<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement / / Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
LeaRonal, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), or 14a-6(i)(1), or 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
/ / $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 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE> 2
[LEARONAL LOGO]
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
OF
LEARONAL, INC.
272 BUFFALO AVENUE
FREEPORT, NEW YORK 11520
---------------------------------
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of LeaRonal,
Inc. (the "Corporation") will be held at the Garden City Hotel, 45 Seventh
Street, Garden City, New York 11530, on Tuesday, July 16, 1996 at 10:00 A.M.
(Eastern Daylight Savings Time), for the following purposes:
(1) To elect nine directors to serve in accordance with the By-Laws of
the Corporation until the next Annual Meeting of Stockholders, and until
their successors are elected and qualified;
(2) To consider and vote upon a proposal to adopt the Corporation's
1996 Long-Term Incentive Plan;
(3) To ratify the appointment of Ernst & Young as auditors of the
Corporation for the current fiscal year; and
(4) To transact such other business as may properly come before the
meeting and any adjournments thereof.
Stockholders of record at the close of business on June 7, 1996 shall be
entitled to notice of and to vote at the meeting. The transfer books will not be
closed.
By Order of the Board of Directors
DONALD THOMSON,
Secretary
Dated: Freeport, New York
June 14, 1996
- --------------------------------------------------------------------------------
YOUR VOTE IS IMPORTANT. If you cannot attend the meeting, you are urged to
complete, date, sign and return the enclosed proxy at your earliest convenience.
A postpaid return envelope is enclosed for this purpose.
<PAGE> 3
LEARONAL, INC.
272 BUFFALO AVENUE
FREEPORT, NEW YORK 11520
---------------------------
PROXY STATEMENT
FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JULY 16, 1996
---------------------------
This Proxy Statement is being furnished to stockholders in connection with
the solicitation of proxies by the Board of Directors of LeaRonal, Inc. (the
"Corporation") for the 1996 Annual Meeting of Stockholders to be held on July
16, 1996, and at any adjournments thereof. If a proxy in the accompanying form
is properly executed and returned, the shares represented thereby will be voted
as instructed in the proxy. Any proxy may be revoked by a stockholder prior to
its exercise upon written notice to the Secretary of the Corporation, or by a
stockholder's vote in person at the meeting. This Proxy Statement and the
enclosed form of proxy is intended to be mailed on or about June 14, 1996.
The purposes of the meeting are (1) to elect nine directors to serve in
accordance with the By-Laws until the next Annual Meeting of Stockholders and
until their respective successors have been elected and qualified; (2) to
consider and vote upon a proposal to adopt the Corporation's 1996 Long-Term
Incentive Plan; (3) to ratify the appointment of Ernst & Young as auditors of
the Corporation for the current fiscal year; and (4) to transact such other
business as may properly come before the meeting and any adjournments thereof.
The cost of this solicitation will be paid by the Corporation. Such costs
include preparation, printing and mailing of the Notice of Annual Meeting, Proxy
Statement and the enclosed proxy. The solicitation will be conducted principally
by mail, although directors, officers and regular employees of the Corporation
and its subsidiaries may solicit proxies personally or by telephone or fax.
Arrangements will be made with brokerage houses and other custodians, nominees
and fiduciaries for proxy material to be sent to their principals and the
Corporation will reimburse such entities and persons for their related expenses.
The shares represented by all properly executed and returned proxies will
be voted, if received in time for the meeting, in accordance with the
instructions, if any, given thereon. Unless otherwise indicated, or if no
instructions are given, with respect to any proposal, the shares represented by
such proxies will be voted FOR such proposal. A proxy is revocable at any time
prior to being voted.
The Corporation had outstanding and entitled to vote on June 7, 1996, the
record date for the meeting, 8,828,485 shares of Common Stock, which is its only
voting security. Each share is entitled to one vote. The only individual
stockholders known to the Corporation to own of record or beneficially more than
5% of the outstanding shares of Common Stock are Barnet D. Ostrow, Fred I. Nobel
and Sol Berg. Information with respect to such ownership is set forth in the
table under "Security Ownership of Directors and Executive Officers".
<PAGE> 4
STOCKHOLDERS PROPOSALS
If a stockholder intends to present a proposal at the Corporation's 1997
Annual Meeting, the proposal must be received by the Corporation by February 14,
1997, for inclusion in the Proxy Statement and form of proxy relating to that
meeting.
ELECTION OF DIRECTORS
There are nine nominees for election to the Board of Directors, all of
which are presently serving in such capacity. The nominees, constituting the
entire Board of Directors, are to be elected at the Annual Meeting for a term of
one year, and until the election and qualification of their respective
successors. If no contrary instructions are indicated, the proxies will be voted
for the election of directors of the nominees named below. The Board of
Directors has no reason to believe that any of the nominees will be unable to
serve as a director. If any nominee shall be unable, for any reason, to accept
nomination or election, it is the intention of the persons named in the enclosed
form of proxy to vote the proxy for the nomination and election of such other
person or persons as the Board of Directors may designate.
Set forth below is the principal occupation, business experience and other
affiliations during the last five years for each person nominated for reelection
to the Board of Directors. All ages given are as of the record date.
BARNET D. OSTROW
Mr. Ostrow, age 82, has served as a director of the Corporation since 1953.
He is presently Chairman of the Board of Directors and formerly served as
President and Chief Executive Officer of the Corporation.
FRED I. NOBEL
Mr. Nobel, age 78, has served as a director of the Corporation since 1953.
He is presently Vice Chairman of the Board of Directors and formerly served as
Executive Vice President and Secretary of the Corporation.
RONALD F. OSTROW
Mr. Ostrow, age 52, has served as a director of the Corporation since 1975.
He is presently President and Chief Executive Officer of the Corporation. Mr.
Ronald F. Ostrow is the son of Mr. Barnet D. Ostrow.
RICHARD KESSLER
Mr. Kessler, age 57, has served as a director of the Corporation since
1987. He is presently Executive Vice President and Chief Operating Officer of
the Corporation.
SOL BERG
Mr. Berg, age 71, has served as a director of the Corporation since 1972.
Mr. Berg is a private investor.
CARL N. GRAF
Mr. Graf, age 69, has served as a director of the Corporation since 1992.
He was the President and Chief Operating Officer of W.R. Grace & Co. from 1981
through January, 1987 and a member of the Board of Directors of Spire Corp. from
1987 through the present.
IRWIN LIEBER
Mr. Lieber, age 57, has served as a director of the Corporation since 1980.
He was the founder, and has been the Chief Investment Officer of GeoCapital
Corp. from October 1979 to the present.
2
<PAGE> 5
ARTHUR M. WINSTON
Mr. Winston, age 52, has served as a director of the Corporation since
1980. He has served as an Investment Manager for Glickenhaus & Co. from April
1991 to the present, as Vice President, Goldman, Sachs & Co. from October 1989
to April 1991, and as General Partner, Glickenhaus & Co. from October 1988 to
April 1989. Mr. Winston also serves on the Board of Directors of Hi-Shear
Industries, Inc.
KENNETH L. STEIN
Mr. Stein, age 58, has served as a director of the Corporation since 1987.
Mr. Stein is a partner of Greenfield Stein & Senior, LLP, which serves as
general counsel to the Corporation.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE IN FAVOR OF EACH NOMINEE.
SECURITY OWNERSHIP OF DIRECTORS AND
EXECUTIVE OFFICERS
The following table sets forth certain information regarding the ownership
of the Corporation's common stock as of June 7, 1996, the record date, by (i)
each director, (ii) each of the six most highly compensated executive officers
of the Corporation, and (iii) all directors and executive officers of the
Corporation as a group. As of the record date, the directors and executive
officers of the Corporation as a group (15 persons) beneficially owned 2,610,868
shares of common stock, or approximately 29.57% of the common stock outstanding
and entitled to vote at the Annual Meeting, not including an aggregate of 41,250
shares of common stock that such persons may acquire pursuant to options
exercisable within 60 days of the record date.
<TABLE>
<CAPTION>
SHARES OF COMMON STOCK
-----------------------
BENEFICIALLY OWNED(1)
-----------------------
BENEFICIAL OWNER NUMBER PERCENT
--------------------------------------------------------- ---------- -------
<S> <C> <C>
Barnet D. Ostrow(2)(3)(4)................................ 825,122 9.35
Fred I. Nobel(3)(5)...................................... 943,272 10.68
Ronald F. Ostrow(2)(6)................................... 249,597 2.83
Richard Kessler(7)....................................... 42,867 *
Donald Thomson(8)........................................ 28,151 *
David L. Rosenthal(9).................................... 9,914 *
David Schram(10)......................................... 4,483 *
James Martin(11)......................................... 2,908 *
Carl Fiore(12)........................................... 825 *
Michael Toben(13)........................................ 188 *
Sol Berg(3)(5)........................................... 496,346 5.62
Carl N. Graf(14)......................................... 500 *
Irwin Lieber(15)......................................... 390 *
Arthur M. Winston(16).................................... 4,680 *
Kenneth L. Stein(17)..................................... 1,625 *
All present directors and officers as a group
(15 persons)........................................... 2,610,868 29.57
</TABLE>
- ---------------
* less than 1%
(1) This table is based upon information supplied by directors and executive
officers. All directors and officers have the sole investment and voting
power over their respective shares, except as otherwise indicated.
