<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
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
/X/ Definitive proxy statement
/ / Definitive additional materials
/ / Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
LOCTITE CORPORATION
(Name of Registrant as Specified in Its Charter)
LOCTITE CORPORATION
(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (Check the appropriate box):
/X/ $125 per Exchange Act Rule 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 transactions applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:(1)
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
/ / 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 registrations 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:
- --------------------------------------------------------------------------------
- ---------------
(1)Set forth the amount on which the filing fee is calculated and state how it
was determined.
<PAGE> 2
LOCTITE CORPORATION
NOTICE OF THE 1994 ANNUAL MEETING OF STOCKHOLDERS
To the Stockholders:
The 1994 Annual Meeting of Stockholders of Loctite Corporation will be held
on the site of the Company's new North American Group headquarters and research
facilities at 1001 Trout Brook Crossing, Rocky Hill, Connecticut on Wednesday,
April 27, 1994 at 3:00 p.m. (Local Time) for the following purposes:
1. To elect nine Directors as described in the attached Proxy Statement to
hold office until the next Annual Meeting of Stockholders and until
their successors are elected and qualified;
2. To confirm the appointment of independent accountants for the current
fiscal year; and
3. To transact such other business as may properly come before said meeting
or any adjournments thereof.
The Board of Directors has fixed the close of business on Friday, March 11,
1994, as the record date for the determination of stockholders who are entitled
to notice of and to vote at this meeting and any and all adjournments thereof.
By Order of the Board of Directors
Eugene F. Miller
Secretary
Hartford, Connecticut 06106
March 18, 1994
YOU ARE CORDIALLY INVITED TO ATTEND THE MEETING. WHETHER OR NOT YOU PLAN TO
ATTEND, PLEASE SIGN, DATE AND VOTE OR OTHERWISE INDICATE YOUR CHOICES WITH
RESPECT TO THE MATTERS TO BE VOTED UPON ON THE ACCOMPANYING PROXY AND RETURN
YOUR PROXY CARD PROMPTLY IN THE ENCLOSED ENVELOPE, WHICH REQUIRES NO POSTAGE IF
MAILED IN THE UNITED STATES. IF FOR ANY REASON YOU DESIRE TO REVOKE YOUR PROXY,
YOU MAY DO SO AT ANY TIME BEFORE THE VOTING.
<PAGE> 3
LOCTITE CORPORATION
10 COLUMBUS BOULEVARD
HARTFORD, CONNECTICUT 06106
PROXY STATEMENT
This Proxy Statement is being furnished to stockholders of Loctite
Corporation (the "Company") in connection with the solicitation by the Board of
Directors of proxies for use at the Annual Meeting of Stockholders to be held on
the site of the Company's new North American Group headquarters and research
facilities at 1001 Trout Brook Crossing, Rocky Hill, Connecticut on Wednesday,
April 27, 1994 at 3:00 p.m. and at any and all adjournments thereof. This Proxy
Statement and the accompanying form of Proxy are being mailed to stockholders on
or about March 18, 1994.
The Board of Directors has fixed the close of business on Friday, March 11,
1994 as the record date for the determination of stockholders entitled to notice
of and to vote at the meeting. On that date, the Company had 35,377,625 shares
of Common Stock outstanding and entitled to vote. Each stockholder is entitled
to one vote per share of Common Stock held by such stockholder on each matter
submitted to a vote.
You are encouraged to read this Proxy Statement and to fill in, date, sign,
and return the enclosed proxy. A stockholder executing and returning a proxy has
the power to revoke it at any time before it is voted at the meeting by filing
with the Secretary of the Company an instrument revoking it or a duly executed
proxy bearing a later date or by attending the meeting and voting in person.
Attendance at the meeting will not in and of itself constitute revocation of a
proxy. Properly executed proxies, not revoked, will be voted in accordance with
the instructions contained thereon. Unless a contrary specification is made
thereon, it is the intention of the persons named on the accompanying proxy to
vote FOR the election of the nominees listed below as Directors and FOR Proposal
2 on the accompanying Notice of Meeting and otherwise in the discretion of the
Proxies.
The cost of solicitation of proxies will be borne by the Company. In
addition to this solicitation by mail, officers and regular employees of the
Company may, without receiving additional compensation therefor, make
solicitations by telephone, mail or personal interviews; and arrangements may be
made with banks, brokerage firms and others to forward proxy material to their
principals. The Company will defray the expenses of such additional
solicitations.
