<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934
Filed by the Registrant / /
Filed by a Party other than the Registrant /X/
Check the appropriate box:
/ / Preliminary Proxy Statement
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.142-12
LAWTER INTERNATIONAL, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
LAWTER INTERNATIONAL, INC.
- --------------------------------------------------------------------------------
(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(i)(2)
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3)
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and 0-11
1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:*
------------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
* Set forth the amount on which the filing fee is calculated and state how it
was determined.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
------------------------------------------------------------------------
2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
3) Filing Party:
------------------------------------------------------------------------
4) Date Filed:
------------------------------------------------------------------------
<PAGE>
[LOGO]
LAWTER INTERNATIONAL, INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
APRIL 25, 1996
TO THE STOCKHOLDERS:
Notice is hereby given that the Annual Meeting of Stockholders of Lawter
International, Inc., a Delaware corporation, will be held in the Auditorium on
the seventh floor of the Terra Museum of American Art, 664 North Michigan
Avenue, Chicago, Illinois on Thursday, April 25, 1996, at 10:00 A.M., Chicago
time, for the purpose of considering and taking action upon the following:
1. The election of eight directors of the Company to hold office until the
Annual Meeting of Stockholders in 1997 or until their successors are
elected and qualified.
2. Such other matters as may properly come before the meeting or any
adjournment thereof.
The Board of Directors has fixed the close of business on March 1, 1996, as
the record date for said meeting, and only holders of Common Stock of the
Company of record at that time will be entitled to notice of and to vote at said
meeting or any adjournment thereof.
The Annual Report of the Company for the year ended December 31, 1995, is
enclosed herewith.
By Order of the Board of Directors.
WILLIAM S. RUSSELL
SECRETARY
March 20, 1996
IMPORTANT
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, MANAGEMENT URGES YOU TO DATE,
SIGN AND MAIL THE ENCLOSED PROXY AS PROMPTLY AS POSSIBLE IN THE ENCLOSED STAMPED
ENVELOPE. YOU MAY REVOKE THE PROXY AT ANY TIME PRIOR TO ITS EXERCISE.
<PAGE>
LAWTER INTERNATIONAL, INC.
990 SKOKIE BOULEVARD
NORTHBROOK, ILLINOIS 60062
PROXY STATEMENT
This Proxy Statement and the accompanying Proxy card are being mailed to
stockholders on March 20, 1996, in connection with the solicitation of proxies
by the Board of Directors of Lawter International, Inc. (hereinafter referred to
as the "Company") for use at the Annual Meeting of Stockholders of the Company
to be held on April 25, 1996, pursuant to the accompanying notice.
All proxies duly executed and returned will be voted. In the absence of
specific instructions to the contrary, proxies received will be voted in
accordance with the recommendations made herein with respect to the proposal
described in this Proxy Statement. Any stockholder who submits a proxy for said
meeting has the right to revoke it at any time prior to the voting thereof.
Each stockholder is entitled to one vote for each share of Common Stock of
the Company beneficially owned in his/her name at the close of business on March
1, 1996. As of said date, there were issued and outstanding 45,070,386 shares of
Common Stock of the Company and a majority of such shares, present in person or
represented by proxy, will constitute a quorum.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following persons are known by the Company to be the beneficial owners
of more than 5% of the Company's outstanding Common Stock:
<TABLE>
<CAPTION>
NAME AND ADDRESS OF AMOUNT AND NATURE OF
BENEFICIAL OWNERS BENEFICIAL OWNERSHIP % OF CLASS
- ----------------------------------------------------------- -------------------- -------------
<S> <C> <C>
Daniel J. Terra............................................ 11,639,688 shares 25.8%
990 Skokie Boulevard
Northbrook, Illinois 60062
James D. Terra............................................. 2,244,137 shares 5.0%
990 Skokie Boulevard
Northbrook, Illinois 60062
Geo Capital Corporation.................................... 2,265,618 shares 5.0%
767 Fifth Avenue
New York, New York 10153
</TABLE>
ELECTION OF DIRECTORS
At the meeting, a full board of eight directors is proposed to be elected.
