<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] No fee required.
[ ] Fee computed on table below per Exchange Act Rules
14a-6(i)(4) and 0-11.
1) Title of each class of securities to which
transaction applies:
.................................................
2) Aggregate number of securities to which
transaction applies:
.................................................
3) Per unit price or other underlying value of
transaction computed pursuant to Exchange Act
Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was
determined):
.................................................
4) Proposed maximum aggregate value of transaction:
.................................................
5) Total fee paid:
.................................................
[ ] Fee paid previously with preliminary material:
......................................................
[ ] 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.
<PAGE>
1) Amount previously paid:
.................................................
2) Form, Schedule or Registration Statement No.:
.................................................
3) Filing Party:
.................................................
4) Date Filed:
.................................................
<PAGE>
<PAGE>
HEALTH-CHEM CORPORATION
1212 AVENUE OF THE AMERICAS
NEW YORK, NEW YORK 10036
----------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To be held May 12, 1998
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 Boardroom of the American Stock
Exchange, 86 Trinity Place, New York, New York, on May 12,
1998, at 10:00 A.M. (local time) for the following
purposes:
1) To elect nine 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 April 2, 1998 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 7, 1998
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 12, 1998 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 9, 1998.
Only stockholders of record at the close of business
on April 2, 1998, 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. Abstentions and
<PAGE>
broker non-votes will each be counted as present for
purposes of determining the presence of a quorum but will
not be treated as votes cast for purposes of any of the
matters to be voted on at the meeting.
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,
1998, the Board of Directors determined that nine directors
shall constitute the Board of Directors of the Company. At
the Meeting, nine 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.
Name Age(1) Principal Occupation
Martin Benis, Ph.D. 71 Professor of Accounting
and Auditing at Baruch
College of the City
University of New York
Steven Bernstein 41 Senior Vice President of
the Company
Matthew Goldstein, Ph.D. 56 President of Baruch
College of the City
University of New York
Paul R. Moeller 51 Vice President-Finance
of the Company and
President of Hercon
Environmental
Corporation
Eugene Roshwalb 58 Certified Public
Accountant
Bruce M. Schloss 42 Vice President,
Secretary and General
Counsel of the Company
Marvin M. Speiser(2) 72 Chairman of the Board
and President of the
Company
<PAGE>
Name Age(1) Principal Occupation
Robert D. Speiser(2) 44 Executive Vice President
of the Company and
President of Transderm
Laboratories Corporation
and Hercon Laboratories
Corporation
Milton Y. Zussman 76 Attorney
(1) Age as of March 1, 1998.
(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
previously the Acting Vice Chancellor for Academic Affairs
for The University and President of the Research Foundation
of The University. Dr. Goldstein is 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 also serves on the Board of Directors of
Audits and Surveys Worldwide, a market research company.
Dr. Goldstein has recently accepted the position of
President of Adelphi University to commence on June 15,
1998. Dr. Goldstein became a director of the Company in
March 1994.
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 January 1992. Mr. Moeller was
elected a director of the Company in December 1988.
<PAGE>
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, Secretary
since October 1991 and Vice President since May 1992.
Prior to joining the Company, Mr. Schloss was a member of
the firm of McLaughlin & Stern, Ballen and Ballen. 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 the Company's
90% owned subsidiary Transderm Laboratories Corporation
("Transderm") since April 1989 and President of Transderm's
98.5% owned subsidiary Hercon Laboratories Corporation
("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 in
private practice for more than five years. Mr. Zussman
also serves as Executive Vice Chairman of the Board of
Directors of United Way Community Services of Southeastern
Michigan. 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 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 1997, 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 1997
was $4,025. Mr. Roshwalb was also paid $5,500 for certain
tax consulting services rendered on behalf of Marvin M.
Speiser.
<PAGE>
During 1997, the Board of Directors held four
meetings. 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 Committee is currently composed of Martin
Benis and Eugene Roshwalb. The Compensation Committee is
currently composed of Martin Benis, Eugene Roshwalb and
Milton Y. Zussman. All Committee members 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 once during
1997.
The Company does not have a standing nomination
committee.