3
<PAGE> 6
(2) Ronald F. Ostrow is the son of Barnet D. Ostrow. No other family
relationships exist between or among any of the directors and officers.
(3) The indicated individuals may be deemed to be "controlled persons" of the
Corporation by reason of share ownership. The address of Messrs. Barnet D.
Ostrow and Fred I. Nobel is c/o LeaRonal, Inc., 272 Buffalo Avenue,
Freeport, New York 11520 and the address of Mr. Sol Berg is 515 Madison
Avenue, 38th Floor, New York, New York 10022.
(4) Includes 3,600 shares beneficially owned by Barnet D. Ostrow and his wife
as partners of Ostrow Properties Limited Partnership #1 and Ostrow
Properties Limited Partnership #2.
(5) Fred I. Nobel and Sol Berg are co-trustees of trusts for the benefit of Mr.
Berg's children which hold an aggregate of 10,413 shares. As co-trustees of
such trusts, Fred I. Nobel and Sol Berg have shared voting and investment
power with respect to such shares, but have no beneficial interest therein.
Such shares are not listed as being owned by Messrs. Nobel and Berg. In
addition, Mr. Nobel disclaims beneficial ownership of 9,375 shares owned by
his wife.
(6) Includes (i) 175,781 shares held in trust for the benefit of Ronald F.
Ostrow, as to which Kenneth L. Stein and Ronald F. Ostrow are trustees and
share voting and investment power (as to which Mr. Stein has no beneficial
interest), (ii) 58,200 shares beneficially owned by Ronald F. Ostrow as a
limited partner of Ostrow Properties Limited Partnership #1, and (iii) 234
shares owned by Batsheva Ostrow, his wife; does not include (i) 83,103
shares owned by Ronald F. Ostrow's children and (ii) 5,156 shares that may
be acquired within 60 days by exercise of stock options.
(7) Does not include (i) an aggregate of 3,786 shares owned by Mr. Kessler's
children in which Mr. Kessler disclaims beneficial ownership, and (ii)
7,250 shares that may be acquired within 60 days by exercise of stock
options.
(8) Does not include 4,531 shares that may be acquired within 60 days by
exercise of stock options.
(9) Does not include 8,625 shares that may be acquired within 60 days by
exercise of stock options.
(10) Does not include 4,219 shares that may be acquired within 60 days by
exercise of stock options.
(11) Does not include 3,969 shares that may be acquired within 60 days by
exercise of stock options.
(12) Does not include 500 shares that may be acquired within sixty (60) days by
exercise of stock options.
(13) Does not include 750 shares that may be acquired within sixty (60) days by
exercise of stock options.
(14) Does not include 1,250 shares that may be acquired within 60 days by
exercise of stock options.
(15) Does not include 2,500 shares that may be acquired within 60 days by
exercise of stock options.
(16) Glickenhaus & Co. is an investment management company. Includes an
aggregate of 2,601 shares held for Mr. Winston's children, of which Mr.
Winston is custodian. Does not include 2,500 shares that may be acquired
within 60 days by exercise of stock options.
(17) Includes 1,000 shares held by Vanguard Discount Brokerage Services for Mr.
Stein's benefit under his firm's retirement plan.
4
<PAGE> 7
OTHER SECURITY OWNERSHIP
To the best knowledge of the Corporation, at May 31, 1996 (in addition to
those directors specified above) the following persons beneficially owned (as
that term is defined by the Securities and Exchange Commission) more than 5% of
the common stock outstanding and entitled to vote at the Annual Meeting:
<TABLE>
<CAPTION>
SHARES OF COMMON
STOCK
BENEFICIALLY
OWNED(1)
-----------------
NAME AND ADDRESS OF BENEFICIAL OWNER NUMBER PERCENT
- -------------------------------------------------------------------------- ------- -------
<S> <C> <C>
SoGen International Fund, Inc.(2)......................................... 516,000 5.84
Societe Generale Asset Management Corp.
1221 Avenue of the Americas
New York, N.Y. 10020
</TABLE>
- ---------------
(1) Based on Schedules 13G filed with the Securities and Exchange Commission by
such beneficial owners and additional information received from each as of
May 31, 1996.
(2) SoGen International Fund, Inc. (the "Fund") is an investment company
registered under Section 8 of the Investment Company Act of 1940, as
amended, and Societe Generale Asset Management Corp. (the "Advisor") is an
investment advisor registered under Section 203 of the Investment Advisor
Act of 1940, as amended. The Fund owns beneficially the shares, however the
Advisor, by virtue of its powers under its investment advisory contract with
the Fund, may be deemed to be a beneficial owner of such shares.
MEETINGS OF THE BOARD OF DIRECTORS AND ATTENDANCE
During the fiscal year ended February 29, 1996, the Board of Directors held
four meetings. Each director attended at least 75 percent of these meetings, as
well as the meetings of the Committees of which he was a member.
DIRECTORS' COMPENSATION AND CONSULTING ARRANGEMENTS
Non-employee directors, except Mr. Stein, received annual fees of $11,000
each, paid in equal quarterly installments. Directors receive no additional
compensation for participation on committees of the Board. Mr. Stein is a
partner of Greenfield Stein & Senior, LLP, which serves as general counsel to
the Corporation. Directors who are employees of the Corporation receive no fees
for attending Board or committee meetings.
Messrs. Barnet D. Ostrow and Fred I. Nobel have consulting agreements with
the Corporation pursuant to which they earned fees of $135,000 and $130,000
respectively, in the Corporation's last fiscal year. Additionally, they are
provided with medical insurance. The current term of each agreement ends
February 28, 1997 and may be renewed for successive additional periods of one
year each.
Non-employee directors are eligible to participate in the 1990 Nonqualified
Stock Option Plan. During the Corporation's last fiscal year, no options were
granted to non-employee directors.
COMMITTEES OF THE BOARD OF DIRECTORS
The Audit Committee consists of Messrs. Lieber and Winston. The Committee
meets annually to review the auditor's reports to the Board of Directors,
financial statements and internal accounting controls. It also monitors the
independence and fees of the independent auditors and recommends further
appointments thereof.
5
<PAGE> 8
The Executive Compensation Committee consists of Messrs. Berg, Lieber and
Graf. The Committee recommends compensation for officers of the Corporation and
administers the 1996 Long-Term Incentive Plan. The Committee met twice during
the fiscal year.
The Stock Option Committee is composed of Messrs. Lieber and Winston, who
are independent non-employee directors, and Ronald F. Ostrow, the Corporation's
chief executive officer.
The Corporation does not have a standing nominating committee. However,
Messrs. Berg, Nobel and Barnet D. Ostrow recommend new directors and changes in
the composition of the Board of Directors.
REPORT OF THE EXECUTIVE COMPENSATION COMMITTEE
The Corporation's Board of Directors approves all compensation of the
Corporation's officers, including the chief executive officer, based on the
recommendations of the Compensation Committee, except that all grants of stock
options under the Corporation's stock incentive plan are approved solely by the
Stock Option Committee. The Compensation Committee is composed exclusively of
independent, non-employee directors who are not eligible to participate in any
executive compensation program, except the 1990 Nonqualified Stock Option Plan
previously approved by the stockholders of the Corporation.
The Corporation's compensation program is intended to enable the
Corporation to compete effectively with other firms in attracting, retaining and
motivating executives of the caliber needed for the future success of the
Corporation's business. This program contains three components: (i)
contractually based compensation; (ii) annual incentive compensation; and (iii)
longer-term incentives in the form of nonqualified stock options and
contributions to the 401(k) Employees Savings Plan. The annual incentive
compensation and nonqualified stock options are primarily dependent on the
Corporation's earnings and profitability as well as the returns realized by the
Corporation's stockholders.
A. Base Compensation
An officer's base compensation is contractually determined, subject to
increases based on a number of factors including, but not limited to: (i) an
assessment of performance over time; (ii) competence; and (iii) potential.
Adjustments to each officer's base compensation are made annually in connection
with annual performance reviews.
B. Annual Incentive Compensation -- Bonus
The Corporation's annual incentive compensation program provides for the
payment of bonuses to the officers and certain other employees on an individual
basis. Such awards are based upon the Corporation's overall earnings growth, a
comparison of the Corporation's earnings in the last fiscal year with those of
the immediately preceding fiscal year, as well as individual performance. The
intent is to motivate and reward performance.
