<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
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
.................Health-Chem Corporation.....................
(Name of Registrant as Specified in Its Charter)
.................Health-Chem Corporation.....................
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rules 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 transaction applies:
...........................................................
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:_/
...........................................................
4) Proposed maximum aggregate value of transaction:
...........................................................
_/ Set forth the amount on which the filing fee is calculated and state how
it was determined.
[ ] 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:
...........................................................
<PAGE>
HEALTH-CHEM CORPORATION
1212 AVENUE OF THE AMERICAS
NEW YORK, NEW YORK 10036
________________
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To be held May 7, 1996
To the Stockholders of Health-Chem Corporation:
Notice is hereby given that the Annual Meeting of Stockholders of Health-
Chem Corporation (the "Company") will be held at the Sheraton Grande Hotel,
333 South Figueroa Street, Los Angeles, California, on May 7, 1996 at 9:00
A.M. (local time) for the following purposes:
1. To elect ten directors.
2. To transact any such other business as may come before the meeting or
any adjournment or adjournments thereof.
The Board of Directors has fixed the close of business on March 22, 1996
as the record date for determining stockholders entitled to notice of and to
vote at the meeting.
A proxy and return envelope are enclosed for your convenience.
By Order of the Board of Directors
Marvin M. Speiser,
Chairman of the Board and President
April 5, 1996
IMPORTANT: WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, A RETURN ENVELOPE
REQUIRING NO POSTAGE IF MAILED IN THE UNITED STATES IS ENCLOSED FOR YOUR
CONVENIENCE. PROMPT RETURN OF THE PROXY WILL ASSURE A QUORUM AND SAVE THE
COMPANY UNNECESSARY EXPENSE.
<PAGE>
<PAGE> HEALTH-CHEM CORPORATION
1212 AVENUE OF THE AMERICAS
NEW YORK, NEW YORK 10036
_________________
PROXY STATEMENT
_________________
This Proxy Statement is furnished to the stockholders of Health-Chem
Corporation, a Delaware corporation (the "Company"), in connection with the
solicitation of proxies by the Board of Directors for use at the annual
meeting of stockholders of the Company (the "Meeting") to be held on May 7,
1996 and any adjournment or adjournments thereof. A copy of the notice of
meeting accompanies this Proxy Statement. It is anticipated that the mailing
of this Proxy Statement and the enclosed proxy will commence on April 8, 1996.
Only stockholders of record at the close of business on March 22, 1996,
the record date for the Meeting, will be entitled to notice of and to vote at
the Meeting. On the record date, the Company had outstanding for purposes of
voting at the Meeting 7,982,424 shares of common stock, par value $.01 per
share (the "Common Stock"). See "Security Ownership of Certain Beneficial
Owners and Management."
Directors of the Company will be elected by a plurality vote of the
outstanding shares of Common Stock present and entitled to vote at the
Meeting. Action on any other matter is approved by a majority vote of the
outstanding shares of Common Stock present and entitled to vote at the
Meeting.
Stockholders who execute proxies may revoke them by giving written
notice to the Secretary of the Company at any time before such proxies are
voted or by submitting a duly executed proxy bearing a later date. Attendance
at the Meeting shall not have the effect of revoking a proxy unless the
stockholder so attending shall, in writing, so notify the Secretary of the
Meeting at any time prior to the voting of the proxy.
The Board of Directors does not know of any matter that is expected to be
presented for consideration at the Meeting other than as is described in this
Proxy Statement. However, if other matters properly come before the Meeting,
the persons named in the accompanying proxy intend to vote thereon in
accordance with their judgment.
All proxies received pursuant to this solicitation will be voted except
as to matters where authority to vote is specifically withheld and, where a
choice is specified as to the proposal, they will be voted in accordance with
such specification. If no instructions are given, the proxy will be voted for
the nominees for election as directors of the Company listed below.
The address of the Company's principal executive office is 1212 Avenue of
the Americas, New York, New York 10036.
<PAGE>
<PAGE>
PROPOSAL NO. 1
ELECTION OF DIRECTORS
The By-laws of the Company provide that the Board of Directors may, from
time to time, fix the number of directors constituting the Board of Directors
to be not less than three and not more than fifteen. On March 26, 1996, the
Board of Directors determined that ten directors shall constitute the Board of
Directors of the Company. At the Meeting, ten directors are to be elected to
serve until the next annual meeting of stockholders or until their respective
successors are elected and qualified. Set forth below are the names of the
nominees for director, their ages, principal occupations and business
experience for at least the previous five years. All of the nominees are
presently directors of the Company. It is the intention of the persons named
in the enclosed proxy to vote for the election as directors of the persons
named in the table below unless a contrary direction is indicated on the
enclosed proxy. If any such nominee should become unavailable for any reason,
which the Board of Directors has no reason to anticipate, the persons named in
the enclosed proxy reserve the right to substitute another person of their
choice in his place. The holders of Common Stock are entitled to one vote per
share. The election of each director will require the affirmative vote of a
plurality of the votes cast at the Meeting.
<TABLE>
Name Age(1) Principal Occupation
<S> <C> <C>
Martin Benis, Ph.D. 69 Professor of Accounting and Auditing
at Baruch College of the City
University of New York
Steven Bernstein 39 Senior Vice President of the Company
Matthew Goldstein, Ph.D. 54 President of Baruch College of the
City University of New York
Samuel R. Goodson 66 President of Pacific Combining
Corporation
Paul R. Moeller 49 Vice President-Finance of the
Company and President of Hercon
Environmental Corporation
Eugene Roshwalb 56 Certified Public Accountant
<PAGE>
<PAGE>
Name Age(1) Principal Occupation
Bruce M. Schloss 40 Vice President, Secretary and
General Counsel of the Company
Marvin M. Speiser(2) 70 Chairman of the Board and President
of the Company
Robert D. Speiser(2) 42 Executive Vice President of the
Company and President of Transderm
Laboratories Corporation and Hercon
Laboratories Corporation
Milton Y. Zussman 74 Attorney
</TABLE>
(1) Age as of March 1, 1996.