1
<PAGE> 4
PROPOSAL 1
ELECTION OF DIRECTORS
The Company's By-Laws provide that the maximum number of Directors is
twelve. At the Annual Meeting, nominations will be made for nine Directors. All
elected Directors will hold office until the next Annual Meeting of the
Stockholders of the Company and until their respective successors are duly
elected and qualified. The nominees for election as Directors are listed on the
following pages with brief statements of their principal occupations and other
information. All nominees have been designated as such by the Board of Directors
based on the recommendations of its Committee on Human Resources, none of the
members of which is an employee of the Company. It is intended that, unless
authorization to do so is withheld, the shares represented by the enclosed proxy
will be voted for the election of the nine nominees set forth below.
All of the nominees were elected by the stockholders to their present terms
at the 1993 Annual Meeting. All nominees have consented to being named herein
and have agreed to serve if elected. In the event any such nominees shall have
become at the time of the meeting unable or unwilling to serve as a Director (an
event not now anticipated), the persons named as proxies intend to vote the
shares to which the proxy relates for the remaining nominees and for such
substitute nominee or nominees as shall be recommended by the Committee on Human
Resources of the Board of Directors.
The election of Directors requires the affirmative vote of a plurality of
the shares of Common Stock present in person or represented by proxy at the
annual meeting and entitled to vote on the election of directors. Votes withheld
and broker non-votes are not counted as votes in favor of any nominee.
NOMINEES FOR ELECTION AS DIRECTORS
ROBERT E. IX, age 64. Mr. Ix is the former Chairman and Chief Executive
Officer of Cadbury Schweppes Inc., a food and confectionary company based in the
United Kingdom. He is a Director of Northeast Bancorp Inc., a commercial bank
holding company; New England Frozen Foods Inc., a distributor of frozen foods;
and Health Waters, Inc., a distributor of bottled water. He is Chairman of the
Committee on Human Resources and has been a Director of the Company since 1978.
FREDERICK B. KRIEBLE, age 52. Mr. Krieble is the President of Management I,
Limited and Management II, Limited, which are family investment management
companies. He is a former Treasurer of the Company and son of Robert H. Krieble,
the retired Chairman of the Board of Directors of the Company. He is a member of
the Audit and Finance Committee and has been a Director of the Company since
1980.
2
<PAGE> 5
KENNETH W. BUTTERWORTH, age 68. Since October, 1986, Mr. Butterworth has
served as Chairman of the Loctite Board of Directors. He served as Chief
Executive Officer of the Company from February, 1985 until April, 1993, and as
President from October, 1983 until October, 1986. From 1981 to 1984, he was
President of the Company's International Group, and from 1976 to 1981, he was
President of the Company's European Region. Mr. Butterworth has been a Director
of the Company since 1985.
DR. ROMAN DOHR, age 63. Since 1958, Dr. Dohr has been associated with
Henkel KGaA, Dusseldorf, Federal Republic of Germany, a major worldwide
manufacturer of chemicals, household products and adhesives. From 1977 to 1982,
he was Vice President Organic Products at Henkel KGaA and from 1982 to 1985 he
served as Vice President of Adhesives and Chemical Auxiliaries. Dr. Dohr is
Executive Vice President of Henkel KGaA, responsible for the Adhesives and
Chemical Auxiliaries Group and is a member of its Management Board. He is a
member of the Committee on Human Resources, and has been a Director of the
Company since 1985.
DR. JURGEN MANCHOT, age 57. Since 1965, Dr. Manchot has been associated
with Henkel KGaA, Dusseldorf, Federal Republic of Germany. Dr. Manchot's
responsibilities at Henkel KGaA have included production and product
development. From 1975 to the present, he has been Vice Chairman of the
Shareholders' Committee of Henkel KGaA. Dr. Manchot is also a director of The
Clorox Company, a manufacturer of bleaches, household products and foods. He is
a member of the Audit and Finance Committee and has been a Director of the
Company since 1985.
JOHN K. ARMSTRONG, age 64. Mr. Armstrong is President of Armstrong
Associates, Hartford, Connecticut, a financial consulting firm. He is a former
Executive Vice President and Chief Investment Officer of CIGNA Corporation and
former chairman of CIGNA Mutual Funds. Mr. Armstrong is a Director of Sealed Air
Corporation, a manufacturer of packaging materials; Yankee Energy Systems, Inc.,
a natural gas distributor; Richfield Hotel Management, Inc., a hotel management
company; and Exel Corporation, a provider of property and casualty insurance. He
is a member of the Audit and Finance Committee and has been a Director since
1987.
STEPHEN J. TRACHTENBERG, age 56. Mr. Trachtenberg is President and
Professor of Public Administration at The George Washington University in
Washington, D.C., a position to which he was named in 1988. Previously, he
served as President of the University of Hartford in Connecticut from 1977 to
1988. He is a Director, Maryland National Bank, a national bank headquartered in
Baltimore, Maryland, American Security Bank, N.A., a national bank headquartered
in Washington, D.C., and Security Trust Company, N.A., a fiduciary institution
in Washington, D.C. He is a member of the Committee on Human Resources and has
been a Director since 1987.
