<PAGE> 1
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:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-2.
</TABLE>
HARSCO CORPORATION
- - --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- - --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-12.
(1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(4) Date Filed:
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<PAGE> 2
[Harsco Corporation Logo]
NOTICE OF
1999 MEETING
AND PROXY
STATEMENT
<PAGE> 3
[Harsco Corporation Logo]
HARSCO CORPORATION
P.O. Box 8888
Camp Hill, Pennsylvania 17001-8888
March 23, 1999
To Our Stockholders:
You are cordially invited to attend the 1999 Annual Meeting of Stockholders of
your Company, which will be held on Tuesday, April 27, 1999, 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.
For this year's Annual Meeting, the Company is providing stockholders with the
opportunity to vote your shares by calling a toll-free number and following the
instructions on your Proxy Card.
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, or vote by telephone, 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 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 27, 1999, 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 four Directors to serve until the 2002 Annual Meeting of
Stockholders, and until their successors are elected and qualified;
2. Considering the approval of the appointment by the Board of Directors of
PricewaterhouseCoopers LLP as independent accountants to audit the
financial statements of the Company for the fiscal year ending December
31, 1999; and
3. Such other business as may properly come before the Annual Meeting.
The Board of Directors has fixed the close of business on March 8, 1999, 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 PROXY CARD IN THE
ENVELOPE PROVIDED, TO WHICH NO POSTAGE NEED BE AFFIXED IF MAILED IN THE UNITED
STATES, OR VOTE BY TELEPHONE, FOLLOWING THE INSTRUCTIONS ON THE PROXY CARD.
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 23, 1999
<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 27, 1999, 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 8, 1999. On the
record date, there were issued and outstanding 41,201,085 shares of the
Company's common stock, $1.25 par value (the "common stock"). This figure does
not include 24,924,475 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. Assuming that a quorum is present, the affirmative
vote of the holders of at least a majority of the shares of common stock of the
Company entitled to vote present in person or by proxy, will be required with
respect to the appointment of PricewaterhouseCoopers LLP as independent
accountants for the current fiscal year and on all other matters to come before
the Annual Meeting.
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. 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 and FOR the adoption of the appointment of
PricewaterhouseCoopers LLP as independent accountants for the current fiscal
year. 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 Proxy Card are first being mailed to stockholders on or about March
23, 1999.
1
<PAGE> 6
ELECTION OF DIRECTORS
The Company currently has eleven Directors, of whom four have a term of
office which will expire at the 1999 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 eleven.
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 1999 Annual Meeting of
Stockholders consists of four Directors. The stockholders are asked to vote FOR
Ms. Scanlan and Messrs. Sordoni, Viviano and Wilburn, all of whom have been duly
nominated by the Board of Directors, upon the recommendation of the Nominating
Committee, to serve a term of office until the 2002 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.
Each person named as a nominee for Director has advised the Company of the
nominee's 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 or her age, a description of present and previous positions, the
year in which he or she first became a Director of the Company, business
experience, other directorships held and the Committees of the Board on which
the individual serves.
The Board of Directors met eight times during the fiscal year ended
December 31, 1998. Each of the Directors of the Board attended at least 75% of
the meetings of the Board and all Committees on which the Director served.
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 1998.
MANAGEMENT DEVELOPMENT AND COMPENSATION COMMITTEE
The Management Development and Compensation Committee administers the
Company's executive compensation policies and programs, 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
Company's 1995 Executive Incentive Compensation Plan 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 six times in 1998. For additional
information regarding the policies and mission of the Compensation Committee see
the "Board
2
<PAGE> 7
Compensation Committee Report on Executive Compensation" which appears beginning
on page 8 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 encountered in the course of the annual audit
and reviews the adequacy of internal controls and other financial issues. The
Audit Committee met three times in 1998.
DIRECTORS' COMPENSATION
Non-employee Directors ("Outside Directors") of the Company currently
receive compensation of $26,000 per year plus $1,000 for participation at each
meeting of the Board and $900 for each committee meeting. Outside Directors who
are chairmen of the Audit and Nominating Committees receive additional
compensation of $3,000 per year and the Chairman of the Management Development
and Compensation Committee receives additional compensation of $4,000 per year.
Certain Outside Directors also receive compensation for special assignments in
their capacity as Director at the rate of $900 per day.
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 2,000 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, 1998, the Company granted stock options in the amount of
2,000 shares each to the Outside Directors. The options permit the holders to
purchase shares at the price of $46.16 per share, exercisable in whole or in
part commencing one year after the date of grant and expiring on April 30, 2008.
The Company maintains a Deferred Compensation Plan for Non-Employee
Directors ("Deferred Compensation Plan") which allows each Outside Director to
elect to defer receipt of all or any portion of the director compensation until
a future date selected by the Director. The Director elects to hold the
accumulated deferred compensation in either an interest-bearing account or a
Harsco phantom share account. The interest-bearing deferred account accumulates
notional interest on the account balance at a rate equal to the five-year United
States Treasury Note yield rate in effect from time to time. Contributions to
the phantom stock account are recorded as notional shares of the Company's
common stock based upon the number of shares of common stock that compensation
payable on a given date would have purchased at the market price of the stock on
that date. Dividends that would be earned on the phantom shares are credited to
the account as additional phantom shares. All phantom shares are non-voting and
payments out of the account are made solely in cash based upon the market price
of the common stock on the date of payment. Under certain circumstances, the
accounts may be paid out early upon termination of directorship following a
change in control.
The Company had previously maintained a non-qualified pension plan for
Directors but terminated that plan in 1996. Directors who are actively employed
by the Company receive no additional compensation for serving as Directors and
by policy, the Company does not pay consulting or professional service fees to
Directors.
