non-employee Directors.
The Board of Directors adopted the Directors' Plan in connection with its
determination to replace the Company's 1986 Stock Option Plan, as amended and
restated (the "1986 Plan"), with the 1995 EICP. See "APPROVAL OF THE 1995
EXECUTIVE INCENTIVE COMPENSATION PLAN." Since 1989, the 1986 Plan has provided
for an automatic annual grant, to each non-employee director, of an option to
purchase 1,000 shares of the Company's common stock. Authority for such grants
under the 1986 Plan is scheduled to terminate in 1996. The Board of Directors
has determined that, in addition to replacing the 1986 Plan with the 1995 EICP
to provide for long-term compensation to employee-directors and other
executives, the Board should continue to authorize annual grants of stock
options to non-employee directors, on substantially the same basis as under the
1986 Plan. In addition, the Board concluded that non-employee directors who
might desire to increase their proprietary interest in the Company should be
permitted to elect to receive cash fees in the form of common stock. The Board,
therefore, adopted the Directors' Plan to provide for such automatic option
grants and elective acquisitions of common stock (including deferred stock, as
described below). The Directors' Plan has been adopted separately from the 1995
EICP in order to reduce the complexity and simplify the administration of each
Plan, as well as to provide greater certainty in complying with certain
regulations of the Securities and Exchange Commission (the "SEC").
The following summary of the material terms of the Directors' Plan is
qualified in its entirety by reference to the full text of the Directors' Plan,
a copy of which is attached as Exhibit B to this Proxy Statement.
The Directors' Plan generally provides for an annual grant to each Director
who is not an employee of the Company or any subsidiary of a stock option to
purchase 1,000 shares of common stock, subject to adjustment (as described
below). Such grants will be made automatically on the
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<PAGE> 34
first business day of May, beginning in 1995. If the nominees for election as
Director named in this proxy statement are reelected, nine Directors would
qualify as non-employee Directors under the Directors' Plan.
Stock options granted under the Directors' Plan are non-qualified stock
options having an exercise price equal to 100% of the fair market value of the
common stock at the date of grant. Directors are not required to pay any cash
consideration at the time of grant of options. A Director may pay the exercise
price of an option in cash or by surrendering previously acquired shares of
common stock. On March 6, 1995, the reported closing price of the Company's
common stock in New York Stock Exchange Composite Transactions was $42.50 per
share.
Stock options granted under the Directors' Plan become exercisable one year
after the date of grant, although a Directors' option will become immediately
exercisable if the optionee ceases serving as a Director for any reason. Such
options will expire at the earlier of ten years after the date of grant or five
years after the optionee ceases serving as a Director for any reason, except
that, if the optionee dies during the five-year post-termination period, such
period shall be extended until the date five years after the optionee's death
(but in no event more than ten years after the date of grant). Options generally
are not transferable by the optionee other than by will or by the laws of
descent and distribution or to a designated beneficiary in the event of death,
and are exercisable during the Director's lifetime only by the Director, except
that transfers of options for estate planning purposes generally will be
permitted if SEC regulations are modified (as currently proposed) to permit such
transfers.
The Directors' Plan also permits a non-employee Director to elect to
receive fees otherwise payable in cash in the form of common stock, or defer
receipt of such fees in the form of "deferred stock." The Director may make such
election for up to 100% of the fees otherwise payable to him or her, including
annual retainer fees, fees for service on a Board committee and fees for service
as chairman of a Board committee. See "Directors' Compensation." If a Director
elects to receive fees in the form of common stock, the Company will issue to
the Director or to an account designated by the Director a number of shares
having an aggregate fair market value equal to the fees (or as nearly as
possible equal to the fees) that would have been payable at that date but for
the Director's election to receive shares instead. If a Director elects to
receive fees in the form of deferred stock, the Company will credit a deferral
account established for the Director with a number of shares of deferred stock
equal to the number of shares (including fractional shares) having an aggregate
fair market value at that date equal to the fees that otherwise would have been
payable at such date but for Director's election to receive deferred stock
instead. When, as, and if dividends are declared and paid on common stock,
dividend equivalents will be credited on deferred stock then credited to a
Director's account, which amounts generally will be either paid to the Director
in cash or deemed to be reinvested in additional deferred stock. A Director's
deferred stock account will be settled, at such time or times as may be elected
by the Director in his or her original deferral election form, by delivering one
share of common stock for each share of deferred stock then credited to the
account and subject to such settlement, together with cash in lieu of any
fractional share. Shares of common stock and deferred stock acquired under the
Directors' Plan are non-forfeitable.
A total of 150,000 shares of common stock are reserved and available for
issuance under the Directors' Plan. Such shares may be authorized and unissued
shares or treasury shares. If any stock option expires without having been
exercised in full, the shares subject to the unexercised portion of the option
will again be available for issuance under the Directors' Plan. The aggregate
number and kind of shares issuable under the Directors' Plan, the number and
kind of shares subject to each automatic annual option grant, the number and
kind of shares subject to outstanding options and the exercise price thereof,
the number and kind of shares to be issued in payment of fees and the number and
kind of shares to be issued in settlement of deferred stock will be
appropriately adjusted by the Board or the Executive Committee in the event of a
recapitaliza-
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<PAGE> 35
tion, reorganization, merger consolidation, spin-off, combination, repurchase,
exchange of shares or other securities of the Company, stock split or reverse
split, stock dividend, certain other extraordinary dividends, liquidation,
dissolution, or other similar corporate transaction or event affecting common
stock, in order to prevent dilution or enlargement of Directors' rights under
the Directors' Plan.
The Directors' Plan will be administered by the Board of Directors or the
Executive Committee of the Board, provided that any action by the Board or such
Committee shall be taken only if approved by vote of a majority of the Directors
who are not then eligible to participate in the Directors' Plan. The Directors'
Plan may be amended, altered, suspended, discontinued, or terminated by the
Board without further stockholder approval, unless such approval is required by
law or regulation or under the rules of the New York Stock Exchange (or other
stock exchange or automated quotation system on which the common stock is then
listed or quoted). Thus, stockholder approval will not necessarily be required
for amendments which might increase the cost of the Plan or broaden eligibility.
Stockholder approval will not be deemed to be required under laws or regulations
that condition favorable treatment of participants on such approval, although
the Board may, in its discretion, seek stockholder approval in any circumstance
in which it deems such approval advisable.
The Directors' Plan will become effective upon its approval by
stockholders. Unless earlier terminated by the Board, the Directors' Plan will
terminate when no shares remain available under the Directors' Plan and the
Company and Directors have no further rights and obligations under the
Directors' Plan.
NEW PLAN BENEFITS TABLE. The following table sets forth the number of
options that would have been automatically granted to non-employee Directors as
a group under the Directors' Plan in 1994 had the Directors' Plan been in effect
during that year:
NEW PLAN BENEFITS
NON-EMPLOYEE DIRECTORS' STOCK OPTION PLAN
<TABLE>
<CAPTION>
NUMBER OF
NAME AND POSITION OPTIONS
----------------- ---------
<S> <C>
Non-employee Director Group (10 in number)............. 10,000
</TABLE>
It is not possible at present to predict the number of shares that will be
issuable under the Directors' Plan to non-employee Directors as common stock or
in connection with deferred stock in payment of fees.
FEDERAL INCOME TAX CONSEQUENCES. The following is a brief description of
the federal income tax consequences generally arising with respect to options
that may be granted and acquisitions of stock or deferred stock in payment of
fees under the Directors' Plan. This discussion is intended for the information
of stockholders considering how to vote at the Annual Meeting and not as tax
guidance to Directors who participate in the Directors' Plan.
The grant of an option will create no tax consequences for the optionee or
the Company. Upon exercise of an option, the optionee must generally recognize
ordinary income equal to the fair market value of the common stock acquired on
the date of exercise minus the exercise price, and the Company will be entitled
to a deduction equal to the amount recognized as ordinary income by the
optionee. A disposition of shares acquired upon the exercise of an option
generally will result in short-term or long-term capital gain or loss measured
by the difference between the sale price and the participant's tax basis (such
basis is generally the exercise price plus the amount recognized as ordinary
income) in such shares. Generally, there will be no tax consequences to the
Company in connection with a disposition of option shares.
If a Director acquires common stock in lieu of cash fees, he or she will
recognize ordinary income equal to the fair market value of the common stock
acquired on the date of acquisition. If a
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<PAGE> 36
Director acquires deferred stock in payment of cash fees, he or she will not
recognize ordinary income at the date the fees would otherwise have been paid or
as a result of the crediting of deferred stock to his or her account (including
upon deemed reinvestment of dividend equivalents). The Director will, however,
at the date of settlement of the deferred stock by issuance of common stock to
the Director, recognize ordinary income equal to the fair market value of the
common stock acquired at that date, and any dividend equivalents paid in cash
will constitute ordinary income as well. The Company generally will be entitled
to a tax deduction equal to any amount that constitutes ordinary income to the
Director.