Each of such directors will hold office until the annual meeting of stockholders
in 1997 or until the election and qualification of a successor. The Board of
Directors has nominated William P. Clark, Arthur A. Hartman, John P. Jilek,
Leonard P. Judy, Richard D. Nordman, John P. O'Mahoney, Fred G. Steingraber and
Daniel J. Terra for re-election to the Board. It is intended that all shares
represented at the meeting by validly executed, unrevoked proxies solicited by
the Board of Directors of the Company will be voted for the election as
directors of the nominees named below, except as otherwise directed by
stockholders in the accompanying form of proxy. Directors are elected by a
plurality of the votes cast by the holders of the Common Stock of the Company at
a meeting at which a quorum is present. "Plurality" means that the individuals
who receive the largest number of votes
1
<PAGE>
cast are elected as directors up to the maximum number of directors to be chosen
at the meeting. Consequently, any shares not voted (whether by abstention,
broker non-votes or otherwise) have no impact in the election of directors
except to the extent the failure to vote for an individual results in another
individual receiving a larger number of votes.
The names of the nominees of the Board of Directors, and certain information
with respect to each, are as follows:
<TABLE>
<CAPTION>
YEAR FIRST
NAME, AGE, OCCUPATION ELECTED
AND BUSINESS EXPERIENCE A DIRECTOR
- ------------------------------------------------------------------------------------------------------ ----------
<S> <C>
WILLIAM P. CLARK, 64.................................................................................. 1985
Chief Executive Officer, Clark Company, private investments, since 1985. He is a director of Pacific
Telesis Corporation and Dulles Access Rapid Transit (DART).(1) (2)
ARTHUR A. HARTMAN, 69................................................................................. 1994
Senior Consultant, APCO Associates, Inc., international business consultants, since 1989. He is a
director of ITT Hartford Insurance Group, Dreyfus Funds and First NIS Investment Fund.(1) (2)
JOHN P. JILEK, 44..................................................................................... 1996
President and Chief Operating Officer, since 1996 and Vice President, 1989-1995, of the Company.
LEONARD P. JUDY, 56................................................................................... 1993
Private investor, since August 1994. Chairman of the Board and Chief Executive Officer 1988-1994,
Rust-Oleum Corporation, manufacturer and marketer of premium coatings. He is a director of Bank One,
Chicago N.A., and Specialty Chemical Resources, Inc.(1) (2)
RICHARD D. NORDMAN, 49................................................................................ 1982
Consultant, since 1996. President and Chief Operating Officer of the Company, 1986-1995.
JOHN P. O'MAHONEY, 39................................................................................. 1996
Vice Chairman and Chief Executive Officer, since 1996, Vice President, 1993-1995, and European
General Manager, 1990-1993, of the Company.
FRED G. STEINGRABER, 57............................................................................... 1993
Chairman of the Board and Chief Executive Officer, since 1986, and Chief Executive Officer, since
1983, A.T. Kearney, Inc., international management consultants. He is a director of Maytag
Corporation, Mercury Finance Company, Southeastern Thrift and Bank Fund, and A.T. Kearney,
Inc.(1) (2)
DANIEL J. TERRA, 84................................................................................... 1958
Chairman of the Board, since 1958, and Chief Executive Officer, 1958-1995, of the Company, Chairman
of the Board, Mercury Finance Company, consumer finance/insurance, since 1989. He is a director of
Mercury Finance Company.(2)
</TABLE>
- ------------------------
(1) Member of Audit Committee.
(2) Member of Compensation Committee.
The Board of Directors of the Company held six meetings during 1995. The
Board has two committees, the Audit Committee and the Compensation Committee,
which held two meetings each during 1995. All of the directors attended at least
75% of the aggregate of such Board and Committee meetings, except Mr. Judy and
Mr. Steingraber. The Board does not have a nominating committee.
The functions of the Audit Committee are to recommend to the Board of
Directors the independent auditors to be selected for each year and to discuss
with the auditors the scope of the annual audit, the result thereof, and the
adequacy of the Company's accounting, financial and operating controls.
2
<PAGE>
The functions of the Compensation Committee are to review the performance
and compensation of officers and to approve stock options granted to officers
and other key employees.
Each director and officer of the Company is required to report to the
Securities and Exchange Commission, by a specified date, his or her transactions
in the Common Stock of the Company. During 1995, Mr. Horn filed one such report
which reported one transaction after the specified date. In making this
statement, the Company has relied on written representations of its directors
and officers and copies of the reports that they have filed with the Securities
and Exchange Commission.