(2) Marvin M. Speiser is the father of Robert D. Speiser.
The following are summaries of the business experience during at least
the last five years of each of the persons nominated for election as a
director of the Company.
Martin Benis, Ph.D. has been Professor of Accounting and Auditing at
Baruch College of the City University of New York since 1972. Dr. Benis
served as the Chairman of the Department of Accounting at Baruch from 1981 to
1987. He is a certified public accountant and the author of a book on
auditing standards and procedures as well as numerous articles and chapters in
books on accounting and auditing. He became a director of the Company in
March 1996.
Steven Bernstein is an industrial engineer. He has been Senior Vice
President of the Company since April 1, 1994. From September 1986 to March
1994, Mr. Bernstein served as Vice President-Operations of the Company. Prior
thereto, he was Vice President-Operations of Union Broach Corporation, a
former wholly-owned subsidiary of the Company ("Union Broach"). Mr. Bernstein
was elected a director of the Company in December 1988.
Matthew Goldstein, Ph.D. has served as President of Baruch College of the
City University of New York ("The University") since September 1991. Dr.
Goldstein was the Acting Vice Chancellor for Academic Affairs for The
University from December 1990 to September 1991. He was President of the
Research Foundation of The University from 1982 to August 1991. Dr. Goldstein
is also a member of the Board of Trustees of the Bronx-Lebanon Hospital Center
and of the Board of Directors of the Jean Cocteau Repertory, ex-officio. He
became a director of the Company in March 1994.
<PAGE>
<PAGE>
Samuel R. Goodson has served as President of Pacific Combining
Corporation, a wholly-owned subsidiary of the Company ("Pacific"), for more
than five years. He was elected a director of the Company in November 1989.
Paul R. Moeller is a certified public accountant. In September 1985, he
joined the Company as Group Controller. He has been Vice President-Finance of
the Company since November 1988 and President of the Company's 98.5% owned
subsidiary, Hercon Environmental Corporation ("Hercon Environmental"), since
April 1995. From January 1992 to April 1995, Mr. Moeller served as President
of the environmental division of Hercon Laboratories Corporation ("Hercon
Laboratories") which is 98.5% owned by the Company's 90% owned subsidiary
Transderm Laboratories Corporation ("Transderm").
Eugene Roshwalb is a certified public accountant. He has maintained a
practice as a sole practitioner for more than five years. He became a
director of the Company in March 1991.
Bruce M. Schloss is an attorney. He has been General Counsel of the
Company since September 1991, Vice President since May 1992 and Secretary
since October 1991. Mr. Schloss has been a practicing attorney in New York
City for more than fifteen years. Prior to joining the Company, Mr. Schloss
was a member of the firm of McLaughlin & Stern, Ballen and Ballen since April
1989. Mr. Schloss was elected a director of the Company in May 1994.
Marvin M. Speiser has served as Chairman of the Board of Directors of the
Company and President since January 1969.
Robert D. Speiser has been Executive Vice President of the Company since
April 1, 1994, President of Transderm since April 1989 and President of Hercon
Laboratories since May 1990. From October 1986 to March 1994, he served as
Senior Vice President of the Company. Mr. Speiser also served as President of
Union Broach from January 1983 through November 1993. Prior to 1986, he
served as Vice President of the Company. Mr. Speiser was elected a director
of the Company in February 1983. Mr. Speiser is an attorney.
Milton Y. Zussman has been an attorney operating as a sole practitioner
for more than five years. Mr. Zussman also serves as Chairman of the Board of
Directors of United Community Services of Metropolitan Detroit. He became a
director of the Company in March 1991.
Directors' Fees, Committees and Meetings
The Company does not compensate its employee directors for services
rendered as directors. Non-employee directors receive $1,250 per month and
an
<PAGE>
additional fee of $500 for each meeting of the Board of Directors attended
and $500 for each committee meeting attended that is independently
scheduled. Non-employee directors were also reimbursed for expenses
incurred in attending such meetings. In addition, in 1995 the Company paid
$20,000 for the benefit of Mr. Gregory P. Speiser, a non-employee director
not standing for reelection in 1996, for consulting services rendered to
the Company in connection with investment strategy and the Company's
repurchase of its 10 3/8% convertible subordinated debentures. Mr. Eugene
Roshwalb, a non-employee director, was provided with the use of a leased
automobile for consulting services rendered to the Company in connection
with the resolution of certain workers' compensation rate disputes. The
adjusted annual lease value of this automobile in 1995 was $4,139.
During 1995, the Board of Directors held five meetings and acted by
unanimous consent on one occasion. During such period no director
participated in fewer than 80% of the aggregate of the number of meetings of
the Board of Directors and committees thereof of which such director was a
member. The Board of Directors has, among others, an Audit Committee and a
Compensation Committee. The Committees receive their authority and
assignments from the Board of Directors and report to the Board. The Audit
and Compensation Committees are currently composed of Eugene Roshwalb and
Milton Y. Zussman, who are non-employee directors.
The Audit Committee, among other things, is empowered to recommend to
the Board of Directors the engagement of the independent auditors and to
review the scope and procedures of the activities of the independent
auditors and their reports on their audits. The Audit Committee meets
periodically with the independent auditors and management to review their
work and confirm that they are properly discharging their responsibilities.
The Audit Committee met twice during the last year.