A specified bonus for each officer is first approved by the Compensation
Committee and then submitted for approval to the Board of Directors. In
contrast, the total available bonus pool for other employees is approved by the
Compensation Committee and the Board of Directors and distributed at the
discretion of the Corporation's President in consultation with the other
officers.
C. Longer-Term Incentives -- Nonqualified Stock Options/401K Plan
These incentives are designed to coordinate the longer-term interests of
the Corporation and its stockholders with those of the Corporation's key
employees, officers and directors. The Stock Option Committee meets periodically
to grant nonqualified stock options to key employ-
6
<PAGE> 9
ees, officers and directors pursuant to the 1990 Nonqualified Stock Option Plan.
The plan is intended to provide such individuals with additional incentive to
advance the interests of the Corporation as stock options only produce value to
such individuals if the price of the Corporation's common stock appreciates.
D. Chief Executive Officer Compensation
Mr. Ronald F. Ostrow's compensation results from his participation in the
same compensation program as the other executives of the Corporation. The bonus
paid to Mr. Ostrow for the fiscal year ended February 29, 1996 was greater than
the amount paid for the prior fiscal year, reflecting the improved performance
of the Corporation in that year.
Executive Compensation Committee
Sol Berg
Irwin Lieber
Carl Graf
SUMMARY COMPENSATION TABLE
The following table sets forth information concerning the compensation of
the Corporation's Chief Executive Officer and the other five highest paid
officers, as well as the total compensation paid to each for the Corporation's
most recent three fiscal years:
LEARONAL, INC.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
-----------------------
ANNUAL COMPENSATION AWARDS
--------------------------------- -----------------------
NAME AND OTHER ANNUAL ALL OTHER
PRINCIPAL YEAR SALARY BONUS COMPENSATION OPTIONS COMPENSATION
POSITION ENDED ($) ($) ($) (#) ($)(7)
- ---------------------- ------------- -------- -------- ------------ ------- ------------
<S> <C> <C> <C> <C> <C> <C>
Ronald F. Ostrow...... February 1996 385,000 100,000 142,446(1) 0 0
President and February 1995 342,004 80,000 5,000 0
Chief February 1994 290,318 65,000 67,387(2) 0 0
Executive Officer
Richard Kessler....... February 1996 264,000 70,000 57,461(3) 0 0
Executive Vice February 1995 236,500 56,000 9,000 5,309
President and February 1994 202,364 45,000 0 4,717
Chief Operating
Officer
Donald Thomson........ February 1996 170,500 47,500 34,134(4) 0 5,022
Vice President- February 1995 148,720 38,000 26,237(5) 5,000 5,309
Technology February 1994 129,358 30,000 0 3,067
and Secretary
David L. Rosenthal.... February 1996 198,000 50,000 25,536(6) 0 5,022
Vice President- February 1995 176,000 40,000 8,000 5,309
Finance February 1994 146,867 31,000 0 3,414
and Treasurer
James Martin.......... February 1996 145,200 20,000 0 5,022
Vice President February 1995 129,250 16,000 5,000 4,915
February 1994 112,484 13,000 0 2,432
David Schram.......... February 1996 154,000 22,500 0 5,022
Vice President February 1995 132,000 18,000 5,000 5,045
February 1994 114,400 13,000 0 2,468
</TABLE>
- ---------------
(1) Includes $121,250, representing the difference between the price paid on
exercise of common stock options and the market price on the date of
exercise. The only Other Annual Compensation for each of the remaining named
officers was in the form of perquisites and was less than the level required
for reporting purposes.
7
<PAGE> 10
(2) Mr. Ronald F. Ostrow exercised stock options in December, 1993, from which
he realized benefits of $40,625, representing the difference between the
price paid for such common stock and the net proceeds of sales.
(3) Includes $44,438, representing the difference between the price paid on
exercise of common stock options and the market price on the date of
exercise.
(4) Includes $27,188, representing the difference between the price paid on
exercise of common stock options and the market price on the date of
exercise.
(5) Includes $19,219, representing the difference between the price paid on
exercise of common stock options and the market price on the date of
exercise.
(6) Includes $20,438, representing the difference between the price paid on
exercise of common stock options and the market price on the date of
exercise.
(7) Consists of contributions by the Corporation to a 401(k) Employees Savings
Plan equal to 50% of the first 4% of the employee's contribution and a pro
rated share of any discretionary contributions made by the Corporation.
OPTION GRANTS DURING LAST FISCAL YEAR
There were no options granted during the last fiscal year.
AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION VALUES
The following table sets forth information concerning stock options
exercised in the fiscal year ended February 29, 1996, including the "value
realized" upon exercise (the difference between the exercise price of the shares
acquired and the market value at the date of exercise), and the value of the
unexercised "in-the-money" options held at February 29, 1996 (the difference
between the exercise price of all such options held and the market value of the
shares covered by such options at February 29, 1996).
AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTIONS
<TABLE>
<CAPTION>
VALUE OF
UNEXERCISED
NUMBER OF IN-THE-MONEY
SHARES ACQUIRED VALUE UNEXERCISED OPTIONS
ON EXERCISE REALIZED OPTIONS AT FY-END
NAME (#) ($) AT FY-END($) ($)
- -------------------------------------- --------------- -------- ------------ ------------
<S> <C> <C> <C> <C>
Ronald F. Ostrow (1).................. 8,750 121,250 51,875 698,828
Richard Kessler (2)................... 4,500 44,438 53,875 766,547
Donald Thomson........................ 1,875 27,198 21,875 292,891
David L. Rosenthal.................... 1,500 20,438 39,000 539,913
James Martin.......................... 0 0 15,875 212,734
David Schram.......................... 0 0 16,875 230,234
</TABLE>
- ---------------
(1) On April 17, 1996, Mr. Ostrow exercised stock options on 5,000 shares at
$13.875 per share which resulted in a gain of $65,625, representing the
difference between the price paid for such common stock and the market price
on the date of exercise.
(2) On May 1, 1996, Mr. Kessler exercised stock options on 5,000 shares at $9.25
per share and on 2,344 shares at $10.625 per share which resulted in gains
of $83,750 and $36,039, respectively, representing the difference between
the price paid for such common stock and the market price on the date of
exercise.
8
<PAGE> 11
PENSION ARRANGEMENTS
On May 11, 1990, the Board of Directors of the Corporation ratified the
adoption of a 401(k) Employees Savings Plan (the "401(k) Plan"). The 401(k) Plan
is a Corporation-sponsored savings plan. The purpose of the 401(k) Plan is to
enable employees of the Corporation to accumulate savings on a tax-deferred
basis. All employees of the Corporation are eligible to participate in the
401(k) Plan, provided they are 21 years of age and have completed one (1) year
of service. Under the 401(k) Plan, eligible employees may contribute from 1% to
15% of their gross taxable income and the Corporation presently makes a matching
contribution equal to 50% of the first 4% of the employees' contribution.
EMPLOYMENT AGREEMENTS
The Corporation has employment agreements with each of its officers, the
terms of which presently expire on February 28, 1998, subject to earlier
termination in specified circumstances. Each agreement provides for the payment
of a specified minimum salary and other benefits to the extent provided by the
Corporation to all of its officers. The agreements also provide for automatic
renewals for additional periods of three years unless either party gives written
notice of termination six month prior to the expiration of any term.
PERFORMANCE COMPARISON
The graph and table on the following page compare the cumulative total
stockholder return on the Corporation's common stock from February 28, 1991
through February 29, 1996 (as measured by dividing (i) the sum of (A) the
cumulative amount of dividends for the measurement period, assuming dividend
reinvestment, and (B) the difference between the Corporation's share price at
the end and the beginning of the period; by (ii) the share price at the
beginning of the period) with the Standard & Poors Specialty Chemicals Index and
the Russell 2000, using data supplied by Star Services, Inc. The graph and table
assume an investment of $100 in the Corporation's common stock and each index on
February 28, 1991, as well as the reinvestment of dividends. The stock price
performance on the graph and table below is not necessarily indicative nor is it
intended to forecast the future performance of the Corporation's common stock.
<TABLE>
<CAPTION>
S & P
Measurement Period CHEMICALS
(Fiscal Year Covered) LeaRonal Inc. RUSSELL 2000 (SPCLTY)
<S> <C> <C> <C>
2/91 100 100 100
2/92 127 134 124
2/93 133 145 136
2/94 130 175 161
2/95 175 175 142
2/96 240 221 188
</TABLE>
9
<PAGE> 12
PROPOSAL TO ADOPT 1996 LONG-TERM INCENTIVE PLAN
On January 12, 1996, the Board of Directors of the Corporation adopted,
subject to stockholder approval, the 1996 Long-Term Incentive Plan for key
employees of the Corporation (the "1996 Incentive Plan" or "Plan"). A copy of
the 1996 Incentive Plan is included herein as Exhibit A.