No authority under the enclosed proxy will be exercised to vote for any
person as a director who is not included in the nominees named above, unless any
of such nominees should become unable to serve, in which case it is intended
that the proxy will be voted for a nominee or nominees who will be designated by
the Board of Directors. The Board has no reason to believe that any of the above
nominees will cease to be a candidate prior to the meeting.
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth certain information as of February 15, 1996
as to the beneficial ownership of the Company's outstanding Common Stock by the
directors and named executive officers of the Company and by all current
directors and executive officers of the Company as a group:
<TABLE>
<CAPTION>
SHARES OF COMMON
STOCK BENEFICIALLY % OF
NAME OWNED(2) CLASS
- ------------------------------------------------------------ ------------------ -----
<S> <C> <C>
William P. Clark............................................ 52,000 (1)
Arthur A. Hartman........................................... 50,000 (1)
John P. Jilek............................................... 146,441 (1)
Leonard P. Judy............................................. 59,000 (1)
Hermann Mueller............................................. 75,000 (1)
Richard D. Nordman.......................................... 477,957 1.1%
John P. O'Mahoney........................................... 122,229 (1)
Fred G. Steingraber......................................... 50,000 (1)
Daniel J. Terra............................................. 11,639,688(3)(4) 25.8%
All current directors and executive officers as a group..... 12,868,742 28.6%
</TABLE>
- ------------------------
(1) Less than 1%.
(2) The numbers and percentages of shares owned as shown in the table assume
that currently unexercised stock options covering shares which were
exercisable within 60 days of February 15, 1996 had been exercised as
follows: Mr. Clark -- 50,000; Mr. Hartman -- 50,000; Mr. Jilek -- 126,666;
Mr. Judy -- 50,000; Mr. Mueller -- 75,000; Mr. Nordman -- 333,333; Mr.
O'Mahoney -- 113,333; Mr. Steingraber -- 50,000; and all current directors
and executive officers as a group -- 974,998. Such persons and the members
of such group disclaim any beneficial ownership of the shares subject to
such options.
(3) Does not include 1,352,152 shares beneficially owned by the Terra Foundation
for the Arts, which shares were gifted to the Foundation by Mr. Terra and of
which Mr. Terra is a Director and Chairman, and as to which beneficial
ownership of such shares is disclaimed by Mr. Terra.
(4) Does not include 39,166 shares owned by Mr. Terra's wife in which Mr. Terra
disclaims any beneficial interest.
COMPENSATION COMMITTEE REPORT
ON EXECUTIVE COMPENSATION
The Compensation Committee was composed of Mr. Clark, Mr. Hartman, Mr. Judy
and Mr. Steingraber, the four independent, non-employee directors, and Mr.
Terra, Chairman and Chief Executive Officer of the Company, at the time of the
actions covered by this report. The Compensation Committee
3
<PAGE>
meets at least annually to discuss and determine compensation for executive
officers. The Compensation Committee is solely responsible for determining the
executive officers' salary and long-term compensation granted in the form of
stock options.
The Compensation Committee's executive compensation policies are designed to
encourage superior performance and to provide levels of compensation that reward
above-average corporate performance, recognize individual initiative and
achievements, and assist the Company in attracting and retaining qualified
executives.
There are two elements to the Company's executive compensation: 1) Base
Salary Compensation and 2) Stock Option Grants. Using the process described
below, the Compensation Committee makes a subjective evaluation of the
performance of each executive in establishing base salary and determining the
amount, if any, of stock options to be granted to each executive.
BASE SALARY
Base salary compensation is determined based on a subjective evaluation of
the individual's potential impact on the Company, the skill and experience
required for the job, the ongoing performance of the individual in the job and
ongoing corporate performance. In evaluating corporate performance, the
Compensation Committee considers various aspects of such performance, including
earnings per share, sales, profits, return on equity, return on sales, and the
Company's performance relative to both other companies in its industry and the
general economy. The Compensation Committee also considers additional factors,
as appropriate. The relative weights of corporate and individual performance may
vary among individuals, and from year to year for the same individual.
The Compensation Committee determined, effective April 1, 1995 to increase
the salaries of the executive officers listed in the Summary Compensation Table
("Named Officers") by amounts ranging from 4% to 7 1/2%. This determination was
based on the Compensation Committee's subjective evaluation of the factors
identified above, giving particular attention, with respect to corporate
performance (since their last increase), to the sales volume increases,
earnings, return on equity and return on sales and the Company's implementation
of its modernization program, and on the lack of any increase since January 1994
for Mr. Nordman, Mr. Jilek and Mr. Mueller. Mr. O'Mahoney's previous increase
had been effective May 1, 1994.