3
<PAGE> 6
WALLACE BARNES, age 68. Mr. Barnes is Chairman of the Board of Barnes
Group, Inc., Bristol, Connecticut, a manufacturer of precision springs and
aerospace components, among other businesses. He served as Chairman and Chief
Executive Officer of Barnes Group, Inc. from 1977 to 1991. From 1964 to 1977,
Mr. Barnes was President of that Company. Mr. Barnes was a state senator in the
Connecticut legislature from 1958 to 1962, and again from 1966 to 1970. He holds
a law degree from Yale Law School and practiced law in Connecticut from 1952 to
1962. He is a Director of Aetna Life & Casualty Company, an insurer; Rogers
Corporation, a producer of electronic interconnection products, among others;
and Rohr Industries, Inc., a manufacturer of aircraft parts and equipment; and
Tradewind Turbines Corporation, a convertor of aircraft to turbine power. Mr.
Barnes is a member of the Committee on Human Resources and has been a Director
since 1990.
DAVID FREEMAN, age 49. Since April, 1993 Mr. Freeman has served as Chief
Executive Officer of the Company and has been President and Chief Operating
Officer of the Company since February 1991. From March 1990 to February 1991,
Mr. Freeman was Chief Operating Officer and Executive Vice-President of the
Company. From 1988 to 1990, Mr. Freeman was Senior Vice-President and President,
North American and Pacific Operations. From 1985 to 1988, he was Vice President
and President of North American Operations. From 1983 to 1985, he was Vice-
President, Finance-Operations. Mr. Freeman has been an employee of Loctite for
19 years. He is a Director of Mechanics Savings Bank, a mutual savings bank
headquartered in Hartford, Connecticut, and Sealed Air Corporation, a
manufacturer of packaging materials. He has been a Director since 1990.
4
<PAGE> 7
STOCK OWNERSHIP OF MANAGEMENT
The following table sets forth certain information with respect to the
Common Stock of the Company beneficially owned by each Director, nominee, and
executive officer named in the Summary Compensation Table, individually, and by
all Directors, nominees, and executive officers of the Company as a group, as of
March 11, 1994.
<TABLE>
<CAPTION>
AMOUNT AND NATURE
OF BENEFICIAL
OWNERSHIP (1) PERCENT OF CLASS (2)
----------------- --------------------
<S> <C> <C>
Robert L. Aller................................ 64,919(3) --
John K. Armstrong.............................. 3,700 --
Louis J. Baccei................................ 10,262(3) --
Wallace Barnes................................. 1,009 --
Gerardus B.E.M. Briels......................... 18,340(3) --
Kenneth W. Butterworth......................... 140,744(3) --
Dr. Roman Dohr................................. 700 --
David Freeman.................................. 86,983(3) --
Robert E. Ix................................... 3,700 --
Frederick B. Krieble........................... 966,470(4) 2.73
Jurgen Manchot................................. 2,700 --
Eugene F. Miller............................... 22,678 --
Jack H. Schofield.............................. 1,288 --
Stephen J. Trachtenberg........................ 2,500 --
All Directors, nominees and executive officers
as a group (14 individuals).................. 1,325,993(3) 3.75
</TABLE>
- ---------------
(1) Information with respect to beneficial ownership is based upon information
furnished by Directors, nominees, and executive officers or is contained in
filings made with the Securities and Exchange Commission. The listing of
such securities is not necessarily an admission of beneficial ownership by
such person. Unless otherwise indicated by footnote, each person held sole
voting and investment powers over such shares.
(2) No disclosure made for less than 1%.
(3) The number of shares of Common Stock shown includes 21,000 shares as to Mr.
Aller; 6,000 shares as to Mr. Baccei; 4,500 shares as to Mr. Briels; 41,280
shares as to Mr. Butterworth; 46,700 shares as to Mr. Freeman; and 12,800
shares as to Mr. Miller, subject to stock options granted by the Company
which are exercisable currently or within 60 days of March 11, 1994.
(4) Included in the amount shown are 39,936 and 216,224 shares owned by
Management I, Limited and Management II Limited, family investment
companies, respectively, as to which Mr. Krieble has shared voting and
investment powers, and 692,458 shares owned by another family investment
company, as to which Mr. Krieble has sole voting and investment powers.
5
<PAGE> 8
BOARD OF DIRECTORS, COMMITTEE MEETINGS AND DIRECTOR COMPENSATION
The business and affairs of the Company are managed by the Board of
Directors subject to the Company's Certificate of Incorporation and By-Laws and
the laws of the State of Delaware.