The Compensation Committee is empowered to make recommendations to the
Board of Directors relating to the overall compensation arrangements for
senior management of the Company and to make recommendations to the Board of
Directors pertaining to any compensation plans in which officers and
directors of the Company are eligible to participate. The Compensation
Committee is also responsible for the administration of the Company's stock
option and performance equity plans and is the approving authority for
management's recommendations with respect to option grants. The
Compensation Committee met twice during 1995.
The Company does not have a standing nomination committee.
<PAGE>
<PAGE> EXECUTIVE OFFICERS
<TABLE>
The following are the executive officers of the Company:
<CAPTION>
Officers Position Age(1)
<S> <C> <C>
Marvin M. Speiser (2) Chairman of the Board 70
and President
Robert D. Speiser(2) Executive Vice President of 42
the Company and President
of Transderm and Hercon
Laboratories
Thomas J. Atkins, Ph.D. Vice President of Transderm 49
and Vice President-Research
and Development of Hercon
Laboratories
Steven Bernstein Senior Vice President 39
Samuel R. Goodson President of Pacific 66
James H. Heath Vice President-Market 50
Development of Hercon
Environmental
Donald E. Kauffman, Jr. Vice President of 41
Transderm and Vice
President-Manufacturing of
Hercon Laboratories
Murray Lieber Vice President of Transderm 57
and Vice President-Marketing
of Hercon Laboratories
Peter F. McKernan Executive Vice President 42
of Herculite
James N. Merrill Executive Vice President 40
of Herculite
Paul R. Moeller Vice President-Finance and 49
President of Hercon
Environmental
Alberto R. Quisumbing, Ph.D. Vice President-Product 48
Development of Hercon
Environmental
Bruce M. Schloss Vice President, Secretary 40
and General Counsel
<PAGE>
James W. Walter Vice President-Production of 67
Pacific
</TABLE>
(1) As of March 1, 1996
(2) Marvin M. Speiser is the father of Robert D. Speiser.
The following is a summary of the business experience during at least
the last five years of all executive officers of the Company and its
subsidiaries who are not directors or nominees for election as directors.
Each of the officers serves at the discretion of the Board of Directors of
the Company or its subsidiary, as the case may be, from the date of his
election until the next annual meeting of the Board of Directors of the
Company or its subsidiary or until his successor is elected and qualified,
subject to earlier termination by removal or resignation.
Thomas J. Atkins, Ph.D. has been Vice President of Transderm and Vice
President-Research and Development of Hercon Laboratories since March 1996.
Prior to joining Hercon Laboratories and since 1995, Dr. Atkins served as
Vice President, Research and Development for Medisorb Technologies
International, L.P. ("Medisorb"). From 1988 to 1994, he served as Director,
Polymer Research and Drug Delivery Systems for Stolle Research & Development
Corporation ("Stolle"). Both Medisorb and its parent Stolle are engaged in
research and manufacturing of controlled release drug delivery systems. Dr.
Atkins is the author of numerous publications and the inventor of numerous
United States and foreign patents.
James H. Heath has been Vice President-Market Development of Hercon
Environmental since April 1995. He held the identical position with the
environmental division of Hercon Laboratories from February 1995 to April
1995. From May 1994 to January 1995, Mr. Heath was Director of Marketing
and Sales at Trece, Inc., a marketer of pheromone products. From 1992 to
May 1994, he was a co-principal of Ridge Technologies, Inc., providing
consulting services to the specialty chemical, pest control and animal
health industries. From 1990 to 1992, Mr. Heath was Marketing Manager and
then Business Manager at Roussel Bio Corporation for Roussel's Pest Control
and Lawn & Garden Product divisions.
Donald E. Kauffman, Jr. has been Vice President of Transderm since July
1995 and Vice President-Manufacturing of Hercon Laboratories since July
1987. Mr. Kauffman joined the Company in June 1976 and has served in
various positions prior to becoming a Vice President of Hercon Laboratories
in 1987.
Murray Lieber has been Vice President of Transderm since July 1995 and
Vice President-Marketing of Hercon Laboratories since June 1992. From
September 1989 to June 1992, he was Vice President, Account Supervisor at
Klemtner Advertising, a pharmaceutical advertising agency. Mr. Lieber was
Vice President of Diversified Health Affiliates, Inc., a pharmaceutical and
health care consulting firm, from January 1988 to September 1989. Prior
thereto, Mr. Lieber held positions in marketing and business development at
companies including Berlex Laboratories (a division of Schering AG), Roche
Laboratories, and Warner-Chilcott Laboratories (a division of Warner Lambert
Company).
<PAGE>
Peter F. McKernan has been an Executive Vice President of Herculite
Products, Inc., a wholly-owned subsidiary of the Company ("Herculite"),
since June 1993. For more than ten years prior thereto, Mr. McKernan was
employed by the BTR Group of companies, a British industrial manufacturing
concern where, for in excess of five years prior to June 1993, Mr. McKernan
served as a Director of Business Development.
James N. Merrill has been an Executive Vice President of Herculite
since June 1993. Mr. Merrill joined Herculite in 1983 as Industrial Sales
Manager. From July 1986 to June 1993, he served as Vice President-Sales and
Marketing of Herculite. Mr. Merrill also served as President of the
environmental division of Hercon Laboratories from April 1989 to December
1991.
Alberto R. Quisumbing, Ph.D. has been Vice President-Product
Development of Hercon Environmental since April 1995. From April 1989 to
April 1995, Dr. Quisumbing held the identical position with the
environmental division of Hercon Laboratories. Dr. Quisumbing joined the
Company in April 1975 as Field Applications Manager and has served in
various positions prior to becoming a Vice President of Hercon
Environmental.
James W. Walter has been Vice President-Production of Pacific since
July 1985.