VOTE REQUIRED. Adoption of the proposal to approve the Directors' Plan
requires the affirmative vote of holders of a majority of the shares present in
person or by proxy and entitled to vote at the Annual Meeting.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR APPROVAL OF THE
1995 NON-EMPLOYEE DIRECTORS' STOCK PLAN.
APPROVAL OF INDEPENDENT ACCOUNTANTS
The Board of Directors has designated Coopers & Lybrand L.L.P., as
independent accountants of the Company's accounts for the fiscal year ending
December 31, 1995, subject to stockholder approval. This firm has audited the
accounts of the Company and its predecessors since 1929. Although neither the
Certificate and By-laws nor the General Corporation Law of the State of
Delaware, the State of incorporation, requires the election or approval of the
selection of independent accountants, the Board of Directors desires that the
selection of independent accountants be approved by the stockholders. Such
designation of Coopers & Lybrand L.L.P. will be submitted to the Annual Meeting
for confirmation or rejection and, in the absence of contrary direction, it is
intended that Proxies in the accompanying form will be voted in favor of
confirmation. A representative of Coopers & Lybrand L.L.P. will attend the
Annual Meeting, with the opportunity to make a statement and answer questions of
stockholders.
If this proposal is not approved by a majority of the shares entitled to
vote at the Annual Meeting present in person or by proxy, the appointment of the
independent accountants will be reevaluated by the Board of Directors. However,
because of the difficulty and expense of making any substitution of accountants
so long after the beginning of the current year, it is contemplated that the
appointment for the fiscal year ending December 31, 1995, will be permitted to
stand unless the Board finds other good reasons for making a change. The Board
will then make an independent business judgment as to whether to seek new
independent accountants for the fiscal year ending 1996.
The Audit Committee of the Company's Board of Directors, at its meeting
held on August 23, 1994, reviewed and approved the fee estimate for the annual
audit of the Company's fiscal 1994 financial statements and, taking into
consideration the possible effect of non-audit services on the accountants'
independence, also approved the type of non-audit services to be rendered in
such year.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE STOCKHOLDERS VOTE
FOR THIS PROPOSAL.
OTHER MATTERS
The cost of this solicitation of Proxies will be borne by the Company. In
addition to solicitation by use of mail, employees of the Company may solicit
Proxies personally or by telephone or telegraph but will not receive additional
compensation for these services. Arrangements may be made with brokerage houses,
custodians, nominees and fiduciaries to send Proxies and Proxy materials to
their principals and the Company may reimburse them for their expense in so
doing. The Company has retained Morrow & Co. to assist in the solicitation at a
cost that is not expected to exceed $8,000 plus reasonable out-of-pocket
expenses.
32
<PAGE> 37
STOCKHOLDER PROPOSALS FOR PRESENTATION AT
1996 ANNUAL MEETING
If a stockholder of the Company wishes to present a proposal for
consideration at the next Annual Meeting of Stockholders, such proposal must be
received at the executive offices of the Company no later than November 22,
1995, to be considered for inclusion in the Company's Proxy Statement and form
of Proxy relating to that Annual Meeting.
HARSCO CORPORATION
/s/ Paul C. Coppock
Paul C. Coppock
Senior Vice President, Chief Administrative Officer, General Counsel and
Secretary
March 22, 1995
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<PAGE> 38
EXHIBIT A
HARSCO CORPORATION
1995 EXECUTIVE INCENTIVE COMPENSATION PLAN
1. PURPOSES. The purposes of this 1995 Executive Incentive Compensation
Plan (the "Plan") of Harsco Corporation, a Delaware corporation (the "Company"),
are to advance the interests of the Company and its stockholders by providing a
means to attract, retain, and reward executive officers and other key employees
of the Company and its subsidiaries, to link compensation to measures of the
Company's performance by providing for annual incentive awards to be settled
partly in cash and partly in stock in order to promote the creation of
stockholder value, and to enable such employees to acquire or increase a
proprietary interest in the Company in order to promote a closer identity of
interests between such employees and the Company's stockholders.
2. DEFINITIONS. The definitions of awards under the Plan, including
Options, SARs (including Limited SARs), Restricted Stock, Deferred Stock, Stock
granted as a bonus or in lieu of other awards, Dividend Equivalents, and Annual
Incentive Awards are set forth in Section 6 of the Plan. Such awards, together
with any other right or interest granted to a Participant under the Plan, are
termed "Awards." The definitions of terms relating to a Change in Control of the
Company are set forth in Section 8 of the Plan. In addition to such terms and
the terms defined in Section 1, the following terms shall be defined as set
forth below:
(a) "Award Agreement" means any written agreement, contract, notice to
a Participant, or other instrument or document evidencing an Award.
(b) "Beneficiary" means the person, persons, trust, or trusts which
have been designated by a Participant in his or her most recent written
beneficiary designation filed with the Committee to receive the benefits
specified under this Plan upon such Participant's death or to which Awards
or other rights are transferred if and to the extent permitted under
Section 9(b). If, upon a Participant's death, there is no designated
Beneficiary or surviving designated Beneficiary, then the term Beneficiary
means person, persons, trust, or trusts entitled by will or the laws of
descent and distribution to receive such benefits.
(c) "Board" means the Board of Directors of the Company.
(d) "Code" means the Internal Revenue Code of 1986, as amended from
time to time. References to any provision of the Code include regulations
thereunder and successor provisions and regulations thereto.
(e) "Committee" means the Management Development and Compensation
Committee of the Board, or such other Board committee as may be designated
by the Board to administer the Plan; provided, however, that the Committee
shall at all times consist of three or more directors each of whom is a
"disinterested person" within the meaning of Rule 16b-3 under the Exchange
Act.
(f) "Exchange Act" means the Securities Exchange Act of 1934, as
amended from time to time. References to any provision of the Exchange Act
include rules thereunder and successor provisions and rules thereto.
(g) "Fair Market Value" means, with respect to Stock, Awards, or other
property, the fair market value of such Stock, Awards, or other property
determined by such methods or procedures as shall be established from time
to time by the Committee. Unless otherwise determined by the Committee, the
Fair Market Value of Stock as of any given date means the average of the
high and the low sale prices of a share of common stock reported in the
table entitled "New York Stock Exchange Composite Transactions" contained
in The Wall Street
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<PAGE> 39
Journal (or an equivalent successor table) for such date or, if no such
prices are reported for such date, on the most recent trading day prior to
such date for which such prices were reported.
(h) "ISO" means any Option intended to be and designated as an
incentive stock option within the meaning of Section 422 of the Code.
(i) "Participant" means a person who, as an executive officer or key
employee of the Company or a subsidiary, has been granted an Award under
the Plan.
(j) "Rule 16b-3" means Rule 16b-3, as from time to time in effect and
applicable to the Plan and Participants, promulgated by the Securities and
Exchange Commission under Section 16 of the Exchange Act.
(k) "Stock" means the Common Stock, $1.25 par value, of the Company
and such other securities as may be substituted for Stock or such other
securities pursuant to Section 4.
3. ADMINISTRATION.
(a) Authority of the Committee. The Plan shall be administered by the
Committee. The Committee shall have full and final authority to take the
following actions, in each case subject to and consistent with the
provisions of the Plan:
(i) to select Participants to whom Awards may be granted;
(ii) to determine the type or types of Awards to be granted to each
Participant;
(iii) to determine the number of Awards to be granted, the number
of shares of Stock to which an Award will relate, the terms and
conditions of any Award granted under the Plan (including, but not
limited to, any exercise price, grant price, or purchase price, any
restriction or condition, any schedule or performance conditions for the
lapse of restrictions or conditions relating to transferability,
forfeiture, exercisability, or settlement of an Award, and waivers,
accelerations, or modifications thereof, based in each case on such
considerations as the Committee shall determine), and all other matters
to be determined in connection with an Award;
(iv) to determine whether, to what extent, and under what
circumstances an Award may be settled, or the exercise price of an Award
may be paid, in cash, Stock, other Awards, or other property, or an
Award may be cancelled, forfeited, or surrendered;
(v) to determine whether, to what extent, and under what
circumstances cash, Stock, other Awards, or other property payable with
respect to an Award will be deferred either automatically, at the
election of the Committee, or at the election of the Participant;
(vi) to prescribe the form of each Award Agreement, which need not
be identical for each Participant;
(vii) to adopt, amend, suspend, waive, and rescind such rules and
regulations and appoint such agents as the Committee may deem necessary
or advisable to administer the Plan;
(viii) to correct any defect or supply any omission or reconcile
any inconsistency in the Plan and to construe and interpret the Plan and
any Award, rules and regulations, Award Agreement, or other instrument
hereunder; and
(ix) to make all other decisions and determinations as may be
required under the terms of the Plan or as the Committee may deem
necessary or advisable for the administration of the Plan.
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<PAGE> 40
(b) Manner of Exercise of Committee Authority. Unless authority is
specifically reserved to the Board under the terms of the Plan, the
Company's Certificate of Incorporation or Bylaws, or applicable law, the
Committee shall have sole discretion in exercising authority under the
Plan. Any action of the Committee with respect to the Plan shall be final,
conclusive, and binding on all persons, including the Company, subsidiaries
of the Company, Participants, any person claiming any rights under the Plan
from or through any Participant, and stockholders. The express grant of any
specific power to the Committee, and the taking of any action by the
Committee, shall not be construed as limiting any power or authority of the
Committee. The Committee may delegate to officers or managers of the
Company or any subsidiary of the Company the authority, subject to such
terms as the Committee shall determine, to perform administrative functions
and, with respect to Participants not subject to Section 16 of the Exchange
Act, to perform such other functions of the Committee as the Committee may
determine, to the extent permitted under Rule 16b-3 and applicable law.
