HERCULES INCORPORATED
NOTICE OF ANNUAL MEETING
OF STOCKHOLDERS TO BE
HELD ON APRIL 28, 1994
AND PROXY STATEMENT
Hercules Incorporated
Hercules Plaza
Wilmington, DE 19894-0001
March 14, 1994
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HERCULES INCORPORATED
Hercules Plaza
Wilmington, DE 19894-0001
March 14, 1994
Dear Stockholder:
Our 1994 Annual Meeting of Stockholders will be held on THURSDAY,
APRIL 28, 1994, at 11 a.m., local time, at the Delaware Art Museum, 2301
Kentmere Parkway, Wilmington, Delaware. We hope that you will be able to
attend. Please note, however, that due to the seating capacity at the
Delaware Art Museum, admittance to the Annual Meeting will be by ticket
only on a first come, first served basis. You may request a ticket by
checking off the appropriate box on your proxy card. If you arrive at the
Annual Meeting without a ticket, you will be seated if space is
available.
The Notice of Meeting and Proxy Statement following this letter
describe the business to be transacted at the Annual Meeting. This year
you are being asked to elect directors and ratify the appointment of
independent accountants.
I plan, as is our custom, to give a report on the activities of
Hercules. You will have the opportunity to comment on and ask questions
about the affairs of Hercules that may be of interest to stockholders
generally. It is important that your shares be represented at the Annual
Meeting. Whether or not you plan to attend, please vote, sign, date and
return your proxy card at your earliest convenience. This will not
prevent you from voting your shares in person if you do attend the Annual
Meeting.
Sincerely,
Thomas L. Gossage
Chairman of the Board, President
and Chief Executive Officer
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HERCULES INCORPORATED
Hercules Plaza
Wilmington, DE 19894-0001
NOTICE of
Annual Meeting of Stockholders
to Be Held April 28, 1994
The Annual Meeting of Stockholders of Hercules Incorporated will be held on
THURSDAY, APRIL 28, 1994, at 11 a.m., local time, at the Delaware Art Museum,
2301 Kentmere Parkway, Wilmington, Delaware, for the following purposes:
* To consider and take action upon the following matters in the proxy
statement:
-- The election of four directors, each for a term of three years.
-- The ratification of the appointment of Coopers & Lybrand as
independent accountants for 1994.
* To transact such other business as may properly come before the Annual
Meeting.
Stockholders of record at the close of business on March 1, 1994, will be
entitled to vote at the Annual Meeting or any adjournments thereof.
By order of the Board of Directors,
Wilmington, Delaware
March 14, 1994
Israel J. Floyd, Esq.
Corporate Secretary
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HERCULES INCORPORATED
Hercules Plaza
Wilmington, DE 19894-0001
PROXY STATEMENT
Annual Meeting of Stockholders
April 28, 1994
GENERAL INFORMATION
The Board of Directors of Hercules Incorporated (the "Board") requests
your proxy and/or voting instruction, in the form of the accompanying proxy/
voting instruction card ("proxy card"), for use at Hercules' 1994 Annual
Meeting of Stockholders to be held on Thursday, April 28, 1994, and any
adjournments thereof (the "Annual Meeting"). A copy of the notice of the 1994
Annual Meeting precedes this Proxy Statement.
You are cordially invited to attend the Annual Meeting, but whether or not
you expect to attend in person, you are urged to sign and date the
accompanying proxy card and return it in the prepaid reply envelope provided
for such purposes. Your execution and return of the proxy card will not in any
way affect your right to attend the Annual Meeting and vote in person the
shares you are entitled to vote in the event that you later find it convenient
to attend the Annual Meeting. A stockholder giving a proxy has the right to
revoke it at any time before it is voted at the Meeting.
Only stockholders of record of common stock issued by Hercules ("Common
Stock") at the close of business on March 1, 1994, the record date for the
Annual Meeting, are entitled to notice of and to vote at the Annual Meeting.
Such stockholders are entitled to one vote for each share on each matter to be
voted upon at the Annual Meeting. As of that date and time, Hercules had
issued and outstanding 40,609,408 shares of Common Stock. The holders of a
majority of the outstanding shares of Common Stock, present in person or
represented by proxy, will constitute a quorum for the transaction of business
at the Annual Meeting. The specific vote requirements for the matters being
submitted to a stockholders' vote at the Annual Meeting are provided under the
description of each matter set forth elsewhere in this Proxy Statement.
PLEASE NOTE THAT SEATING IS LIMITED AND ADMISSION TO THE ANNUAL MEETING IS
BY TICKET ONLY. If you would like to attend and you are a stockholder as of
the record date, please check the appropriate box on your proxy card for a
ticket. If, however, your shares are held in the name of a broker or other
nominee, please notify the Corporate Secretary and bring with you a proxy or
letter from that firm confirming your ownership of shares.
The number of shares designated on the accompanying proxy card represents
the total number of shares held in your name on the record date, including any
shares held in Hercules' automatic dividend reinvestment service and/or one or
more of its executive compensation plans or employee benefit plans. The total
number also includes shares for which you have voting power that are credited
to your savings plan account held in custody by the trustee.
If you receive in separate mailings more than one proxy card, it is an
indication that your shares are registered differently in more than one
account. All proxy cards received by you should be signed and mailed by you to
ensure that all your shares are voted.
This Proxy Statement, the accompanying proxy card and Hercules' Annual
Report to Stockholders, containing financial statements reflecting the
financial position and results of Hercules for 1993, are being distributed
together commencing on or about March 14, 1994.
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YOU ARE ENCOURAGED TO SPECIFY YOUR CHOICES BY MARKING THE APPROPRIATE
BOXES ON THE PROXY CARD. HOWEVER, IT IS NOT NECESSARY TO MARK ANY BOXES IF YOU
WISH TO VOTE IN ACCORDANCE WITH THE BOARD'S RECOMMENDATIONS; MERELY SIGN, DATE
AND RETURN THE PROXY CARD IN THE ENVELOPE PROVIDED, POSTAGE FOR WHICH HAS BEEN
PREPAID.
Except as noted hereinafter with respect to participation in Hercules'
automatic dividend reinvestment plan or savings plans, the following proxy
procedure will apply. When proxy cards are returned properly signed, the
shares represented thereby will be voted in accordance with your directions.
Please specify your choices by marking the appropriate boxes on the
accompanying proxy card. If you return a proxy card properly signed, but do
not indicate your voting preferences, Hercules has been informed by the
persons named on the front of the proxy card that they will vote your shares
FOR:
1. The election of the four (4) nominees for director, each for a term of
three years;
2. The ratification of the appointment of Coopers & Lybrand as Hercules'
independent accountants for 1994.
As of the date of this Proxy Statement, the Board does not intend to
present any matter for action at the Annual Meeting other than the items
referred to in this proxy statement. However, please note that except as to
shares, if any, credited to your account under the Hercules Incorporated
Employee Savings Plan or the Hercules Incorporated Savings and Investment
Plan, the accompanying proxy card, when properly executed, confers
discretionary authority on the persons named on the face of the proxy card to
vote in accordance with their judgment the shares represented thereby on any
matter that was not known on the date of this Proxy Statement but that may
properly be presented for action at the Annual Meeting.
Abstentions and Broker Non-votes: Votes cast at the Annual Meeting will
be counted by The Corporation Trust Company, who have been appointed by
Hercules to act as inspectors of election for the Annual Meeting. The
inspectors of election will treat shares of Common Stock represented by a
properly executed and returned proxy card as present at the Annual Meeting for
purposes of determining a quorum. Abstentions and broker non-votes with
respect to particular proposals will not affect the determination of a quorum.
Directors will be elected by the majority vote of the shares of Common
Stock then issued and outstanding and entitled to vote at the Annual Meeting.
Accordingly, votes withheld as to the election of directors will have the same
effect as votes against each election. All other matters to come before the
Annual Meeting require the approval of a majority of the shares of Common
Stock present and entitled to vote thereat; therefore, abstentions as to
particular proposals will have the same effect as votes against such
proposals. Broker non-votes as to particular proposals will not, however, be
deemed to be part of the voting power present with respect to such proposals
and will not therefore count as votes for or against such proposals and will
not be included in calculating the number of votes necessary for approval of
such proposals.