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
(a) As of February 29, 1996, other than as set forth in the following
table, the Company knows of no other person or "group" (as that term is
defined in Section 13(d)(3) of the Securities Exchange Act of 1934) who
beneficially owns more than 5% of any class of the Company's voting
securities. The following table contains, as to each class of the
Company's voting securities, the name and address of each such 5%
beneficial owner, the amount of securities of such class beneficially
owned, and the percent of such class beneficially owned.
<TABLE>
<CAPTION> Number of Shares
Beneficially Owned
Name and address as of Percent
Title of Class of Beneficial Owner February 29, 1996(1) of Class
<S> <C> <C> <C>
Common Stock Marvin M. Speiser(2) 3,703,317(3)(4) 45.62%
Laura G. and Marvin M.
Speiser Trust(2) 3,703,317(5) 45.62%
<PAGE>
Dimensional Fund Advisors Inc. 470,600(6) 5.90%
1299 Ocean Avenue
Santa Monica, CA 90401
________________________
</TABLE>
(1) The information concerning security holders is based upon information
furnished to the Company by such security holder. Except as otherwise
indicated, all of the shares are owned of record and beneficially and
the persons identified have sole voting and investment power with
respect thereto.
(2) Address is c/o Health-Chem Corporation, 1212 Avenue of the Americas, New
York, NY 10036.
(3) Includes the following shares of Common Stock: (i) 266,664 shares owned
by Lauralei Investors, Inc. ("Lauralei"), of which Mr. Speiser and his
wife, Laura G. Speiser, are the sole stockholders; (ii) 204,000 shares
owned by Laurvin Corporation ("Laurvin"), in which Mr. Speiser owns
preferred stock convertible into 98% of its voting common stock; (iii)
124,000 shares which Mr. Speiser would receive upon the exercise of all
stock options which are currently exercisable or exercisable within
sixty days; (iv) 13,371 shares which Mr. Speiser would receive upon
conversion of 10 3/8% convertible subordinated debentures; and (v) an
aggregate of 1,312,593 shares held by two Laura G. and Marvin M. Speiser
Trusts (the "Trusts"), of which Laura G. Speiser and Marvin M. Speiser
serve as trustees.
(4) Includes: (i) 1,207,689 shares of Common Stock which the Company has the
right to acquire pursuant to an Option Agreement, dated as of December
28, 1990, between Mr. Speiser and the Company as amended on August 30,
1991 (the "1991 Option Shares"); and (ii) 575,000 shares of Common Stock
which the Company has the right to acquire pursuant to a Stock Purchase
and Option Agreement, dated as of July 15, 1994, between Mr. Speiser and
the Company (the "1994 Option Shares"). Until such time as the Company
purchases the 1991 Option Shares and/or the 1994 Option Shares, Mr.
Speiser has agreed to vote all such Option Shares on all matters for
which stockholders are entitled to vote substantially in the same
proportion as all other shares of the Company's Common Stock are voted
at any special or annual meeting of stockholders of the Company.
On March 26, 1996, the Board of Directors of the Company approved a
recommendation by a special committee (consisting of Messrs. Goldstein,
Roshwalb and Zussman) that the Company enter into a stock purchase
agreement with Marvin M. Speiser (the "Stock Purchase Agreement")
relating to the 1,782,689 shares of Common Stock owned by him subject to
the Company's option to repurchase. Pursuant to the Stock Purchase
Agreement, the Company will undertake a subscription rights offering of
approximately 1,300,000 shares of the Common Stock to its stockholders
other than Mr. Speiser. This offering will be registered under the
<PAGE>
Securities Act of 1933, as amended. The Stock Purchase Agreement
provides that Mr. Speiser will sell to the Company such number of shares
of Common Stock as are subscribed to in the offering at a per share
price equal to the combined weighted average exercise price per share of
the 1991 Option Shares and the 1994 Option Shares. Mr. Speiser will not
receive any subscription rights in the offering but the total number of
shares being offered will reflect his retention of such number of shares
as would have been offered to him, pro rata. The excess, if any, of the
aggregate subscription price received by the Company over the aggregate
purchase price paid to Mr. Speiser will be retained by the Company to be
applied against the expenses of the transaction and for other corporate
purposes. The Stock Purchase Agreement also provides that upon the
conclusion of the offering, the agreements relating to the 1991 Option
Shares and the 1994 Option Shares and all further rights of the Company
to purchase said Option Shares shall be terminated.
(5) Includes the following shares of Common Stock: (i) 1,312,593 shares of
Common Stock held by the Trusts; (ii) 266,664 shares of Common Stock
owned by Lauralei; (iii) 204,000 shares of Common Stock owned by
Laurvin; (iv) options granted to Marvin M. Speiser to purchase 124,000
shares of Common Stock which are currently exercisable or exercisable
within 60 days; (v) 13,371 shares of Common Stock which Marvin M.
Speiser would receive upon the conversion of 10 3/8% convertible
subordinated debentures; and (vi) 1,782,689 shares of Common Stock owned
by Marvin M. Speiser. The Trusts and Laura G. Speiser disclaim
beneficial ownership of all shares of Common Stock other than those
referenced in (i) above.
(6) Dimensional Fund Advisors Inc. ("Dimensional"), a registered investment
advisor, is deemed to have beneficial ownership of 470,600 shares of
Common Stock as of December 31, 1995, all of which shares are held in
portfolios of DFA Investment Dimensions Group Inc., a registered open-
end investment company, or in series of the DFA Investment Trust
Company, a Delaware business trust, or the DFA Group Trust and DFA
Participating Group Trust, investment vehicles for qualified employee
benefit plans, all of which Dimensional Fund Advisors Inc. serves as
investment manager. Dimensional disclaims beneficial ownership of all
such shares.