(c) Limitation of Liability. Each member of the Committee shall be
entitled to, in good faith, rely or act upon any report or other
information furnished to him by any officer or other employee of the
Company or any subsidiary, the Company's independent certified public
accountants, or any executive compensation consultant, legal counsel, or
other professional retained by the Company to assist in the administration
of the Plan. No member of the Committee, nor any officer or employee of the
Company acting on behalf of the Committee, shall be personally liable for
any action, determination, or interpretation taken or made in good faith
with respect to the Plan, and all members of the Committee and any officer
or employee of the Company acting on behalf of the Committee or members
thereof shall, to the extent permitted by law, be fully indemnified and
protected by the Company with respect to any such action, determination, or
interpretation.
4. STOCK AVAILABLE UNDER PLAN; PER-PERSON AWARD LIMITATIONS; ADJUSTMENTS.
(a) Stock Reserved for Awards. Subject to adjustment as hereinafter
provided, the total number of shares of Stock reserved and available for
delivery to Participants in connection with Awards under the Plan shall be
2,000,000. No Award may be granted if the number of shares to which such
Award relates, when added to the number of shares to which other then-
outstanding Awards relate, exceeds the number of shares then remaining
available for delivery under this Section 4. If all or any portion of an
Award is forfeited, settled in cash, or otherwise terminated without
delivery of shares to the Participant, the shares to which such Award or
portion thereof related shall again be available for Awards under the Plan;
provided, however, that, if any such shares could not again be available
for Awards to a Participant who is subject to Section 16 of the Exchange
Act under applicable requirements of Rule 16b-3, such shares shall be
available exclusively for Awards to Participants who are not subject to
Section 16. The Committee may adopt procedures for the counting of shares
relating to any Award to ensure appropriate counting and avoid double
counting (in the case of tandem or substitute awards). Any shares of Stock
delivered pursuant to an Award may consist, in whole or in part, of
authorized and unissued shares or treasury shares.
(b) Annual Individual Limitations. During any calendar year, no
Participant may be granted Options and SARs under the Plan with respect to
more than 25,000 shares of Stock. In addition, the maximum value of any
Annual Incentive Award settled during any calendar year (including the
value of any Restricted Stock granted in settlement thereof) shall not
exceed $800,000.
(c) Adjustments. In the event that the Committee shall determine that
any dividend or other distribution (whether in the form of cash, Stock, or
other property), recapitalization, forward or reverse split,
reorganization, merger, consolidation, spin-off, combination, repurchase,
or share exchange, or other similar corporate transaction or event, affects
the Stock
A-3
<PAGE> 41
such that an adjustment is appropriate in order to prevent dilution or
enlargement of the rights of Participants under the Plan, then the
Committee shall, in such manner as it may deem equitable, adjust any or all
of (i) the number and kind of shares of Stock reserved and available for
Awards under Section 4(a), (ii) the number and kind of shares of
outstanding Restricted Stock or other outstanding Award in connection with
which shares have been issued or transferred to Participants, (iii) the
number and kind of shares that may be issued or delivered in respect of
other outstanding Awards, (iv) the exercise price, grant price, or purchase
price relating to any Award (or, if deemed appropriate, the Committee may
make provision for a cash payment with respect to any outstanding Award),
and (v) the number of shares with respect to which Options and SARs may be
granted to a Participant in any calendar year, as set forth in Section
4(b). In addition, the Committee is authorized to make adjustments in the
terms and conditions of, and the criteria included in, Awards in
recognition of unusual or nonrecurring events (including, without
limitation, events described in the preceding sentence) affecting the
Company or any subsidiary or the financial statements of the Company or any
subsidiary, or in response to changes in applicable laws, regulations, or
accounting principles. The foregoing notwithstanding, no adjustments shall
be authorized under this Section 4(c) with respect to ISOs or SARs in
tandem therewith to the extent that such authority would cause the Plan to
violate Section 422(b)(1) of the Code, and no such adjustment shall be
authorized with respect to Options or SARs or Annual Incentive Awards to
the extent that such authority would cause such Awards to fail to qualify
as "qualified performance-based compensation" under Section 162(m)(4)(C) of
the Code and regulations thereunder.
5. ELIGIBILITY. Executive officers and other key employees of the Company
and its subsidiaries, including any director or officer who is also such an
employee, are eligible to be granted Awards under the Plan. The foregoing
notwithstanding, no member of the Committee shall be eligible to be granted
Awards under the Plan.
6. SPECIFIC TERMS OF AWARDS.
(a) General. Awards may be granted on the terms and conditions set
forth in this Section 6. In addition, the Committee may impose on any Award
or the exercise thereof, at the date of grant or thereafter (subject to
Section 9(e)), such additional terms and conditions, not inconsistent with
the provisions of the Plan, as the Committee shall determine, including
terms requiring forfeiture of Awards in the event of termination of
employment by the Participant or upon the occurrence of other events.
Awards will be granted under the Plan in order to obtain for the Company
and its subsidiaries the benefit of the services of Participants;
accordingly, except as provided in Sections 6(f) or 7(a) and to the extent
required to comply with requirements of the Delaware General Corporation
Law that lawful consideration be paid for Stock, no other consideration may
be required in connection with the grant (but not the exercise) of any
Award.
(b) Options. The Committee is authorized to grant Options to
Participants on the following terms and conditions:
(i) Exercise Price. The exercise price per share of Stock
purchasable under an Option shall be determined by the Committee;
provided, however, that such exercise price shall be not less than the
Fair Market Value of a share on the date of grant of such Option.
(ii) Time and Method of Exercise. The Committee shall determine
the time or times at which an Option may be exercised in whole or in
part, the methods by which such exercise price may be paid or deemed to
be paid, the form of such payment, including, without limitation, cash,
Stock, other Awards or awards granted under other Company plans, or
other property (including notes or other contractual obligations of
Participants to make payment on a deferred basis, such as through
"cashless exercise" arrangements, to the extent permitted by applicable
law), and the methods by which Stock will be delivered
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<PAGE> 42
or deemed to be delivered to Participants; provided, however, that
Participants shall be permitted to specify that Stock issued upon
exercise of Options shall be registered in the name of a person other
than the Participant.
(iii) Expiration Date of Options. No Option shall expire later
than ten years after the date of its grant.
(iv) ISOs. The terms of any ISO granted under the Plan shall
comply in all respects with the provisions of Section 422 of the Code,
including but not limited to the requirement that no ISO shall be
granted more than ten years after the effective date of the Plan.
Anything in the Plan to the contrary notwithstanding, no term of the
Plan relating to ISOs shall be interpreted, amended, or altered, nor
shall any discretion or authority granted under the Plan be exercised,
so as to disqualify either the Plan or any ISO under Section 422 of the
Code, unless the Participant has first requested such disqualification.
(c) Stock Appreciation Rights ("SARs"). The Committee is authorized
to grant SARs to Participants on the following terms and conditions.
(i) Right to Payment. An SAR shall confer on the Participant to
whom it is granted a right to receive, upon exercise thereof, the excess
of (A) the Fair Market Value of one share of Stock on the date of
exercise, over (B) the grant price of the SAR as determined by the
Committee as of the date of grant of the SAR, which shall be not less
than the Fair Market Value of one share of Stock on the date of grant.
(ii) Other Terms. The Committee shall determine the time or times
at which an SAR may be exercised in whole or in part, the method of
exercise, method of settlement, form of consideration payable in
settlement, method by which Stock will be delivered or deemed to be
delivered to Participants, whether or not an SAR shall be in tandem with
any other Award, and any other terms and conditions of any SAR. Limited
SARs that may only be exercised upon the occurrence of a Change in
Control (as such term is defined in Section 8(b) or as otherwise defined
by the Committee) may be granted on such terms, not inconsistent with
this Section 6(c), as the Committee may determine. Such Limited SARs may
be either freestanding or in tandem with other Awards.
(iii) Expiration Date of SARs. No SAR shall expire later than ten
years after the date of its grant.
(d) Restricted Stock. The Committee is authorized to grant Restricted
Stock to Participants on the following terms and conditions:
(i) Grant and Restrictions. Restricted Stock shall be subject to
such restrictions on transferability and other restrictions, if any, as
the Committee may impose, which restrictions may lapse separately or in
combination at such times, under such circumstances, in such
installments, or otherwise as the Committee may determine; provided,
however, that Restricted Stock the grant of which is not conditioned
upon achievement of any performance objective shall be subject to a
restriction on transferability and a risk of forfeiture for a period of
not less than three years after the date of grant (except that the
Committee may accelerate the lapse of such restrictions in the event of
the Participant's termination of employment due to death, disability,
normal or approved early retirement, or involuntary termination by the
Company or a subsidiary without "cause," as defined by the Committee).
Except to the extent restricted under the terms of the Plan and any
Award Agreement relating to the Restricted Stock, a Participant granted
Restricted Stock shall have all of the rights of a stockholder
including, without limitation, the right to vote Restricted Stock or the
right to receive dividends thereon.