Confidentiality: Proxies, ballots and voting tabulations that identify
individual participants are kept confidential. Such items are available for
examination only by the inspectors of election and certain employees
associated with processing proxy cards and tabulating the vote. The vote of
any stockholder is not disclosed except as may be necessary to meet legal
requirements. Additionally, all comments directed to management from
stockholders, whether written on the proxy card or elsewhere, will be
forwarded to management in a form that does not permit identification of the
stockholder unless expressly stated otherwise.
Automatic Dividend Reinvestment and Savings Plan Shares: If you
participate in Hercules' automatic dividend reinvestment plan, the number of
uncertificated, whole shares credited to your account on the record date are
included in the total number of shares shown on the proxy card. If you
participate in any of the savings plans sponsored by Hercules or any of its
subsidiaries, the number of uncertificated, whole shares credited to your
account on the record date, which is December 31, 1993, for the
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savings plans, are also included in the total number of shares shown on the
proxy card. The shares in both the dividend reinvestment plan and the savings
plans will be voted in accordance with your voting instructions, if any,
indicated on the properly signed proxy card returned by you to Hercules. If
you return a proxy card properly signed, but do not indicate your voting
preferences, Hercules has been advised by the administrator of the automatic
dividend reinvestment plan and the trustee of each of the savings plans that
shares represented by your proxy card will be voted in favor of each of the
nominees for directors, each for a term of three years, and the ratification
of the appointment of Coopers & Lybrand as accountants for 1994. IF A PROPERLY
SIGNED PROXY CARD IS NOT RECEIVED, THE SHARES HELD IN YOUR ACCOUNT IN THE
AUTOMATIC DIVIDEND REINVESTMENT PLAN WILL NOT BE VOTED, HOWEVER; THE SHARES
HELD BY THE TRUSTEE FOR THE SAVINGS PLAN SHARES WILL BE VOTED IN PROPORTION TO
THE WAY THAT THE OTHER PARTICIPANTS HAVE VOTED THEIR PROXIES.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
PRINCIPAL STOCKHOLDERS
Oppenheimer Group, Inc., and The Travelers, Inc. have reported holdings,
as of December 31, 1993, of 3,708,967 shares and 2,272,753 shares,
respectively, of Common Stock. This amount represents 8.9% and 5.5%,
respectively, of all Hercules shares outstanding. Apart from these holdings,
Hercules knows of no other beneficial owner of, or group that owns, 5% or more
of Common Stock.
DIRECTORS AND OFFICERS
According to information confirmed by them, none of the nominees,
directors or other individuals named in the table below (including the five
most highly compensated officers) beneficially owned (as defined by Securities
and Exchange Commission rules) as much as one percent (1%) of the Common Stock
outstanding as of March 1, 1994; and all nominees for directors, directors
continuing in office and officers as a group beneficially owned as of March 1,
1994, a total of 810,269 shares of Common Stock, constituting approximately
2.0% of the total Common Stock outstanding on that date. More specifically,
according to the information confirmed by them, the individuals named in the
table below beneficially owned (as defined) as of March 1, 1994, the number of
shares shown in the table. Except as otherwise noted, these individuals have
sole voting and investment power with respect to the shares listed.
<TABLE>
<CAPTION>
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Amount and Nature of Shares
Beneficially Owned
Name as of March 1, 1994
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Right to Contingent
Direct(1) Acquire(2) Shares(3)
--------- ---------- -----------
<S> <C> <C> <C>
M. Caspari, Director 1,808 942 0
V. J. Corbo, Officer 8,738 21,100 3,600
R. K. Elliott, Director and Officer 33,223 23,400 5,400
R. M. Fairbanks, III, Director 1,093 0 0
T. L. Gossage, Director and Officer 229,957 161,800 11,600
E. E. Holiday, Director 778 0 0
R. G. Jahn, Director 1,650 2,000 0
G. N. Kelley, Director 1,543 2,000 0
R. L. MacDonald, Jr., Director 2,371 2,000 0
H. E. McBrayer, Director 10,548 1,000 0
R. Schwartz, Director and Officer 75,675 51,400 5,400
T. G. Tepas, Officer 5,080 7,360 3,600
L. M. Thomas, Director 1,401 2,000 0
Directors and Officers As a Group (20) 414,147 349,307 46,815
===========================================================================================================================
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<FN>
(1) Reported in this column are shares held individually in the named
individual's name, individually or jointly with others, or in the name of
a bank, broker or nominee for the individual's account. Also included in
this column are:
a. Shares credited, as of December 31, 1993, to individual accounts
under the Hercules Incorporated Savings and Investment Plan ("S&I
Plan"): V. J. Corbo, 615 shares; R. K. Elliott, 1,830 shares; T. L.
Gossage, 534 shares; R. Schwartz, 383 shares; and T. G. Tepas, 156
shares; and all directors and officers as a group, 9,175 shares. As
long as such shares remain in the S&I Plan trust, the named
individuals have no power to direct disposition (except for changes in
investment medium within the S&I Plan), but do have the same rights to
vote and receive dividends (although held in trust until withdrawal as
permitted by the S&I Plan) as do other stockholders of Hercules.
b. Shares subject to restrictions and forfeiture risks during
specified restriction periods under either the Hercules Incorporated
Long Term Incentive Compensation Plan or the Hercules Incorporated
Restricted Stock Plan of 1986 (hereinafter the "Plans"): V. J. Corbo,
6,134 shares; R. K. Elliott, 27,593 shares; T. L. Gossage, 229,423
shares; R. Schwartz, 66,293 shares; and T. G. Tepas, 4,624 shares; and
all directors and officers as a group, 363,871 shares. As long as
restricted stock awards are subject to the Plans' restrictions,
holders of such awards have the same rights, including voting and
dividend rights, with respect to the shares covered by the award, as
do other stockholders of Hercules, except for the right to sell or
transfer those shares as long as they are subject to the restrictions
of the Plans.
c. As first reported in 1992, Mr. Gossage purchased 15,000 shares that
are subject to restrictions and risks of forfeiture similar to those
under the Hercules Incorporated Restricted Stock Plan of 1986.
d. Shares awarded (500) to and shares purchased (250) by each non-
employee director under the initial, one-time equity award opportunity
described on page 7 of this Proxy Statement. These shares, owned of
record by Messrs. Caspari, Fairbanks, Jahn, Kelley, MacDonald,
McBrayer and Thomas and Ms. Holiday are subject to restrictions on
transfer until retirement or resignation.
e. Shares shown for Mr. Kelley also include 460 shares in which he
shares voting and investment power with his spouse.
f. The shares for Mr. Schwartz include 9,000 shares held in trust.
(2) Reported in this column are shares of Hercules Common Stock which the
named individuals have a right to acquire within 60 days after March 1,
1994.
(3) Reported in this column are shares contingently awarded under the
Hercules Incorporated Long Term Incentive Compensation Plan. These shares
are earned in whole or in part according to the degree of achievement of
predetermined performance goals over specified performance periods of time
and are subject to restrictions and forfeiture risk during such
performance periods. As long as the shares are subject to the Plan's
restrictions, holders of such awards have the same rights, including
voting and dividend rights (on an accrued basis), with respect to the
shares, as do other stockholders of Hercules, except for the right to sell
or transfer those shares as long as they are subject to the restrictions
of the Plan.
</TABLE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In the ordinary course of business, Hercules and its affiliated entities
from time to time engage in transactions with other entities whose officers or
directors are also directors of Hercules. Hercules
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believes that all such transactions of this nature were on terms that were
reasonable and competitive. Additional transactions of this nature are
expected to take place in the ordinary course of business in the future. In
1993, no director had an involvement in such transaction(s), which involvement
was of a nature or magnitude to require disclosure under the applicable SEC
thresholds.
THE BOARD OF DIRECTORS
The business and affairs of Hercules are managed under the direction of
the Board. Members of the Board are kept informed of Hercules' business and
affairs primarily through discussions with the Chief Executive Officer and
other officers and members of senior management, by reviewing analyses,
reports and other materials sent to them each month and by participating in
Board and Board Committee meetings. Regular meetings of the Board are
scheduled at the end of each year for the ensuing year, and special meetings
are scheduled when required. The Board held 8 meetings in 1993; the Board
Committees held 32 meetings. No director attended fewer than 91% of the
aggregate of the total number of meetings held by the Board or by the Board
Committees, on which he or she served.