Pursuant to the By-Laws, the Board of Directors elects the officers of the
Company, including the chief executive officer, who perform such duties and
possess such powers as customarily pertain to their respective offices, as are
imposed by the By-Laws, and as from time to time are prescribed by the Board of
Directors. The Board regularly reviews various aspects of the business and
affairs of the Company including budgets, results of operations, financial
matters, as well as the annual and longer term plans of the Company. The Board
also reviews and approves certain fundamental corporate matters such as changes
in capital structure, issuance of stock, dividend policy, major borrowings, and
acquisitions or divestitures.
The Directors are elected at each Annual Meeting of Stockholders. During
the fiscal year ended December 31, 1993, the Board of Directors held five
meetings.
The Board of Directors has established two committees to assist in the
discharge of its responsibilities. The functions of these committees, and the
members which are appointed annually by the Chairman of the Board of Directors,
are described below. During the fiscal year ended December 31, 1993, the Audit
and Finance Committee and the Committee on Human Resources held four meetings
each.
Audit and Finance Committee--The Audit and Finance Committee currently
consists of four members as follows: Jack H. Schofield (Chairman), Dr. Jurgen
Manchot, John K. Armstrong, and Frederick B. Krieble.
The Audit and Finance Committee recommends to the Board of Directors the
selection of the Company's independent accountants; reviews with its internal
auditors, independent accountants, and management the Company's policies and
procedures with respect to internal auditing, accounting, and financial
controls; reviews with the independent accountants the scope and results of
their audits, their findings and recommendations; approves the schedule of
planned professional services provided by the independent accountants prior to
the performance of such services; considers the range of audit and nonaudit
fees; reviews with the independent accountants, upon completion of their audit,
their report; makes recommendations to the Board of Directors concerning cash or
stock dividends to be declared; reviews and recommends to the Board matters
concerning capital expenditures and uses of the Company's cash and other
tangible assets, including facilities and real property; and generally reviews
and makes recommendations concerning the financial operations of the Company to
the Board of Directors.
Committee on Human Resources--The Committee on Human Resources currently
consists of four members as follows: Robert E. Ix (Chairman), Wallace Barnes,
Stephen J. Trachtenberg, and Dr. Roman Dohr.
6
<PAGE> 9
The Committee on Human Resources reviews the salary structure and policies
of the Company; reviews and approves the salaries of all officers, operating
executives, and key employees above a certain position level; annually reviews
and recommends the election of the Company's officers; reviews, interprets and
administers such of the Company's employee incentive compensation plans as are
specifically delegated to it by the plans or by the Board and grants bonuses,
options and benefits under such plans; reviews and administers certain aspects
of the Company's retirement and thrift investment plans; and reviews employee
fringe benefits.
Each member of the Board of Directors attended more than 90 percent of the
aggregate of the total number of meetings of the Board of Directors and the
total number of meetings held by Committees of the Board on which he served.
Except as otherwise indicated under "Executive and Consulting Agreements," each
director who is not an officer of the Company is paid an annual retainer fee of
$18,000 for membership on the Board, an additional fee of $1,000 for each Board
meeting, and a fee of $1,000 in the event of a Committee meeting which occurs
apart from a regular Board meeting. In addition, each Committee Chairman
receives an annual retainer fee of $3,000. Officers who are Directors do not
receive retainers or meeting fees.
Each non-employee Director receives an award of 200 unrestricted shares of
Common Stock, subject to adjustment for stock splits and dividends, at the time
of election or reelection to the Board of Directors at an Annual Meeting.
Directors are not required to pay any cash for shares so awarded.
Effective July 1, 1990, the Company adopted a retirement plan for outside
Directors to allow the Company to attract and retain the services of
non-employee Directors with the requisite qualifications. The plan is
administered by the Committee on Human Resources, is non-qualified and provides
a cash benefit paid from the general funds of the Company.
Each member of the Board terminating service with the Board shall be
entitled to an annual benefit in an amount equal to such member's vested
percentage multiplied by 50% of compensation received by such member for serving
on the Board during such member's final year of service. The vested percentage
is zero until the completion of three years' service, when it becomes 30% and
then increases in 10% increments up to 100% for ten or more years of service. In
computing years of service, each member is credited with a year of service for
each full term served as a member of the Board for which the member is elected
by the stockholders of the Company, including such terms completed prior to the
effective date of the plan.
Only non-employee Directors of the Company are eligible to receive benefits
under the plan. Consequently, employee Directors do not become eligible until
they sever employment with the Company. Benefits paid out under the plan
terminate upon the date of death of the former Board member.