(b) As of February 29, 1996, each director of the Company, each of the
Company's current executive officers named in the Summary Compensation
Table below and all directors and officers of the Company, as a group,
beneficially owned the following amounts (and percentages) of each class
of the voting securities of the Company.
<PAGE>
<TABLE> Number of Shares
<CAPTION> Beneficially Owned
Name of as of Percent
Title of Class Beneficial Owner February 29, 1996(1) of Class
<S> <C> <C> <C>
Common Stock Steven Bernstein 32,000(2) *
Common Stock Matthew Goldstein 0 0
Common Stock Samuel R. Goodson 12,000(2) *
Common Stock Murray Lieber 8,500(2) *
Common Stock Paul R. Moeller 19,000(2) *
Common Stock Eugene Roshwalb 5,000 *
Common Stock Bruce M. Schloss 12,000(2) *
Common Stock Gregory P. Speiser** 265 *
Common Stock Marvin M. Speiser 3,703,317(2)(3)(4) 45.62%
Common Stock Robert D. Speiser 79,858(2)(3) *
Common Stock Milton Y. Zussman 24,495(3) *
Common Stock All directors and
officers as a group 3,936,635(5) 47.43%
(17 Persons)
______________________
* Indicates ownership of less than one percent (1%) of class.
** Incumbent director not standing for reelection in 1996. Gregory P. Speiser
is the son of Marvin M. Speiser.
</TABLE>
(1) The information concerning security holders is based upon information
furnished to the Company by such security holder. Except as otherwise
indicated, all of the shares are owned of record and beneficially and
the persons identified have sole voting and investment power with
respect thereto.
(2) Includes the following shares of Common Stock subject to stock options
which are currently exercisable or exercisable within 60 days: Mr.
Bernstein - 30,000; Mr. Goodson - 12,000; Mr. Lieber - 3,500; Mr.
Moeller - 19,000; Mr. Schloss - 12,000; Mr. Marvin M. Speiser - 124,000;
and Mr. Robert D. Speiser - 54,000.
(3) Includes the following shares of Common Stock which the named individual
would receive upon the conversion of 10 3/8% convertible subordinated
debentures: Mr. Marvin M. Speiser - 13,371; Mr. Robert D. Speiser -
8,658; and Mr. Zussman - 1,895.
(4) See footnote (3) to the table under (a) above for the number of shares
with respect to which Mr. Marvin M. Speiser has the right to acquire
beneficial ownership and footnote (4) to the table under (a) as to the
beneficial ownership of certain other shares.
(5) Includes the following shares of Common Stock: (i) 294,700 shares which
twelve of such persons would receive upon the exercise of stock options
<PAGE>
which are either currently exercisable, or exercisable within 60 days;
(ii) 23,924 shares which would be acquired by three of such persons upon
the conversion of 10 3/8% convertible subordinated debentures; and (iii)
an aggregate of 470,664 shares owned by entities controlled by or for
the benefit of certain relatives of three of such persons, all of which
shares are or may be deemed to be beneficially owned by such persons.
EXECUTIVE COMPENSATION
The following Summary Compensation Table sets forth the compensation of
each of the Chief Executive Officer and the four most highly-compensated
executive officers of the Company whose annual salary and bonus, if any,
exceeded $100,000 for services in all capacities to the Company during the
last three fiscal years.
<TABLE>
<CAPTION> SUMMARY COMPENSATION TABLE
Name Long-term
and Other Compensation
Principal Annual Compensation Annual Awards
Position Year Salary Bonus(1) Compensation Options(2)
<S> <C> <C> <C> <C>
Marvin M. Speiser 1995 $422,425 $ --- $ 39,917 0
Chairman and Chief 1994 395,070 152,075 101,749 30,000
Executive Officer 1993 363,753 451,950 109,322 20,000
Robert D. Speiser 1995 $227,367 $ --- $ 13,561 0
Executive Vice President 1994 212,644 152,075 13,481 20,000
and President- Transderm 1993 195,788 394,573(6) 6,876 20,000
Laboratories Corporation
and Hercon Laboratories
Corporation
Bruce M. Schloss 1995 $143,500 $ --- $ 9,724 0
Vice President and 1994 135,039 --- 9,136 10,000
General Counsel 1993 125,077 15,000 5,196 10,000
Samuel R. Goodson 1995 $143,002 $ --- $ 7,518 0
President-Pacific 1994 133,742 --- 6,546 10,000
Combining Corporation 1993 126,396 --- 10,269 10,000
Elio P. Mariani 1995 $174,250 $ --- $ 1,481 0
Former Vice President- 1994 165,039 76,038 1,432 10,000
Transderm Laboratories 1993 155,626 197,287 5,635 10,000
Corporation and former
Senior Vice President-
Hercon Laboratories
Corporation
All Other
Compensation(1)(3)
<C>
$99,047
34,428
27,480
$ 510
510
1,927
$ 198
194
180
$ 4,410
2,457
2,457
$ 1,350
1,350
864
</TABLE>
(1) Does not include information with respect to personal benefits provided
to the named individuals which do not exceed disclosure thresholds
established under Securities and Exchange Commission rules.
(2) Does not include options to purchase common stock of subsidiary. See
<PAGE>
"Executive Compensation-Employment Agreements."
(3) Represents the term cost value of all excess group life insurance
policies on behalf of the named individuals. For Marvin M. Speiser,
also includes $9,400 which represents the term portion of the premium
paid with respect to a split dollar life insurance arrangement between
the Company and Mr. Speiser, and $59,374 which represents the present
value to Mr. Speiser of the non-term portion of the premium paid by the
Company with respect to this arrangement. The present value was
calculated as an interest-free loan on the whole life portion of the
premium over the maturation of the policy.