3
<PAGE> 8
NOMINEES FOR TERMS EXPIRING IN 2002
<TABLE>
<CAPTION>
DIRECTOR
POSITION WITH THE COMPANY OF THE
NAME AGE AND PRIOR BUSINESS EXPERIENCE COMPANY
---- --- ----------------------------- SINCE
<C> <C> <S> <C>
51 Since 1996, President and Chief Executive 1998
[C. F. Scanlan photo] Officer of The Health Alliance of Pennsylvania
C. F. Scanlan (representation and advocacy organization) and
Executive Vice President and Chief Operating
Officer since 1995. President and Chief
Executive Officer of The Hospital and
Healthsystem Association of Pennsylvania since
1995. Executive Vice President of the
Healthcare Association of New York State from
1987 to 1995.
Member of the Management Development and Com-
pensation Committee.
55 Chairman of Sordoni Construction Services, Inc. 1988
[A. J. Sordoni, III (building construction and management services
photo] company) and has been employed by that company
A. J. Sordoni, III 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.
Member of the Audit Committee, the Management
Development and Compensation Committee and the
Nominating Committee.
60 Vice Chairman of Hershey Foods Corporation. Was 1999
[J. P. Viviano photo] President and Chief Operating Officer of
J. P. Viviano Hershey Foods Corporation from 1994 to 1998
(confectionery and grocery products). Mr.
Viviano is a director of Hershey Foods
Corporation, Chesapeake Corporation and Huffy
Corporation.
55 President and Chief Executive Officer of the 1986
[R. C. Wilburn photo] Colonial Williamsburg Foundation (historic
R. C. Wilburn preservation and educational outreach
organization). 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 Education 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 a Director of Crestar
Bank.
Chairman of the Nominating Committee; member of
the Audit Committee and Executive Committee.
</TABLE>
4
<PAGE> 9
DIRECTORS WHOSE TERMS EXPIRE IN 2000
<TABLE>
<CAPTION>
DIRECTOR
POSITION WITH THE COMPANY OF THE
NAME AGE AND PRIOR BUSINESS EXPERIENCE COMPANY
---- --- ----------------------------- SINCE
<C> <C> <S> <C>
[D. C. Hathaway photo] 54 Chairman and Chief Executive Officer. Was 1991
D. C. Hathaway Chairman, President and Chief Executive Officer
from April 1, 1994 to January 1, 1998.
President and Chief Executive Officer from
January 1, 1994 to April 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.
Chairman of the Executive Committee.
[J. J. Jasinowski 60 President of the National Association of 1999
photo] Manufacturers (business advocacy and policy
J. J. Jasinowski association) since 1990, and was its Executive
Vice President and Chief Economist from 1980 to
1990. Mr. Jasinowski is also an author and
commentator on economic, industrial and
governmental issues. Mr. Jasinowski is a
director of Phoenix Home Life Insurance and
President of the Washington Tennis and
Education Foundation.
[R. F. Nation photo] 73 Retired as President of Penn Harris Company 1983
R. F. Nation (hotel) in 1995. Mr. Nation has been involved
in a variety of activities in community, state
and industrial areas.
Chairman of the Management Development and
Compensation Committee and member of the Execu-
tive Committee.
</TABLE>
5
<PAGE> 10
DIRECTORS WHOSE TERMS EXPIRE IN 2001
<TABLE>
<CAPTION>
DIRECTOR
POSITION WITH THE COMPANY OF THE
NAME AGE AND PRIOR BUSINESS EXPERIENCE COMPANY
---- --- ----------------------------- SINCE
<C> <C> <S> <C>
[L.A. Campanaro photo] 50 President and Chief Operating Officer since 1998
L. A. Campanaro January 1, 1998. Previously was Senior Vice
President and Chief Financial Officer from
April 1994, prior to which he served as Senior
Vice President-Finance from December 1992. Mr.
Campanaro joined Harsco in 1980 and served in a
number of financial, operating and general
management positions at three divisions during
a 10 year period as an officer, before
returning to the Corporate Office in 1992.
[R. L. Kirk photo] 70 Retired as Chairman of British Aerospace 1990
R. L. Kirk Holdings, Inc. (aerospace) in 1998; former
Chairman and Chief Executive Officer of CSX
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 Executive Officer of LTV
Aerospace and Defense Company from 1977 until
1986. He is also a Director of First Aviation
Services, Inc.
Member of the Nominating Committee.
[J. E. Marley photo] 63 Retired as Chairman of AMP Incorporated 1993
J. E. Marley (manufacturer of electrical components) in
1998. Mr. Marley joined AMP Incorporated in
1963 and was 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 Armstrong
World Industries, Inc.
Member of the Management Development and Com-
pensation Committee.
[J. I. Scheiner photo] 54 President and Chief Operating Officer of 1995
J. I. Scheiner Benatec Associates, Inc. (architectural and
engineering consulting company). He was
President 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 Department of Transportation. He
is a Director of Keystone Financial, Inc., a
member of the Pennsylvania Chamber of Business
and Industry Board and a Trustee of Harrisburg
Area Community College.
Member of the Audit Committee.