COMMITTEES OF THE BOARD
Because of the number of matters requiring Board consideration, and to
make the most effective use of each individual Board member's capabilities,
the Board has established a number of standing Board Committees to devote
attention to specific subjects and to assist it in the discharge of its
responsibilities. The major functions of these Board Committees, their current
members and the number of meetings held during 1993 are described below.
The Audit Committee provides on behalf of the Board ongoing oversight of
Hercules' auditing, accounting, financial reporting and internal accounting
control functions. In performance of its responsibilities, the Audit
Committee, among other things, recommends to the Board the firm to be engaged
as independent accountants to audit Hercules' financial statements and to
perform services related to the audit; reviews with management and the
independent accountants the plan and results of the auditing and non-audit
services, including related fees; and reviews internal auditing, accounting
and financial controls. The Audit Committee met four (4) times during 1993.
Current members of the Audit Committee (all non-employee directors) are: Mr.
Thomas (Chairperson), Dr. Caspari, Mr. Fairbanks and Mr. Kelley.
The Compensation Committee, on behalf of the Board, provides ongoing
oversight of Hercules' executive compensation and employee benefit plans or
programs. In performance of its responsibilities, the Compensation Committee,
among other things, reviews and makes recommendations to the Board concerning
management's proposals as to the establishment and modification of executive
compensation plans and programs. It also performs the duties and
responsibilities outlined in the Compensation Committee report on page 13. The
Compensation Committee met five (5) times in 1993. Current members of the
Compensation Committee (all non-employee directors) are: Mr. MacDonald
(Chairperson), Mr. Kelley and Mr. McBrayer.
The Executive Committee has and may exercise, whenever the Board is not in
session, limited powers over certain matters when it would be impractical to
call a meeting of the full Board. The Executive Committee meets only on an "as
needed" basis and is not permitted to act if any Executive Committee member
feels the matter under consideration should be discussed by the full Board.
The Executive Committee met one (1) time during 1993. Current members of the
Executive Committee are: Mr. Gossage (Chairperson), Mr. Elliott, Prof. Jahn,
Mr. MacDonald and Mr. Schwartz.
The Finance Committee provides on behalf of the Board ongoing oversight of
the financial affairs of Hercules and its subsidiaries and affiliates. The
Finance Committee has full and final authority as to certain financial matters
designated to it by the Board. The Finance Committee is the named fiduciary
for, with responsibility to administer, all of Hercules' qualified pension and
savings plans. The Finance
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Committee met six (6) times during 1993. Current members of the Finance
Committee are: Mr. McBrayer (Chairperson), Mr. Elliott, Mr. Fairbanks, Mr.
Gossage, Ms. Holiday, Mr. MacDonald and Mr. Schwartz.
The Nominating Committee's principal roles are (1) to consider and
recommend to the Board nominees for election as directors, and (2) to review
Board procedures and practices on an annual basis to include the evaluation
process for the function and effectiveness of the Board, its Committees as
well as individual members. In performance of this function, the Nominating
Committee considers potential candidates obtained from a number of sources,
including nominees recommended by stockholders. The Nominating Committee met
seven (7) times during 1993. Current members of the Nominating Committee (all
non-employee directors) are: Mr. Kelley (Chairperson), Dr. Caspari and Prof.
Jahn.
The Technology Committee advises and recommends to the Board on the
adequacy of Hercules' technology to support its strategic plans. As part of
these efforts the Technology Committee considers a variety of topics including
the congruency of the technical plans with the business plans, the adequacy of
Hercules' patent strategy on key products and technology, the assessment of
potential technology opportunities and shortfalls, and the technical
assessment of potential new business opportunities. The Technology Committee
met five (5) times in 1993. Current members of the Technology Committee are:
Prof. Jahn (Chairperson), Dr. Caspari, Mr. Elliott, Mr. Gossage, Mr. McBrayer
and Mr. Schwartz.
The Social Responsibility Committee reviews and makes recommendations to
the Board concerning Hercules' policies, programs and practices that relate to
such social issues of significance as equal employment opportunity;
environmental, safety and health matters; and community affairs and relations.
The Social Responsibility Committee met four (4) times in 1993. Current
members of the Social Responsibility Committee are: Dr. Caspari (Chairperson),
Ms. Holiday, Prof. Jahn, Mr. Schwartz and Mr. Thomas.
COMPENSATION OF DIRECTORS
Directors who are also employees of Hercules or any of its affiliated
companies do not receive any fee or extra compensation, as such, for service
on the Board or any Board Committees.
Directors who are not employees of Hercules or any of its affiliated
companies ("non-employee directors") receive for their services as a director
an annual retainer of $20,000 and a fee of $800 for each Board and each Board
Committee meeting attended. In addition, those non-employee directors who also
chair a Board Committee receive an additional annual retainer of $3,000. If
any non-employee director undertakes special assignments upon the request of
Hercules, he or she is compensated at the rate of $800 per day. Directors are
also reimbursed for their customary and usual expenses incurred in attending
Board, Board Committee and stockholder meetings, including those for travel,
food and lodging. The total aggregate amount paid in 1993 to non-employee
directors as a group was $282,260, which amount covers expenses (including
travel, food and lodging) incurred in attending Board, Board Committee and
stockholder meetings.
HERCULES INCORPORATED NON-EMPLOYEE DIRECTOR STOCK ACCUMULATION PLAN
As approved by the stockholders, the Hercules Incorporated Non-employee
Director Stock Accumulation Plan, as amended in 1993 ("NEDSAP"), provides a
voluntary deferred compensation plan for non-employee directors. Under NEDSAP,
a non-employee director may elect, prior to the commencement of any calendar
year, to defer a percentage or flat dollar amount of his or her anticipated
annual retainer and meeting fees for the calendar year (i) to a memorandum
cash account and/or (ii) for exchange of shares of Hercules Common Stock.
The memorandum cash account accrues interest quarterly until paid. With
each election to defer fees, a director must irrevocably decide whether to
receive that deferral in a lump sum or in 40 equal
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installments. Distributions of the deferred amounts begin either the quarter
following the quarter a director ceases to be a director or on an anniversary
of such date, not later than the fifth such anniversary. In the exchange for
shares account, shares will be acquired and credited to each participant's
account on the third business day following the disclosure of Hercules' annual
earnings -- or for a director who first enrolls during the year, on the third
business day following publication of Hercules' next quarterly earnings.
Shares acquired are calculated by dividing a director's deferral exchange
account balance by 85% of the fair market value of one share of Common Stock
on the date of exchange. Such shares are subject to a risk of forfeiture and
are held in custody by Hercules and are nontransferable until the director
terminates his or her service as a director of Hercules. Dividends are paid
quarterly to each participant. Currently, a maximum of 30,000 shares for the
group may be exchanged from time to time under NEDSAP.
Also under NEDSAP, non-employee directors have a stock option plan which
provides for the automatic, annual granting of a non-qualified option to each
non-employee director to purchase 1,000 shares of Common Stock. The options
are granted to each non-employee director during a specified period following
the release of Hercules' third quarter earnings. The option price is set at
the fair market value of the Common Stock on the date of grant. After holding
their options for one full year from the date of grant, a director may
exercise his or her right to acquire Common Stock.
EQUITY AWARD
As of the date on which he or she is for the first time elected a
director, Hercules makes available to all new non-employee directors an
initial, one time equity award opportunity of 500 shares of Common Stock
("Initial Equity Award"), without payment to Hercules and subject to and upon
the purchase of 250 Common Stock shares from Hercules ("Qualifying Shares").
The purchase price per share for Qualifying Shares is an amount equal to the
closing price for one share of Common Stock on the day immediately preceding
the day of purchase. Both the Initial Equity Award and the Qualifying Shares
are not transferable prior to (i) the director's retirement as a director of
Hercules pursuant to Hercules' retirement policy for the directors or (ii) the
director's termination of service due to death or disability (with respect to
a director, an inability to perform duties and services as a director of
Hercules by reason of a medically determinable physical or mental impairment,
supported by medical evidence, which can be expected to last for a continuous
period of not less than six months), whichever is first to occur.