OPTION GRANTS IN LAST FISCAL YEAR
During 1995, no options to purchase Common Stock of the Company were
granted to any named executives. See "Executive Compensation-Employment
Agreements" for information with respect to options granted to purchase
stock of Transderm.
<TABLE>
<CAPTION>
AGGREGATED OPTION EXERCISES IN LAST
FISCAL YEAR AND FISCAL YEAR END OPTION VALUE
Number of Value of Unexercised
Unexercised In-the-Money
Options at Options at
12/31/95 12/31/95(2)
Shares Acquired Exercisable/ Exercisable/
on Exercises (1) Value Realized Unexercisable Unexercisable
Name (#) ($)(1) (#) ($)
<S> <C> <C> <C> <C>
Marvin M. Speiser --- --- 124,000/56,000 0/0
Robert D. Speiser --- --- 54,000/36,000 0/0
Bruce M. Schloss --- --- 12,000/18,000 0/0
Samuel R. Goodson --- --- 12,000/18,000 0/0
Elio P. Mariani --- --- 12,000/18,000(3) 0/0
</TABLE>
(1) None of the named executive officers exercised any stock options during
the fiscal year ended December 31, 1995.
(2) Based upon the closing sale price of the Company's Common Stock on
December 31, 1995 on the American Stock Exchange minus the respective
option exercise price.
(3) All options expired subsequent to December 31, 1995.
<PAGE>
<PAGE> EMPLOYMENT AGREEMENTS
In April 1995, Health-Chem entered into a five-year Employment
Agreement with Marvin M. Speiser which provided for an initial base annual
salary of $415,552 ($120,000 in respect of services as an officer of the
Company's Herculite subsidiary) plus an annual bonus determined by the
Company's Board at least equal to ten percent of the amount by which pretax
net income of each of the Company's Herculite, Hercon Laboratories and
Hercon Environmental subsidiaries for a calendar year exceeds the average of
such subsidiary's pretax net income, as defined, for the prior two calendar
years, and for similar benefits, vacation and perquisites as that made
available to comparable executives of the Company. The Employment Agreement
also provides for minimum yearly salary increases of 4% on each September 1
during the employment period. The Employment Agreement further provides
that upon retirement on or after January 1, 2000 (the "retirement date"),
Marvin M. Speiser will be entitled to receive an annual supplemental pension
benefit equal to 60% of his final base salary, which for this purpose will
be the highest nominal annual salary paid to him during his employment. The
supplemental pension will be payable for a period of ten (10) years
beginning on the retirement date, or if later, the January 1 following
termination of employment. In the event of termination of employment prior
to the retirement date, the amount of the supplemental pension payable on
that date will be prorated based on the period of employment from December
31, 1994 to the date of termination. No proration will be applied, however,
if Mr. Speiser's employment is involuntarily terminated (as described
below). An actuarially reduced supplemental pension benefit may be paid if
the benefit is commenced upon termination of employment prior to the
retirement date.
Pursuant to the Employment Agreement, the Company caused its Transderm
subsidiary to grant to Marvin M. Speiser an option to purchase 5,000,000
shares of common stock of Transderm, at an exercise price of $.10 per share,
which was the per share subscription exercise price in Transderm's initial
public offering. This option will become exercisable in full on November
13, 1996, the first anniversary of the date of grant, subject to
acceleration in the event of involuntary termination or a Change in Control,
and, will expire ten (10) years from the date of grant, subject to earlier
termination on the first anniversary of termination of Mr. Speiser's
employment due to death or disability, or in circumstances that do not
qualify as involuntary termination under the Employment Agreement. In the
event of involuntary termination, the option will terminate on the earlier
of the fifth anniversary of such termination of employment or ten (10) years
from the date of grant. Finally, if within 18 months following the
termination of his employment with the Company or any of its subsidiaries,
Marvin M. Speiser accepts employment with a competitor or otherwise engages
in competition with the business of the Company or any of its subsidiaries,
any unexercised options at that time will be forfeited and he will be
obligated to pay Transderm with respect to any exercised options, the
economic value realized or obtained at the time of exercise.
<PAGE>
Marvin M. Speiser is entitled to continue to receive the salary, bonus
and other compensation provided for under the Employment Agreement for a
period of five (5) years following an involuntary termination of his
employment during the term of the Employment Agreement. Marvin M. Speiser's
employment will be deemed to have been involuntarily terminated if his
employment is terminated by the Company for reasons other than cause, which
is defined to mean certain felony convictions or the willful and continued
failure to substantially perform duties. Mr. Speiser's employment will be
deemed to have been involuntarily terminated in the event of his resignation
following a breach of the Employment Agreement by the Company, a material
diminution of his duties and responsibilities, a change in his primary
employment location to a place outside the New York City metropolitan area,
or for any reason within one year following a Change in Control. For
purposes of the Employment Agreement, a "Change in Control" is defined to
include (i) the acquisition of beneficial ownership of 25% of the combined
voting power of the Company's securities, (ii) the first purchase of the
Company's Common Stock pursuant to a tender or exchange offer, (iii) the
approval by the Company's stockholders of a merger or consolidation in which
the Company is not the surviving corporation or a sale or disposition of
substantially all of the Company's assets or a plan of liquidation or
dissolution, or (iv) a change in the composition of the Board of the Company
by more than one-third (1/3) in any two-year period other than directors
nominated by the existing Board. The Employment Agreement also provides
that Marvin M. Speiser will be entitled to supplemental compensation to
mitigate the effect of any excise taxes to which he may be subject as a
result of a Change in Control.