</TABLE>
6
<PAGE> 11
SHARE OWNERSHIP OF MANAGEMENT
The following table sets forth, as of March 8, 1999, information with
respect to the beneficial ownership of the Company's outstanding voting
securities, stock options and other stock equivalents by (a) each Director (b)
the Company's Chief Executive Officer and the Company's four most highly
compensated other 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 NUMBER OF OTHER
NAME SHARES(1) EXERCISABLE OPTIONS(2) STOCK EQUIVALENTS
---- --------- ---------------------- -----------------
<S> <C> <C> <C>
L. A. Campanaro.............. 33,078(3) 71,815 26,693(6)
P. C. Coppock................ 51,231(4) 75,000 21,204(6)
S. D. Fazzolari.............. 9,335 44,000 20,253(6)
D. C. Hathaway............... 82,758 120,000 53,213(6)
J. J. Jasinowski............. 200 -0- 98(7)
R. W. Kaplan................. 15,869 56,422 20,705(6)
R. L. Kirk................... 7,254 16,000 4,556(7)
J. E. Marley................. 1,000 12,000 5,139(7)
R. F. Nation................. 27,000 16,000 3,972(7)
C. F. Scanlan................ 600 2,000 -0-
J. I. Scheiner............... 3,526 8,000 760(7)
A. J. Sordoni, III........... 75,500(5) 20,000 -0-
J. P. Viviano................ 700 -0- 78
R. C. Wilburn................ 1,800 16,000 -0-
All Directors and executive
officers as a group. (15
persons in total, including
those listed above)........ 311,773 472,017 164,671
</TABLE>
- - ------------
(1) Includes, in the case of Messrs. Campanaro, Coppock, Fazzolari, Hathaway,
Kaplan and all Directors and executive officers as a group, 11,095 shares,
9,419 shares, 6,969 shares, 19,154 shares, 9,643 shares and 57,859 shares,
respectively, pursuant to the Company's Savings Plan in respect of which
such persons have shared voting power.
(2) Represents all stock options exercisable within 60 days of March 8, 1999
awarded under the 1986 Stock Option Plan, the 1995 Executive Incentive
Compensation Plan and the 1995 Non-Employee Directors' Stock Plan.
Unexercised stock options have no voting power.
(3) Includes 1,000 shares owned by his wife as to which Mr. Campanaro disclaims
beneficial ownership.
(4) Includes 18,480 shares owned by his wife as to which Mr. Coppock disclaims
beneficial ownership.
(5) Includes 14,000 shares owned by his wife and children as to which Mr.
Sordoni disclaims beneficial ownership.
(6) Includes stock options not exercisable within 60 days of March 8, 1999 and
non-voting phantom shares held under the Supplemental Retirement Benefit
Plan which will ultimately be paid out in cash based upon the value of
shares of common stock at the time of the payout.
7
<PAGE> 12
(7) Certain Directors have elected to defer a portion of their Directors' fees
in the form of credits for non-voting phantom shares under the terms of the
Company's Deferred Compensation Plan for Non-Employee Directors. These
amounts will ultimately be paid out in cash based upon the value of the
shares at the time of payout.
Except as otherwise stated, each individual has sole voting and investment
power over the shares set forth opposite his name. As of March 8, 1999, the
Directors and executive officers of the Company as a group beneficially owned
less than 1% of the Company's outstanding common stock.
SHARE OWNERSHIP OF CERTAIN BENEFICIAL OWNER
Based on information contained on a Schedule 13G filed with the Securities
and Exchange Commission with respect to beneficial ownership at December 31,
1998, as of March 8, 1999, except as set forth below, 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.
<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 Stock...................... FMR Corp. 5,448,200 12.26
82 Devonshire Street Sole Voting Power for
Boston, MA 02109 463,400 shares and
Sole Dispositive Power
for 5,448,200 shares
</TABLE>
BOARD COMPENSATION COMMITTEE REPORT
ON EXECUTIVE COMPENSATION
The Company's executive compensation program is administered by the
Management Development and 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 and 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 1999 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 stockholders 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.
8
<PAGE> 13
At the 1995 Annual Meeting of Stockholders, the Board of Directors
proposed, and the stockholders overwhelmingly approved the 1995 Executive
Incentive Compensation Plan which the Board believes has provided an improved
basis for achieving these goals. The current compensation program is applicable
to all corporate and divisional officers of the Company and 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;
- Annual incentive compensation awarded under the 1995 Executive Incentive
Compensation Plan, based upon achievement of specific financial
objectives (return on capital, earnings per share, cash flow provided by
operations and sales growth) and strategic goals established for the
relevant business unit;
- Stock option grants under the 1995 Executive Incentive Compensation Plan
made annually by the Compensation Committee on the basis of the
Committee's evaluation of each unit's strategic planning and the
contribution of the executive, 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 46 division officers in addition to the six executive officers and
two 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 1995 Executive
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 incentive compensation awards.
The Compensation Committee also believes that 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. This objective is met by granting stock options for the Company's common
stock. The quantity of stock options granted to an individual in any year is
based upon the executive's grade level and the strategic planning performance of
the executive and the executive's business unit. 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 the Proxy Statement. The Company has determined
that given the rates of compensation currently in effect and the exemption under
Internal Revenue Service regulations applicable to income derived from stock
options granted under the Harsco 1986 Stock Option Plan or the 1995 Executive
Incentive Compensation Plan, and the exemption applicable to the performance
based incentive compensation bonuses under the 1995 Executive Incentive
Compensation Plan, the Company should not be exposed to any nondeductibility of
executive compensation expense under Section 162(m) in the 1998 tax year. In
1995, the Company obtained stockholder approval of the 1995 Executive Incentive
Compensation Plan, which was designed to preserve the deductibility to the
extent possible, of executive compensation resulting from perform-
9
<PAGE> 14
ance based awards under that Plan. The Company obtained renewal of that approval
by the Stockholders last year.
RELATIONSHIP OF PERFORMANCE TO COMPENSATION
The Company currently ties executive pay to corporate performance primarily
through the 1995 Executive 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 Plan
The opportunity for compensation under the 1995 Executive Incentive
Compensation Plan in effect for 1998 was dependent upon meeting the four
financial objectives and the specific strategic objectives established by the
Compensation Committee prior to the beginning of the plan year, for the
appropriate business unit. Under the 1995 Executive Incentive Compensation Plan,
80% of the total possible award is based on achievement of financial objectives
established by the Compensation Committee each year, and 20% is based on
attainment of strategic goals. The financial goals for 1998 were based upon
return on capital, earnings per share, cash flow provided by operations, and
sales growth.