RETIREMENT POLICY
In addition, Hercules has established a retirement income plan for non-
employee directors. For directors with at least five years of Board service,
it provides an annual retirement benefit for 10 years in the amount of 60% of
the annual Board retainer in effect at the time the director retires from the
Board or reaches age 70, whichever is earlier. The benefit increases by 10% of
such retainer for each additional year of a non-employee director's service as
a director, for a maximum of four additional years. Benefits are payable in
quarterly installments, beginning at the later of 65 or when the director
retires from the Board.
A director who reaches retirement age shall serve until the next annual
meeting of stockholders. Directors who are also employees of Hercules may
continue to serve on the Board beyond the time they have ceased to be active
employees, but, as is the case while they are active employees, they will not
be compensated for their services as directors. The Board has the discretion
to make exceptions to the policy in particular cases.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Based solely on review of the copies of forms furnished to Hercules, or
written representations that no annual forms (SEC Form 5) were required,
Hercules believes that during 1993 all filing requirements of its officers,
directors and 10-percent shareholders for reporting to the Securities and
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Exchange Commission their ownership and changes in ownership of Common Stock
(as required pursuant to Section 16(a) of the Securities Exchange Act of 1934)
were complied with; except that Marshall Steinberg filed one late report.
PROCEDURE FOR DIRECTOR NOMINATIONS BY STOCKHOLDERS
Any stockholder may recommend any person as a nominee for director of
Hercules by writing to the Chairman of the Nominating Committee, c/o Hercules
Incorporated, Hercules Plaza, Wilmington, DE 19894-0001. Recommendations must
be accompanied by a statement from the nominee indicating his or her
willingness to serve if elected and disclosing his or her principal
occupations or employments over the past five years.
MATTERS ON WHICH TO BE VOTED AT THE ANNUAL MEETING
Election of Four Directors (Proxy Item No. 1)
Hercules' Restated Certificate of Incorporation provides that the number
of directors, as determined from time to time by the Board, shall be not less
than seven nor more than 18. It further provides that directors shall be
divided into three classes serving staggered three-year terms, with each class
to be as nearly equal in number as possible. The Board currently consists of
11 directors.
As set forth below and on the proxy card, four nominees are to be elected
at the Annual Meeting. These directors comprise the class whose current term
expires in 1994 and whose term after the Annual Meeting will expire in 1997.
The remaining seven directors are currently serving terms which will expire in
1995 or 1996.
In accordance with the recommendation of its Nominating Committee, the
Board has nominated Richard M. Fairbanks, III, Edith E. Holiday, H. Eugene
McBrayer, and Lee M. Thomas, all of whom are currently serving as directors,
for election at the Annual Meeting for a term expiring at the 1997 annual
meeting of stockholders, and in each case until their successors are elected
and qualified. Each nominee has consented to being named in this Proxy
Statement and to serve if elected.
Except as previously indicated in the case of Hercules' savings plans and
the dividend reinvestment plan, in the absence of instructions to the
contrary, the proxyholders named on the face of the proxy card have informed
Hercules that they will vote the proxies received by them for the designated
nominees of the Board for a term of three years and until their successors are
chosen and have qualified. In the event some unexpected occurrence results in
any of the designated nominees becoming unavailable for election as a
director, the Board, in its discretion, may by resolution either provide for a
lesser number of directors or designate substitute nominees. In the latter
event, the above referenced proxyholders have advised that such shares
represented by proxies will be voted for such substitute nominee.
Certain information regarding each nominee and each director continuing in
office after the Annual Meeting is set forth on the following pages.
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NOMINEES FOR ELECTION FOR TERM EXPIRING IN 1997
RICHARD M. FAIRBANKS, III DIRECTOR SINCE OCTOBER 1993
MEMBER, FINANCE AND AUDIT COMMITTEES
Mr. Fairbanks, age 53, is managing director, Domestic and
International Issues at the Center for Strategic &
International Studies; and senior counsel at the law firm
of Paul, Hastings, Janofsky & Walker. He was Ambassador-
at-Large under President Reagan. He is a director of
SEACOR Holdings, Inc., and a member of the Advisory Board
of The Law Companies Group, Inc.
Term to expire at the
1994 Annual Meeting of Stockholders
H. EUGENE MCBRAYER DIRECTOR SINCE APRIL 1992
CHAIRPERSON, FINANCE COMMITTEE
MEMBER, COMPENSATION AND TECHNOLOGY COMMITTEES
H. Eugene McBrayer, age 62, retired as president of Exxon
Chemical Company, a producer of chemicals, in January 1992
after 37 years with Exxon. Mr. McBrayer is a former
chairman of the Board of the Chemical Manufacturers
Association and is currently a director of American Air
Liquide, Inc. and Air Liquide International. He is also a
member of the National Council of the World Wildlife Fund
and the Advisory Committee for the Pacific Northwest
National Laboratory.
Term to Expire at the
1994 Annual Meeting of Stockholders
EDITH E. HOLIDAY DIRECTOR SINCE MARCH 1993
MEMBER, FINANCE AND SOCIAL RESPONSIBILITY COMMITTEES
Edith E. Holiday, an attorney, age 42, was Assistant to
the President of the United States and Secretary of the
Cabinet from 1990 until early 1993. Prior to her White
House experience, Ms. Holiday was the General Counsel,
United States Treasury Department from 1989 to 1990 and
served as Counselor to the Secretary of the Treasury and
Assistant Secretary for Public Affairs and Public Liaison,
United States Treasury Department from 1988 to 1989. Ms.
Holiday is a director of Amerada Hess Corporation,
Bessimer Trust Company, N.A., Bessimer Trust Company of
New Jersey and H. J. Heinz Company.
Term to expire at the
1994 Annual Meeting of Stockholders
LEE M. THOMAS DIRECTOR SINCE 1991
CHAIRPERSON, AUDIT COMMITTEE
MEMBER, SOCIAL RESPONSIBILITY COMMITTEE
Lee Thomas, age 49, is senior vice-president, Environment,
Government Affairs and Communications of Georgia-Pacific
Corporation, a paper company. Formerly, he was chairman
and chief executive officer of Law Companies Environmental
Group, Inc., an environmental services firm. From January
1985 to January 1989 he was administrator, United States
Environmental Protection Agency. Mr. Thomas is also
chairman of the Marine Spill Response Corporation.
Term to expire at the
1994 Annual Meeting of Stockholders
The Board Recommends a Vote FOR the Election of the Nominees for Director.
The affirmative vote of a majority of the outstanding shares of Common
Stock entitled to vote at the Annual Meeting is required in order to elect
each director.
9
<PAGE>
INCUMBENT DIRECTORS CONTINUING IN OFFICE FOR TERM EXPIRING IN 1995
ROBERT G. JAHN DIRECTOR SINCE 1985
CHAIRPERSON, TECHNOLOGY COMMITTEE
MEMBER, EXECUTIVE, NOMINATING AND SOCIAL RESPONSIBILITY
COMMITTEES
Robert G. Jahn, age 63, assumed his present position as
professor, Aerospace Sciences, Princeton University, in
1967. He served as Dean of the School of Engineering/
Applied Science at Princeton from 1971 to 1986. He also is
a director of Roy F. Weston, Inc., an environmental
services firm.
Term to expire at the
1995 Annual Meeting of Stockholders
RICHARD SCHWARTZ DIRECTOR SINCE 1989
EXECUTIVE VICE PRESIDENT AND PRESIDENT, HERCULES AEROSPACE
COMPANY
MEMBER, EXECUTIVE, FINANCE, SOCIAL RESPONSIBILITY AND
TECHNOLOGY COMMITTEES
Richard Schwartz, age 58, has been Hercules' executive
vice president since January 1991 and the president of
Hercules Aerospace Company since October 1989. He was a
Senior Vice President of Hercules from 1989 to the end of
1990. Before joining Hercules in 1989, for several years
he had been president of the Rocketdyne Division of
Rockwell International Corporation, a producer of liquid
rocket engine systems.
Term to expire at the
1995 Annual Meeting of Stockholders
RALPH L. MACDONALD, JR. DIRECTOR SINCE 1989
CHAIRPERSON, COMPENSATION COMMITTEE
MEMBER, EXECUTIVE AND FINANCE COMMITTEES
Ralph L. MacDonald, age 52, is a principal in Island
Capital Corporation, a private investment firm dedicated
to the acquisition and development of small to medium-
sized industrial manufacturing and distribution companies.