Purpose
The purpose of the 1996 Incentive Plan is to enable key employees of the
Corporation to: (i) own shares of stock in the Corporation, (ii) participate in
the shareholder value which has been created, (iii) have a mutuality of interest
with other shareholders and (iv) enable the Corporation to attract, retain and
motivate key employees of particular merit.
Administration
The 1996 Incentive Plan shall be administered by a committee which has been
appointed by the Board of Directors and the members of which shall serve at the
pleasure of the Board. The Board has designated its existing Executive
Compensation Committee (the "Committee") to administer the Plan. The Committee
shall have the authority to grant to eligible employees, pursuant to the terms
of the Plan: (i) stock options, (ii) stock appreciation rights, (iii) restricted
stock, and/or (iv) long term performance awards. The Committee also shall have
the authority to determine the terms and conditions of any award granted
thereunder, including, but not limited to: the number of shares to be covered by
each such award, the share price and any restriction or limitation or any
vesting acceleration or forfeiture waiver regarding any stock option or other
award, based on such factors as the Committee shall determine in its sole
discretion.
Stock Subject to the 1996 Incentive Plan
The stock to be subject or related to awards under the 1996 Incentive Plan
shall be shares of the Corporation's stock and may be either authorized and
unissued or held in the treasury of the Corporation. The maximum number of
shares of stock authorized with respect to the grant of awards under the 1996
Incentive Plan, subject to adjustment as hereinafter provided, shall be 800,000
shares of stock. Notwithstanding the foregoing, no individual shall receive over
the term of the 1996 Incentive Plan, more than an aggregate of 30% of the shares
authorized for grant under such Plan. In the event of any merger,
reorganization, consolidation, recapitalization, stock dividend or other change
in corporate structure affecting the stock, such substitution or adjustment
shall be made in the aggregate number of shares reserved for issuance under the
1996 Incentive Plan, in the number and option price of shares subject to
outstanding options granted under the Plan and in the number and price of shares
subject to other awards made under the Plan as may be determined to be
appropriate by the Committee in its sole discretion.
Eligibility
Officers and other employees of the Corporation and/or its subsidiaries
(but excluding members of the Committee and any person who serves only as a
Director) are eligible to be granted awards under the 1996 Incentive Plan.
Stock Options
Stock Options granted under the 1996 Incentive Plan may be either Incentive
Stock Options or Non-Qualified Stock Options. The option price per share of
stock purchasable under a Stock Option shall be determined by the Committee at
the time of grant but shall be not less than 100% of the fair market value of
the stock at the time of grant. However, any Incentive Stock
10
<PAGE> 13
Option granted to any participant who, at the time the option is granted owns,
in accordance with Section 424(d) of the Internal Revenue Code (the "Code"),
more than 10% of the voting power of all classes of stock of the Corporation, or
of a parent or subsidiary corporation, must have an option price of not less
than 110% of fair market value of the stock at the time of grant. The term of
each Stock Option shall be fixed by the Committee but no Stock Option shall be
exercisable more than ten years after the date the Stock Option is granted.
Stock Appreciation Rights
Stock Appreciation Rights may be granted in conjunction with all or part of
any stock option granted under the 1996 Incentive Plan. A Stock Appreciation
Right or applicable portion thereof granted with respect to a given stock option
shall terminate and no longer be exercisable upon the termination or exercise of
the related stock option.
Restricted Stock
Shares of Restricted Stock may be issued either alone or in addition to
other awards granted under the 1996 Incentive Plan. The Committee shall
determine the officers and key employees of the Corporation and its subsidiaries
and affiliates to whom, and the time or times at which, grants of restricted
stock will be made, the number of shares to be awarded, the price (if any) to be
paid by the recipient of restricted stock, the time or times within which such
awards may be subject to forfeiture and all other conditions of the awards.
Long Term Performance Awards
Long Term Performance Awards may be awarded either alone or in addition to
other awards granted under the 1996 Incentive Plan. The Committee shall
determine the nature, length and starting date of the performance period for
each Long Term Performance Award, which shall be at least two years, and shall
determine the performance objectives to be used in valuing Long Term Performance
Awards and determining the extent to which such Long Term Performance Awards
have been earned. Performance objectives may vary from participant to
participant and between groups of participants and shall be based upon such
corporation, business unit and/or individual performance factors and criteria as
the Committee may deem appropriate, including, but not limited to, earnings per
share or return on equity.
Amendments and Termination
The Board of Directors may amend, alter or discontinue the 1996 Incentive
Plan at any time and from time to time, but no amendment, alteration or
discontinuation shall be made which would impair the rights of a participant
with respect to a Stock Option, Stock Appreciation Right, Restricted Stock, or
Long Term Performance Award which has been granted under the Plan, without the
participant's consent, or which, without the approval of the Corporation's
stockholders, would:
(a) except as expressly provided in the Plan, materially increase the
total number of shares reserved for the purpose of the Plan;
(b) decrease the option price of any Stock Option to less than 100% of
the fair market value on the date of grant;
(c) change the employees or class of employees eligible to participate
in the Plan; or
(d) extend the maximum option period under the Plan.
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<PAGE> 14
Unfunded Status of Plan
The 1996 Incentive Plan is intended to constitute an "unfunded" plan for
incentive and deferred compensation. With respect to any payments not yet made
to a participant by the Corporation, nothing contained in the Plan shall give
any participant any rights that are greater than those of a general creditor of
the Corporation.
Effective Date and Term of Plan
The 1996 Incentive Plan shall be effective on the date it is approved by a
vote of the holders of a majority of the total outstanding stock. No Stock
Option, Stock Appreciation Right, Restricted Stock or Long Term Performance
Award shall be granted pursuant to the 1996 Incentive Plan on or after the tenth
anniversary of the date of stockholder approval, but awards granted prior to
such tenth anniversary may extend beyond that date.
Options Granted
The following Non-Qualified Stock Options have been granted to certain key
employees of the Corporation, subject to approval of the 1996 Incentive Plan by
the holders of a majority of the shares of the Corporation's common stock:
<TABLE>
<CAPTION>
OFFICER NUMBER OF OPTIONS
----------------------------------------------------------- -----------------
<S> <C>
Ronald F. Ostrow........................................... 150,000
Richard Kessler............................................ 100,000
Donald Thomson............................................. 50,000
David L. Rosenthal......................................... 75,000
James Martin............................................... 35,000
David Schram............................................... 35,000
Michael Toben.............................................. 15,000
Carl Fiore................................................. 15,000
-------
Total.................................................... 475,000
</TABLE>
These Stock Options were granted by the Committee on April 11, 1996, subject to
shareholder approval of the Plan, at an option price per share equal to the fair
market value of the stock as determined by the closing selling price on the New
York Stock Exchange on the date of grant, which price was $24.50 per share.
The 1996 Incentive Plan is effective, subject to the affirmative vote of
the holders of a majority of the shares of the Corporation's common stock,
present or represented, and entitled to vote at the meeting.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE PROPOSAL TO ADOPT THE 1996
LONG-TERM INCENTIVE PLAN.
RATIFICATION OF APPOINTMENT OF AUDITORS
Subject to the approval of the stockholders at the Annual Meeting, the
Board of Directors of the Corporation has engaged the firm of Ernst & Young to
audit the books, records and accounts of the Corporation for the current fiscal
year. Ernst & Young has acted in that capacity for several years.
Representatives of Ernst & Young are expected to be present at the Annual
Meeting of Stockholders, will have the opportunity to make a statement if they
desire to do so, and are expected to be available to respond to appropriate
questions.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THIS PROPOSAL.
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<PAGE> 15
OTHER MATTERS
The Corporation has no knowledge of any other matters to be presented at
the meeting. If, however, other matters are presented at the meeting, it is the
intention of the persons named in the enclosed proxy to act in their discretion
on such other matters as may properly come before the meeting and any
adjournments thereof.
The Annual Report to Stockholders for the fiscal year ended February 29,
1996 was mailed on or about May 30, 1996 to all stockholders of record on May
26, 1996. Such Annual Report is not incorporated herein by reference and is not
to be deemed part of this Proxy Statement.
By Order of the Board of Directors
DONALD THOMSON,
Secretary
Dated: Freeport, New York
June 14, 1996
13
<PAGE> 16
EXHIBIT A
LEARONAL, INC.
1996 LONG-TERM INCENTIVE PLAN
SECTION 1. PURPOSE; DEFINITIONS.
The name of this plan is the LEARONAL 1996 Long-Term Incentive Plan (the
"Plan"). The purpose of the Plan is to enable employees of LEARONAL, INC. (the
"Corporation") to (i) own shares of stock in the Corporation, (ii) participate
in the shareholder value which has been created, (iii) have a mutuality of
interest with other shareholders and (iv) enable the Corporation to attract,
retain and motivate key employees of particular merit.