7
<PAGE> 10
STOCKHOLDER NOMINATIONS
While there is no formal Nominating Committee of the Board of Directors,
this function has been delegated to the Committee on Human Resources. Under the
Company's By-laws, a stockholder may nominate persons for election to the Board
of Directors at any meeting of the stockholders called for the election of
directors. The stockholder must be entitled to vote for the election of
directors at the meeting and must provide timely notice in writing to the
Secretary of the Company of any nomination. To be timely, a stockholder's notice
must be delivered to or mailed and received at the principal executive offices
of the Company not less than 60 nor more than 90 days prior to the meeting. If
less than 70 days' notice or prior public disclosure of the date of the meeting
is given or made to stockholders, the stockholder's notice must be received by
the Company not later than the close of business on the tenth day following the
day on which notice of the date of the meeting or the public disclosure was
made. A stockholder's notice must contain (1) as to each nominee, all
information relating to the nominee that is required to be disclosed in
solicitations of proxies for election of directors under the regulations of the
Securities and Exchange Commission and (2) as to the stockholder giving the
notice, the name and address as they appear on the Company's books of the
stockholder proposing the nomination and any other stockholders known by the
stockholder to be supporting the nomination and the class and number of shares
which are beneficially owned by the stockholder.
8
<PAGE> 11
EXECUTIVE COMPENSATION AND OTHER INFORMATION
SUMMARY COMPENSATION TABLE
The following table sets forth the cash and non-cash compensation for each
of the last three fiscal years awarded to or earned by the Chief Executive
Officer of the Company and the four other most highly compensated executive
officers of the Company.
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
-------------------------------
AWARDS
ANNUAL -------------------------------
COMPENSATION RESTRICTED SECURITIES
-------------------- STOCK UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS(1) AWARD(S)(2) OPTIONS/SARS(#)(3) COMPENSATION(4)
- ---------------------------- ---- -------- -------- ----------- ------------------ ---------------
<S> <C> <C> <C> <C> <C> <C>
Kenneth W. Butterworth, 1993 $509,622 $ 0 $ 0 0 $ 7,075
Chairman and former Chief 1992 482,695 250,000 0 3,000 6,866
Executive Officer(6) 1991 399,984 200,000 0 25,800 (5)
David Freeman, 1993 348,756 0 0 10,000 7,075
President and Chief 1992 304,890 152,500 0 2,000 6,866
Executive Officer(6) 1991 266,540 152,500 0 20,000 (5)
Robert L. Aller, 1993 210,750 0 0 0 7,075
Senior Vice President -- 1992 200,000 70,000 0 0 6,866
Finance and Administration 1991 177,385 100,000 0 15,000 (5)
Gerardus B.E.M. Briels, 1993 190,000 0 0 0 7,075
Vice President and
President, 1992 165,384 95,000 0 5,000 548
North American Group 1991 149,327 80,000 0 0 (5)
Louis J. Baccei, 1993 169,923 0 0 0 2,339
Senior Vice President and 1992 160,000 64,000 0 0 2,300
President--New Business 1991 141,153 70,000 0 10,000 (5)
Development
Eugene F. Miller, 1993 160,269 0 0 0 6,398
Vice President, Secretary 1992 152,000 53,000 0 0 6,660
and General Counsel 1991 134,127 70,000 0 20,000 (5)
</TABLE>
- ---------------
(1) The bonus amounts are payable pursuant to the Company's Management Incentive
Compensation Plan described under the caption "Committee on Human Resources
Report on Executive Compensation." Bonuses payable under this Plan are
determined by reference to the executives' base salary in effect at fiscal
year end.
(2) As of December 31, 1993, the number and value of aggregate restricted stock
holdings were as follows: 19,000 shares ($698,250) by Mr. Butterworth;
15,750 shares ($578,893) by Mr. Freeman; 10,250 shares ($376,688) by Mr.
Aller; 10,000 shares ($367,500) by Mr. Briels; 2,000 shares ($73,500) by Dr.
Baccei; and 5,200 shares ($191,000) by Mr. Miller. Dividends are paid on the
restricted stock to the same extent paid on all outstanding shares.
(3) Stock Appreciation Rights are not available under any of the Company's
incentive plans.
9
<PAGE> 12
(4) The compensation reported represents Company contributions under the
Employee Thrift Investment Plan.
(5) Disclosure not called for by applicable rules of the Securities and Exchange
Commission.
(6) Mr. Butterworth relinquished his position as Chief Executive Officer on
April 25, 1993 and was succeeded in that position by Mr. Freeman. Mr.
Butterworth retired as an employee of the Company on December 31, 1993. For
a discussion of certain compensation arrangements relating to Mr.
Butterworth's retirement, see "Executive and Consulting Agreements."