In April 1995, Health-Chem also entered into a similar Employment
Agreement with Robert D. Speiser, with the following material exceptions:
(i) an initial base annual salary of $223,668 ($104,000 in respect of his
services as an officer of Hercon Laboratories) plus an annual bonus
determined by the Company's Board at least equal to the increase in pretax
net income, as defined, for Hercon Laboratories under the same terms as set
forth above for Marvin M. Speiser; and (ii) a "retirement date," as defined
in the Employment Agreement, of January 1, 2010. The Company also caused
Transderm to grant Robert D. Speiser, in accordance with his Employment
Agreement, an option to purchase up to 5,000,000 shares of common stock of
Transderm at an exercise price of $.10 per share on substantially the same
terms and conditions as set forth above for Marvin M. Speiser.
<PAGE>
<PAGE> STOCK PERFORMANCE GRAPH
The following graph compares the yearly percentage change in the
cumulative total stockholder return for the five years ended December 31,
1995 based upon the market price of the Company's Common Stock, with the
cumulative total return on the AMEX Market Value Index and a defined peer
group based on (a) similar market capitalization as of December 31, 1995 and
(b) comparable sales performance over the five year period. The Company has
elected to compare its yearly percentage change in total stockholder return
against a market capitalization peer group because the Company operates in
several lines of business and financial information on the Company's
competitors in the synthetic fabric industry is not publicly available. The
Company therefore does not believe that it can reasonably identify an
industry-based peer group. The graph assumes a $100 investment on December
31, 1990 and the reinvestment of any and all dividends.
HEALTH-CHEM CORPORATION
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
Health-Chem Corporation, AMEX Market Value Index and Market
Capitalization Peer Group
Capitalization Health-Chem AMEX Market Market Peer
Date Corporation Value Index Group
12/31/90 $100.00 $100.00 $100.00
12/31/91 150.00 123.17 159.74
12/31/92 283.33 124.86 127.86
12/31/93 500.00 148.34 113.97
12/31/94 416.67 131.04 81.79
12/31/95 200.00 168.90 59.67
<PAGE>
<PAGE>
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors (the "Committee")
is composed of two independent outside directors of the Company. During
1995, the Committee met on two occasions to carry out its responsibilities
including the development and administration of policies governing annual
compensation for senior executives of the Company.
In developing and administering these policies, the Committee has
focused on compensating Company executives: on a competitive basis with
other comparably sized and managed companies; in a manner consistent and
supportive of overall Company objectives; and, through a compensation plan
which balances the longer and shorter-term strategic initiatives of the
Company. Consistent with compensation program objectives identified in last
year's Compensation Committee Report, the Committee intends that the
executive compensation program will:
(1) Reward executives for strategic management and enhancement of
stockholder value;
(2) reflect each executive's success at resolving key operational
issues;
(3) facilitate both the short and long-term planning process; and
(4) attract and retain key executives believed to be critical to the
long-term success of the Company.
The Company's compensation program for executive officers generally
consists of a fixed base salary, performance-related bonus awards and long-
term incentive compensation in the form of stock options. In addition,
Company executives are able to participate in various benefit plans
generally available to other full-time employees of the Company.
In reviewing the Company and executives' performance over the past
fiscal year, the Committee took into consideration, among other things, the
following performance factors in making its compensation recommendations:
continued implementation of materials management and cost control programs
and successful completion of the transactions contemplated under the Plan of
Reorganization and Asset Exchange Agreement (the "Plan of Reorganization"),
including the partial spin-off of Transderm.
In the first quarter of 1995, Marvin M. Speiser and Robert D. Speiser,
with the encouragement of the Committee, proposed that five-year employment
agreements be entered into between the Company and each of them which would
incorporate for the most part the existing basis of compensation, including
bonuses tied to growth in pretax income for business operations for which
each was responsible.
<PAGE>
The Committee, in negotiating the final terms of the employment
agreements (which were entered into in April 1995), utilized, in part, the
study provided by compensation consultants during 1994 as to relevant
factors including, the overall content, market competitiveness, long-term
vs. short-term balance, and performance vs. pay elements. For a more
complete description of these employment agreements see "Executive
Compensation-Employment Agreements" elsewhere in this Proxy Statement.
Base Salary
The Company's base salary is intended to provide a competitive
remuneration for services provided to the Company over a one year period or
such longer period as may be covered under employment agreements. Base
salaries are set at levels designed to attract and retain the most
appropriately qualified individuals for each of the key management level
positions within the Company. In determining these amounts, the Committee
takes into consideration regional and national compensation information for
comparable companies, industry patterns, and levels of responsibility for
each executive.
Short-Term Incentives
Short-term incentives are paid primarily to recognize specific
operating performance achieved within the last fiscal year. Since such
incentive payments are related to a specific year's performance, the
Committee understands and accepts that such payments may vary considerably
from one year to the next. The Company's bonus program ties executive
compensation directly back to operating profitability in each of the
Company's subsidiaries. Depending on management level and seniority,
certain executives within each entity are able to earn a percentage of the
improvement in earnings over the average earnings for the preceding two
calendar years within the entity. Based on this formula, no bonus payments
were paid to any of the named executives for the fiscal year 1995.
Long-Term Incentives
Although the Committee recognizes the value of stock option grants in
motivating long-term strategic decision making, in 1995 no options to
acquire Common Stock were granted nor were any awards made under the 1995
Performance Equity Plan to any executive officers, officers or any employees
of the Company. However pursuant to the employment agreements with Marvin
M. Speiser and Robert D. Speiser, at the conclusion of the subscription
rights offering of Transderm's common stock, each of them was granted an
option to acquire up to 5,000,000 shares of common stock of Transderm at
$.10 per share, the subscription price therefor. Each such option becomes
exercisable in November 1996, subject to acceleration in certain
circumstances, and remains exercisable until November 2005. See "Executive
Compensation-Employment Agreements" elsewhere in this Proxy Statement for a
more complete description of these options.