For the purposes of the Plan, the following terms shall be defined as set
forth below:
(a) "Board" means the Board of Directors of the Corporation.
(b) "Cause" means a felony conviction of a Participant or the failure of a
Participant to contest prosecution for a felony, or a Participant's willful
misconduct or dishonesty, any of which is directly and materially harmful to the
business or reputation of the Corporation, as determined by the Corporation in
its reasonable business judgment.
(c) "Code" means the Internal Revenue Code of 1986, as amended from time to
time, and any successor thereto.
(d) "Committee" means the Compensation Committee of the Board, or such
other Board committee as may be designated by the Board to administer the Plan,
or any subcommittee of either; provided, that the Committee, and any
sub-committee thereof, shall consist of two or more directors, each of whom is a
"disinterested person" within the meaning of Rule 16b-3 under the Exchange Act
and an "outside director" within the meaning of Section 162(m) of the Code.
(e) "Corporation" means LEARONAL, INC., a corporation organized under the
laws of the State of New York or any successor organization.
(f) "Disability" means permanent and total disability as determined under
the Corporation's long-term disability program.
(g) "Early Retirement" means retirement, with consent of the Committee at
the time of retirement, from active employment with the Corporation pursuant to
the early retirement provisions of the pension plan of the Corporation.
(h) "Exchange Act" means the Securities Exchange Act of 1934, as amended
from time to time. References to any provision of the Exchange Act shall be
deemed to include successor provisions thereto and regulations thereunder.
(i) "Fair Market Value" means, as of any given date, the closing selling
price of the Stock on the New York Stock Exchange (consolidated trading), or if
Stock is no longer traded on the New York Stock Exchange, then any successor
exchange or market on which the Stock is traded (the Exchange), or, if no such
sale occurs on the Exchange on such date, the fair market value of the Stock as
determined by the Committee in good faith based on the best available facts and
circumstances at the time.
(j) "Incentive Stock Option" means any Stock Option intended to be and
designated as an "Incentive Stock Option" within the meaning of Section 422 of
the Code.
(k) "Insider" means a Participant who is subject to the requirements of the
Rules (as defined below).
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(l) "Long-Term Performance Award" or "Long-Term Award" means an award made
pursuant to Section 8 below that is payable in cash and/or Stock (including
Restricted Stock) in accordance with the terms of the grant, based on
Corporation, business unit and/or individual performance over a period of at
least two years.
(m) "Non-Qualified Stock Option" means any Stock Option that is not an
Incentive Stock Option.
(n) "Normal Retirement" means retirement from active employment with the
Corporation and any Subsidiary or Affiliate pursuant to the normal retirement
provisions of the pension plan of the Corporation.
(o) "Parent" means any corporation that would constitute a parent
corporation of the Corporation, as that term is defined in Section 424(e) of the
Code.
(p) "Participant" means an employee to whom an Award is granted pursuant to
the Plan.
(q) "Plan" means the LEARONAL 1996 Long-Term Incentive Plan, as hereinafter
amended from time to time.
(r) "Restricted Stock" means an award of shares of Stock that is subject to
restrictions pursuant to Section 7 below.
(s) "Retirement" means Normal or Early Retirement.
(t) "Rules" means Section 16 of the Exchange Act.
(u) "Securities Broker" means the registered securities broker acceptable
to the Corporation who agrees to effect the cashless exercise of an Option
pursuant to Section 5(l) hereof.
(v) "Stock" means the Common Stock $1.00 par value per share, of the
Corporation.
(w) "Stock Appreciation Right" means the right, pursuant to an award
granted under Section 6 below, to surrender to the Corporation all (or a
portion) of a Stock Option in exchange for an amount equal to the difference
between (i) the Fair Market Value, as of the date such Stock Option (or such
portion thereof) is surrendered, of the shares of Stock covered by such Stock
Option (or such portion thereof), and (ii) the aggregate exercise price of such
Stock Option (or such portion thereof).
(x) "Stock Option" or "Option" means any option to purchase shares of Stock
(including Restricted Stock, if the Committee so determines) granted pursuant to
Section 5 below.
(y) "Subsidiary" means any corporation that would constitute a subsidiary
corporation of the Corporation, as that term is defined in Section 424(f) of the
Code.
SECTION 2. ADMINISTRATION
The Plan shall be administered by a Committee which shall be appointed by
the Board and which shall serve at the pleasure of the Board.
The Committee shall have the authority to grant to eligible employees,
pursuant to the terms of the Plan: (i) Stock Options, (ii) Stock Appreciation
Rights, (iii) Restricted Stock, and/or (iv) Long-Term Performance Awards.
In particular, the Committee shall have the authority:
(a) to select the officers and other employees of the Corporation to whom
Stock Options, Stock Appreciation Rights, Restricted Stock and Long-Term
Performance Awards may from time to time be granted hereunder;
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<PAGE> 18
(b) to determine whether and to what extent Incentive Stock Options,
Non-Qualified Stock Options, Stock Appreciation Rights, Restricted Stock and
Long-Term Performance Awards, or any combination thereof, are to be granted
hereunder;
(c) to determine the number of shares to be covered by each such award
granted hereunder;
(d) to determine the terms and conditions, not inconsistent with the terms
of the Plan, of any award granted hereunder: including, but not limited to, the
share price and any restriction or limitation, or any vesting acceleration or
forfeiture waiver regarding any Stock Option or other award and/or the shares of
Stock relating thereto, based on such factors as the Committee shall determine,
in its sole discretion;
(e) to determine whether and under what circumstances a Stock Option may be
settled in cash or stock, including Restricted Stock under Section 5(k);
(f) to determine whether and under what circumstances a Stock Option may be
exercised without a payment of cash under Section 5(l); and
(g) to determine whether, to what extent and under what circumstances Stock
and other amounts payable with respect to an award under this Plan shall be
deferred.
The Committee shall have the authority to adopt, alter and repeal such
administrative rules, guidelines and practices governing the Plan as it shall,
from time to time, deem advisable; to interpret the terms and provisions of the
Plan and any award issued under the Plan (and any agreements relating thereto);
and to otherwise supervise the administration of the Plan.
All decisions made by the Committee pursuant to the provisions of the Plan
shall be final and binding on all persons, including the Corporation and Plan
Participants.
SECTION 3. STOCK SUBJECT TO THE PLAN
(a) STOCK SUBJECT TO PLAN. The stock to be subject or related to awards
under the Plan shall be shares of the Corporation's Stock and may be either
authorized and unissued or held in the treasury of the Corporation. The maximum
number of shares of Stock authorized with respect to the grant of awards under
the Plan, subject to adjustment in accordance with paragraph 3(d) below, shall
be 800,000 shares of Stock, any or all of such 800,000 shares of Stock may be
granted for awards of Incentive Stock Options.
Notwithstanding the foregoing, no individual shall receive, over the term
of the Plan, more than an aggregate of 30% of the shares authorized for grant
under the Plan.
(b) COMPUTATION OF STOCK AVAILABLE FOR THE PLAN. For the purpose of
computing the total number of shares of Stock available for distribution at any
time during which the Plan is in effect in connection with the exercise of
options awarded under the Plan, there shall be debited against the total number
of shares of Stock determined to be available pursuant to paragraphs (a), and
(c) of this Section 3, the maximum number of shares of Stock subject to issuance
upon exercise of options or other stock based awards made under the Plan.
(c) UNUSED, FORFEITED AND REACQUIRED SHARES. Any unused portion of the
shares available for award shall be carried forward and shall be made available
for Plan awards in succeeding calendar years. The shares related to the
unexercised or undistributed portion of any terminated, expired or forfeited
award for which no material benefit was received by a participant (i.e.
dividends) also shall be made available for distribution in connection with
future awards under the Plan to the extent permitted to receive exemptive relief
pursuant to the Rules. Any shares made available for distribution in connection
with future awards under this
A-3
<PAGE> 19
Plan pursuant to this paragraph (c) shall be in addition to the shares available
pursuant to paragraph (a) of this Section 3.
(d) OTHER ADJUSTMENT. In the event of any merger, reorganization,
consolidation, recapitalization, Stock dividend, or other change in corporate
structure affecting the Stock, such substitution or adjustment shall be made in
the aggregate number of shares reserved for issuance under the Plan, in the
number and option price of shares subject to outstanding Options granted under
the Plan and in the number and price of shares subject to other Awards made
under the Plan, as may be determined to be appropriate by the Committee in its
sole discretion, provided that the number of shares subject to any award shall
always be a whole number. Such adjusted option price shall also be used to
determine the amount payable by the Corporation upon the exercise of any Stock
Appreciation Right associated with any Stock Option.