<PAGE>
<PAGE>
EXECUTIVE OFFICERS
The following are the executive officers of the Company:
Officers Position Age(1)
Marvin M. Speiser(2) Chairman of the Board 72
and President
Robert D. Speiser(2) Executive Vice President of 44
the Company and President
of Transderm and Hercon
Laboratories
Thomas J. Atkins, Ph.D. Vice President of Transderm 51
and Vice President-Research
and Development of Hercon
Laboratories
Steven Bernstein Senior Vice President 41
Ronald J. Burghauser Vice President, Secretary 37
and Treasuer of Transderm
and Vice President-Finance
of Hercon Laboratories
J. Alan Collier Vice President-Materials 47
Herculite
William R. Harris Vice President-Finance of 49
Pacific
David J. Heath, Jr. Controller 40
James H. Heath Vice President-Market 52
Development of Hercon
Environmental
Donald E. Kauffman, Jr. Vice President of 43
Transderm and Vice
President-Manufacturing of
Hercon Laboratories
Murray Lieber Vice President of Transderm 59
and Vice President-Marketing
of Hercon Laboratories
Walter H. McCoy Vice President-Sales of 57
Pacific
Peter F. McKernan Executive Vice President 44
of Herculite and Pacific
Paul R. Moeller Vice President-Finance and 51
President of Hercon
Environmental
<PAGE>
Bruce M. Schloss Vice President, Secretary 42
and General Counsel
James M. Schrader Senior Vice President 42
of Pacific
(1) As of March 1, 1998
(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 named inventor
on numerous United States and foreign patents.
Ronald J. Burghauser, a certified public accountant,
has served as Vice President of Transderm and Vice
President-Finance of Hercon Laboratories since January 1998
and as Treasurer and Secretary of Transderm since July
1995. From June 1995 through December 1997, Mr. Burghauser
was Controller of Transderm and Hercon Laboratories. Prior
thereto and since January 1990, Mr. Burghauser served as
Controller for Adell Plastics, Inc. a Baltimore, Maryland
plastics manufacturer. From 1982 to 1989, Mr. Burghauser
was employed by Ernst & Young, Baltimore, Maryland, as an
Audit Manager.
J. Alan Collier has been Vice President-Materials of
Herculite Products, Inc., a wholly-owned subsidiary of the
Company ("Herculite"), since January 1, 1998. Mr. Collier
joined the Company in Feburary 1994 as Senior Buyer and has
served in various positions prior to becoming a Vice
President of Herculite. From January 1993 until joining
the Company, Mr. Collier was the President of the USA Girl
Division of C.P.T.O. Sportswear, Inc.
William R. Harris has been Vice President-Finance of
Pacific Combining Corporation, a wholly-owned subsidiary of
the Company ("Pacific"), since July 1997, and Controller of
Pacific since June 1996. For the five years prior thereto,
Mr. Harris served as Director of Finance and Administration
for Energy Container Corp., a California aerospace
manfacturer.
<PAGE>
David J. Heath, Jr. has been Controller of the Company
since January 1, 1998. Mr. Heath served as Assistant
Controller of the Company from March 1989 through December
1997.
James H. Heath has been Vice President-Market
Development of Hercon Environmental since February 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.
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).
Walter H. McCoy has been Vice President-Sales and
Marketing of Pacific since July 1997. From August 1993 to
June 1997, Mr. McCoy served as Director of Sales and
Marketing for Pacific. For the three years prior thereto,
Mr. McCoy worked in the sales department for Teknor Apex
Corp., a California vinyl manufacturer.
Peter F. McKernan has been an Executive Vice President
of Herculite since June 1993 and of Pacific since October
1997. 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 M. Schrader has been Senior Vice President of
Pacific since July 1997. Mr. Schrader served as Vice
President-Manufacturing of Pacific from May 1996 to June
1997. From January 1995 to April 1996, Mr. Schrader served
as Plant Manager of Formica Corporation's Evandale, Ohio
facility. Mr. Schrader served as Plant Manager at the Port
Clinton, Ohio facility of Uniroyal Technology Corporation
("Uniroyal") from 1993 to 1994, and in various other
capacities with Uniroyal from 1979 to 1993.
<PAGE>
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
(a) As of February 28, 1998, 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.