No award will be made for achievement of only the minimum performance
level, but awards will begin to be earned as performance in each of the
designated objective categories rises above the minimum. Achieving target levels
of performance in all objectives results in an award that is 67% of the award
for achieving the maximum level of performance against all objectives, and the
award will continue to rise correspondingly as the achieved results approach the
maximum financial and strategic objective performance levels set by the
Compensation Committee.
The Compensation Committee establishes minimum, target and maximum
financial objectives for the corporate office and each division for that year,
which will constitute 80% of the annual bonus criteria. The corporate officer
financial objectives for minimum, target and maximum achievement are established
based upon a consolidation of the goals for the operating divisions. Thus, the
incentive compensation awards of the corporate officers are closely related to
the overall performance of the divisions against their goals. The strategic
goals which constitute the other 20% of the evaluation criteria under the
current 1995 Executive Incentive Compensation Plan are established by the
Compensation Committee and are assigned various weights. The strategic goals set
for each business unit in 1998 involved achievement of various objectives
important to the profitable growth of the particular Harsco operating division
in such areas as safety, new product introduction, new product profitability and
cost savings initiatives. The corporate officer awards are then dependent on the
degree of achievement based upon the average attainment of strategic goals by
the operating divisions.
In past years, 60% of an executive participant's annual incentive
compensation award was paid in cash with the remaining 40% paid in the form of
restricted shares of Harsco common stock subject to the participant's
opportunity to receive the award all in cash with a 25% reduction in the total
award. Following three years of annual incentive compensation awards under this
cash and stock payment mechanism, the Committee last year reviewed the incentive
program. The Committee concluded that the Plan would provide a stronger
incentive to achieve annual objectives if the awards were payable all in cash,
without the 25% discount. The Committee considered a study prepared last year
for the Company by the compensation consulting firm of Towers Perrin, which
showed that on average, the base salaries of corporate and division officers
were below the median of comparable companies. While the Committee believes in
weighting compensation toward the at risk component, it determined that the
lower base cash
10
<PAGE> 15
compensation should be offset by the opportunity to earn a more substantial
annual cash award for achieving objectives. This will strengthen the incentive
to achieve goals set annually by the Committee, and provide a competitive cash
compensation package that will continue to attract and retain the level of
executive talent that the Company requires. The Committee therefore replaced the
cash and stock payment terms of the Plan with payment entirely in cash without
discount of the award value. The change is effective for awards commencing with
the 1998 Plan year. In order to achieve a comprehensive termination of the
restricted stock feature and to eliminate the complexities that it created, the
Committee authorized the Company to repurchase the restricted shares issued in
1998 for the 1997 Plan year and the related dividend reinvestment shares, and
lifted all restrictions on the shares granted for the 1995 and 1996 Plan years
including the related dividend reinvestment shares. The stock option program
will continue to ensure that officers' economic interests are closely aligned
with the value of the Company's stock.
The executive officers attained 46.3% of maximum achievement with respect
to the combined strategic goals. The Company's financial performance yielded an
achievement factor of 63.3% for 1998 for the financial goals. The combined
achievement on strategic and financial goals resulted in each of the executive
officers earning 60% of the maximum annual incentive compensation for 1998.
Stock Options
As shown in the table that follows, the Compensation Committee granted
stock options to the executive officers on January 26, 1998 under the 1995
Executive Incentive Compensation Plan with an exercise price of $37.81 per
share, which was the market price on the date of grant. This Plan was approved
by the stockholders in 1995 and is used to make grants to other corporate
officers and key employees, division officers as well as the executive officers.
The number of options granted to each officer is determined by grade level and
the Committee's evaluation of the strategic planning performance of the
individual and the individual's unit. Thus, the Chairman and Chief Executive
Officer, Mr. Hathaway, who has the highest grade level, received the largest
award. The absolute maximum stock option award as provided in the 1995 Plan is
150,000 shares for any single participant in a calendar year.
The guidelines for the maximum annual number of options granted for each
grade level were established in 1995 based upon a recommendation from Towers
Perrin, a compensation consulting firm, and that firm's survey of the long-term
incentive compensation practices of 130 major United States companies. In
determining the January 26, 1998 grants, the Committee considered the number of
options previously granted to participants under the 1986 Stock Option Plan and
the 1995 Plan, and the increase in the aggregate number that would be
outstanding upon approval of the 1998 grants.
Salaries
The Compensation Committee made its regular annual review of salaries of
all corporate and division officers, including the Named Executives, at its
November 12, 1997 Committee meeting, and recommended salary increases which the
Board then approved for implementation on January 1, 1998.
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 1998, the Committee approved a budget for salary
increases which was 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
11
<PAGE> 16
consulting firms. Based on this information, the Committee, at its November 1997
meeting, approved a 3% increase in the salary range structure for all officer
grade levels. The last adjustment to the salary range structure was made in
1996. The Committee also established three new grade levels above the previous
top level to make the Company's most senior grade levels more comparable to
those at other companies. 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.
In 1996, compensation consultant Towers Perrin prepared 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) for the Company's key executive positions. The analysis was based
on competitive data from Towers Perrin 1996 Executive Compensation Data Bank for
general industry companies with annual revenues between $1 and $3 billion. The
salary increases effective January 1, 1998 were based upon that analysis, 1997
compensation survey information prepared by Towers Perrin and three other major
consulting firms, and a review of the performance of each officer. The salary
for the Chief Executive Officer was substantially below the median in the Towers
Perrin analysis and below the median in each of the other compensation surveys.
The Chief Executive Officer salary remained unchanged at $500,000 per annum in
1998 and remained below the median in the Towers Perrin analysis and below the
other survey medians. The compensation for the other executive officers was also
below the Towers Perrin medians for those positions.