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<PAGE> 43
(ii) Forfeiture. Except as otherwise determined by the Committee,
upon termination of employment during the applicable restriction period,
Restricted Stock that is at that time subject to restrictions shall be
forfeited and reacquired by the Company; provided, however, that the
Committee may provide, by rule or regulation or in any Award Agreement,
or may determine in any individual case, that restrictions or forfeiture
conditions relating to Restricted Stock will be waived in whole or in
part in the event of terminations resulting from specified causes,
except as otherwise provided in Section 6(d)(i).
(iii) Certificates for Stock. Restricted Stock granted under the
Plan may be evidenced in such manner as the Committee shall determine.
If certificates representing Restricted Stock are registered in the name
of the Participant, such certificates shall bear an appropriate legend
referring to the terms, conditions, and restrictions applicable to such
Restricted Stock, the Company shall retain physical possession of the
certificate, and the Participant shall have delivered a stock power to
the Company, endorsed in blank, relating to the Restricted Stock.
(iv) Dividends and Distributions. Dividends paid on Restricted
Stock shall be either paid at the dividend payment date in cash or in
shares of unrestricted Stock having a Fair Market Value equal to the
amount of such dividends, or the payment of such dividends shall be
deferred and/or the amount or value thereof automatically reinvested in
additional Restricted Stock, other Awards, or other investment vehicles,
as the Committee shall determine or permit the Participant to elect. To
this end, the Committee may require or permit such dividends to be
automatically reinvested through any dividend reinvestment plan or
program of the Company, subject to such terms and conditions as the
Committee may specify. Stock distributed in connection with a Stock
split or Stock dividend, and other property distributed as a dividend,
shall be subject to restrictions and a risk of forfeiture to the same
extent as the Restricted Stock with respect to which such Stock or other
property is distributed.
(e) Deferred Stock. The Committee is authorized to grant Deferred
Stock to Participants, subject to the following terms and conditions:
(i) Award and Restrictions. Delivery of Stock will occur upon
expiration of the deferral period specified for an Award of Deferred
Stock by the Committee (or, if permitted by the Committee, as elected by
the Participant). In addition, Deferred Stock shall be subject to such
restrictions as the Committee may impose, if any, which restrictions may
lapse at the expiration of the deferral period or at earlier specified
times, separately or in combination, under such circumstances, in such
installments, or otherwise as the Committee may determine.
(ii) Forfeiture. Except as otherwise determined by the Committee,
upon termination of employment during the applicable deferral period or
portion thereof to which forfeiture conditions apply (as provided in the
Award Agreement evidencing the Deferred Stock), all Deferred Stock that
is at that time subject to such risk of forfeiture shall be forfeited;
provided, however, that the Committee may provide, by rule or regulation
or in any Award Agreement, or may determine in any individual case, that
restrictions or forfeiture conditions relating to Deferred Stock will be
waived in whole or in part in the event of terminations resulting from
specified causes.
(f) Bonus Stock and Awards in Lieu of Cash Obligations. The Committee
is authorized to grant Stock as a bonus, or to grant Stock or other Awards
in lieu of Company obligations to pay cash under other plans or
compensatory arrangements; provided, however, that, in the case of
Participants subject to Section 16 of the Exchange Act, the amount of such
Stock or Awards shall be determined by the Committee in a manner conforming
to the disinterested
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administration requirements of Rule 16b-3. Stock or Awards granted
hereunder shall be subject to such other terms as shall be determined by
the Committee.
(g) Dividend Equivalents. The Committee is authorized to grant
Dividend Equivalents to a Participant, entitling the Participant to receive
cash, Stock, other Awards, or other property equal in value to dividends
paid with respect to a specified number of shares of Stock. Dividend
Equivalents may be awarded on a free-standing basis or in connection with
another Award. The Committee may provide that Dividend Equivalents shall be
paid or distributed when accrued or shall be deemed to have been reinvested
in additional Stock, Awards, or other investment vehicles, and subject to
such restrictions on transferability and risks of forfeiture, as the
Committee may specify.
(h) Annual Incentive Awards. The Committee is authorized to grant
Annual Incentive Awards, which Awards shall represent a conditional right
to receive cash and/or Restricted Stock upon achievement of preestablished
performance objectives, subject to the following terms and conditions:
(i) Status of Awards Under Section 162(m) of the Code. It is the
intent of the Company that Annual Incentive Awards under this Section
6(h)(i) granted to persons who are "covered employees" within the
meaning of Code Section 162(m) and regulations thereunder (including
Proposed Regulation 1.162-27 until such time as successor proposed
regulations or final regulations may be adopted) shall constitute
"qualified performance-based compensation" within the meaning of Code
Section 162(m) and regulations thereunder. Accordingly, this Section
6(h)(i), and the definition of "covered employee" and other terms used
herein, shall be interpreted in a manner consistent with Code Section
162(m) of the Code and regulations thereunder. The foregoing
notwithstanding, because the Committee cannot determine with certainty
whether a given Participant will be a "covered employee" with respect a
fiscal year that has not yet been completed, the term "covered employee"
as used in this Section 6(h)(i) shall mean only a person determined by
the Committee, at the time of grant of an Annual Incentive Award, likely
to be a "covered employee" with respect to that fiscal year.
(ii) Grants of Annual Incentive Awards. If the Committee
determines to grant Annual Incentive Awards with respect to any fiscal
year, the Committee shall select the Participants to be granted such
Awards and establish the performance objectives, amounts payable and
other terms of settlement, and all other terms of such Awards. Such
determinations by the Committee shall be made, in the case of any
covered employee, not later than the end of the first quarter of that
fiscal year or such earlier date as may be necessary to comply with Code
Section 162(m) and regulations thereunder.
(iii) Performance Objectives and Amounts Payable. The performance
objectives relating to an Annual Incentive Award shall consist of (A)
two or more business criteria, (B) minimum, targeted, and maximum levels
of performance with respect to each such business criteria, and (C)
amounts payable upon achievement of such levels of performance and at
other levels of performance between the specified minimum and maximum
levels, as specified by the Committee subject to this Section 6(h)(iii).
In the case of persons determined by the Committee to be covered
employees, performance objectives shall be objective and shall otherwise
meet the requirements of Section 162(m)(4)(C) of the Code and
regulations thereunder. Business criteria used by the Committee in
establishing performance objectives shall be selected from among the
following:
(1) Annual return on capital;
(2) Annual earnings per share;
(3) Annual cash flow provided by operations;
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(4) Annual sales; and/or
(5) Strategic business criteria, consisting of one or more
objectives based on meeting specified sales, market
penetration, geographic business expansion goals, cost targets,
safety goals, goals relating to acquisitions or divestitures,
research and development and product development goals.
The Committee may, in its discretion, specify business criteria other than
those stated above in establishing business objectives for such Awards to
Participants other than covered employees, but may not specify business
criteria other than those stated above in establishing the business
objectives for such Awards to covered employees. The levels of performance
required with respect to such business criteria may be expressed in
absolute or relative levels. Achievement of performance objectives with
respect to such Awards shall be measured over a period of one year.
Performance objectives may differ for such Awards to different
Participants, including such Awards to different covered employees. The
Committee shall specify the weighting to be given to each performance
objective for purposes of determining the final amount payable with respect
to any such Award.
(iv) Payment of Cash and/or Restricted Stock in Settlement. The
Committee shall specify whether and to what extent an Annual Incentive
Award shall be settled in cash, in shares of Restricted Stock, or in a
combination thereof. With respect to covered employees, the Committee
shall specify the form or forms of settlement at the time of grant of
such Award. If any Restricted Stock is awarded in settlement of such an
Award, at least 50% of such Restricted Stock shall be subject to a
restriction on transferability and a risk of forfeiture for a period
extending until the end of the fiscal year following the year to which
such Award related, and the remaining portion of such Restricted Stock
shall be subject to a restriction on transferability and a risk of
forfeiture for a period extending until the end of the third fiscal year
following the year to which such Award related (except that the
Committee may accelerate the lapse of such restrictions in the event of
the Participant's termination of employment due to death, disability,
normal or approved early retirement, or involuntary termination by the
Company or a subsidiary without "cause," as defined by the Committee).
The Committee may specify additional or longer restrictions on
transferability and risks of forfeiture with respect to such Restricted
Stock.
(v) Committee Determinations and Adjustments to Amounts
Payable. As promptly as practicable following completion of the year or
other period with respect to which performance objectives relating to
Annual Incentive Awards are to be achieved, the Committee shall
determine whether and to what extent such performance objectives have in
fact been achieved. All such determinations by the Committee shall be
made in writing. The Committee may, in its discretion, increase or
reduce the amounts payable in settlement of such an Award after the date
of grant and prior to settlement (including upon consideration by the
Committee of other performance criteria), except that the Committee may
not exercise discretion to increase the amounts payable in settlement of
such an Award to a covered employee. The Committee may not delegate any
responsibility under this Section 6(h)(v).