Mr. MacDonald was formerly managing director, Global
Corporate Finance, of Bankers Trust Company, a banking
institution. Mr. MacDonald is also a director of United
Meridian Corporation.
Term to expire at the
1995 Annual Meeting of Stockholders
10
<PAGE>
INCUMBENT DIRECTORS CONTINUING IN OFFICE FOR TERM EXPIRING IN 1996
MANFRED CASPARI DIRECTOR SINCE 1990
CHAIRPERSON, SOCIAL RESPONSIBILITY COMMITTEE
MEMBER, AUDIT, NOMINATING AND TECHNOLOGY COMMITTEES
Manfred Caspari, age 69, retired as the Director General
for Competition, European Economic Community (EEC) in
1989. Prior to his EEC experience, he worked in the
Ministry of Economic Affairs for the German Government.
From January 1990 to December 1992, Dr. Caspari was
Chairman of the International Commission for the
Protection of the Rhine against polution. Since January
1992 he has been an advisor to the Badische Stahlwerke
(steelworks) in Kehl, Germany.
Term to expire at the
1996 Annual Meeting of Stockholders
R. KEITH ELLIOTT DIRECTOR SINCE 1991
SENIOR VICE PRESIDENT AND CHIEF FINANCIAL OFFICER
MEMBER, EXECUTIVE, FINANCE AND TECHNOLOGY COMMITTEES
R. Keith Elliott, age 52, has been Hercules' senior vice
president and chief financial officer since March 1991.
Before joining Hercules in 1991, he had been senior vice
president and chief financial officer of Engelhard
Corporation, a producer of catalysts, engineered
materials, precious metals and derivative products. He
joined Engelhard in 1981.
Term to expire at the
1996 Annual Meeting of Stockholders
THOMAS L. GOSSAGE DIRECTOR SINCE 1989
CHAIRMAN OF THE BOARD, PRESIDENT AND CHIEF EXECUTIVE
OFFICER
CHAIRPERSON, EXECUTIVE COMMITTEE
MEMBER, FINANCE AND TECHNOLOGY COMMITTEES
Thomas L. Gossage, age 59, has been Hercules' chairman of
the board and chief executive officer since January 1991
and was elected president in June 1992. He had been a
senior vice president of Hercules since September 1989 and
president and chief executive officer of The Aqualon
Group, a group of entities wholly owned by Hercules, since
October 1989. Before joining Hercules in 1988 as
president, Hercules Specialty Chemicals Company, he had
been a group vice president at Monsanto Company, a
chemical producer. Mr. Gossage is a director of Wilmington
Trust Company and The Dial Corporation. He is also a
member of the Business Roundtable.
Term to expire at the
1996 Annual Meeting of Stockholders
GAYNOR N. KELLEY DIRECTOR SINCE 1989
CHAIRPERSON, NOMINATING COMMITTEE
MEMBER, AUDIT AND COMPENSATION COMMITTEES
Gaynor N. Kelley, age 62, became chairman and chief
executive officer of The Perkin-Elmer Corporation, a
manufacturer of analytical instrumentation and materials
coating systems, in December 1990. He was elected
president and chief operating officer of Perkin-Elmer in
1985 and has been a director of the company since 1984.
Mr. Kelley is also a director of Clark Equipment Company.
Mr. Kelley also serves on the Connecticut Commission for
Excellence in Education and is a member of the Business
Roundtable.
Term to expire at the
1996 Annual Meeting of Stockholders
11
<PAGE>
Ratification of Independent Accountants (Proxy Item No. 2)
Upon the recommendation of the Audit Committee, the Board has appointed
Coopers & Lybrand as independent accountants of Hercules for 1994. This
appointment is subject to ratification by the stockholders. If the
stockholders do not ratify the appointment, the Audit Committee and the Board
will reconsider the appointment.
Coopers & Lybrand, which has offices or affiliates convenient to most of
the localities in which Hercules and its affiliates operate worldwide, has
been the independent public accountant for Hercules and most of its affiliates
for many years. The Board believes that the firm's long-term knowledge of
Hercules' business is most valuable, enabling it to carry out its assignments
and responsibilities with effectiveness and efficiency. In keeping with the
established policy of Coopers & Lybrand, partners and employees of the firm
engaged in auditing Hercules are periodically changed. Among other benefits,
this practice gives Hercules the advantage of new expertise and experience.
Coopers & Lybrand persons have direct access to members of the Audit Committee
and regularly attend the Audit Committee's meetings.
At its December 1993 meeting, the Audit Committee reviewed all services
provided by Coopers & Lybrand to ensure that the services provided in 1993
were within the scope previously approved by the Audit Committee; at the same
time, it concluded that the non-audit services performed by Coopers & Lybrand
did not impair its independence as accountants for Hercules.
Hercules has been informed that, as in past years, representatives of
Coopers & Lybrand will be present at the Annual Meeting to respond to
appropriate stockholder questions. They will be given the opportunity to make
a statement if they so desire.
The Board Recommends a Vote FOR Ratification of
Coopers & Lybrand as Independent Accountants.
The affirmative vote of the majority of the shares of Common Stock present
in person or by proxy and entitled to vote at the Meeting is required in order
to ratify Coopers & Lybrand as independent accountants.
12
<PAGE>
EXECUTIVE COMPENSATION
REPORT OF THE COMPENSATION COMMITTEE
COMPENSATION PHILOSOPHY
The objectives of Hercules' executive compensation program are to motivate
management to create shareholder value by linking executive compensation with
the returns realized by shareholders and ensure the continued growth and
performance of Hercules by attracting, retaining, and motivating talented
executives through competitive compensation.
The Compensation Committee, composed of three independent non-employee
directors, has the responsibility to administer executive compensation
programs, policy and practice.
There are three elements which constitute Hercules' executive compensation
program: base pay, an annual incentive program, and a long-term incentive
compensation program.
BASE PAY
Hercules' executive base pay program is based on individual performance
and comparing Hercules' executive compensation to the compensation for
comparable positions in chemical and general industry companies, including
many of the companies designated in the Standard & Poors Chemical Index.
The Compensation Committee determined Mr. Gossage's 1993 base pay by
considering, without specific weighting, (i) an analysis of competitive CEO
compensation in diversified chemical companies; (ii) input from three outside
consulting firms who reviewed competitive data and estimated a competitive
level of base pay for Mr. Gossage; (iii) progress towards Hercules' stated 14%
ROE goal; (iv) Hercules' improvement in shareholder value during the prior
year (see the second chart on page 16); (v) Hercules' asset portfolio
realignment; and (vi) the continued improvement of Hercules operating
performance. Pursuant to such considerations, the Compensation Committee
determined that a base pay of $735,000 for Mr. Gossage in 1993 was
appropriate.
In the case of other executive officers, their respective base pay was
determined, without specific weighting, upon consideration of competitive
compensation data as obtained from analysis of selected chemical company
salaries, published industry surveys for comparable positions and individual
performance.
ANNUAL INCENTIVE COMPENSATION
Under the Hercules Incorporated Annual Management Incentive Compensation
Plan (MICP), bonuses are paid in cash, or a combination of cash and restricted
stock, in the year following the calendar year of performance, based on the
achievement of predetermined corporate, business unit, corporate staff unit
and/or individual goals. The MICP provides that no payouts will occur unless
the minimum level of performance as established by the Compensation Committee
is exceeded. A maximum of 200% of target may be paid upon achievement of
outstanding performance. Once established, the Compensation Committee may
adjust the performance level expected for minimum, target, or maximum payouts
only upon the occurrence of extraordinary event(s). In the last three years,
the Compensation Committee has not waived the minimum level of performance nor
adjusted the target or maximum goals required for payout. In 1993, the
Compensation Committee increased the cap on the maximum individual payouts to
reflect outstanding individual performance while maintaining the overall pool
at the 200% cap.