<PAGE>
Chief Executive Officer
In April 1995, Mr. Marvin M. Speiser, Chief Executive Officer, entered
into an employment agreement with the Company. In accordance with the
employment agreement, as of September 1, 1995, Mr. Speiser received an
increase in his base salary of 5% over the prior year's level, adjusted
proportionately for the balance of 1995. Pursuant to the employment
agreement, the amount of any bonus for Mr. Speiser is based on the
improvement in earnings over the average earnings for the preceding two
calendar years within the Company's operating businesses. Based on this
formula, Mr. Speiser received no bonus payment for fiscal year 1995.
Finally, Mr. Speiser was granted an option to purchase up to 5,000,000
shares of Transderm common stock. The option was granted at an exercise
price equal to the subscription offering exercise price, and therefore
attains value only through an increase in the publicly traded price per
share. The options become exercisable in November 1996 and remain
exercisable for nine years.
The Committee believes that Mr. Speiser's compensation reflects his
contribution to the Company and the achievement of specific long-term and
short-term objectives of the Company. In addition to the Company's
financial performance, the Committee has taken into consideration a number
of other managerial and leadership factors, including the spearheading of
programs related to cost containment and materials management and his role
in the successful completion of the transactions contemplated by the Plan of
Reorganization.
Compensation Committee
Eugene Roshwalb
Milton Y. Zussman
<PAGE>
<PAGE>
INTEREST OF MANAGEMENT IN CERTAIN TRANSACTIONS
In July 1995, the Company advanced Marvin M. Speiser $150,000 with
respect to an installment of principal due to The First National Bank of
Maryland ("FNBM") under a loan agreement dated July 15, 1994 (the "FNBM
Agreement"). In addition, during 1995 the Company advanced to Mr. Speiser
an aggregate of approximately $97,500 relating to the interest payable under
the FNBM Agreement. These advances were intended to be repaid out of Mr.
Speiser's bonus for 1995 and thereafter or as a set-off to the purchase
price to be paid to Mr. Speiser by the Company upon exercise of its option
to repurchase shares of Common Stock issued to him pursuant to a Stock
Purchase and Option Agreement dated July 15, 1994.
As described in note (4) to table (a) under "Security Ownership of
Certain Beneficial Owners and Management," the Company intends to effect a
registered subscription rights offering of its Common Stock and that these
advances to Mr. Speiser together with any other amounts advanced with
respect to the FNBM Agreement will be set off against the aggregate purchase
price due to Mr. Speiser upon the completion of the offering.
In connection with the FNBM Agreement, the Company agreed to pledge to
FNBM certain cash equivalent collateral in exchange for the written
agreement by Mr. Speiser and his wife, Laura G. Speiser (collectively "the
Speisers") to indemnify and hold the Company harmless from and against any
and all losses that the Company may suffer as a result of the foreclosure by
FNBM on the pledged collateral in connection with the FNBM Agreement (the
"Indemnification Agreement"). The Indemnification Agreement between the
Speisers and the Company is secured by the Speisers' pledge of certain
assets having an aggregate net realizable value at least equal to the
collateral pledged by the Company to FNBM in connection with the FNBM
Agreement.
INDEPENDENT PUBLIC ACCOUNTANTS
Coopers & Lybrand, L.L.P., independent public accountants, currently
audits the Company's books and records.
Effective November 13, 1995, the Board of Directors of the Company
approved the recommendation of the Company's Audit Committee to appoint the
accounting firm of Coopers & Lybrand, L.L.P. as independent accountants for
the Company for the year ending December 31, 1995. The audit work of
Deloitte & Touche LLP was terminated as of November 13, 1995.
During the 1994 and 1993 fiscal years and the subsequent interim period
preceding the termination of Deloitte & Touche LLP, there were no
disagreements with Deloitte & Touche LLP on any matter of accounting
principles or practices, financial statement disclosure, or auditing scope
or procedure or any reportable events.
Deloitte & Touche LLP's report on the financial statements for the past
two years contained no adverse opinion or disclaimer of opinion and was not
qualified or modified as to uncertainty, audit scope or accounting
principles.
<PAGE>
Representatives of Coopers & Lybrand, L.L.P., are expected to be
present at the Meeting, will be given the opportunity to make a statement if
they so desire, and are expected to be available to respond to appropriate
questions.
ANNUAL REPORT TO STOCKHOLDERS
A copy of the Company's 1995 Annual Report has been mailed to
stockholders of record at the close of business on March 22, 1996 together
with this Notice of Meeting and Proxy Statement. The Company files an
annual report on Form 10-K with the Securities and Exchange Commission which
includes additional information concerning the Company and its operations.
This report, except for exhibits, will be furnished to stockholders, without
charge, upon written request to the Secretary of the Company.
COST OF SOLICITATION
The Company will bear the cost of the Meeting and the cost of
soliciting proxies, including the cost of mailing the proxy material. In
addition to solicitation by mail, directors, officers, and regular employees
of the Company (who will not be specifically compensated for such services)
may solicit proxies by telephone or otherwise. Arrangements will be made
with brokerage houses and other custodians, nominees, and fiduciaries to
forward proxies and proxy material to their principals, and the Company will
reimburse them for their reasonable expenses incurred in connection
therewith.
STOCKHOLDER PROPOSALS
Stockholders of the Company wishing to include proposals in the proxy
material in relation to the annual meeting of the Company to be held in 1997
must submit the same in writing so as to be received at the principal
executive office of the Company on or before November 15, 1996. Such
proposals must also meet the other requirements of the rules of the
Securities and Exchange Commission relating to stockholder proposals.
By Order of the Board of Directors,
Marvin M. Speiser
Chairman of the Board and President
New York, New York