STOCK OPTION GRANTS
The Compensation Committee believes that stock options are very beneficial
to aligning management's and shareholders' interest in the enhancement of
shareholder value. In keeping with that philosophy, stock options are granted
under the 1992 Non-Qualified Stock Option Plan to executive officers and other
key employees of the Company based on a subjective evaluation of individual
performance and corporate performance. In doing so, the Compensation Committee
reviews the existing options held by each of the executive officers. The grant
of stock options is intended to encourage ownership of the Company's Common
Stock by officers and other key employees of the Company, to provide incentive
for superior performance by such individuals, to attract and maintain employees
of the highest caliber and, as a result, enhance shareholder value. Stock
options are granted at the fair market value of the Company's Common Stock on
the date of grant and will only have value if the Company's stock price
increases.
The Compensation Committee granted stock options to Mr. O'Mahoney and Mr.
Jilek in 1995 based upon the process referred to above and their promotions to
Vice Chairman and Chief Executive Officer, and President and Chief Operating
Officer, respectively, effective January 1, 1996. The Compensation Committee did
not grant stock options to the other Named Officers in 1995 since stock options
were granted on December 23, 1994.
SECTION 162(M) OF THE INTERNAL REVENUE CODE
The Company's Compensation Committee has been advised of the effect of
Section 162(m) of the Code, imposing a limitation on the deductibility for
federal income tax purposes of compensation paid to
4
<PAGE>
certain executive officers. The Company believes its 1992 Non-Qualified Stock
Option Plan qualifies as a "performance-based" compensation plan that would not
be subject to such limitations. The other compensation currently paid to the
Company's executive officers is not expected to exceed the limitation in Section
162(m).
CHIEF EXECUTIVE OFFICER
Mr. Terra, the Chairman and until December 31, 1995, Chief Executive Officer
of the Company, founded the Company and continues to be a significant
stockholder of the Company. Mr. Terra has been authorized to receive but has
waived his annual salary from the Company since 1982. In addition, Mr. Terra
does not receive grants of stock options under the Company's stock option plan.
Accordingly, the Compensation Committee has not specifically evaluated Mr.
Terra's performance against corporate performance during 1995.
Compensation Committee: Daniel J. Terra, Chairman Leonard P. Judy
William P. Clark Fred G. Steingraber
Arthur A. Hartman
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee is composed of Mr. Clark, Mr. Hartman, Mr. Judy
and Mr. Steingraber, the four independent, non-employee directors, and Mr.
Terra, Chairman and until December 31, 1995, Chief Executive Officer of the
Company.
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT AND CHANGE-IN-CONTROL
ARRANGEMENTS
The Company has employment agreements with certain employees that are
activated only on a change in control and, until then, these employees remain
subject to termination at will. The terms of the employment agreement with each
of Messrs. Jilek and Russell, provide that the agreement will become effective
upon a "change in control" (defined as (i) an event that would be required to be
reported as such pursuant to Schedule 14A of Regulation 14A promulgated under
the Securities Exchange Act of 1934 or (ii) certain changes in membership of the
Board of Directors). Providing the employee is still serving as such at the time
of such a change in control, the agreement provides that the Company will
continue to employ the employee for a period of two years after such change in
control at a guaranteed minimum salary equal to the employee's salary at the
time thereof. The agreement also provides that the employee may participate
without discrimination in all of the Company's benefit plans available to its
officers, prohibits the employee from disclosing confidential information during
or after employment and prohibits the employee from working for a competitor of
the Company during and for a period of eighteen months following the termination
of employment. In the event that the location of the Company's office is changed
by more than 25 miles or the employee's position and duties are changed
following the agreement becoming effective upon a change in control, the
employee may terminate the agreement, whereupon the employee's salary and
benefits for the remainder of the term will become payable in a lump sum. In
addition, if an excise tax is imposed pursuant to the applicable provisions of
the Internal Revenue Code upon any payments to the employee by the Company, the
agreement provides that the employee will be paid an additional amount
calculated so as to provide the employee with the same compensation he would
have received had no excise tax been imposed.