The Compensation Committee approved the 1993 MICP pool at the maximum
level. In its measurement of Hercules corporate results for 1993, the
Compensation Committee used the 1993 corporate
13
<PAGE>
goal of earnings per share (EPS). EPS was chosen because it is an indicator of
the consistency of company performance. In 1993, Hercules achieved an EPS of
$4.78 before required FAS 106, 109, and 112 adjustments. In addition to this
above goal of EPS, the 1993 pool reflected without specific weighting (i)
Hercules substantial progress on major strategic and tactical initiatives;
(ii) Hercules year to year improvement in return on equity (12.2% up from
9.2%), improvement in EPS; and increased earnings before the effect of
accounting changes of $40 million over 1992, all as compared to peer
companies; and (iii) cash flow increase before financial activities and
dividends.
Eighty percent of Mr. Gossage's MICP payout is attributable to corporate
performance. With respect to the remaining 20%, the Compensation Committee
considered Mr. Gossage's individual accountabilities, and, without specific
weighting, (i) the positive result on the Titan recovery, (ii) progress on
important restructuring and future growth issues, (iii) implementation of
critical safety and environmental programs, (iv) progress on the establishment
of management development programs and (v) the development of a culture which
values diversity. In light of such considerations, a final 1993 MICP payout to
Mr. Gossage of $924,000 was approved by the Compensation Committee.
The final 1993 MICP payouts as approved by the Compensation Committee for
Mr. Richard Schwartz, Mr. R. Keith Elliott, Mr. Thomas G. Tepas, and Dr.
Vincent J. Corbo was an aggregate of $1,346,000 for such four individuals as a
group. In the approval of the 1993 MICP payouts to such individuals, the
Compensation Committee considered, without specific weighting, Hercules
corporate performance and the individuals' contributions to Hercules' success.
LONG TERM INCENTIVE COMPENSATION
In 1993, Hercules placed long-term executive compensation emphasis on
shareholder value creation through grants of stock options and on executive
share ownership through grants of performance shares.
Under the Long Term Incentive Compensation Plan (LTICP), the Compensation
Committee approves the pool of shares and options to be awarded to all
employees and the specific awards for officers and certain other key
employees. In accordance with the provisions of the LTICP, the Chief Executive
Officer approves all awards for other employees.
Receipt of performance shares under the LTICP is dependent on the
achievement of certain three year goals and can vary from 0% to 200% of the
targeted number of shares. Once established, the Compensation Committee will
consider changes to such goals only upon implementation of mandated accounting
changes, such as Financial Accounting Standards Board (FAS) pronouncements.
The LTICP provides that no payouts will occur unless the minimum level of
corporate performance as established by the Compensation Committee is
exceeded. In the last three years, the Compensation Committee has not waived
or lowered the minimum level of performance required for payout. In 1993, the
Compensation Committee raised the 1993 corporate goals to recognize the
favorable impact of FAS accounting standards 106, 109 and 112. In 1993, the
goals for the receipt of performance shares are the accomplishment of certain
return on equity objectives.
In 1993, the Compensation Committee granted Mr. Gossage 5,800 performance
shares payable upon the achievement of performance goals in 1995, and 44,000
stock options. In making this grant, the Compensation Committee considered,
without specific weighting, the value of long-term incentives, as such value
was determined by two outside consulting firms; the ratio of performance
shares and stock options; and the number of performance shares and stock
options granted in the prior year.
In 1993, the Compensation Committee also approved grants to Mr. Richard
Schwartz, Mr. R. Keith Elliott, Mr. Thomas G. Tepas, and Dr. Vincent J. Corbo
which aggregated 9,000 performance shares and 72,000 stock options for such
four individuals as a group. In approving these grants, the Compensation
Committee considered, without specific weighting, the same factors as for Mr.
Gossage.
14
<PAGE>
In 1994, the Compensation Committee approved a maximum level payout of the
1991 performance shares awards based on the achievement of outstanding level
of performance in 1991-1993 performance period. Such payout was based solely
on the achievement of 9.9% average Return on Equity for 1991, 1992 and 1993.
For Mr. Gossage, the number of performance shares approved from the 1991
award by the Compensation Committee in 1994 was 4,900. For Mr. Richard
Schwartz, Mr. R. Keith Elliott, Mr. Thomas G. Tepas, and Dr. Vincent J. Corbo
the aggregate number of shares approved by the Committee was 8,540.
DEDUCTIBILITY OF COMPENSATION
Under the new Section 162(m) of the Internal Revenue Code, certain forms
of compensation in excess of $1,000,000 may no longer be deducted for taxes
for employees included in the compensation table. The Compensation Committee
undertook a review of Hercules' current plans and practices and determined
that Hercules would not suffer adverse impact in 1994, that the nature of the
disclosure requirements was such that the company would compromise the
confidentiality of its business strategy, and that a review in 1994 would be
undertaken upon publication of the final regulations.
PERFORMANCE CHARTS
The following graphs on page 16 demonstrate a five-calendar year and
three-calendar year comparison of cumulative total returns based on an initial
investment of $100.00 in Common Stock as compared with the S&P 500 (Broad
Market Index) and the S&P Chemical Index. The second graph, showing the three-
year comparison of cumulative total returns, is included to highlight the
improvement in shareholder value since Mr. Gossage became CEO in January of
1991 and installed a new management team, which includes Messrs. Schwartz,
Elliott, and others.
COMPENSATION COMMITTEE
R. L. MacDonald, Jr., Chairperson
G. N. Kelley
H. E. McBrayer
15
<PAGE>
GRAPHS HERE ON PRINTED PROXY
16
<PAGE>
Summary Compensation Table
The following table shows, for the last three fiscal years, cash and other
compensation paid or accrued for those years, to each of Hercules' five most
highly compensated executive officers. The amounts of Other Annual
Compensation and All Other Compensation for 1991 are not required to be
reported (NR).
<TABLE>
<CAPTION>
=============================================================================================================================
Long Term Compensation
Annual Compensation Awards Payouts
- ------------------------------------------------------------------------------------------------------------------------------
Name
and
Principal Other Restricted Securities
Position Annual Stock Underlying LTIP All Other
Year Salary Bonus Compensation Award(s)(2) Options Payouts Compensation(4)
($) ($) ($) ($) (#) ($)(3) ($)
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
T. L. Gossage 1993 $725,834 $924,000 $18,209 $1,870,939 44,000 $ 0 $131,516
Chm., Pres., and CEO 1992 680,004 816,000 11,347 0 44,000 0 71,451
1991 504,000 490,000 NR 1,309,175 98,500 0 NR
R. Schwartz 1993 403,228 407,000 9,675 650,545 18,000 903,102 55,545
Exec. VP & Pres., HAC 1992 386,868 375,000 8,629 0 18,000 0 39,321
1991 366,000 210,000 NR 41,895 9,000 0 NR
R. K. Elliott(1) 1993 350,830 426,000 6,962 164,459 18,000 0 42,028
Sr. VP & CFO 1992 325,000 330,000 5,545 0 18,000 0 19,144
1991 219,318 200,000 NR 388,145 9,000 0 NR
T. G. Tepas 1993 218,750 260,000 9,027 8,335 8,000 0 56,764
Sr. VP, Administration 1992 203,300 188,000 391 0 18,000 0 46,434
1991 148,510 78,400 NR 25,358 8,000 0 NR
V. J. Corbo 1993 220,420 248,000 5,444 9,220 8,000 0 52,860
Grp. VP & Pres. 1992 204,334 208,000 2,619 0 18,000 0 43,298
HF&FPC 1991 161,385 121,095 NR 25,358 4,800 0 NR
===========================================================================================================================
<FN>
Footnotes to Summary Compensation Table:
(1) The amount shown for R. K. Elliott in 1991 reflects that he joined
Hercules in March 1991.
(2) The amounts appearing in this column are the dollar values of restricted
stock awards, granted during each reporting year. Each value is determined
by multiplying the number of shares in each award grant by the closing
market price of Hercules Common Stock on the date of grant and subtracting
the consideration, if any, paid by the named executive officer. Dividends,
as and when payable to stockholders generally of Common Stock, will be
paid on the restricted stock. Such closing price was $113.50.
The value of each holding is determined by taking the number of shares
multiplied by the closing market price of Hercules Common Stock on
December 31, 1993, minus the amount of consideration, if any, paid by the
named executive for such restricted stock award. Such holdings and values
are: T. L. Gossage, 210,784 shares, valued at $13,330,051; R. Schwartz,
57,253 shares, valued at $2,721,821; R. K. Elliott, 24,634 shares, valued
at $1,864,119; T. G. Tepas 1,623 shares, valued at $127,819; and V. J.