7. CERTAIN PROVISIONS APPLICABLE TO AWARDS.
(a) Stand-Alone, Additional, Tandem, and Substitute Awards. Awards
granted under the Plan may, in the discretion of the Committee, be granted
either alone or in addition to, in tandem with, or in substitution for, any
other Award granted under the Plan or any award granted under any other
plan of the Company, any subsidiary, or any business entity to be acquired
by the Company or a subsidiary, or any other right of a Participant to
receive payment from the Company or any subsidiary. Awards granted in
addition to or in tandem with other
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Awards or awards may be granted either as of the same time as or a
different time from the grant of such other Awards or awards.
(b) Term of Awards. The term of each Award shall be for such period
as may be determined by the Committee, subject to Sections 6(b)(iii) and
6(c)(iii).
(c) Form of Payment Under Awards. Subject to the terms of the Plan
and any applicable Award Agreement, payments to be made by the Company or a
subsidiary upon the grant or exercise of an Award may be made in such forms
as the Committee shall determine, including, without limitation, cash,
Stock, other Awards, or other property, and may be made in a single payment
or transfer, in installments, or on a deferred basis. Such payments may
include, without limitation, provisions for the payment or crediting of
reasonable interest on installment or deferred payments or the grant or
crediting of Dividend Equivalents in respect of installment or deferred
payments denominated in Stock.
(d) Rule 16b-3 Compliance.
(i) Six-Month Holding Period. Unless a Participant could otherwise
dispose of or exercise a derivative security or dispose of Stock
delivered under the Plan without incurring liability under Section 16(b)
of the Exchange Act, (i) at least six months shall elapse from the date
of acquisition of a derivative security under the Plan to the date of
disposition of the derivative security (other than upon exercise or
conversion) or its underlying equity security and (ii) Stock granted or
awarded under the Plan other than upon exercise or conversion of a
derivative security shall be held for at least six months from the date
of grant or award.
(ii) Reformation To Comply with Exchange Act Rules. It is the
intent of the Company that this Plan comply in all respects with
applicable provisions of Rule 16b-3 or Rule 16a-1(c)(3) under the
Exchange Act in connection with any grant of Awards to or other
transaction by a Participant who is subject to Section 16 of the
Exchange Act (except for transactions exempted under alternative
Exchange Act Rules or acknowledged in writing to be non-exempt by such
Participant). Accordingly, if any provision of this Plan or any Award
Agreement relating to an Award does not comply with the requirements of
Rule 16b-3 or Rule 16a-1(c)(3) as then applicable to any such
transaction, such provision will be construed or deemed amended to the
extent necessary to conform to the applicable requirements of Rule 16b-3
or Rule 16a-1(c)(3) so that such Participant shall avoid liability under
Section 16(b).
(e) Awards to Participants Outside the United States. The Committee
may modify the terms of any Award under the Plan made to or held by a
Participant who is then resident or primarily employed outside of the
United States in any manner deemed by the Committee to be necessary or
appropriate in order that such Award shall conform to laws, regulations,
and customs of the country in which the Participant is then resident or
primarily employed, or so that the value and other benefits of the Award to
the Participant, as affected by foreign tax laws and other restrictions
applicable as a result of the Participant's residence or employment abroad,
shall be comparable to the value of such an Award to a Participant who is
resident or primarily employed in the United States. An Award may be
modified under this Section 7(e) in a manner that is inconsistent with the
express terms of the Plan, so long as such modifications will not
contravene any applicable law or regulation or result in actual liability
under Section 16(b) for the Participant whose Award is modified.
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8. CHANGE IN CONTROL PROVISIONS.
(a) In the event of a "Change in Control," as defined in this Section,
the following acceleration provisions shall apply:
(i) any Award carrying a right to exercise that was not previously
exercisable and vested shall become fully exercisable and vested,
subject only to the restrictions set forth in Sections 7(d)(i) and 9(a);
and
(ii) The restrictions, deferral of settlement, and forfeiture
conditions applicable to any other Award granted under the Plan shall
lapse and such Awards shall be deemed fully vested, subject to the
restrictions set forth in Sections 7(d)(i) and 9(a).
(b) For purposes of the Plan, a "Change in Control" shall have
occurred if:
(i) Stock Acquisition. Any "person" (as such term is used in
Section 13(d) and 14(d)(2) of the Exchange Act), other than the Company
or a corporation a majority of whose outstanding stock entitled to vote
is owned, directly or indirectly, by the Company, is or becomes, other
than by purchase from the Company or such a corporation, the "beneficial
owner" (as such term is defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, of securities of the Company representing 20% or
more of the combined voting power of the Company's then outstanding
voting securities. Such a Change in Control shall be deemed to have
occurred on the first to occur of the business day immediately preceding
the date securities are first purchased by a tender or exchange offer,
or the date on which the Company first learns of the acquisition of 20%
of such securities, or the earlier of the business day immediately
preceding the effective date of an agreement for the merger,
consolidation or other reorganization of the Company or the date of
approval thereof by the stockholders of the Company, as the case may be.
(ii) Change in Board. During any period of two consecutive years,
individuals who at the beginning of such period were members of the
Board of Directors[, and any new director whose election by the Board or
nomination for election by the Company's stockholders was approved by a
vote of at least two-thirds ( 2/3) of the directors then still in office
who either were directors at the beginning of the period or whose
election or nomination for election was previously so approved,] cease
for any reason to constitute at least a majority of the Board of
Directors. Such a Change in Control shall be deemed to have occurred on
the date upon which the requisite majority of directors fails to be
elected by the stockholders of the Company.
(iii) Other Events. There occurs a change in control of the
Company of a nature that would be required to be reported as such in
response to Item 1(a) of the Current Report on Form 8-K pursuant to
Section 13 or 15(d) of the Exchange Act, or any successor provision to
such Item relating to a "change in control," or in any other filing
under the Exchange Act.
9. GENERAL PROVISIONS.
(a) Compliance With Laws and Obligations. The Company shall not be
obligated to issue or deliver Stock in connection with any Award or take
any other action under the Plan in a transaction subject to the
registration requirements of the Securities Act of 1933, as amended, or any
other federal or state securities law, any requirement under any listing
agreement between the Company and any national securities exchange or
automated quotation system, or any other law, regulation, or contractual
obligation of the Company, until the Company is satisfied that such laws,
regulations, and other obligations of the Company have been complied with
in full. Certificates representing shares of Stock delivered under the Plan
will be subject to such stop-transfer orders and other restrictions as may
be applicable under such laws,
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regulations, and other obligations of the Company, including any
requirement that a legend or legends be placed thereon.
(b) Limitations on Transferability. Awards and other rights under the
Plan, including any Award or right which constitutes a derivative security
as generally defined in Rule 16a-1(c) under the Exchange Act, will not be
transferable by a Participant except by will or the laws of descent and
distribution (or to a designated Beneficiary in the event of the
Participant's death), and, if exercisable, shall be exercisable during the
lifetime of a Participant only by such Participant or his guardian or legal
representative; provided, however, that such Awards and other rights (other
than ISOs and SARs in tandem therewith) may be transferred to one or more
Beneficiaries during the lifetime of the Participant in connection with the
Participant's estate planning, and may be exercised by such transferees in
accordance with the terms of such Award, but only if and to the extent then
permitted under Rule 16b-3, consistent with the registration of the offer
and sale of Stock on Form S-8 or a successor registration form of the
Securities and Exchange Commission, and permitted by the Committee. Awards
and other rights under the Plan may not be pledged, mortgaged,
hypothecated, or otherwise encumbered, and shall not be subject to the
claims of creditors.
(c) No Right to Continued Employment. Neither the Plan nor any action
taken hereunder shall be construed as giving any employee the right to be
retained in the employ of the Company or any of its subsidiaries, nor shall
it interfere in any way with the right of the Company or any of its
subsidiaries to terminate any employee's employment at any time.
(d) Taxes. The Company and any subsidiary is authorized to withhold
from any Award granted or to be settled, any delivery of Stock in
connection with an Award, any other payment relating to an Award, or any
payroll or other payment to a Participant amounts of withholding and other
taxes due or potentially payable in connection with any transaction
involving an Award, and to take such other action as the Committee may deem
advisable to enable the Company and Participants to satisfy obligations for
the payment of withholding taxes and other tax obligations relating to any
Award. This authority shall include authority to withhold or receive Stock
or other property and to make cash payments in respect thereof in
satisfaction of a Participant's tax obligations; in such case, the shares
withheld shall be deemed to have been delivered for purposes of Section
4(a).
(e) Changes to the Plan and Awards. The Board may amend, alter,
suspend, discontinue, or terminate the Plan or the Committee's authority to
grant Awards under the Plan without the consent of stockholders or
Participants, except that any such action shall be subject to the approval
of the Company's stockholders at or before the next annual meeting of
stockholders for which the record date is after such Board action if such
stockholder approval is required by any federal or state law or regulation
or the rules of any stock exchange or automated quotation system on which
the Stock may then be listed or quoted, and the Board may otherwise, in its
discretion, determine to submit other such changes to the Plan to
stockholders for approval; provided, however, that, without the consent of
an affected Participant, no such action may materially impair the rights of
such Participant under any Award theretofore granted to him. The Committee
may waive any conditions or rights under, or amend, alter, suspend,
discontinue, or terminate, any Award theretofore granted and any Award
Agreement relating thereto; provided, however, that, without the consent of
an affected Participant, no such action may materially impair the rights of
such Participant under such Award.