OPTIONS
The following tables summarize option grants and exercises during fiscal
1993 to or by the executive officers named in the Summary Compensation Table
above, and the value of the options held by such persons at December 31, 1993.
Stock Appreciation Rights are not available under any of the Company's plans.
OPTION GRANTS IN FISCAL 1993
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
---------------------------
NUMBER OF % OF TOTAL
SECURITIES OPTIONS
UNDERLYING GRANTED TO EXERCISE OR GRANT DATE
OPTIONS EMPLOYEES IN BASE PRICE EXPIRATION PRESENT
NAME GRANTED FISCAL 1993 ($/SHARE) DATE VALUE(1)
- ----------------------------- ----------- ------------ ----------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Kenneth W. Butterworth....... -0- -- -- -- --
David Freeman................ 10,000(2) 17.9% $ 39.25 04/23/03 $189,400
Robert L. Aller.............. -0- -- -- -- --
Gerardus B.E.M. Briels....... -0- -- -- -- --
Louis J. Baccei.............. -0- -- -- -- --
Eugene F. Miller............. -0- -- -- -- --
</TABLE>
- ---------------
(1) Present value determinations were made using a Black-Scholes option pricing
model. The actual value, if any, an executive may realize will depend on the
excess of the stock price over the exercise price on the date the option is
exercised, so that there is no assurance the value realized by an executive
will be at or near the value estimated by the Black-Scholes model. The
estimated values under that model are based on a volatility factor of 21.8%
(which was based on the 1993 daily closing prices of the stock), an interest
rate factor of 5.79% (which was based on U.S. Treasury Bonds with a maturity
date closest to the expiration date of the option) and dividend yield
assumptions which factored in the actual dividends for 1993. There was no
time of exercise assumption made.
(2) These options were granted on April 23, 1993, and will become exercisable as
follows: 40% of the shares on April 23, 1994; 20% of the shares on April 23,
1995; 20% of the shares on April 23, 1996; and 20% of the shares on April
23, 1997.
10
<PAGE> 13
AGGREGATED OPTION EXERCISES IN FISCAL YEAR 1993
AND VALUE OF OPTIONS AT END OF FISCAL 1993
<TABLE>
<CAPTION>
NUMBER OF VALUE OF
SECURITIES UNEXERCISED
UNDERLYING IN-THE-
UNEXERCISED MONEY
OPTIONS OPTIONS
SHARES AT END OF AT END OF
ACQUIRED FISCAL 1993 FISCAL 1993
ON VALUE EXERCISABLE/ EXERCISABLE/
NAME EXERCISE(#) REALIZED($)(1) UNEXERCISABLE UNEXERCISABLE(1)
- -------------------------------- ------------ -------------- -------------- -----------
<S> <C> <C> <C> <C>
Kenneth W. Butterworth.......... 8,000 $243,000 40,680/12,120 $544,270/0
David Freeman................... 0 0 42,300/19,200 781,900/0
Robert L. Aller................. 0 0 21,000/ 6,000 292,250/0
Gerardus B.E.M. Briels.......... 8,000 192,000 3,500/ 3,000 23,438/0
Louis J. Baccei................. 0 0 6,000/ 4,000 0/0
Eugene F. Miller................ 0 0 12,800/ 8,000 0/0
</TABLE>
- ---------------
(1) Value based on market value of the Company's Common Stock at date of
exercise or end of fiscal 1993, minus the exercise price.
COMMITTEE ON HUMAN RESOURCES REPORT ON EXECUTIVE COMPENSATION
General Philosophy:
The Committee on Human Resources of the Board of Directors ("Committee") is
composed entirely of outside Directors and is responsible for considering and
submitting recommendations to the Board in connection with the Company's
executive compensation policies. It is the philosophy of the Committee to
establish a total compensation program for executive officers which is superior
to the Company's peer group and at least competitive with a broader range of
companies of comparable size and complexity in order to attract and retain the
best and the brightest managerial talent. Some of the companies studied by the
Committee are included in the S&P Chemicals and Materials Index, the stock
performance of which is shown on the Performance Graph on page 15. Other
companies which the Committee considers comparable are included in the broader
S&P Chemicals Index. The Committee believes that this philosophy will reward
stockholders with superior performance and return on investment. The Committee
has available to it an outside compensation consultant and access to independent
compensation data.
Executive Officer Compensation Program:
The Company's executive officer compensation program is comprised of base
salary, annual cash incentive compensation, long term incentive compensation in
the form of stock options, restricted stock grants and various benefits,
including medical and pension plans generally available to all employees of the
Company.