In preparation for future compensation adjustments, the Committee intends
to periodically review similar detailed survey data. In general, the Committee
strives to maintain total compensation packages which range from moderately
below to moderately above the industry medians.
Other Compensation
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 as described elsewhere
in this Proxy Statement, which supplements both the qualified pension plan and
the Company's 401(k) Savings Plan.
THE CHIEF EXECUTIVE OFFICER'S 1998 COMPENSATION
The incentive plan cash, stock options, and salary awarded or paid to Mr.
Hathaway with respect to 1998 are discussed in the Summary Compensation Table on
page 14 in this Proxy Statement with respect to amounts, and in this Report with
respect to the factors considered by the Compensation Committee. Of the total
$1,022,000 in cash compensation paid to Mr. Hathaway for 1998 as reflected in
the Summary Compensation Table, 51.08% was dependent upon achieving performance
objectives under the 1995 Executive 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 are composed of financial and
strategic objectives. The Compensation Committee believes that attainment of
specific, measurable financial and strategic goals is an important determinant
of total return to stockholders over the long-term and has the advantage of not
being subject 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
12
<PAGE> 17
of these compensation elements is to establish strong incentives to achieve
results which will provide stockholders with the investment returns that they
seek.
In summary, the Committee believes that the total compensation program
implemented in 1995 achieves the objective of providing meaningful and
appropriate rewards, recognizing both current performance contributions and the
attainment of long-term strategic business goals of critical importance to the
future growth of Harsco Corporation.
SUBMITTED BY THE MANAGEMENT DEVELOPMENT AND COMPENSATION
COMMITTEE OF THE BOARD OF DIRECTORS:
R. F. Nation, Chairman
J. E. Marley
C. F. Scanlan
A. J. Sordoni, III
13
<PAGE> 18
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>
ANNUAL COMPENSATION LONG-TERM 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(5)....... 1998 500,000 522,000(4) -0- -0- 40,000 -0- 26,510
Chairman & 1997 500,000 393,660 -0- 262,440 50,000 -0- 175,099
Chief Executive 1996 400,000 336,312 -0- 224,208 30,000 -0- 22,731
Officer
L.A. Campanaro(5)...... 1998 325,000 292,500(4) -0- -0- 25,000 -0- 12,432
President & Chief 1997 260,000 174,377 -0- 116,251 20,000 -0- 88,063
Operating Officer 1996 244,900 175,402 -0- 116,935 20,000 -0- 12,537
P.C. Coppock........... 1998 221,300 183,236(4) -0- -0- 15,000 -0- 8,455
Senior Vice 1997 217,000 145,538 -0- 97,025 20,000 -0- 85,979
President, Chief 1996 208,000 148,974 -0- 99,316 20,000 -0- 10,811
Administrative
Officer, General
Counsel & Secretary
S.D. Fazzolari(5)...... 1998 180,000 149,040(4) -0- -0- 20,000 -0- 3,433
Senior Vice President 1997 130,000 64,444 -0- 42,962 8,000 -0- 35,850
& Chief Financial 1996 122,800 65,008 -0- 43,338 8,000 -0- 5,679
Officer
R.W. Kaplan(5)......... 1998 187,200 155,002(4) -0- -0- 9,000 -0- 5,256
Senior Vice 1997 167,050 93,505 -0- 62,336 10,000 -0- 66,769
President-
Operations 1996 157,000 100,229 -0- 66,819 10,000 -0- 3,031
</TABLE>
- - ---------------
(1) Represents 40% share of total annual incentive compensation award under the
terms of the 1995 Executive Incentive Compensation Plan. (The other 60%
share of the annual incentive compensation awards for 1996 and 1997 was paid
in cash and appears in the column entitled "Bonus"). One-half of the stock
granted for 1996 had a one year restriction from the date of grant and the
remaining one-half of the stock has a three year restriction from the date
of the grant. All stock granted for 1997 has a three year restriction.
During the period of restriction, the restricted shares could be voted and
dividends were reinvested. The dividend reinvestment shares were restricted
for the same period as the underlying shares. The restricted shares awarded
for the 1996 plan year were issued in February 1997 and restrictions as to
one-half of those shares expired in February 1998 and restrictions as to the
other one-half of those shares were originally scheduled to expire in
February 2000. The restricted shares awarded for 1997 plan year were issued
in February 1998 and restrictions as to all of those shares were originally
scheduled to expire in February 2001. The aggregate holdings of restricted
shares, and market value as of December 31, 1998, for the Named Executives
is as follows: Mr. Hathaway -- 13,462.70 shares with a value of $395,466.81;
Mr. Campanaro -- 6,388.40 shares with a value of $187,659.25; Mr.
Coppock -- 5,445.27 shares with a value of $159,954.81; Mr.
Fazzolari -- 2,391.40 shares with a value of $70,247.38 and Mr.
Kaplan -- 3,536.11 shares with a value of $103,873.23. The market value at
December 31, 1998, was $29.375 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. As discussed in the Compensation Committee
Report on pages 10 to 11, effective January 1, 1999, the Company
14
<PAGE> 19
terminated the restricted stock payment feature of the annual incentive
compensation plan, replacing it with an all-cash payout which commenced with
the February 1999 award for the 1998 plan year. In January 1999, the Company
also repurchased the restricted shares issued in 1998 for the 1997 plan year
along with the related dividend reinvestment shares, and lifted all
restrictions on the shares granted for the 1995 and 1996 plan years,
including the related dividend reinvestment shares. The repurchase price for
the shares issued in 1998 was the original grant value of $43.22 per share.
As a result, the Company repurchased restricted shares from the Named
Executives as follows: Mr. Hathaway -- 6,176.3070 shares; Mr.
Campanaro -- 2,735.7590 shares; Mr. Coppock -- 2,283.1890 shares; Mr.