SECTION 4. ELIGIBILITY
Officers and other employees of the Corporation (but excluding members of
the Committee and any person who serves only as a director) of the Corporation
and/or its Subsidiaries are eligible to be granted awards under the Plan.
SECTION 5. STOCK OPTIONS
Stock Options may be granted alone, in addition to or in tandem with other
awards granted under the Plan. Any Stock Option granted under the Plan shall be
in such form as the Committee may, from time to time, approve.
Stock Options granted under the Plan may be of two types: (i) Incentive
Stock Options and (ii) Non-Qualified Stock Options.
The Committee shall have the authority to grant any Participant Incentive
Stock Options, Non-Qualified Stock Options, or both types of Stock Options (in
each case with or without Stock Appreciation Rights). To the extent that any
Stock Option does not qualify as an Incentive Stock Option, it shall constitute
a separate Non-Qualified Stock Option. Anything in the Plan to the contrary
notwithstanding, no term of this Plan relating to Incentive Stock Options shall
be interpreted, amended or altered, nor shall any discretion or authority
granted under the Plan be so exercised, so as to disqualify the Plan under
Section 422 of the Code, or, without the consent of the Participant(s) affected,
to disqualify any Incentive Stock Option under such Section 422.
Options granted under the Plan shall be subject to the following terms and
conditions and shall contain such additional terms and conditions, not
inconsistent with the terms of the Plan, as the Committee shall deem
appropriate:
(a) OPTION PRICE. The option price per share of Stock purchasable under a
Stock Option shall be determined by the Committee at the time of grant but shall
be not less than 100% of the Fair Market Value of the Stock at the time of
grant. However, any Incentive Stock Option granted to any Participant who, at
the time the Option is granted owns, in accordance with 424(d) of the Code, more
than 10% of the voting power of all classes of Stock of the Corporation or of a
Parent or Subsidiary corporation must have an option price of not less than 110%
of Fair Market Value of the stock at the time of grant.
(b) OPTION TERM. The term of each Stock Option shall be fixed by the
Committee, but no Stock Option shall be exercisable more than ten years after
the date the Stock Option is granted. However, any Incentive Stock Option
granted to any Participant who, at the time the Option is granted owns, in
accordance with 424(d) of the Code, more than 10% of the voting power of all
classes of Stock of the Corporation or of a Parent or Subsidiary corporation may
not have a term of more than five years. No Option may be exercised by any
person after expiration of the term of the Option.
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<PAGE> 20
(c) EXERCISABILITY. Stock Options shall be exercisable at such time or
times and subject to such terms and conditions as shall be determined by the
Committee at or after grant, provided, however, that, except as provided in
Section 5(f), unless otherwise determined by the Committee at or after grant, no
Stock Option shall be exercisable during the six months following the date of
the granting of the Stock Option. If the Committee provides, in its discretion,
that any Stock Option is exercisable only in installments, the Committee may
waive such installment exercise provisions at any time at or after grant in
whole or in part, based on such factors as the Committee shall determine, in its
sole discretion.
(d) METHOD OF EXERCISE. Subject to whatever installment exercise
provisions apply under Section 5(c), Stock Options may be exercised in whole or
in part at any time and from time to time during the option period, by giving
written notice of exercise to the Corporation specifying the number of shares to
be purchased.
Such notice shall be accompanied by payment in full of the purchase price,
either by certified or bank check, or such other instrument as the Committee may
accept. As determined by the Committee, in its sole discretion, at or after
grant, payment in full or in part may also be made in the form of shares of
unrestricted Stock owned by the Participant, in which case, satisfaction of the
Option price shall be based on the Fair Market Value of the Stock, as determined
by the Committee, on the date the Option is exercised. In the case of an
Incentive Stock Option, the right to make payment in the form of already owned
shares may be authorized only at the time of Option grant.
The Committee, in its sole discretion, may at the time of grant or such
later time as it determines, permit payment of the option exercise price of a
Non-Qualified Stock Option to be made in whole or in part in the form of
Restricted Stock. If such payment is permitted, then such Restricted Stock shall
remain (or be) restricted in accordance with the original terms of the
Restricted Stock award in question, and any additional Stock received upon the
exercise, shall be subject to the same forfeiture restrictions, unless otherwise
determined by the Committee, in its sole discretion, at or after grant.
If payment of the Option exercise price of a Non-Qualified Option is made
in whole or in part in the form of unrestricted Stock already owned by the
Participant, the Corporation may require that the Stock be owned by the
Participant for a period of six months or longer so that such payment would not
result in a pyramid exercise.
No shares of Stock shall be issued until full payment therefore has been
made. A Participant shall generally have the rights to dividends or other rights
of a shareholder with respect to shares subject to the Option when the
Participant has given written notice of exercise, has paid in full for such
shares, and, if requested, has given the representation described in Section
11(a).
(e) NON-TRANSFERABILITY OF OPTIONS. No Stock Option shall be transferable
by the Participant otherwise than by will or by the laws of descent and
distribution, and all Stock Options shall be exercisable, during the
Participant's lifetime, only by the Participant.
(f) TERMINATION BY REASON OF DEATH. Subject to Section 5(j), if a
Participant's employment by the Corporation and any Subsidiary terminates by
reason of death, any Stock Option held by such Participant may thereafter by
exercised, to the extent then exercisable or on such accelerated basis as the
Committee may determine at or after grant, by the legal representative of the
estate or by the legatee of the Participant under the will of the Participant,
for a period of one year (or such shorter period as the Committee may specify at
grant) from the date of such death or until the expiration of the stated term of
such Stock Option, whichever period is the shorter.
(g) TERMINATION BY REASON OF DISABILITY. Subject to Section 5(j), if a
Participant's employment by the Corporation and any Subsidiary terminates by
reason of Disability, any
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<PAGE> 21
Stock Option held by such Participant may thereafter be exercised by the
Participant, to the extent it was exercisable at the time of termination, or on
such accelerated basis as the Committee may determine at or after grant, for a
period of one year (or such shorter period as the Committee may specify at
grant) from the date of such termination of employment or until the expiration
of the stated term of such Stock Option, whichever period is the shorter.
(h) TERMINATION BY REASON OF RETIREMENT. Subject to Section 5(j), if a
Participant's employment by the Corporation terminates by reason of Normal or
Early Retirement, any Stock Option held by such Participant may thereafter be
exercised by the Participant, to the extent it was exercisable at the time of
such Retirement or on such accelerated basis as the Committee may determine at
or after grant, for a period of one year (or such shorter period as Committee
may specify at grant) from the date of such termination of employment or the
expiration of the stated term of such Stock Option, whichever period is the
shorter. Notwithstanding the foregoing, Incentive Stock Options may be exercised
for the lesser of three months from the date of such termination of employment
or the balance of such Stock Option's term.
(i) OTHER TERMINATION. Unless otherwise determined by the Committee at or
after grant, if an Participant's employment by the Corporation terminates for
any reason other than death, Disability or Normal or Early Retirement, the Stock
Option shall thereupon terminate, except that such Stock Option may be exercised
to the extent that it was exercised at the time of such termination, for the
lesser of three months or the balance of such Stock Option's term if the
Participant is involuntarily terminated by the Corporation without Cause.
(j) INCENTIVE STOCK OPTION LIMITATIONS. To the extent required for
"Incentive Stock Option" status under Section 422 of the Code, the aggregate
Fair Market Value (determined as of the time of grant) of the Stock with respect
to which Incentive Stock Options are exercisable for the first time by the
Participant during any calendar year under the Plan and/or any other stock
option plan of the Corporation and its Parent and Subsidiaries, if any, shall
not exceed $100,000.
(k) CASH-OUT OF OPTION: SETTLEMENT OF SPREAD VALUE. On receipt of written
notice to exercise, the Committee may, in its sole discretion, elect to cash out
all or part of the portion of the option(s) to be exercised by paying the
Participant an amount, in cash or Stock, equal to the excess of the Fair Market
Value of the Stock over the option price (the "Spread Value") on the effective
date of such cash-out. In addition, if the option agreement so provides at grant
or is amended after grant and prior to exercise to so provide (with the
Participant's consent), the Committee may require that all or part of the shares
to be issued with respect to the Spread Value of an exercised option take the
form of Restricted Stock, which shall be valued on the date of exercise on the
basis of the Fair Market Value of such Restricted Stock determined without
regard to the forfeiture restrictions involved.
(l) CASHLESS EXERCISE. To the extent permitted under the applicable laws
and regulations under Section 16 of the Securities Exchange Act of 1934, as
amended, and the Rules promulgated thereunder, and with the consent of the
Committee, the Corporation agrees to cooperate in a "cashless exercise" of an
Option. The cashless exercise shall be effected by the Participant delivering to
the Securities Broker instructions to sell a sufficient number of shares of
Common Stock to cover the costs and expenses associated therewith.