Corbo, 3,066 shares, valued at $295,745. Included in the above totals are
shares that each named executive purchased under the terms of the Hercules
Incorporated Long Term Incentive Compensation Plan. The aggregate amount
paid for these shares by the named executives was $13,069,349. Portions of
these shares are subject to forfeiture upon termination from Hercules. The
total for Mr. Gossage also includes 15,000 shares that he purchased in
1991.
In addition to the restricted stock awards cited above, current phantom
stock holdings (the cash equivalent of restricted stock) for the named
executives are: R. Schwartz 28,700 units valued at
17
<PAGE>
$3,257,450; and V. J. Corbo, 610 units valued at $69,235. These amounts
are valued in the same manner as the restricted stock awards shown on this
table.
(3) As reported in the 1993 Proxy Statement, Mr. Schwartz had an opportunity
to receive up to 40,000 phantom units under the Phantom Stock Plan upon
the achievement of pre-established performance objectives for the Hercules
Aerospace Company during a performance period extending from January 1,
1991, through December 31, 1993. The amount reported in this column
reflects a payout to Mr. Schwartz on 12,000 phantom units from this award
reflecting performance accomplished in 1992. The remaining 28,000 phantom
units will be evaluated in 1994 reflecting performance in 1993.
(4) The components of the amounts shown in this column consist of (i) matching
contributions made by Hercules on behalf of each of the named executives
to Hercules' Savings and Investment Plan and to the Hercules Nonqualified
Savings Plan (T. L. Gossage, $43,312; R. Schwartz, $22,597;
R. K. Elliott, $11,987; T. G. Tepas, $11,090; and V. J. Corbo, $11,930);
(ii) dividend and dividend equivalents accrued in 1993 on performance
shares and stock options under Hercules' Long Term Incentive Compensation
Plan (T. L. Gossage, $30,874; R. Schwartz, $14,991; R. K. Elliott,
$14,991; T. G. Tepas, $33,995; and V. J. Corbo, $33,995); (iii) interest
and dividend equivalents vested to T. L. Gossage in the amount of
$39,223 upon exchange of phantom stock to restricted stock; and
(iv) the dollar value of premiums for life insurance under Hercules'
Survivor Benefit Plan (T. L. Gossage, $18,107; R. Schwartz, $17,957;
R. K. Elliott, $20,330; T. G. Tepas, $11,679; and V. J. Corbo, $6,935).
</TABLE>
Options Grants Table
The following table contains information regarding the grant of stock
options in 1993 to the five most highly compensated executive officers of
Hercules. All grants were made in the form of non-qualified stock options.
<TABLE>
<CAPTION>
==============================================================================================================================
Options Grants in Last Fiscal Year
Potential Realizable
Value at Assumed
Annual Rates of Stock
Price Appreciation for
Individual Grants Option Term
- ------------------------------------------------------------------------------------------------------------------------------
Number of % of Total
Securities Options
Underlying Granted to Exercise
Options Employees or Base
Granted in Fiscal Price Expiration
Name (#)(1) Year ($/Sh) Date 0%(2) 5% ($)(2) 10% ($)(2)
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
T. L. Gossage 44,000 14.6 $75.00 4/29/03 0% $ 2,075,352 $ 5,259,350
R. Schwartz 18,000 6.0 75.00 4/29/03 0 849,008 2,151,552
R. K. Elliott 18,000 6.0 75.00 4/29/03 0 849,008 2,151,552
T. G. Tepas 8,000 2.7 75.00 4/29/03 0 377,337 956,245
V. J. Corbo 8,000 2.7 75.00 4/29/03 0 377,337 956,245
All Optionees 308,850 -- 77.6349(3) 0 15,079,350 38,214,059
All Shareholders 40,837,000 -- 77.6349 -- 0 1,993,834,656 5,052,768,483
Optionee Gain
as % of All
Shareholders
Gain -- -- -- -- 0 0.76% 0.76%
==============================================================================================================================
18
<PAGE>
<FN>
Footnotes to Options Grants Table:
(1) Grants to named executives were made with the following exercise dates:
40% may be exercised on 4/29/94; 40% on 4/29/95; and the remaining 20% on
4/29/96.
(2) The dollar amounts illustrate value that might be realized upon exercise
of the options immediately prior to the expiration of their term, covering
the specific compounded rates of appreciation set by the Securities and
Exchange Commission (5% and 10%) and are not, therefore, intended to be
forecasts by Hercules of possible future appreciation, if any, of the
stock price of Hercules. The 0% column illustrates that value of the
options to the optionee is dependent on stock price appreciation.
(3) Weighted average price for all options granted to employees during 1993.
</TABLE>
Option Exercises and Year-End Value Table
The following table shows information with respect to the five most highly
compensated executive officers regarding the exercise of options during the
last fiscal year and unexercised options held by them as of December 31, 1993.
<TABLE>
<CAPTION>
=============================================================================================================================
Aggregated Option Exercises in Last Fiscal Year, and FY-End Option Value
Value Number of Securities Value of Unexercised
Shares Acquired Realized Underlying Unexercised In-the-Money Options
Name on Exercise (#) ($) Options at FY-End (#) at FY-End ($)(1)
- ------------------------------------------------------------------------------------------------------------------------------
Exercisable Unexercisable Exercisable Unexercisable
<S> <C> <C> <C> <C> <C> <C>
T. L. Gossage 0 0 138,500 76,100 $10,375,600 $3,708,875
R. Schwartz 0 0 42,400 30,600 $ 3,054,300 $1,476,450
R. K. Elliott 0 0 14,400 30,600 $ 982,800 $1,476,450
T. G. Tepas 1,920 $88,080 3,200 23,760 $ 191,200 $1,313,480
V. J. Corbo 0 0 16,940 23,760 $ 1,191,954 $1,313,480
==============================================================================================================================
<FN>
(1) The closing price for Common Stock as reported by the New York Stock
Exchange on December 31, 1993 was $113.50. Value is calculated on the
basis of the difference between the option exercise price and $113.50
multiplied by the number of shares of Common Stock underlying the option.
</TABLE>
Long-Term Incentive Plan Awards Table
The following table provides information with respect to awards made to
the five most highly compensated executive officers of Hercules under its
long-term incentive compensation plan.
<TABLE>
<CAPTION>
=============================================================================================================================
Long-Term Incentive Plan Awards in Last Fiscal Year
Estimated Future Payouts under
Non-Stock Price Based Plans
-----------------------------------------------------
Number of Performance or
Shares, Units Other Period Threshold Target Maximum
or Other Until Maturation (#) (#) (#)
Name Rights (#)(1) or Payout (2)(5) (3)(5) (4)(5)
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
T. L. Gossage 5,800 1/1/93 -12/31/95 0 5,800 11,600
R. Schwartz 2,700 1/1/93 -12/31/95 0 2,700 5,400
R. K. Elliott 2,700 1/1/93 -12/31/95 0 2,700 5,400
T. G. Tepas 1,800 1/1/93 -12/31/95 0 1,800 3,600
V. J. Corbo 1,800 1/1/93 -12/31/95 0 1,800 3,600
=============================================================================================================================
19
<PAGE>
<FN>
(1) The totals in this column reflect the number of performance shares awarded
to each of the named executive officers in 1993 under the Hercules
Incorporated Long Term Incentive Compensation Plan. The actual amount
payable at the conclusion of the performance period is dependent on the
executive's attainment of certain performance goals, including a
predetermined corporate return on equity ("ROE") and a predetermined
return on capital ("ROC") of the executive's business unit. As determined
by the Compensation Committee, the above target performance shares will
vest to the named executive officer if Hercules achieves a certain three-
year average ROE, and the grant to Mr. Schwartz will vest at target level
if Hercules achieves a certain ROE goal and his business unit achieves a
certain ROC goal.
(2) The totals in this column represent the number of shares of Common Stock
that could be received by the named executive officer upon the attainment
of a predetermined minimum performance goal.
(3) The amounts in this column represent the number of shares of Common Stock
that would be received by the named executive officer upon the full
attainment of the predetermined performance goals as set out in Footnote
(1), above.