Fazzolari -- 1,011.9256 shares; and Mr. Kaplan -- 1,467.5464 shares. Also as
a result, restrictions were removed on January 6, 1999 for the Named
Executives with respect to the shares issued in 1996 and 1997 as follows:
Mr. Hathaway -- 7,286.3925 shares; Mr. Campanaro -- 3,652.6400 shares; Mr.
Coppock -- 3,162.0798 shares; Mr. Fazzolari -- 1,379.4734 shares; and Mr.
Kaplan -- 2,068.5597 shares.
(2) Represents stock options granted in the respective years. The Company
granted these options, relating to shares of its common stock, to certain
employees, including executive officers, of the Company under its 1995
Executive Incentive Compensation Plan. The Company's Plan 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 upon 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 date of 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 matching contributions for the purchase of
common stock of the Company for the account of each participating employee
equal to 50% of the first 1% to 6% of such employee's "Salary Reduction"
contribution. Under the Supplemental Savings Benefit portion of the
Supplemental Retirement Benefit Plan, if the IRS-imposed limitations on
Section 401(k) Savings Plan contributions are reached by a Named Executive
for a given year, so that he is unable to make the maximum 6% of pre-tax
compensation "Salary Reduction" contribution that would be subject to the
Company's matching contributions under the Savings Plan, the Company will
make contributions on behalf of such Named Executive to the Supplemental
Savings Benefit portion of the Supplemental Retirement Benefit Plan in an
amount equal to the amount of the matching contributions that it would have
made under the Savings Plan if the Executive could have contributed the full
6% of his pre-tax compensation, less the amount of matching contributions
that the Company actually made for his benefit under the Savings Plan. Such
Company contributions to the Supplemental Retirement Benefit portion of the
Supplemental Retirement Benefit Plan are credited in the form of phantom
shares based upon the value of common stock on the date of the Company's
contributions. Dividends that would have been paid on common stock are
credited as additional phantom shares, and all phantom shares will
ultimately be paid out in cash based upon the value of shares of common
stock at the time of payment.
For 1997, includes a special cash bonus award for successful achievement of
the defense business exit strategy.
(4) Effective January 1, 1999, the Company terminated the restricted stock
payment feature of the annual incentive compensation plan, and commencing
with the award for the 1998 plan year, is paying the entire value of the
award in cash.
(5) Indicates titles effective as of January 1, 1999. At December 31, 1997, Mr.
Hathaway's title was Chairman, President and Chief Executive Officer, Mr.
Campanaro's title was Senior Vice President and Chief Financial Officer and
Mr. Fazzolari's title was Vice President and Controller. Mr. Kaplan became
Senior Vice President-Operations effective July 1, 1998 and was previously
President of the Taylor-Wharton Gas Equipment Division.
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 1995 Executive
Incentive Compensation Plan during the last fiscal year:
OPTION GRANTS IN 1998
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
---------------------------------------------------
NUMBER OF % OF TOTAL
SECURITIES OPTIONS
UNDERLYING GRANTED TO EXERCISE
OPTIONS EMPLOYEES OR BASE
GRANTED IN FISCAL PRICE EXPIRATION GRANT DATE PRESENT
NAME (#)(1) YEAR ($/SH) DATE VALUE($)(2)
---- ---------- ---------- -------- ---------- ------------------
<S> <C> <C> <C> <C> <C>
D. C. Hathaway -- 40,000 15.4 37.81 1/25/08 262,400
Chairman & Chief Executive
Officer
L. A. Campanaro -- 25,000 9.7 37.81 1/25/08 164,000
President & Chief Operating
Officer
P. C. Coppock -- 15,000 5.8 37.81 1/25/08 98,400
Senior Vice President, Chief
Administrative Officer, General
Counsel & Secretary
S. D. Fazzolari -- 20,000 7.7 37.81 1/25/08 131,200
Senior Vice President & Chief
Financial Officer
R. W. Kaplan -- 9,000 3.5 37.81 1/25/08 59,040
Senior Vice
President -- Operations
</TABLE>
- - ---------------
(1) The Company granted these options, for shares of its common stock, to
certain employees, including executive officers, of the Company under its
1995 Executive Incentive Compensation Plan. The Company's 1995 Executive
Incentive Compensation 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 1995 Executive Incentive
Compensation 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 1998.
(2) The fair value of the options granted during 1998 is estimated on the date
of grant using the binomial option pricing model. This estimate has been
developed for purposes of comparative disclosure and does not necessarily
reflect the Company's view of the value of the option. The estimated value
has been determined based upon the terms of the option grant, the common
stock price performance history and the Company's experience that its
options, on average, are exercised within four years of grant. Other
assumptions are: 16% expected stock volatility, 5.65% risk free interest
rate, a $0.88 dividend and a 5% rate of dividend increase.
16
<PAGE> 21
OPTION EXERCISES AND HOLDINGS
The following table sets forth information, with respect to the Named
Executives, concerning the exercise of options during fiscal year 1998 and
unexercised options at December 31, 1998:
AGGREGATED OPTION EXERCISES IN 1998
AND OPTION VALUES AT 12/31/98
<TABLE>
<CAPTION>
SHARES
ACQUIRED NUMBER OF SECURITIES VALUE OF UNEXERCISED
ON VALUE UNDERLYING UNEXERCISED IN-THE-MONEY
EXERCISE REALIZED OPTIONS AT OPTIONS AT
NAME (#) ($)(1) 12/31/98 (#)(2) 12/31/98 ($)(3)
---- -------- -------- ---------------------- --------------------
EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
D. C. Hathaway --
Chairman & Chief Executive
Officer............................ -0- -0- 80,000 40,000 -0- -0-
L. A. Campanaro --
President & Chief Operating
Officer............................ -0- -0- 47,815 25,000 67,867 -0-
Paul C. Coppock --
Senior Vice President, Chief
Administrative Officer, General
Counsel & Secretary................ 10,134 238,149 60,000 15,000 153,750 -0-
S. D. Fazzolari --
Senior Vice President & Chief
Financial Officer.................. -0- -0- 24,000 20,000 61,500 -0-
R. W. Kaplan --
Senior Vice
President -- Operations............ -0- -0- 47,422 9,000 228,797 -0-
</TABLE>
- - ---------------
(1) Represents the difference between the exercise price and the market price of
common stock 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.