SECTION 6. STOCK APPRECIATION RIGHTS
(a) GRANT AND EXERCISE. Stock Appreciation Rights may be granted in
conjunction with all or part of any Stock Option granted under the Plan. In the
case of a Non-Qualified Stock Option, such rights may be granted either at or
after the time of the grant of such Stock Option. In the case of an Incentive
Stock Option, such rights may be granted only at the time of the grant of such
Stock Option.
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A Stock Appreciation Right or applicable portion thereof granted with
respect to a given Stock Option shall terminate and no longer be exercisable
upon the termination or exercise of the related Stock Option, except that,
unless otherwise determined by the Committee, in its sole discretion, at the
time of grant, a Stock Appreciation Right granted with respect to less than the
full number of shares covered by a related Stock Option shall not be reduced
until the number of shares covered by an exercise or termination of the related
Stock Option exceeds the number of shares not covered by the Stock Appreciation
Right.
A Stock Appreciation Right may be exercised by a Participant, in accordance
with Section 6(b), by surrendering the applicable portion of the related Stock
Option. Upon such exercise and surrender, the Participant shall be entitled to
receive an amount determined in the manner prescribed in Section 6(b). Stock
Options which have been so surrendered, in whole or in part, shall no longer be
exercisable to the extent the related Stock Appreciation Rights have been
exercised.
(b) TERMS AND CONDITIONS. Stock Appreciation Rights shall be subject to
such terms and conditions, not inconsistent with the provisions of the Plan, as
shall be determined from time to time by the Committee, including the following:
(i) Stock Appreciation Rights shall be exercisable only at such time
or times and to the extent that the Stock Options to which they relate, if
any, shall be exercisable in accordance with the provisions of Section 5
and this Section 6 of the Plan; provided, however, that any Stock
Appreciation Right granted subsequent to the grant of the related Stock
Option shall not be exercisable during the first six months of its term,
except that this special limitation shall not apply in the event of death
or Disability of the Participant prior to the expiration of the six-month
period.
(ii) Upon the exercise of a Stock Appreciation Right, a Participant
shall be entitled to receive up to, but not more than, an amount in cash
and/or shares of Stock equal in value to the excess of the Fair Market
Value of one share of Stock over the option price per share specified in
the related Stock Option, multiplied by the number of shares in respect of
which the Stock Appreciation Right shall have been exercised, with the
Committee having the right to determine the form of payment.
(iii) Upon the exercise of a Stock Appreciation Right, the Stock
Option or part thereof to which such Stock Appreciation Right is related
shall be deemed to have been exercised for the purpose of the limitation
set forth in Section 3 of the Plan on the number of shares of Stock to be
issued under the Plan, but only to the extent of the number of shares
issued under the Stock Appreciation Right at the time of exercise based on
the value of the Stock Appreciation Right at such time.
SECTION 7. RESTRICTED STOCK
(a) ADMINISTRATION. Shares of Restricted Stock may be issued either alone
or in addition to other awards granted under the Plan. The Committee shall
determine the officers and key employees of the Corporation and its Subsidiaries
and Affiliates to whom, and the time or times at which, grants of Restricted
Stock will be made, the number of shares to be awarded, the price (if any) to be
paid by the recipient of Restricted Stock (subject to Section 7(b)), the time or
times within which such awards may be subject to forfeiture, and all other
conditions of the awards.
The Committee may condition the grant of Restricted Stock upon the
attainment of specified performance goals or such other factors as the Committee
may determine, in its sole discretion.
The provisions of Restricted Stock awards need not be the same with respect
to each recipient.
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(b) AWARDS AND CERTIFICATES. The prospective recipient of a Restricted
Stock award shall not have any rights with respect to such award, unless and
until such recipient has executed an agreement evidencing the award and has
delivered a fully executed copy thereof to the Corporation, and has otherwise
complied with the applicable terms and conditions of such award.
(i) The purchase price for shares of Restricted Stock shall be at
least equal to their par value.
(ii) Awards of Restricted Stock must be accepted within a period of 60
days (or such shorter period as the Committee may specify at grant) after
the award date, by executing a Restricted Stock Award Agreement and paying
whatever price (if any) is required under Section 7(b)(i).
(iii) Each participant receiving a Restricted Stock award shall be
issued a stock certificate in respect of such shares of Restricted Stock.
Such certificate shall be registered in the name of such participant, and
shall bear an appropriate legend referring to the terms, conditions, and
restrictions applicable to such award, substantially in the following form:
"The transferability of this certificate and the shares of stock
represented hereby are subject to the terms and conditions (including
forfeiture) of the LEARONAL 1996 Long-Term Incentive Plan and an
Agreement entered into between the registered owner and LEARONAL, INC.
Copies of such Plan and Agreement are on file in the offices of
LEARONAL, INC."
(iv) The Committee shall require that the stock certificates
evidencing such shares be held in custody by the Corporation until the
restrictions thereon shall have lapsed.
(c) RESTRICTIONS AND CONDITIONS. The shares of Restricted Stock awarded
pursuant to this Section 7 shall be subject to the following restrictions and
conditions:
(i) Subject to the provisions of this Plan and the award agreement,
during a period set by the Committee commencing with the date of such award
(the "Restriction Period"), the participant shall not be permitted to sell,
transfer, pledge, assign or otherwise encumber shares of Restricted Stock
awarded under the Plan. Within these limits, the Committee, in its sole
discretion, may provide for the lapse of such restrictions in installments
and may accelerate or waive such restrictions in whole or in part, based on
service, performance and/or such other factors or criteria as the Committee
may determine, in its sole discretion.
(ii) Except as provided in this paragraph (ii) and Section 7(c)(i),
the participant shall have, with respect to the shares of Restricted Stock,
all of the rights of a shareholder of the Corporation, including the right
to vote the shares, and the right to receive any cash dividends. The
Committee, in its sole discretion, as determined at the time of award, may
permit or require the payment of cash dividends to be deferred and, if the
Committee so determines, reinvested in additional Restricted Stock to the
extent shares are available under Section 3.
(iii) Subject to the applicable provisions of the award agreement and
this Section 7, upon termination of a participant's employment with the
Corporation for any reason during the Restriction Period, all shares still
subject to restriction shall be forfeited by the participant.
(iv) In the event of hardship or other special circumstances of a
participant whose employment with the Corporation is involuntarily
terminated (other than for Cause), the Committee may, in it sole
discretion, waive in whole or in part any or all remaining restrictions
with respect to such participant's shares of Restricted Stock, based on
such factors as the Committee may deem appropriate.
A-8
<PAGE> 24
(v) If and when the Restriction Period expires without a prior
forfeiture of the Restricted Stock subject to such Restriction Period, the
certificates for such shares shall be delivered to the participant
promptly, with the restrictive legends removed.
SECTION 8. LONG TERM PERFORMANCE AWARDS
(a) AWARDS AND ADMINISTRATION. Long Term Performance Awards may be awarded
either alone or in addition to other awards granted under the Plan. The
Committee shall determine the nature, length and starting date of the
performance period (the "Performance Period") for each Long Term Performance
Award, which shall be at least two years, and shall determine the performance
objectives to be used in valuing Long Term Performance Awards and determining
the extent to which such Long Term Performance Awards have been earned.
Performance objectives may vary from participant to participant and between
groups of participants and shall be based upon such Corporation, business unit
and/or individual performance factors and criteria as the Committee may deem
appropriate, including, but not limited to, earnings per share or return on
equity. Performance Periods may overlap and participants may participate
simultaneously with respect to Long Term Performance Awards that are subject to
different Performance Periods and/or different performance factors and criteria.
At the beginning of each Performance Period, the Committee shall determine
for each Long Term Performance Award subject to such Performance period the
range of dollar values or number of shares of Stock to be awarded to the
participant at the end of the Performance Period if and to the extent that the
relevant measure(s) of performance for such Long Term Performance Award is (are)
met. Such dollar values or number of shares of Stock may be fixed or may vary in
accordance with such performance and/or other criteria as may be specified by
the Committee, in its sole discretion.
(b) ADJUSTMENT OF AWARDS. In the event of special or unusual events or
circumstances affecting the application of one or more performance objectives to
a Long Term Performance Award, the Committee may revise the performance
objectives and/or underlying factors and criteria applicable to the Long Term
Performance Awards affected, to the extent deemed appropriate by the Committee,
in its sole discretion, to avoid unintended windfalls or hardship.
(c) TERMINATION OF EMPLOYMENT. If a Participant terminates employment with
the Corporation during a Performance Period because of death, Disability or
Retirement, such Participant shall be entitled to a payment with respect to each
outstanding Long Term Performance Award at the end of the applicable Performance
Period, but only to the extent provided in the relevant award agreement(s). All
determinations hereunder shall be made by the Committee, in its sole discretion.
However, the Committee may provide for an earlier payment in settlement of
such award in such amount and under such terms and conditions as the Committee
deems appropriate.