(f) No Rights to Awards; No Stockholder Rights. No Participant or
employee shall have any claim to be granted any Award under the Plan, and
there is no obligation for uniformity of treatment of Participants and
employees. No Award shall confer on any Participant any of the rights of a
stockholder of the Company unless and until Stock is duly issued or
transferred to
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the Participant in accordance with the terms of the Award or, in the case
of an Option, the Option is duly exercised.
(g) Unfunded Status of Awards; Creation of Trusts. The Plan is
intended to constitute an "unfunded" plan for incentive and deferred
compensation. With respect to any payments not yet made to a Participant
pursuant to an Award, nothing contained in the Plan or any Award shall give
any such Participant any rights that are greater than those of a general
creditor of the Company; provided, however, that the Committee may
authorize the creation of trusts or make other arrangements to meet the
Company's obligations under the Plan to deliver cash, Stock, other Awards,
or other property pursuant to any Award, which trusts or other arrangements
shall be consistent with the "unfunded" status of the Plan unless the
Committee otherwise determines with the consent of each affected
Participant.
(h) Nonexclusivity of the Plan. Neither the adoption of the Plan by
the Board nor its submission to the stockholders of the Company for
approval shall be construed as creating any limitations on the power of the
Board to adopt such other compensatory arrangements as it may deem
desirable, including, without limitation, the granting of stock options
otherwise than under the Plan, and such arrangements may be either
applicable generally or only in specific cases.
(i) No Fractional Shares. No fractional shares of Stock shall be
issued or delivered pursuant to the Plan or any Award. The Committee shall
determine whether cash, other Awards, or other property shall be issued or
paid in lieu of such fractional shares or whether such fractional shares or
any rights thereto shall be forfeited or otherwise eliminated.
(j) Compliance with Code Section 162(m). It is the intent of the
Company that Options, SARs, and Annual Incentive Awards to covered
employees shall constitute "qualified performance-based compensation"
within the meaning of Code Section 162(m) and regulations thereunder
(including Proposed Regulation 1.162-27). Accordingly, if any provision of
the Plan or any Award Agreement relating to such an Award does not comply
or is inconsistent with the requirements of Code Section 162(m) or
regulations thereunder, such provision shall be construed or deemed amended
to the extent necessary to conform to such requirements, and no provision
shall be deemed to confer upon the Committee or any other person discretion
to increase the amount of compensation otherwise payable in connection with
any such Award upon attainment of the performance objectives.
(k) Governing Law. The validity, construction, and effect of the
Plan, any rules and regulations under the Plan, and any Award Agreement
will be determined in accordance with the Delaware General Corporation Law,
to the extent applicable, other laws (including those governing contracts)
of the State of Pennsylvania, without giving effect to principles of
conflicts of laws, and applicable federal law.
(l) Effective Date, Stockholder Approval, and Plan Termination. The
Plan shall become effective on January 1, 1995; provided, however, that,
not later than the final adjournment of the first annual meeting of
stockholders of the Company held after such effective date, the Plan shall
have been approved by the affirmative votes of the holders of a majority of
the voting securities of the Company present, or represented, and entitled
to vote on the subject matter at a duly held meeting of stockholders.
Unless earlier terminated by action of the Board of Directors, the Plan
will remain in effect until such time as no Stock remains available for
delivery under the Plan and the Company has no further rights or
obligations under the Plan with respect to outstanding Awards under the
Plan.
As recommended by the Management Development and Compensation Committee and
adopted by the Board of Directors on November 15, 1994.
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EXHIBIT B
HARSCO CORPORATION
1995 NON-EMPLOYEE DIRECTORS' STOCK PLAN
1. PURPOSE. The purpose of this 1995 Non-Employee Directors' Stock Plan
(the "Plan") of Harsco Corporation (the "Company") is to advance the interests
of the Company and its stockholders by providing a means to attract and retain
highly qualified persons to serve as non-employee directors and to promote
ownership by non-employee directors of a greater proprietary interest in the
Company, thereby aligning such directors' interests more closely with the
interests of stockholders of the Company.
2. DEFINITIONS. In addition to terms defined elsewhere in the Plan, the
following terms shall be defined as set forth below:
(a) "Code" means the Internal Revenue Code of 1986, as amended from
time to time. References to any provision of the Code include regulations
thereunder and successor provisions and regulations thereto.
(b) "Deferred Stock" means the credits to a Participant's deferral
account under Section 7, each of which represents the right to receive one
share of Stock upon settlement of the deferral account. Deferral accounts,
and Deferred Stock credited thereto, are maintained solely as bookkeeping
entries by the Company evidencing unfunded obligations of the Company.
(c) "Exchange Act" means the Securities Exchange Act of 1934, as
amended. References to any provision of the Exchange Act include rules
thereunder and successor provisions and rules thereto.
(d) "Fair Market Value" of Stock means, as of any given date, the
average of the high and the low sale prices of a share of common stock
reported in the table entitled "New York Stock Exchange Composite
Transactions" contained in The Wall Street Journal (or an equivalent
successor table) for such date or, if no such prices are reported for such
date, on the most recent trading day prior to the date of grant with
respect to which such prices were reported.
(e) "Option" means the right, granted to a Participant under Section
6, to purchase Stock at the specified exercise price for a specified period
of time under the Plan.
(f) "Participant" means a director who is granted Options or who
receives fees in the form of Stock or defers fees in the form of Deferred
Stock under the Plan.
(g) "Stock" means the Common Stock, $1.25 par value, of the Company
and such other securities as may be substituted for Stock or such other
securities pursuant to Section 8.
3. SHARES AVAILABLE UNDER THE PLAN. Subject to adjustment as provided in
Section 8, the total number of shares of Stock reserved and available for
delivery under the Plan is 150,000. Such shares may be authorized but unissued
shares, treasury shares, or shares acquired in the market for the account of the
Participant. If any Option expires or terminates for any reason without having
been exercised in full, the shares subject to the unexercised portion of such
Option will again be available for delivery under the Plan.
4. ADMINISTRATION OF THE PLAN. The Plan will be administered by the Board
of Directors of the Company and the Executive Committee thereof, provided that
any action by the Board or Committee relating to the Plan will be taken only if,
in addition to any other required vote, approved
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by the affirmative vote of a majority of the directors who are not then eligible
to participate under the Plan.
5. ELIGIBILITY. Each director of the Company who, on any date on which an
Option is to be granted under Section 6 or on which fees are to be paid, is not
an employee of the Company or any subsidiary of the Company will be eligible, at
such date, to receive a grant of Options under Section 6 or receive fees in the
form of Stock or defer fees in the form of Deferred Stock under Section 7. No
person other than those specified in this Section 5 will participate in the
Plan.
6. STOCK OPTIONS. An Option to purchase 1,000 shares of Stock will be
granted on the first business day of May in each year to each director of the
Company who is then eligible to receive an Option grant. Options granted under
the Plan will be non-qualified stock options which will be subject to the
following terms and conditions:
(a) Exercise Price. The exercise price per share of Stock purchasable
under an Option will be equal to 100% of the Fair Market Value of Stock on
the date of grant of the Option.
(b) Option Term. Each Option will expire at the earlier of (i) ten
years after the date of grant or (ii) five years after the Participant
ceases to serve as a director of the Company for any reason, provided that,
if the Participant dies during such five-year post-termination exercise
period, such period shall be extended until not later than the date five
years after the Participant's death (but in no event more than ten years
after the date of grant).
(c) Exercisability. Each Option will become fully exercisable one
year after the date of grant of the Option; provided, however, that an
Option previously granted to a Participant will be fully exercisable after
the Participant ceases to serve as a director of the Company for any
reason.
(d) Method of Exercise. Each Option may be exercised, in whole or in
part, at such time as it is exercisable and prior to its expiration by
giving written notice of exercise to the Company specifying the Option to
be exercised and the number of shares to be purchased, and accompanied by
payment in full of the exercise price in cash (including by check) or by
surrender of shares of Stock of the Company already owned by the
Participant (except for shares acquired from the Company by exercise of an
option less than six months before the date of surrender) having a Fair
Market Value at the time of exercise equal to the exercise price, or a
combination of a cash payment and such surrender of Stock.
7. RECEIPT OF STOCK OR DEFERRED STOCK IN LIEU OF FEES. Each director of
the Company may, in lieu of receipt of fees in his or her capacity as a director
(including annual retainer fees for service on the Board, fees for service on a
Board committee, and fees for service as chairman of a Board committee) in cash,
receive such fees in the form of Stock or defer receipt of such fees in the form
of Deferred Stock in accordance with this Section 7, provided that such director
is eligible under Section 5 to receive fees in the form of Stock or defer fees
in the form of Deferred Stock at the date any such fee is otherwise payable.