EXECUTIVE COMPENSATION
The table below sets forth the annual, long term and other compensation for
services in all capacities to the Company for the three years ended December 31,
1995 of those persons who were (1) the Chief Executive Officer and (2) the other
four most highly compensated executive officers of the Company in 1995 (the
Named Officers):
5
<PAGE>
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
----------------
ANNUAL COMPENSATION AWARDS
---------------------------- ----------------
OTHER SECURITIES
ANNUAL UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY COMPENSATION OPTIONS/SARS(#) COMPENSATION (2)
- -------------------------------------- --------- ------------- ------------- ---------------- -----------------
<S> <C> <C> <C> <C> <C>
Daniel J. Terra....................... 1995 $ --(1) $ -- -- $ --
Chairman and Chief 1994 --(1) -- -- --
Executive Officer 1993 --(1) -- -- --
Richard D. Nordman.................... 1995 393,000 -- -- 27,510
President and Chief 1994 372,000 -- 160,000 26,040
Operating Officer 1993 354,000 -- 40,000 24,780
John P. Jilek......................... 1995 157,250 -- 100,000 11,008
Vice President 1994 152,000 -- 80,000 10,640
1993 145,000 -- 20,000 10,150
Hermann Mueller....................... 1995 160,500 -- -- 11,235
Vice President 1994 156,000 -- 60,000 10,920
1993 150,000 -- 15,000 10,500
John P. O'Mahoney (4)................. 1995 168,475 25,615(3) 150,000 11,793
Vice President 1994 140,755 44,110(3) 80,000 9,853
1993 126,947 39,303(3) 20,000 8,886
<FN>
- ------------------------
(1) Mr. Terra was authorized to receive but waived cash compensation of
$450,000 for each of the past three years.
(2) The total amounts shown in this column consist of Company contributions for
the Growth Sharing Plan (the Company's defined contribution retirement
plan).
(3) These amounts represent educational expenses, paid by the Company, for Mr.
O'Mahoney's children who attend an English speaking international school as
a result of being transferred from Ireland to Belgium.
(4) Mr. O'Mahoney's salary was paid in Belgian Francs and the U.S. dollars
shown here are affected by the exchange rates.
</TABLE>
COMPENSATION OF DIRECTORS
Directors of the Company who are not officers were paid an annual fee of
$11,000 plus $750 for each Board or Committee meeting attended in 1995.
On February 14, 1995, the Board of Directors adopted, subject to stockholder
approval, the 1995 Non-Qualified Stock Option Plan for Non-Employee Directors.
At the time of the adoption of the Plan, Messrs. Clark, Hartman, Judy and
Steingraber each received a grant of options covering 30,000 shares of Common
Stock under the Plan at an exercise price of $12.125 per share. This plan was
approved by the stockholders at the April 24, 1995 Annual Meeting.
STOCK OPTIONS
Options are granted to officers and other key employees under the Company's
1992 Non-Qualified Stock Option Plan which is administered by the Compensation
Committee. Shown below is information with respect to the grant and exercise of
options during 1995 and the unexercised options held as of December 31, 1995 by
the Named Officers.
6
<PAGE>
OPTION/SAR GRANTS IN 1995
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
-------------------------------------------------------- POTENTIAL REALIZABLE VALUE
NUMBER OF % OF TOTAL AT ASSUMED ANNUAL RATES OF
SECURITIES OPTIONS/ SARS EXERCISE STOCK PRICE APPRECIATION
UNDERLYING GRANTED TO OR FOR OPTION TERM (3)
OPTIONS/SARS EMPLOYEES IN BASE PRICE EXPIRATION --------------------------
NAME GRANTED(#)(1) 1995(2) ($/SH) DATE 5%($) 10%($)
- ------------------------------ ------------- --------------- ----------- ----------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
John P. Jilek................. 100,000 37.2% $ 11.00 11-9-2005 $ 692,000 $ 1,753,000
John P. O'Mahoney............. 150,000 55.9% 11.00 11-9-2005 1,038,000 2,630,000
</TABLE>
- ------------------------
(1) The option grants were non-qualified stock options. These options become
exercisable one year after the grant date, which was November 9, 1995.
(2) The percentages shown in the table are based on total options granted to
officers and other key employees in 1995 of 268,500 shares of the Company's
Common Stock.