If a Participant terminates employment with the Corporation during a
Performance Period for any other reason, then such participant shall not be
entitled to any payment with respect to the Long Term Performance Awards subject
to such Performance Period, unless the Committee shall otherwise determine, in
its sole discretion.
(d) FORM OF PAYMENT. The earned portion of a Long Term Performance Award
may be paid currently or on a deferred basis with such interest or earnings
equivalent as may be determined by the Committee, in its sole discretion.
Payment shall be made in the form of cash or whole shares of Stock, including
Restricted Stock, either in a lump sum payment or in annual installments
commencing as soon as practicable after the end of the relevant Performance
Period, all as the Committee shall determine at or after grant. If and to the
extent a Long Term Performance Award is payable in Stock and the full amount of
such value is not paid in Stock,
A-9
<PAGE> 25
then the shares of Stock representing the portion of the value of the Long Term
Performance Award not paid in Stock shall again become available for award under
the Plan.
SECTION 9. AMENDMENTS AND TERMINATION
The Board may amend, alter, or discontinue the Plan at any time and from
time to time, but no amendment, alteration, or discontinuation shall be made
which would impair the rights of a Participant or participants with respect to a
Stock Option, Stock Appreciation Right, Restricted Stock or Long Term
Performance Award which has been granted under the Plan, without the
Participant's or participants' consent, or which, without the approval of the
Corporation's stockholders, would:
(a) except as expressly provided in this Plan, materially increase the
total number of shares reserved for the purpose of the Plan;
(b) decrease the option price of any Stock Option to less than 100% of the
Fair Market Value on the date of grant;
(c) change the employees or class of employees eligible to participate in
the Plan; or
(d) extend the maximum option period under Section 5(b) of the Plan.
The Committee may amend the terms of any Stock Option or other award
theretofore granted, prospectively or retroactively, but, subject to Section 3
above, no such amendment shall impair the rights of any holder without the
holder's consent. The Committee may also substitute new Stock Options for
previously granted Stock Options, including previously granted Stock Options
having higher option prices.
Subject to the above provisions, the Board shall have broad authority to
amend the Plan to take into account changes in applicable tax laws and
accounting rules, as well as other developments.
SECTION 10. UNFUNDED STATUS OF PLAN
The Plan is intended to constitute an "unfunded" plan for incentive and
deferred compensation. With respect to any payments not yet made to a
Participant by the Corporation, nothing contained herein shall give any such
Participant any rights that are greater than those of a general creditor of the
Corporation. In its sole discretion, the Committee may authorize the creation of
trusts or other arrangements to meet the obligations created under the Plan to
deliver Stock or payments in lieu of or with respect to awards hereunder,
provided, however, that, unless the Committee otherwise determines with the
consent of the affected participant, the existence of such trusts or other
arrangements is consistent with the "unfunded" status of the Plan.
SECTION 11. GENERAL PROVISIONS
(a) The Committee may require each person purchasing shares pursuant to a
Stock Option under the Plan to represent to and agree with the Corporation in
writing that the Participant is acquiring the shares without a view to
distribution thereof. The certificates for such shares may include any legend
which the Committee deems appropriate to reflect any restrictions on transfer.
All certificates for shares of Stock or other securities delivered under
the Plan shall be subject to such stock-transfer orders and other restrictions
as the Committee may deem advisable under the rules, regulations, and other
requirements of the Exchange Act, any stock exchange upon which the Stock is
then listed, and any applicable Federal or state securities law, and the
Committee may cause a legend or legends to be put on any such certificates to
make appropriate reference to such restrictions.
A-10
<PAGE> 26
(b) Nothing contained in this Plan shall prevent the Board of Directors
from adopting other or additional compensation arrangements, subject to
stockholder approval if such approval is required; and such arrangements may be
either generally applicable or applicable only in specific cases.
(c) The adoption of the Plan shall not confer upon any employee of the
Corporation any right to continued employment with the Corporation, as the case
may be, nor shall it interfere in any way with the right of the Corporation to
terminate the employment of any of its employees at any time.
(d) No later than the date as of which an amount first becomes includible
in the gross income of the participant for Federal income tax purposes with
respect to any award under the Plan, the participant shall pay to the
Corporation, or make arrangements satisfactory to the Committee regarding the
payment of, any Federal, state, or local taxes of any kind required by law to be
withheld with respect to such amount. Unless otherwise determined by the
Committee, the minimum required withholding obligations may be settled with
Stock, including Stock that is part of the award that gives rise to the
withholding requirement. The obligations of the Corporation under the Plan shall
be conditional on such payment or arrangements and the Corporation shall, to the
extent permitted by law, have the right to deduct any such taxes from any
payment of any kind otherwise due to the participant.
(e) At the time of grant, the Committee may provide in connection with any
grant made under this Plan that the shares of Stock received as a result of such
grant shall be subject to a right of first refusal, pursuant to which the
participant shall be required to offer to the Corporation any shares that the
participant wishes to sell, with the price being the then Fair Market Value of
the Stock, subject to such other terms and conditions as the Committee specify
at the time of grant.
(f) The reinvestment of dividends in additional Restricted Stock (or in
other types of Plan awards) at the time of any dividend payment shall only be
permissible if sufficient shares of Stock are available under Section 3 for such
reinvestment (taking into account then outstanding Stock Options and other Plan
awards).
(g) The Committee shall establish such procedures as it deems appropriate
for a participant to designate a beneficiary to whom any amounts payable in the
event of the participant's death are to be paid.
(h) The Plan and all awards made and actions taken thereunder shall be
governed by and construed in accordance with the laws of the State of New York.
SECTION 12. EFFECTIVE DATE OF PLAN
The Plan shall be effective on the date it is approved by a vote of the
holders of a majority of the total outstanding Stock.
SECTION 13. TERM OF PLAN
No Stock Option, Stock Appreciation Right, Restricted Stock or Long Term
Performance Award shall be granted pursuant to the Plan on or after the tenth
anniversary of the date of stockholder approval, but awards granted prior to
such tenth anniversary may extend beyond that date.
A-11
<PAGE> 27
PROXY PROXY
LEARONAL, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned stockholder of LeaRonal, Inc., hereby appoints BARNET D. OSTROW
and FRED I. NOBEL, and each of them, attorneys and proxies, with full power of
substitution, to vote at the Annual Meeting of Stockholders to be held at the
Garden City Hotel, 45 Seventh Street, Garden City, New York 11530, on Tuesday,
July 16, 1996 at 10:00 A.M. (Eastern Daylight Savings Time), and at any
adjournments thereof, in the name of the undersigned and with the same force
and effect as the undersigned could do if personally present, upon the matters
set forth below as indicated.
(CONTINUED ON OTHER SIDE)
<PAGE> 28
LEARONAL, INC.
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY. /X/
1. ELECTION OF DIRECTORS: FOR ALL
Barnet D. Ostrow, Fred I. Nobel, Ronald F. Ostrow, FOR WITHHELD EXCEPT
Richard Kessler, Sol Berg, Carl N. Gral, Irwin / / / / / /
Lieber, Arthur M. Winston and Kenneth L. Stein.
INSTRUCTION: To withhold authority to vote for
any Individual nominee, write that nominee's name
in the space provided below:
--------------------------------------------------
PLEASE DATE AND SIGN EXACTLY AS NAME APPEARS ABOVE.
2. RATIFICATION OF INCENTIVE PLAN: the FOR AGAINST ABSTAIN
proposal to adopt the Corporation's 1996 Long- / / / / / /
Term Incentive Plan.
3. RATIFICATION OF SELECTION OF AUDITORS: FOR AGAINST ABSTAIN
the proposal to ratify the appointment of Ernst & / / / / / /
Young as auditors of the Corporation for the
current fiscal year.
4. In their discretion, to act on any other matters which may properly come
before the meeting and any adjournments thereof.
The shares represented by this Proxy will be voted at the
meeting. IF NO CONTRARY INSTRUCTIONS ARE INDICATED, THIS
PROXY SHALL BE DEEMED TO GRANT AUTHORITY TO VOTE "FOR"
ALL NOMINEES AS DIRECTORS, "FOR" THE PROPOSAL TO ADOPT
THE CORPORATION'S 1996 LONG-TERM INCENTIVE PLAN AND
"FOR" THE PROPOSAL TO RATIFY THE APPOINTMENT OF ERNST &
YOUNG AS AUDITORS OF THE CORPORATION FOR THE CURRENT
FISCAL YEAR. (Please sign here exactly as your name
appears hereon. When signing as attorney, executor,
administrator, trustee, guardian, or in any other
representative capacity, please give your full title.)
Dated: , 1996
-----------------------------------------------------------------
(please date this Proxy)
Signature of Stockholder:
----------------------------------------------------
LEARONAL, INC.
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY. /X/