(a) Elections. Each director who elects to receive fees in the form
of Stock or defer fees in the form of Deferred Stock for any calendar year
must file an irrevocable written election with the Secretary of the Company
no later than the June 30 of the preceding year; provided, however, that,
with respect to 1995, directors may file such election at any time prior to
the effective date of the Plan, and that any newly elected or appointed
director may file an election for any year not later than 30 days after the
date of such person first became a director. An election by a director
shall be deemed to be continuing and therefore applicable to subsequent
Plan years unless the director revokes or changes such election by filing a
new election form by
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the due date for such form specified in this Section 7(a). The election
must specify the following:
(i) A percentage, not to exceed an aggregate of 100% of the
Participant's fees, to be received in the form of Stock or deferred in
the form of Deferred Stock under the Plan;
(ii) In the case of a deferral, whether dividend equivalents on
Deferred Stock credited to the Participant's deferral account will be
paid directly to the Participant in cash or credited to his or her
deferral account and deemed to be reinvested in additional Deferred
Stock; and
(iii) In the case of a deferral, the period during which settlement
of the Deferred Stock will be deferred.
In the event directors' fees are increased during any year, a Participant's
elections in effect for such year will apply to the amount of such
increase.
(b) Payment of Fees in the Form of Stock. At any date on which fees
are payable to a Participant who has elected to receive fees in the form of
Stock, the Company will issue or transfer to such Participant, or to an
account designated by such Participant, a number of shares of Stock having
an aggregate Fair Market Value at that date equal to the fees, or as nearly
as possible equal to the fees, that would have been payable at such date
but for the Participant's election to receive Stock in lieu thereof. If the
Stock is to be credited to an account maintained by the Participant and to
the extent reasonably practicable without requiring the issuance or
delivery of fractional shares, the Company shall cause fractional shares to
be credited to the Participant's account. If fractional shares are not so
credited, any part of the Participant's fees not paid in the form of Stock
will be paid in cash to the Participant.
(c) Deferral of Fees in the Form of Deferred Stock. The Company will
establish a deferral account for each Participant who elects to defer fees
in the form of Deferred Stock under this Section 7. At any date on which
fees are payable to a Participant who has elected to defer fees in the form
of Deferred Stock, the Company will credit such Participant's deferral
account with a number of shares of Deferred Stock equal to the number of
shares of Stock having an aggregate Fair Market Value at that date equal to
the fees that otherwise would have been payable at such date but for the
Participant's election to defer receipt of such fees in the form of
Deferred Stock. The amount of Deferred Stock so credited shall include
fractional shares calculated to at least three decimal places.
(d) Payment or Crediting of Dividend Equivalents. Whenever dividends
are paid or distributions made with respect to Stock, a Participant to whom
Deferred Stock is then credited in a deferral account shall be entitled to
be paid an amount equal in value to the amount of the dividend paid or
property distributed on a single share of Stock multiplied by the number of
shares of Deferred Stock (including any fractional share) credited to his
or her deferral account as of the record date for such dividend or
distribution. Such dividend equivalents shall be credited to the
Participant's deferral account as a number of shares of Deferred Stock
equal to the number of shares of Stock having an aggregate Fair Market
Value at the payment date of the dividend or distribution equal to the
value of such dividend equivalents.
(e) Settlement of Deferral Account. The Company will settle the
Participant's deferral account by delivering to the Participant (or his or
her beneficiary) the number of shares of Stock equal to the number of whole
shares of Deferred Stock then credited to the deferral account (or a
specified portion in the event of any partial settlement), together with
cash in lieu of any fractional share remaining at a time that less than one
whole share of Deferred Stock is credited to such deferral account.
B-3
<PAGE> 53
(f) Designation of Beneficiary. Each Participant may designate one or
more beneficiaries to receive the amounts distributable from the
Participant's deferral account under the Plan in the event of such
Participant's death, on forms provided by the Company. The Company may rely
upon the beneficiary designation last filed in accordance with the terms of
the Plan.
(g) Delayed Effectiveness of Elections in Order to Comply with Rule
16b-3. Other provisions of this Section 7 notwithstanding, if any payment
of fees in the form of Stock or deferral of fees in the form of Deferred
Stock would occur less than six months after the Participant filed the
irrevocable election which would result in such payment or deferral and at
a time that the Company's employee benefit plans are being operated in
conformity with Rule 16b-3 as adopted and in effect on and after May 1,
1991, such payment shall be made in cash and on a non-deferred basis.
(h) Vesting. The interest of each Participant in any fees paid in the
form of Stock or in any Deferred Stock (and any deferral account relating
thereto) shall be at all times fully vested and non-forfeitable.
8. ADJUSTMENT PROVISIONS. In the event any recapitalization,
reorganization, merger, consolidation, spin-off, combination, repurchase,
exchange of shares or other securities of the Company, stock split or reverse
split, extraordinary dividend having a value in excess of 150% of the quarterly
dividends paid during the preceding 12-month period, liquidation, dissolution,
or other similar corporate transaction or event affects Stock such that an
adjustment is determined by the Board of Directors or Executive Committee to be
appropriate in order to prevent dilution or enlargement of Participants' rights
under the Plan, then the Board or Committee will, in a manner that is
proportionate to the change to the Stock and is otherwise equitable, adjust (i)
any or all of the number or kind of shares of Stock reserved for issuance under
the Plan, (ii) the number or kind of shares of Stock to be subject to each
automatic grant of Options under Section 6, (iii) the number and kind of shares
of Stock issuable upon exercise of outstanding Options, and/or the exercise
price per share thereof (provided that no fractional shares will be issued upon
exercise of any Option), and (iv) the number of kind of shares of Stock to be
delivered upon settlement of Deferred Stock under Section 7. The foregoing
notwithstanding, no adjustment may be made hereunder except as shall be
necessary to maintain the proportionate interest of a Participant under the Plan
and to preserve, without exceeding, the value of outstanding Options and
potential grants of Options. If at any date an insufficient number of shares are
available for the automatic grant of Options or the receipt of fees in the form
of Stock or deferral of fees in the form of Deferred Stock at that date, Options
will first be automatically granted under Section 6 proportionately to
Participants, to the extent shares are available, and then, if any shares remain
available, fees shall be paid in the form of Stock or deferred in the form of
Deferred Stock proportionately among Participants under Section 7, to the extent
shares are available.
9. CHANGES TO THE PLAN. The Board of Directors may amend, alter, suspend,
discontinue, or terminate the Plan or authority to grant Options or pay fees in
the form of Stock or Deferred Stock under the Plan without the consent of
stockholders or Participants, except that any such action will be subject to the
approval of the Company's stockholders at the next annual meeting of
stockholders having a record date after the date such action was taken if such
stockholder approval is required by any federal or state law or regulation or
the rules of any stock exchange or automated quotation system on which the Stock
may then be listed or quoted, or if the Board of Directors determines in its
discretion to seek such stockholder approval; provided, however, that, without
the consent of an affected Participant, no such action may impair the rights of
such Participant with respect to any previously granted Option or any previous
payment of fees in the form of Stock or deferral of fees in the form of Deferred
Stock; and provided further, that any Plan provision that specifies the
directors who may receive grants of Options, the amount and price of securities
to be granted to such directors, and the timing of grants to such directors, or
is otherwise a "plan
B-4
<PAGE> 54
provision" referred to in Rule 16b-3(c)(2)(ii)(B) under the Exchange Act, shall
not be amended more than once every six months, other than to comport with
changes in the Code or the rules thereunder.
10. GENERAL PROVISIONS.
(a) Consideration; Agreements. Options will be granted under the Plan
in order to obtain for the Company the benefit of the services of
Participants and, except for the payment of the exercise price of an
Option, no other consideration shall be required in connection with
Options. The consideration for Stock issued or delivered in lieu of payment
of fees or in settlement of Deferred Stock will be the director's services
during the period to which the fees paid in the form of Stock or Deferred
Stock related. Grants of Options will be evidenced by agreements executed
by the Company and the Participant containing the terms and conditions set
forth in the Plan together with such other terms and conditions not
inconsistent with the Plan as the Board of Directors or Executive Committee
may from time to time approve.
(b) Compliance with Laws and Obligations. The Company will not be
obligated to issue or deliver Stock in connection with any Option, in lieu
of a directors' fee, or in settlement of Deferred Stock in a transaction
subject to the registration requirements of the Securities Act of 1933, as
amended, or any other federal or state securities law, any requirement
under any listing agreement between the Company and any national securities
exchange or automated quotation system, or any other law, regulation, or
contractual obligation of the Company, until the Company is satisfied that
such laws, regulations, and other obligations of the Company have been
complied with in full. Certificates representing shares of Stock delivered
under the Plan will be subject to such stop-transfer orders and other
restrictions as may be applicable under such laws, regulations, and other
obligations of the Company, including any requirement that a legend or
legends be placed thereon.
(c) Limitations on Transferability. Options, Deferred Stock, and any
other right under the Plan that may constitute a "derivative security" as
generally defined in Rule 16a-1(c) under the Exchange Act will not be
transferable by a Participant except by will or the laws of descent and
distribution (or to a designated beneficiary in the event of a
Participant's death), and will be exercisable during the lifetime of a
Participant only by such Participant or his or her guardian or legal
representative; provided, however, that Options, Deferred Stock, and such
other rights may be transferred to one or more trusts or other
beneficiaries during the lifetime of the Participant in connection with the
Participant's estate planning, and may be exercised by such transferees in
accordance with the terms of such Option or Deferred Stock, but only if and
to the extent then permitted under Rule 16b-3 and consistent with the
registration of the offer and sale of Stock on Form S-8 or a successor
registration form of the Securities and Exchange Commission. Options,
Deferred Stock, and other rights under the Plan may not be pledged,
mortgaged, hypothecated, or otherwise encumbered, and shall not be subject
to the claims of creditors.