<PAGE>
<PAGE>
<TABLE>
Number of Shares
Beneficially Owned
as of
Title of Class Name and Address February 28, Percent
of Beneficial Owner 1998(1) of Class
<S> <C> <C> <C>
Common Stock Marvin M. Speiser (2) 2,712,180 (3)(4) 33.56%
Common Stock Laura G. Speiser (2) 2,712,180 (3)(4) 33.56%
Common Stock Laura G. and Marvin M. 2,712,180 (3)(4) 33.56%
Speiser 1995 Trust (2)
Common Stock Andy E. Yurowitz 506,214 (5) 6.34%
8 Kupperman Lane
Monsey, NY 10952
/TABLE
<PAGE>
<PAGE>
(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
dispositive 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 Marvin M. Speiser and his
wife, Laura G. Speiser, are the sole stockholders;
(ii) 84,000 shares which Mr. Speiser would receive
upon the exercise of all stock options which are
currently exercisable or exercisable within 60 days;
(iii) 14,754 shares which Mr. Speiser would receive
upon conversion of 10 3/8% convertible subordinated
debentures; (iv) 410,415 shares held by the Laura G.
and Marvin M. Speiser 1995 Trust (the "1995 Trust"),
of which Laura G. Speiser and Marvin M. Speiser serve
as trustees; (v) 204,000 shares held by the Marvin M.
Speiser 1996 Trust (the "1996 Trust"), of which Laura
G. Speiser and Robert D. Speiser serve as trustees;
(vi) 830,169 shares owned by Marvin M. Speiser; and
(vii) 902,178 shares owned by Laura G. Speiser.
Marvin M. Speiser disclaims beneficial ownership of
the shares of Common Stock referenced in (vii) above.
Laura G. Speiser disclaims beneficial ownership of
the shares of Common Stock referenced in (i), (ii),
(iii) and (vi) above. The 1995 Trust disclaims
beneficial ownership of all shares of Common Stock
other than those referenced in (iv) above.
(4) Includes 317,406 shares subject to repurchase by the
Company from Marvin M. Speiser pursuant to option
agreements entered into in 1991 and 1994. See
"Interest of Management in Certain Transactions."
(5) Pursuant to Schedule 13D filed with the Company in
September 1996. Includes shares where voting and/or
dispositive power is shared with other family
members.
(b) As of February 28, 1998, 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>
<PAGE>
<TABLE>
Number of Shares
Beneficially Owned
Name of as of Percent of
Title of Class Beneficial Owner February 28, 1998 (1) Class
<C> <S> <S> <S>
Common Stock Thomas J. Atkins 0 0
Common Stock Martin Benis 3,900 *
Common Stock Steven Bernstein 27,000 (2) *
Common Stock Matthew Goldstein 3,000 *
Common Stock Peter F. McKernan 8,000 (2) *
Common Stock Paul R. Moeller 24,000 (2) *
Common Stock Eugene Roshwalb 6,500 *
Common Stock Bruce M. Schloss 24,000 (2) *
Common Stock Marvin M. Speiser 2,712,180 (2)(3)(4) 33.56%
Common Stock Robert D. Speiser 285,223 (2)(3)(5) 3.55%
Common Stock Milton Y. Zussman 31,222 (3) *
Common Stock All directors and
officers as a group
(20 Persons) 2,949,405 (6) 35.83%
</TABLE>
<PAGE>
<PAGE>
* Indicates ownership of less than one percent (1%) of
class.
(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
dispositive 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 - 22,000;
Mr. McKernan - 3,000; Mr. Moeller - 24,000; Mr.
Schloss - 24,000; Mr. Marvin M. Speiser - 84,000; and
Mr. Robert D. Speiser - 48,000.
(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 - 14,754; Mr.
Robert D. Speiser - 7,326; and Mr. Zussman - 1,742.
(4) See footnote (3) to the table under (a) above for the
number of shares with respect to which 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 204,000 shares held by the 1996 Trust, of
which Robert D. Speiser serves as a trustee. Mr.
Speiser disclaims beneficial ownership of these
shares.
(6) Includes the following shares of Common Stock: (i)
226,200 shares which eleven of such persons would
receive upon the exercise of stock options which are
either currently exercisable, or exercisable within
60 days; (ii) 23,822 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 266,664 shares owned by an entity
controlled by or for the benefit of certain relatives
of two of such persons, all of which shares are or
may be deemed to be beneficially owned by such
persons.