(4) The amounts in this column reflect the number of shares of Common Stock
that could be received by the named executive officer upon the attainment
of predetermined maximum performance goals. Upon attainment of the maximum
performance goal the payout received by the executive would consist of the
number of shares of Common Stock payable upon the attainment of the target
performance goal plus an additional amount that would be paid either in
Common Stock or cash at the Compensation Committee's option. The cash
value would be calculated based on the fair market value of the Common
Stock on the date of the payout.
(5) Attainment of a performance level between the predetermined minimum,
target, and maximum goals would yield a payout based on the proportional
amount of the target goal achieved or surpassed.
</TABLE>
Pension Plans Table
The following table shows the estimated annual pension benefits payable to
a covered participant at normal retirement age under Hercules' qualified
benefits pension plan, as well as nonqualified supplemental benefits, based on
the stated remuneration and years of service with Hercules and its
subsidiaries.
<TABLE>
<CAPTION>
==============================================================================================================================
Years of Service
Remuneration 15 Years 20 Years 25 Years 30 Years 35 Years
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$ 125,000 $ 28,272.00 $ 37,696.00 $ 47,120.00 $ 56,544.00 $ 65,968.00
175,000 40,272.00 53,696.00 67,120.00 80,544.00 93,968.00
225,000 52,272.00 69,696.00 87,120.00 104,544.00 121,968.00
250,000 58,272.00 77,696.00 97,120.00 116,544.00 135,968.00
300,000 70,272.00 93,696.00 117,120.00 140,544.00 163,968.00
400,000 94,272.00 125,696.00 157,120.00 188,544.00 219,968.00
450,000 106,272.00 141,696.00 177,120.00 212,544.00 247,968.00
500,000 118,272.00 157,696.00 197,120.00 236,544.00 275,968.00
600,000 142,272.00 189,696.00 237,120.00 284,544.00 331,968.00
700,000 166,272.00 221,696.00 277,120.00 332,544.00 387,968.00
800,000 190,272.00 253,696.00 317,120.00 380,544.00 443,968.00
900,000 214,272.00 285,696.00 357,120.00 428,544.00 499,968.00
1,000,000 238,272.00 317,696.00 397,120.00 476,544.00 555,968.00
1,750,000 418,272.00 557,696.00 697,120.00 836,544.00 975,968.00
==============================================================================================================================
</TABLE>
Annual contributions by Hercules to its qualified pension plan, if any are
required, are determined actuarially by an independent actuary, and no amount
is attributed to an individual employee. Due to the funded status of the Plan,
there was no Hercules contribution to the Plan in 1993.
Except in special cases (e.g., see below Employment Contracts and
Termination of Employment and Change-In-Control Arrangements), the aggregate
retirement benefit, under both the qualified and nonqualified plans, is a
monthly amount determined by taking the sum of (i) 1.2% of the employee's
20
<PAGE>
average monthly earnings (based on the highest five consecutive calendar years
during the last 10 calendar years of employment) up to one-half the Social
Security Tax Base ($57,600 in 1993), and (ii) 1.6% of the employee's average
monthly earnings (as determined above) in excess of one-half of the Social
Security Tax Base, multiplied by the employee's total years and months of
credited service. For this purpose, "average monthly earnings" consist of
salary plus annual incentive or bonus compensation.
For Messrs. Gossage, Elliott, Schwartz, Tepas and Corbo compensation used
for calculating retirement income benefits consists of the highest 5
consecutive years of average monthly earnings. These amounts for 1993, are
shown under the "Salary" and "Bonus" columns of the Summary Compensation
Table. The estimated credited years of service for Messrs. Gossage, Elliott,
Schwartz, Tepas and Corbo are 32, 8, 36, 23 and 25, respectively.
Employment Contracts and Termination of Employment and Change-In-Control
Arrangements
It is and has been for many years Hercules' policy to indemnify its
officers and directors against any costs, expenses and other liabilities to
which they may become subject by reason of their service to Hercules, and to
insure its directors and officers against such liabilities, as and to the
extent permitted by applicable law and in accordance with the principles of
good corporate governance. In this regard, Hercules' By-Laws require that
Hercules indemnify and advance costs and expenses to its directors and
officers as permitted by the law of the state of Delaware.
In furtherance to the above indemnification policy, Hercules has purchased
directors and officers liability insurance, and has entered into employment
and indemnification agreements with certain employee directors, officers and
other key management personnel. This insurance, together with the
indemnification agreements, and the employment agreements described in the
next succeeding paragraphs, supplement the provisions in Hercules' Restated
Certificate of Incorporation -- which eliminates the potential monetary
liability of directors to Hercules or its stockholders in certain situations
as permitted by law. The cost for such insurance was $911,415 in 1991;
$942,875 in 1992; and $1,161,790 in 1993.
Since 1986, Hercules has also entered into separate agreements with all of
the executive officers named in the Summary Compensation Table, and a limited
number of other key management personnel, that become operative only upon a
change of control (as defined in the agreement) of Hercules or other specified
event. These agreements provide for the continuation of salary and certain
benefits for a specifed period of time upon involuntary termination of
employment within two years following a change of control in Hercules or upon
other specified events. The agreements also provide that, once they become
operative, the contracting executive shall also be given three additional
years of service for purposes of calculating pension benefits and, to the
extent needed for taking an unreduced early retirement, the contracting
executive shall have up to five years added to his actual age (provided no
credit shall accrue to the executive beyond his 65th birthday). This
additional benefit is provided on a nonqualified, unfunded basis.
In addition to the agreements above, Hercules has entered into an
employment agreement with R. K. Elliott which is not contingent upon an
unauthorized change in control and is currently in effect. The agreement,
entered into in April 1991, is effective for a three (3)-year term until April
1994 with options to extend it until April 1996. Yearly compensation is set at
a minimum of $300,000 to be paid in equal monthly amounts and once increased
may not be decreased. Per the terms of the agreement, at the time Mr. Elliott
joined Hercules, he was granted 10,000 shares of restricted stock to vest in 5
years
21
<PAGE>
from the date of grant. For purposes of pension formula calculations, Mr.
Elliott will receive credit for two additional years of service with Hercules
for each year of actual Hercules service until the additional years of credit
equal his service with his former employer. The benefit derived from this
enhanced formula, however, will be offset by the benefit earned under the
pension plan of the former employer. Additionally, unless Mr. Elliott
voluntarily terminates his employment or is otherwise discharged for cause,
Hercules will make benefits and incentive compensation calculations as if Mr.
Elliott were 55 years of age until February 1997.
Mr. Gossage has an arrangement with Hercules whereby he is entitled to
receive pension benefits calculated as though his service with Monsanto
Company had been spent with Hercules, offset by the actual deferred vested
pension to which he is entitled from Monsanto.
Mr. Schwartz has an arrangement with Hercules whereby, should he choose to
retire, his retirement benefit under the Hercules Pension Plan will be
calculated using his total credited service at his former employer and
Hercules, less the actual retirement income received from the former employer.
Proxy Solicitation Costs
The entire cost of soliciting proxies will be borne by Hercules. Hercules
has engaged Morrow & Co., Inc. to assist in the distribution of proxy
materials and with the solicitation of proxies for a fee of $8,000 plus out-
of-pocket expenses. Proxies may be solicited through the mail and personally
by telephone or telegram by the directors, officers and regular employees of
Hercules without additional compensation for such services.
Hercules will also reimburse brokerage houses and other custodians,
nominees and fiduciaries for their reasonable out-of-pocket expenses for
forwarding soliciting material to the beneficial owners of Common Stock.
1995 Stockholder Proposals
Stockholders of Hercules wishing to include proposals in Hercules' proxy
materials to be distributed in connection with the 1995 annual meeting of
stockholders must submit the same in writing so as to be received by Hercules
at its principal office at Hercules Plaza, Wilmington, DE 19894-0001, on or
before November 23, 1994. Such proposals must also meet the other requirements
of the rules of the Securities and Exchange Commission relating to
stockholders' proposals.
By Authority of the Board of Directors,
ISRAEL J. FLOYD, ESQ.
Corporate Secretary
Wilmington, Delaware
March 14, 1994
22
<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant ( )
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
HERCULES INCORPORATED
- ------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
THE WINCHELL COMPANY
- ------------------------------------------------------------------------------
(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:
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