(d) Compliance with Rule 16b-3. It is the intent of the Company that
this Plan comply in all respects with applicable provisions of Rule 16b-3
under the Exchange Act in connection with any grant of Options, payment of
fees in the form of Stock, or deferral of fees in the form of Deferred
Stock. Accordingly, if any provision of this Plan or any agreement
hereunder does not comply with the requirements of Rule 16b-3 as then
applicable to any such transaction by a Participant, or would cause any
Participant to no longer be deemed a "disinterested person" within the
meaning of Rule 16b-3, such provision will be construed or deemed amended
to the extent necessary to conform to such requirements with respect to
such Participant. In addition, the Board of Directors and Executive
Committee shall have no authority to make any amendment, alteration,
suspension, discontinuation, or termination of the Plan or any agreement
hereunder, to make any adjustment under Section 8, or take other action if
and to the
B-5
<PAGE> 55
extent such authority would cause such transactions by a Participant not to
be exempt, or would cause a Participant no longer to be deemed a
"disinterested person," under Rule 16b-3 under the Exchange Act.
(e) Continued Service as an Employee. If a Participant ceases serving
as a director and, immediately thereafter, is employed by the Company or
any subsidiary, then, solely for purposes of Sections 6(b) and (c) of the
Plan, such Participant will not be deemed to have ceased service as a
director at that time, and his or her continued employment by the Company
or any subsidiary will be deemed to be continued service as a director;
provided, however, that such former director will not be eligible for
additional grants of Options or receipt of fees in the form of Stock or
deferral of fees in the form of Deferred Stock under the Plan.
(f) No Right to Continue as a Director. Nothing contained in the Plan
or any agreement hereunder will confer upon any Participant any right to
continue to serve as a director of the Company.
(g) No Stockholder Rights Conferred. Nothing contained in the Plan or
any agreement hereunder will confer upon any Participant any rights of a
stockholder of the Company unless and until shares of Stock are in fact
issued or transferred to such Participant upon the valid exercise of an
Option or in accordance with Section 7.
(h) Governing Law. The validity, construction, and effect of the Plan
and any agreement hereunder will be determined in accordance with the
Delaware General Corporation Law, to the extent applicable, other laws
(including those governing contracts) of the State of Pennsylvania, without
giving effect to principles of conflicts of laws, and applicable federal
law.
11. STOCKHOLDER APPROVAL, EFFECTIVE DATE, AND PLAN TERMINATION. The Plan
will be effective if, and at such time as, the stockholders of the Company have
approved it by the affirmative votes of the holders of a majority of the voting
securities of the Company present, or represented, and entitled to vote on the
subject matter at a duly held meeting of stockholders, provided that such
approval is obtained not later than the final adjournment of the first annual
meeting of stockholders of the Company held after the date the Board of
Directors adopted the Plan. Unless earlier terminated by action of the Board of
Directors or Executive Committee, the Plan will remain in effect until such time
as no Stock remains available for delivery under the Plan and the Company has no
further rights or obligations under the Plan with respect to outstanding Options
or Deferred Stock under the Plan.
As recommended by the Management Development and Compensation Committee and
adopted by the Board of Directors on November 15, 1994.
B-6
<PAGE> 56
PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
HARSCO CORPORATION
The undersigned hereby appoints R.F. Nation, N.H. Prater and A.J. Sordoni,
III proxies, each with power to act without the other and with power of
substitution, and hereby authorizes them to represent and vote, as designated
on the other side and otherwise in their discretion, all the shares of stock of
Harsco Corporation standing in the name of the undersigned with all powers
which the undersigned would possess if present at the Annual Meeting of
Stockholders of the Company to be held April 25, 1995 or any adjournment
thereof.
(CONTINUED, AND TO BE MARKED, DATED AND SIGNED, ON THE OTHER SIDE)
FOLD AND DETACH HERE
[HARSCO CORPORATION LOGO] ANNUAL
MEETING OF
STOCKHOLDERS
APRIL 25, 1995, 10:00 A.M.
The Radisson Penn Harris Hotel
and Convention Center
Routes 11 and 15 at Erford Road
Camp Hill, Pennsylvania
<PAGE> 57
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR PROPOSALS 1, 2, 3 AND 4. MANAGEMENT RECOMMENDS A VOTE FOR PROPOSALS
1, 2, 3 AND 4.
<TABLE>
<CAPTION>
1. ELECTION OF DIRECTORS NOMINEES: R.L. Kirk, J.E. Marley, J.I. Scheiner
(S> <C> <C>
FOR all nominees WITHHOLD (INSTRUCTION: To withhold authority to vote for any individual nominee, write the
listed to the right AUTHORITY nominee's name in the space provided below.)
(except as marked to vote for all
to the contrary) nominees listed ------------------------------------------------------------------------------------
to the right
/ / / /
</TABLE>
2. Approval of the 1995 Executive Incentive Compensation Plan.
FOR AGAINST ABSTAIN
/ / / / / /
3. Approval of the 1995 Non-Employee Directors' Stock plan.
FOR AGAINST ABSTAIN
/ / / / / /
4. Appointment of Coopers & Lybrand as the independent accountants of the
corporation.
FOR AGAINST ABSTAIN
/ / / / / /
Please sign exactly as name appears to the left. When shares are held by joint
tenants, both should sign. When signing as 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.
Dated: , 1995
------------------------------------------------------------------
- ------------------------------------------------------------------------------
(Signature)
- ------------------------------------------------------------------------------
(Signature if held jointly)
PLEASE SIGN, DATE, AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
FOLD AND DETACH HERE
ANNUAL MEETING
OF
HARSCO CORPORATION STOCKHOLDERS
TUESDAY, APRIL 25, 1995
10:00 A.M.
THE RADISSON PENN HARRIS HOTEL
AND CONVENTION CENTER
ROUTES 11 AND 15 AT ERFORD ROAD
CAMP HILL, PENNSYLVANIA
<PAGE> 58
PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
HARSCO CORPORATION
The undersigned hereby appoints R.F. Nation, N.H. Prater and A.J. Sordoni,
III proxies, each with power to act without the other and with power of
substitution, and hereby authorizes them to represent and vote, as designated
on the other side and otherwise in their discretion, all the shares of stock of
Harsco Corporation standing in the name of the undersigned with all powers
which the undersigned would possess if present at the Annual Meeting of
Stockholders of the Company to be held April 25, 1995 or any adjournment
thereof.
(CONTINUED, AND TO BE MARKED, DATED AND SIGNED, ON THE OTHER SIDE)
FOLD AND DETACH HERE
[HARSCO CORPORATION LOGO] ANNUAL
MEETING OF
STOCKHOLDERS
APRIL 25, 1995, 10:00 A.M.
The Radisson Penn Harris Hotel
and Convention Center
Routes 11 and 15 at Erford Road
Camp Hill, Pennsylvania
<PAGE> 59
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR PROPOSALS 1, 2, 3 AND 4. MANAGEMENT RECOMMENDS A VOTE FOR PROPOSALS
1, 2, 3 AND 4.
<TABLE>
<CAPTION>
1. ELECTION OF DIRECTORS NOMINEES: R.L. Kirk, J.E. Marley, J.I. Scheiner
(S> <C> <C>
FOR all nominees WITHHOLD (INSTRUCTION: To withhold authority to vote for any individual nominee, write the
listed to the right AUTHORITY nominee's name in the space provided below.)
(except as marked to vote for all
to the contrary) nominees listed ------------------------------------------------------------------------------------
to the right
/ / / /
</TABLE>
2. Approval of the 1995 Executive Incentive Compensation Plan.
FOR AGAINST ABSTAIN
/ / / / / /
3. Approval of the 1995 Non-Employee Directors' Stock Plan.
FOR AGAINST ABSTAIN
/ / / / / /
4. Appointment of Coopers & Lybrand as the independent accountants of the
corporation.
FOR AGAINST ABSTAIN
/ / / / / /
Please sign exactly as name appears to the left. When shares are held by joint
tenants, both should sign. When signing as 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.
Dated: , 1995
-------------------------------------------------------------------
- ------------------------------------------------------------------------------
(Signature)
- ------------------------------------------------------------------------------
(Signature if held jointly)
PLEASE SIGN, DATE, AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
HARSCO CORPORATION
Camp Hill, PA 17011
IF YOU HAVE ALREADY
SENT IN YOUR PROXY PLEASE
DISREGARD THIS LETTER
April 10, 1995
To the Stockholders of
HARSCO CORPORATION
A REMINDER
We have previously sent to you proxy soliciting material relative to
the Annual Meeting of Stockholders to be held on April 25, 1995.
According to our latest records, we have not as yet received your
Proxy. The time before the meeting is short and many of our shares are held in
small amounts. Your signed Proxy will be helpful, whether your holding is
large or small, and we encourage you return it without delay.
A Proxy and return envelope are enclosed for your use.
Thank you for your cooperation.
Very truly yours,
PAUL C. COPPOCK
Senior Vice President, General
Counsel & Secretary
PLEASE ACT PROMPTLY