<PAGE>
Compliance with Section 16(a) of the Exchange Act
Section 16(a) of the Securities Exchange Act of 1934
requires the Company's executive officers, directors and
persons who beneficially own more than 10% of the Company's
Common Stock to file initial reports of ownership and
reports of changes in ownership with the Securities and
Exchange Commission ("SEC"). Such persons are required by
SEC regulations to furnish the Company with copies of all
Section 16(a) reports filed by such persons.
Based solely on the Company's review of such reports
furnished to the Company, and written representations from
certain reporting persons, the Company believes that all
such filing requirements were complied with during or in
respect of the year ended December 31, 1997.
<PAGE>
<PAGE>
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
$100,000 for services in all capacities to the Company
during the last three fiscal years.
<PAGE>
<PAGE>
SUMMARY COMPENSATION TABLE
<TABLE> Long-Term
Compensation
Awards/Secu- All Other
Name and Principal Annual Compensation Other Annual rities Under- Compensa-
Position Year Salary Bonus Compensation(1) lying Options tion(1)(3)
($) ($) ($) (#) ($)
<S> <C> <C> <C> <C> <C> <C>
Marvin M. Speiser 1997 458,147 121,178 12,772 0 86,758
Chairman and Chief 1996 443,462 78,553 36,151 0 99,785
Executive Officer 1995 422,425 --- 39,917 5,000,000(2) 99,047
Robert D. Speiser 1997 246,594 --- 3,686 0 510
Executive Vice 1996 238,691 --- 3,876 0 510
President and 1995 227,367 --- 13,561 5,000,000(2) 510
President - Transderm
Laboratories
Corporation and Hercon
Laboratories Corporation
Peter F. McKernan 1997 135,000 98,947 7,646 0 306
Executive Vice 1996 132,500 39,277 4,892 0 301
President- 1995 127,500 --- 24,826 0 289
Herculite Products,
Inc. and Pacific
Combining Corporation
Steven Bernstein 1997 145,000 39,000 7,450 0 306
Senior Vice President 1996 140,000 10,000 12,687 0 198
1995 130,000 --- 7,408 0 440
Thomas J. Atkins 1997 130,000 25,000 6,536 0 836
Vice President-Trans- 1996 104,500 20,069 48,144 250,000(2) 557
derm Laboratories Corp-
oration and Vice Pres-
dent-Research and Devel-
opment of Hercon Labora-
tories Corporation /TABLE
<PAGE>
<PAGE>
(1) Does not include information with respect to personal
benefits, if any, provided to the named individuals
which do not exceed disclosure thresholds established
under Securities and Exchange Commission rules.
(2) Represents options to purchase shares of common stock
of Transderm Laboratories Corporation subsidiary.
3) Represents the term cost value of all group life
insurance policies on behalf of the named individuals.
For Marvin M. Speiser, also includes $23,851 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 $51,627 which
represents the present value to Mr. Speiser of the
non-term portion of the premium paid by the Company
with respect to this arrangement. The present value
was calculated as an interest-free loan on the whole
life portion of the premium over the maturation of the
policy.
OPTION GRANTS IN LAST FISCAL YEAR
During 1997, no options to purchase Common Stock of
the Company were granted to any named executives.
<PAGE>
<PAGE>
<TABLE>
AGGREGATED OPTION EXERCISES IN LAST
FISCAL YEAR AND FISCAL YEAR END OPTION VALUE
Number of Securities Value of Unexer-
Underlying Unexer- cised In-the-
cised Options Money Options at
Shares at 12/31/97 12/31/97(2)
Acquired on Value Exercisable/ Exercisable/
Name Exercises (1) Realized(1) Unexercisable Unexercisable
(#) ($) (#) ($)
<S> <C> <C>
Marvin M. Speiser --- --- 84,000/16,000 0/0
Robert D. Speiser --- --- 48,000/12,000 0/0
Peter F. McKernan --- --- 3,000/ 2,000 0/0
Steven Bernstein --- --- 22,000/ 6,000 0/0
Thomas J. Atkins --- --- 0/ 0 0/0
</TABLE>
<PAGE>
<PAGE>
(1) None of the named executive officers exercised any
stock options during the fiscal year ended December
31, 1997.
(2) Based upon the closing sale price per share of $.50
of the Company's Common Stock on December 31, 1997 on
the American Stock Exchange minus the respective
option exercise price.
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.