11
<PAGE> 14
Base Salary:
Base salary ranges for the Company's executive officers are reviewed
periodically by the Committee following analysis of salary trends among the
Company's peer industries and other comparable companies, and following review
of periodic recommendations submitted by outside compensation consultants. The
Committee approved modest increases in base salaries for executives during 1993,
which, with the exception of Mr. Freeman who received a promotional increase, as
described below, reflected the effects of inflation, independent published
salary data, and a performance appraisal. The Committee did not retain the
services of outside compensation consultants during 1993.
Annual Incentive Compensation:
The Management Incentive Compensation Plan (the "Plan") is the Company's
annual incentive program for executive officers and key managers. When viewed
together with the Company's base salary program, the purpose of the Plan is to
provide a balance between fixed compensation and variable, results-oriented
compensation. The Plan is intended to reward superior results with overall
superior compensation. The Committee determines awards under the Plan by
comparing the Company's actual performance for each fiscal year with the
Company's annual business plan for such year, which is approved by the Board of
Directors. Key elements of each annual business plan are the Company's sales
growth and profitability, with particular reference to the preceding fiscal
year. Additional factors which the Committee considers are the relationship of
the year's results with the most recent long-range and strategic goals and
objectives, the general economic environment during the year, and the
performance of the Company's peer group. Finally, the Committee also considers
individual factors such as the executive's achievement of approved target
accomplishments, and his or her contributions to the long-range growth and
profitability objectives of the Company. Because the Company did not achieve the
sales and operating profit goals laid down by the Board in the Company's 1993
business plan, the Committee did not award any bonuses to executives under the
Plan for fiscal 1993.
Stock Option and Restricted Stock Plans:
The Company's stock option and restricted stock plans are intended to
provide long-term incentives to executive officers and key managers and to
encourage such individuals to maintain a significant long-term ownership
position in the Company's common stock. During recent years the Committee has
preferred to award restricted stock to managers below the executive officer
level and to reserve, although not exclusively, stock options for executive
officers in the belief that stock options more closely tie executive performance
to the enhancement of shareholder values. Both in the case of restricted stock
and stock options the Committee looks at the executive's total holdings before
making an award under either plan. With the exception of Mr. Freeman's award
discussed below, no executive received a restricted stock award or stock option
during fiscal 1993.
12
<PAGE> 15
Benefits:
The Company provides medical and pension benefits to the executive officers
that are generally available to Company employees. The amount of perquisites, as
determined in accordance with the rules of the Securities and Exchange
Commission relating to executive compensation, did not exceed reportable
thresholds for fiscal 1993.
Chief Executive Officer Compensation:
At the beginning of fiscal 1993, Mr. Freeman's base salary was $305,000,
and had last been increased on December 31, 1991. Effective May 1, 1993, Mr.
Freeman's base salary was increased to $370,000 in recognition of the increased
responsibilities associated with his promotion to chief executive officer on
April 23, 1993. The Committee also considered updated published compensation
data from companies in its peer industry and from companies of comparable size
and complexity when determining Mr. Freeman's base salary.
The Committee did not award a bonus to Mr. Freeman under the Management
Incentive Compensation Plan for fiscal 1993 for the reasons mentioned above
under the heading "Annual Incentive Compensation." However, the Committee did
grant Mr. Freeman a stock option for 10,000 shares upon his election to the
position of chief executive officer in order to give him a significant stake in
the future growth of the Company.
Mr. Butterworth elected to step down as Chief Executive Officer at the
Annual Meeting of the Company on April 23, 1993. The financial arrangements
concluded with Mr. Butterworth at that time are set forth in detail on pages 17
and 18 of this Proxy Statement under the heading "Executive and Consulting
Agreements." The Committee's decision to maintain Mr. Butterworth's then current
salary until his retirement as an active employee on December 31, 1993 was based
on the belief that this level of compensation was commensurate with the value of
his services to the Company as Executive Chairman. In reaching this judgment,
the Committee did not seek advice from outside compensation consultants, but
rather relied on its perception of what comparable companies within the
Company's peer group and companies of comparable size and complexity outside of
the Company's peer group would do under similar circumstances and with knowledge
of Mr. Butterworth's past contributions to Company growth and shareholder value.
The financial terms of Mr. Butterworth's Consulting Agreement were agreed
between the Committee and Mr. Butterworth and establish a minimum number of days
per month on which Mr. Butterworth will be available to the Company and include
an undertaking from Mr. Butterworth to work on special projects, without regard
to the number of business days committed, as assigned from time to time by the
Chief Executive Officer. It was the sense of the Committee that the terms of
this Consulting Agreement with Mr. Butterworth would assure the availability of
Mr. Butterworth's services and experience to the Company during the period of
the
13
<PAGE> 16
Agreement. In recognition of his contributions to the Company and the Company's
performance during his tenure as Chief Executive Officer, the Committee agreed
to accelerate the vesting of Mr. Butterworth's unvested restricted stock.