(3) Represents the difference between the exercise price and the market price of
common stock on December 31, 1998, multiplied by the number of in-the-money
unexercised options contained in the respective category. Average market
price at December 31, 1998 was $29.375 per share. Options are in-the-money
when the market price of the underlying securities exceeds the exercise
price.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
Directors and certain of its officers to send reports of their ownership of
Harsco Corporation stock and changes in ownership to the Company and the
Securities and Exchange Commission (the "SEC"), The New York Stock Exchange,
Inc. and The Pacific Exchange, Inc. SEC regulations also require the Company to
identify in this Proxy Statement any person subject to this requirement who
failed to file any such report on a timely basis.
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, 1993 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 INDUSTRIAL-
HARSCO CORPORATION S&P MIDCAP 400 INDEX DIVERSIFIED
------------------ -------------------- ---------------------
<S> <C> <C> <C>
'1993' 100 100 100
'1994' 104 96 92
'1995' 152 126 120
'1996' 184 150 156
'1997' 236 199 204
'1998' 171 237 235
</TABLE>
- - ---------------
(1) Peer companies included in the Dow Jones Industrial-Diversified Index are:
Aeroquip-Vickers Inc., Allied-Signal Inc., Cooper Industries Inc., Crane
Company Inc., Danaher Corporation, Dover Corporation, FMC Corporation,
Illinois Tool Works, Inc., Ingersoll-Rand Company, ITT Industries, Inc.,
National Service Industries, Inc., Parker Hannifin Corporation, PPG
Industries Inc., Raychem Corporation, Stanley Works, Tenneco, Inc., The
Timken Company and Tyco International Ltd.
RETIREMENT PLANS
The Company provides retirement benefits for each officer under the
Supplemental Retirement Benefit Plan ("Supplemental Plan"). All executive
officers are covered by the Supplemental Plan. The
18
<PAGE> 23
Supplemental Plan replaces the 401(k) Company match lost due to government
limitations on such contributions. The replacement is in the form of phantom
shares as more fully described in footnote 3 on page 15. 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. Early retirement
benefits commencing prior to age 65 are reduced. The Supplemental Plan also
provides for unreduced pension benefits if retirement occurs after age 62,
provided at least 30 years of service have been completed. The Supplemental Plan
contains a provision providing for a preretirement death benefit payable in a
monthly benefit to a beneficiary designated by the participant for participants
who die after qualifying for benefits. The Supplemental Plan also includes
provisions which fully vest participants upon termination of employment
following a "change in control" of the Company as defined in the Supplemental
Plan.
Total pension benefits are based on final average compensation and years of
service. The normal retirement benefit under the Supplemental Plan is equal to a
total of .8% of final average compensation up to the "Social Security Covered
Compensation" as defined in the Supplemental Plan 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 pension plan and
the 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, 1999.
PENSION PLAN TABLE
<TABLE>
<CAPTION>
YEARS OF SERVICE
--------------------------------------------------------------
REMUNERATION(1) 10 15 20 25 30 35*
- - --------------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
100,000................................... 13,355 20,033 26,710 33,388 40,066 44,072
200,000................................... 29,355 44,033 58,710 73,388 88,066 96,872
300,000................................... 45,355 68,033 90,710 113,388 136,066 149,672
400,000................................... 61,355 92,033 122,710 153,388 184,066 202,472
500,000................................... 77,355 116,033 154,710 193,388 232,066 255,272
600,000................................... 93,355 140,033 186,710 233,388 280,066 308,072
700,000................................... 109,355 164,033 218,710 273,388 328,066 360,872
800,000................................... 125,355 188,033 250,710 313,388 376,066 413,672
900,000................................... 141,355 212,033 282,710 353,388 424,066 466,472
1,000,000................................... 157,355 236,033 314,710 393,388 472,066 519,272
</TABLE>
- - ---------------
* The Supplemental Plan has 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: $988,148; Mr. Campanaro: $536,380; Mr.
Coppock: $439,870; Mr. Fazzolari: $229,518; and Mr. Kaplan: $317,837. The
estimated credited years of service for each Named Executive are as follows:
Mr. Hathaway: 32.5 years; Mr. Campanaro: 18.5 years; Mr. Coppock: 17.5
years; Mr. Fazzolari: 18.5 years; and Mr. Kaplan: 19.5 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 Messrs.
Hathaway, Coppock and Kaplan, and subsequently with Messrs. Campanaro and
Fazzolari (the "Agreements"). Pursuant to those authorizations, the Company
entered into individual Agreements with the Named Executive 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
interests 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 Agreement. 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 had become operative on
January 1, 1999, the Company would have been required to pay Messrs. Hathaway,
Campanaro, Coppock, Fazzolari and Kaplan the following termination payments
based on compensation information available at December 31, 1998: $2,693,835,
$1,480,665, $1,206,831, $637,487 and $818,752, 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.
20
<PAGE> 25
APPROVAL OF INDEPENDENT ACCOUNTANTS
The Board of Directors, upon recommendation of the Audit Committee, has
designated PricewaterhouseCoopers LLP, as independent accountants to audit the
financial statements for the fiscal year ending December 31, 1999, subject to
stockholder approval. This firm has audited the financial statements of the
Company and its predecessors since 1929. Although neither the Restated
Certificate of Incorporation 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 PricewaterhouseCoopers LLP 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 PricewaterhouseCoopers
LLP 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,
due to the difficulty and expense of making any substitution of accountants long
after the beginning of the current year, it is contemplated that the appointment
for the fiscal year ending December 31, 1999, 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 2000.