(3) The potential realizable values shown in the table are based on assumed
annual rates of stock price appreciation compounded annually. The actual
value of the options will depend on the market value of the Company's Common
Stock on the dates the options are exercised. No realization of value from
the options is possible without an increase in the price of the Company's
Common Stock, which would benefit all stockholders commensurately.
AGGREGATED OPTION/SAR EXERCISES IN
1995 AND YEAR END OPTION/SAR VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING IN-THE-MONEY
UNEXERCISED OPTIONS/SARS OPTIONS/SARS
SHARES AT DECEMBER 31, 1995(#) AT DECEMBER 31, 1995 (1)
ACQUIRED ON VALUE -------------------------- --------------------------
NAME EXERCISE(#) REALIZED(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- -------------------------------- ----------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Richard D. Nordman.............. -- $ -- 333,333 -- $ 162,000 $ --
John P. Jilek................... 20,775 102,938 126,666 100,000 32,400 62,500
Hermann Mueller................. -- -- 75,000 -- -- --
John P. O'Mahoney............... -- -- 113,333 150,000 16,200 93,750
</TABLE>
- ------------------------
(1) The amounts reported here represent the mathematical differences before
taxes between the aggregate exercise price and the market value on the
actual dates of exercise or December 31, 1995 (if unexercised) rather than
any actual net gain. Such amounts do not take into consideration the cost of
funds used for purchase or additional taxes.
INDEBTEDNESS OF MANAGEMENT
Under the terms of the stock option plan, officers may borrow funds from the
Company in order to exercise their stock options. Interest is charged on the
loans at the Company's effective rate to borrow funds, adjusted quarterly.
During 1995, the Company's weighted average interest rate on borrowed funds was
6.23%. The stock purchased is held as collateral by the Company. The loans are
repayable within eighteen months. During 1995, Mr. Jilek had a maximum amount
borrowed of $142,578, which was paid in full in 1995.
Under the terms of the Company's relocation policy, employees may borrow
funds, on an interest-free basis, as a bridge loan, to buy a house in their new
location of employment until their previous house is sold. During 1995, Mr.
O'Mahoney, Vice Chairman and Chief Executive Officer of the Company, borrowed
$567,500 under this policy after relocating from Belgium in order to purchase a
house in the United States. This amount was repaid in full on January 31, 1996.
7
<PAGE>
SHAREHOLDER RETURN PERFORMANCE GRAPH
Shown below is a line graph comparing the yearly percentage change in the
cumulative total shareholder return on the Company's Common Stock against the
cumulative total return of the S&P Composite -- 500 Stock Index and a Specialty
Chemicals Peer Group for the period of five years commencing January 1, 1991 and
ending December 31, 1995, assuming the investment of $100 on January 1, 1991 and
the full reinvestment of all dividends. The Specialty Chemicals Peer Group is
composed of the following companies: Betz Laboratories, Inc., Cabot Corp.,
Chemed Corp., Ferro Corp., Imperial Chemical Industries, PLC, Guardsman
Products, Inc., Intersystems, Inc./DE, Lawter International, Inc., Learonal,
Inc., Loctite Corp., Morton International, Inc., Nalco Chemical Co., PPG
Industries, Inc., Pratt & Lambert, Inc., Sherwin-Williams Co., Specialty
Chemical Res., Univar Corp. and Valspar Corp. Pengo Industries, Inc. has been
dropped from the peer group since they are no longer listed on the stock
exchange.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
AMONG LAWTER INTERNATIONAL, INC., S&P 500 INDEX & SPECIALTY CHEMICALS INDEX
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHICS
<TABLE>
<CAPTION>
1990 1991 1992 1993 1994 1995
--------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Lawter International, Inc...................................... 100.0 165.3 176.7 176.9 162.9 161.4
S&P 500........................................................ 100.0 130.5 140.4 154.6 156.6 215.5
Speciality Chemicals Peer Group................................ 100.0 139.0 134.8 137.8 137.2 161.5
</TABLE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On December 31, 1995, Mr. Nordman resigned as President and Chief Operating
Officer of the Company. He remains a Director and became a Consultant to the
Company effective January 1, 1996. Under the terms of the Consulting Agreement,
Mr. Nordman will provide information, advice, and assistance concerning
operating, financial and administrative matters as requested by the Board of
Directors or the Chief Executive Officer of the Company. Mr. Nordman will be
available to provide these services an average of one and one-half days per
week, and will be paid a fee of $100,000 per year. The Consulting Agreement is
for two years.