Mr. Speiser received 5% salary increases on each of
September 1, 1995 and 1996. Mr. Speiser and the Company
have agreed to defer consideration of the September 1, 1997
salary increase until consideration of the salary increase
to which Mr. Speiser is entitled in 1998 pursuant to the
Employment Agreement. 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.
<PAGE>
Pursuant to the Employment Agreement, the Company caused
its Transderm subsidiary to grant to Marvin M. Speiser, in
November 1995, an option to purchase 5,000,000 shares of
common stock of Transderm, at an exercise price of $.10 per
share, which option is exercisable through November 13,
2005.
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, as defined in the
Employment Agreement. Mr. Speiser's employment will be
deemed to have been involuntarily terminated in certain
events as listed in the Employment Agreement, including
termination for any reason within one year following a
Change in Control, as defined in the Employment Agreement.
The Employment Agreement also provides that Mr. 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 differences: (i) his initial base annual
salary was $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) his "retirement date," as
defined in the Employment Agreement, is January 1, 2010.
Mr. Speiser received 5% salary increases on each of
September 1, 1995 and 1996. Mr. Speiser and the Company
have agreed to defer consideration of the Setpember 1, 1997
salary increase until consideration of the salary increase
to which Mr. Speiser is entitled in 1998 pursuant to the
Employment Agreement. In 1995, 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, 1997 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, 1997 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, 1992 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
__.__ Health-Chem Corporation __*__AMEX Market Value
Index
__|__ Market Capitalization Peer Group*
<PAGE>
<PAGE>
<TABLE>
12/31/92 12/31/93 12/31/94 12/31/95 12/31/96 12/31/97
<S> <C> <C> <C> <C> <C> <C>
Health-Chem
Corporation $100.00 $176.47 $147.06 $ 70.59 $ 47.06 $ 23.53
Market
Capitalization
Peer Group* $100.00 $ 98.66 $ 87.54 $ 50.04 $ 50.22 $ 20.33
AMEX Market $100.00 $118.81 $104.95 $135.28 $142.74 $171.76
Value Index
__________________
* Comprised of Alfin, Inc., Inotek Technologies Corp., NView Corp., Specialty
Chemical Resources Corp. and V Band Corporation.
/TABLE
<PAGE>
<PAGE>
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors
(the "Committee") is composed of three independent outside
directors of the Company. During 1997, the Committee met
on one occasion 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 the policies, the
Committee has focused on compensating Company executives:
on a competitive basis with other comparably sized (in
terms of revenues and assets) and managed companies (which
are not the same group of companies used for purposes of
the five-year performance chart); in a manner consistent
and supportive of overall Company objectives; and, through
a compensation plan which is intended to balance 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 of
the past fiscal year and making its compensation
recommendations, the Committee took several issues into
consideration, including performance factors such as
continued implementation of materials management and cost
control programs and the overall improved performance of
the Company's Herculite Products, Inc. ("Herculite") and
Hercon Environmental Corporation ("Hercon Environment")
subsidiaries.
<PAGE>
Compensation of two senior executives, Marvin M. Speiser
and Robert D. Speiser, is governed largely by the terms of
employment agreements entered into between the Company and
each of them in 1995. For a more complete description of
these agreements, see "Executive Compensation-Employment
Agreements" elsewhere in this Proxy Statement.
Base Salary
An executive's base salary is intended to provide
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 has taken into
consideration regional and national compensation
information for comparable companies, industry patterns,
and levels of executive responsibility.
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, certain of the named executives
earned bonus payments aggregating $232,125 for the fiscal
year 1997 based on the increase in average earnings of
Herculite and Hercon Environmental. In addition, an
aggregate of $52,000 in minimum bonus payments were paid to
three named executives in repsect of (i) additional duties
assumed by two of such executives in respect of (i)
additional duties assumed by two of such executives in
connection with the Company's Pacific Combining Corporation
subsidiary and (ii) an agreement with one executive entered
into at the time of his employment by the Company's
Transderm Laboratories Corporation subsidiary in 1996.
<PAGE>
Long-Term Incentives
Although the Committee recognizes the value of stock
option grants in motivating long-term strategic decision
making, in 1997 no options to acquire Common Stock of the
Company were granted nor were any awards made under the
Company's 1995 Performance Equity Plan to any executive
officers, officers or any employees of the Company.
Chief Executive Officer
Under his employment agreement with the Company, Mr.