The Audit Committee of the Company's Board of Directors, at its meeting
held on August 25, 1998, reviewed and approved the fee estimate for the annual
audit of the Company's fiscal 1998 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 facsimile 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 $9,000 plus reasonable out-of-pocket
expenses.
21
<PAGE> 26
STOCKHOLDER PROPOSALS AND NOMINATIONS FOR PRESENTATION AT
2000 ANNUAL MEETING OF STOCKHOLDERS
If a stockholder of the Company wishes to submit a proposal for
consideration at the 2000 Annual Meeting of Stockholders, such proposal must be
received at the executive offices of the Company no later than November 24,
1999, to be considered for inclusion in the Company's Proxy Statement and Proxy
Card relating to the 2000 Annual Meeting. Although a stockholder proposal
received after such date will not be entitled to inclusion in the Company's
Proxy Statement and Proxy Card, a stockholder can submit a proposal for
consideration at the 2000 Annual Meeting in accordance with the Company's By-
laws if written notice is given to the Secretary of the Company not less than 60
days nor more than 90 days prior to the Meeting. In the event that the Company
gives less than 70 days notice of the Meeting date to stockholders, the
stockholder must give notice of the proposal within ten days after the mailing
of notice or announcement of the Meeting date. The 2000 Annual Meeting will be
held on April 25, 2000. In order to nominate a candidate for election as a
Director at the 2000 Annual Meeting, a stockholder must provide written notice
and supporting information to the Secretary of the Company by personal delivery
or mail not later than January 27, 2000.
HARSCO CORPORATION
/s/ Paul C. Coppock
Paul C. Coppock
Senior Vice President,
Chief Administrative Officer,
General Counsel and Secretary
March 23, 1999
22
<PAGE> 27
PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
HARSCO CORPORATION
The undersigned hereby appoints D.C. Hathaway, R.F. Nation, and J.J.
Jasinowski 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 27, 1999 or any adjournment
thereof.
(CONTINUED, AND TO BE MARKED, DATED AND SIGNED ON THE OTHER SIDE WHICH ALSO
INCLUDES INSTRUCTIONS ON HOW TO VOTE BY TELEPHONE.)
- - -------------------------------------------------------------------------------
*FOLD AND DETACH HERE*
[HARSCO CORPORATION LOGO] ANNUAL
MEETING OF
STOCKHOLDERS
APRIL 27, 1999 10:00 A.M.
THE RADISSON PENN HARRIS
HOTEL AND CONVENTION CENTER
ROUTES 11 AND 15 AT ERFORD ROAD
CAMP HILL, PENNSYLVANIA
<PAGE> 28
<TABLE>
<CAPTION>
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS
MADE, THIS PROXY WILL BE VOTED FOR PROPOSALS 1 AND 2. THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSALS 1 AND 2.
<S> <C>
Please mark
your votes as [X]
indicated in
this example
1. ELECTION OF DIRECTORS NOMINEES: 01 C.F. Scanian, 02 A.J. Sordoni, III, 03, J.P. Viviano and
04 R.C. Wilburn
FOR all nominees WITHHOLD
listed to the right AUTHORITY (INSTRUCTION: To withhold authority to vote for any individual nominee,
(except as marked to the to vote for all nominees write that nominee's name in the space provided below.)
contrary) listed to the right
[ ] [ ] --------------------------------------------------------------------------
2. Appointment of PricewaterhouseCoopers LLP as the independent Please sign exactly as name appears to
accountants of the Company. the left. When shares are held by joint
tenants, both should sign. When signing
FOR AGAINST ABSTAIN 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: , 1999
--------------------------
---------------------------------------
(Signature)
---------------------------------------
(Signature if held jointly)
PLEASE MARK, SIGN, DATE AND RETURN THIS
PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
- - ------------------------------------------------------------------------------------------------------------------------------------
-FOLD AND DETACH HERE-
--------------------------------------------------------------------------
[TELEPHONE VOTE BY TELEPHONE [TELEPHONE
GRAPHIC] QUICK *** EASY *** IMMEDIATE GRAPHIC]
--------------------------------------------------------------------------
YOUR VOTE IS IMPORTANT! -- YOU CAN VOTE IN ONE OF TWO WAYS:
1. TO VOTE BY PHONE: Call toll-free 1-800-840-1208 on a touch tone telephone 24 hours a day-7days a week
There is NO CHARGE to you for this call. Have your Proxy Card in hand.
You will be asked to enter a Control Number, which is located in the box in the lower right hand corner of this form
----------------------------------------------------------------------------------------------------------------------------
OPTION 1: To vote as the Board of Directors recommends on ALL proposals, press 1
----------------------------------------------------------------------------------------------------------------------------
When asked, please confirm by Pressing 1.
----------------------------------------------------------------------------------------------------------------------------
OPTION 2: If you choose to vote on each Proposal separately, press 0. You will hear these instructions:
----------------------------------------------------------------------------------------------------------------------------
Proposal 1 - To vote FOR ALL nominees, press 1; to WITHHOLD FOR ALL nominees, press 9
To WITHHOLD FOR AN INDIVIDUAL nominee, Press 0 and listen to the instructions
Proposal 2 - To vote FOR, press 1; AGAINST, press 9; ABSTAIN, press 0.
WHEN ASKED, PLEASE CONFIRM BY PRESSING 1.
OR
2. TO VOTE BY PROXY: Mark, sign and date your Proxy Card and return promptly in the enclosed envelope.
NOTE: If you vote by telephone, THERE IS NO NEED TO MAIL BACK your Proxy Card.
THANK YOU FOR VOTING.
</TABLE>