8
<PAGE>
On Janury 9, 1996, the Company entered into an agreement with Mr. Terra,
Chairman of the Company, whereby the Company acquired a put option from Mr.
Terra enabling the Company to sell any shares in Idexx Laboratories, Inc.
("Idexx") it purchases on the open market to Mr. Terra at a price $1.00 per
share less than the Company's average purchase price per share net of
commission. This option would only be exercised by the Company if the price of
Idexx was more than $1.00 per share less than the average purchase price per
share paid by the Company. This option can be exercised by the Company in whole
between December 10, 1996 and December 20, 1996.
In connection with the relocation to the United States of Mr. O'Mahoney,
Vice Chairman and Chief Executive Officer of the Company, the Company agreed to
purchase his house in Belgium. The price paid was $406,500 which was determined
by taking the average of three appraisals from three independent real estate
appraisers in Belgium.
EXPENSES OF SOLICITATION
The costs and expenses of solicitation of proxies will be paid by the
Company. In addition to the use of the mails, proxies may be solicited
personally by telephone or telegram by directors, officers and other employees
of the Company. No arrangements have been made or are presently contemplated for
the assistance of any professional proxy solicitors. The Company will reimburse
banks, brokerage firms and other custodians, nominees and fiduciaries for
reasonable expenses incurred by them in sending proxy material to the beneficial
owners of the Common Stock of the Company.
OTHER MATTERS
The Company expects to select the firm of Arthur Andersen LLP as its
independent public accountants for the next fiscal year. The selection is
normally based upon the Audit Committee's recommendation to the Board of
Directors. Representatives of Arthur Andersen LLP are expected to be present at
the stockholders' meeting to make a statement if they so desire and to be
available to respond to appropriate questions.
The management is not aware of any other matters to be presented for action
at the meeting. If any other matters properly come before the meeting, it is the
intention of the persons named in the accompanying form of Proxy to vote the
shares represented thereby in accordance with their best judgement.
STOCKHOLDER PROPOSALS
Proposals of stockholders intended to be presented at the Company's 1997
annual meeting of stockholders must be received by the Company not later than
November 20, 1996 for inclusion in the issuer's proxy statement and form of
proxy relating to that meeting. Any such proposal must relate to a matter which
is proper for consideration at such a meeting and not of the type which the
Company is specifically permitted to omit by the regulations of the Securities
and Exchange Commission.
WILLIAM S. RUSSELL
SECRETARY
9
<PAGE>
PROXY PROXY
LAWTER INTERNATIONAL, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON APRIL 25, 1996
The undersigned appoints Daniel J. Terra, John P. O'Mahoney and John P.
Jilek, or any of them, proxies for the undersigned, each with full power of
substitution, to attend the Annual Meeting of Stockholders of Lawter
International, Inc., to be held on April 25, 1996, at 10:00 a.m., Chicago time,
and at any adjournments or postponements of the Annual Meeting, and to vote as
specified in this Proxy all the Common Stock of the Company which the
undersigned would be entitled to vote if personally present. This proxy when
properly executed will be voted in accordance with your indicated directions. If
no direction is made, this Proxy will be voted FOR the election of Directors.
The Board of Directors recommends a vote FOR the election of Directors.
YOUR VOTE IS IMPORTANT! PLEASE MARK, SIGN AND DATE THIS PROXY ON THE
REVERSE SIDE AND RETURN IT PROMPTLY IN THE ACCOMPANYING ENVELOPE.
(CONTINUED AND TO BE SIGNED ON REVERSE SIDE.)
<PAGE>
LAWTER INTERNATIONAL, INC.
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY. /X/
For All
For Withheld Except
1. Election of Directors -- / / / / / /
NOMINEES: W. Clark, A. Hartman,
J. Jilek, L. Judy, R. Nordman,
J. O'Mahoney, F. Steingraber, D. Terra
________________________________
Nominee Exception
The undersigned acknowledges receipt of the Notice of Annual Meeting of
Stockholders and of the Proxy Statement.
Dated_____________, 1996
Signature(s)____________________________
________________________________________
Please sign exactly as your name appears. Joint owners should each sign
personally. Where applicable, indicate your official position or representation
capacity.