Marvin M. Speiser, Chief Executive Officer, is entitled to
an increase in his base salary of at least 4% over the
prior year's level. Mr. Speiser and Health-Chem have
agreed to defer consideration of the September 1, 1997
salary increase until consideration of the salary increase
to which Mr. Speiser is entitled in 1998 pursuant to the
employment agreement. Pursuant to his 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 certain of the
Company's operating businesses. On this basis, Mr. Speiser
earned a bonus for fiscal year 1997 in the amount of
$121,178 due to the improvement in earnings of Herculite
and Hercon Environmental.
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 and that the performance bonus arrangement
under his employment agreement creates the appropriate
incentives to improve Company performance.
Compensation Committee,
MARTIN BENIS
EUGENE ROSHWALB
MILTON Y. ZUSSMAN
<PAGE>
<PAGE>
INTEREST OF MANAGEMENT IN CERTAIN TRANSACTIONS
In September 1996, the Company exercised its options
pursuant to option agreements with Marvin M. Speiser
entered into in 1991 and 1994, respectively (the "Option
Agreements") and acquired 952,520 shares of Common Stock
from Mr. Speiser for an aggregate of $1,030,246 (or $1.0816
per share). This amount represented a portion of the
proceeds received by the Company from the sale of 952,520
shares of Common Stock (at $1.10 per share) pursuant to a
subscription rights offering commenced in August 1996 to
its stockholders of record. Of the total of 1,782,689
shares of Common Stock previously held by Mr. Speiser
subject to the Company's repurchase rights under the Option
Agreements, 952,520 shares were repurchased by the Company,
512,763 shares were retained by Mr. Speiser free of the
Company's option (as the deemed exercise of his pro rata
subscription rights) and 317,406 shares remain subject to
the Option Agreements.
The 1991 Option Agreement, as to which 215,028 of Mr.
Speiser's shares remain subject, expires June 30, 1999.
The exercise price is $0.3125 per share plus an amount
equal to accrued interest at a rate of prime plus one
percent from the date of grant to the date of exercise. At
December 31, 1997 the exercise price was $0.5012 per share.
The 1994 Option Agreement, as to which 102,378 of Mr.
Speiser's shares remain subject, also expires on June 30,
1999. The exercise price is $2.00 per share plus an amount
equal to accrued interest at prime rate from the date of
grant to the date of exercise. At December 31, 1997, the
exercise price was $2.5961 per share. The Option
Agreements provide that Mr. Speiser will vote all shares
subject thereto on all matters in which stockholders are
entitled to vote at any annual or special meeting
substantially in the same proportion as all other shares of
Common Stock are voted.
In July 1994, Mr. Speiser purchased 575,000 shares of
Common Stock from the Company which shares were the subject
of the 1994 Option Agreement. For this purchase he
borrowed $1,150,000 from The First National Bank of
Maryland ("FNBM"). The FNBM loan bore interest at the
prime rate and was secured by the stock, and other
collateral, including the cash value of a life insurance
policy on Mr. Speiser. In 1996, concurrently with the
Company's purchase of the 952,520 shares of Common Stock
from Mr. Speiser, the FNBM loan was repaid in full. In
July 1995 and July 1996, the Company advanced Mr. Speiser
$150,000 and $250,000, respectively, the amounts of the
<PAGE>
annual principal repayment under the FNBM loan. In
addition, the Company advanced to Mr. Speiser amounts equal
to the interest on the FNBM loan. During 1997, the highest
amount owed by Mr. Speiser to the Company was $337,100, the
aggregate amount due from him at December 31, 1997. This
amount, together with interest at the prime rate as
published in the Wall Street Journal, is intended to be
repaid by Mr. Speiser upon the earliest of (i) the sale of
the shares which remain subject to the Option Agreements;
(ii) the Company's exercise of its options under the Option
Agreements; and (iii) the expiration of the Option
Agreements on June 30, 1999.
INDEPENDENT PUBLIC ACCOUNTANTS
Coopers & Lybrand, L.L.P., independent public
accountants, currently audits the Company's books and
records.
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 1997 Annual Report has been
mailed to stockholders of record at the close of business
on April 2, 1998 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.
<PAGE>
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 1999 must submit the same in
writing so as to be received at the principal executive
office of the Company on or before November 13, 1998. 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