ROBERT E. IX, CHAIRMAN
WALLACE BARNES
DR. ROMAN DOHR
STEPHEN J. TRACHTENBERG
MEMBERS OF THE COMMITTEE ON HUMAN RESOURCES
14
<PAGE> 17
COMPARATIVE STOCK PERFORMANCE
The following is a graph which compares the five year cumulative return
from investing $100 on December 31, 1988 in each of Loctite Corporation common
stock; the S&P 500; the S&P Chemicals; and the S&P Chemicals & Materials Index,
with dividends assumed to be reinvested when received. The S&P Chemicals
&Materials Index is an index published by Standard & Poor's Corporation which
tracks 20 companies in the S&P MidCap 400 Index that have been categorized as
chemicals and materials companies.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN*
AMONG LOCTITE, S&P 500, S&P CHEMICALS AND S&P MID-CAP CHEM & MAT INDICES
<TABLE>
<CAPTION>
MEASUREMENT PERIOD S&P MID-CAP
(FISCAL YEAR COVERED) LOCTITE CORP CHEM & MAT S&P 500 S&P CHEMICALS
<S> <C> <C> <C> <C>
1988 100 100 100 100
1989 146 106 132 129
1990 190 120 128 110
1991 323 194 166 143
1992 301 228 179 157
1993 249 259 197 175
1994
</TABLE>
*$100 INVESTED ON 12/31/88 IN STOCK OR INDEX. INCLUDING REINVESTMENT OF
DIVIDENDS. FISCAL YEAR ENDING DECEMBER 31.
15
<PAGE> 18
PENSION BENEFITS
The Company's non-contributory, defined benefit pension plan covers all
persons regularly employed by the Company on a salaried and hourly basis, except
certain employees covered by collective bargaining agreements.
The pension plan establishes an account for each employee when the employee
becomes an "Active Participant" in the plan (upon completion of one year of
continuous service) and credits the account with a percentage of pay for each
year worked after becoming an Active Participant. For employees with less than
10 years of service, this annual credit equals 4% of that year's compensation
which is not in excess of 1/3 of the current social security wage base and 6% of
that year's compensation which exceeds 1/3 of the current social security wage
base. For employees with 10 or more years of service, this annual credit equals
5% of that year's compensation which is not in excess of 1/3 of the current
social security wage base and 7% of that year's compensation which exceeds 1/3
of the current social security wage base. Accounts are also credited with a
guaranteed rate of interest. To the extent that the pension plan benefits of any
of the executives named in the Summary Compensation Table (except Mr.
Butterworth) are limited by the provisions of Section 401(a)(17) or 415 of the
Internal Revenue Code of 1986, as amended, the Company's nonqualified retirement
plan supplements the benefits under the pension plan.
The estimated annual pension benefits payable under the pension plan, as
supplemented by the nonqualified retirement plan, upon retirement at age 65,
assuming no change in salary and annual interest credits of 8%, for each of the
following executives are $221,829 for David Freeman, $86,096 for Robert L.
Aller, $49,809 for Louis J. Baccei, and $106,506 for Eugene F. Miller.
Mr. Butterworth does not participate in the nonqualified retirement plan.
Mr. Butterworth retired effective December 31, 1993 and he is expected to
commence receiving his pension benefit during the first quarter of 1994. The
amount payable to Mr. Butterworth under the pension plan will offset amounts
payable under his Supplemental Retirement Agreement discussed below. His
estimated annual pension benefit payable under the pension plan is $104,281.
This annual benefit is stated in the form of an annuity payable over the life of
Mr. Butterworth only. Alternatively, Mr. Butterworth is entitled to receive his
benefit under the pension plan in actuarially equivalent forms, including a lump
sum distribution.
Since Mr. Butterworth was not eligible to participate in the Company's
pension plan when he commenced employment with the Company in 1976, a
Supplemental Retirement Agreement provides him with additional pension benefits.
Benefits under the Supplemental Retirement Agreement are based on his
compensation during his final 12 months of employment by the Company. Mr.
Butterworth will begin receiving an annual benefit under the Supplemental
Retirement Agreement during the first quarter of 1994. The amount of such
benefit will be an annuity, payable over the life of Mr. Butterworth only, of
$184,052 prior to age 70 and $167,852 from age 70.
16
<PAGE> 19
Mr. Briels is entitled to receive pension benefits under a pension plan for
designated foreign executives which provides for defined benefits in the event
of retirement at a specified age and after a specified number of years of
service based on average final compensation (highest average consecutive three
calendar year earnings during the last ten calendar years of employment).
Benefits under this plan are estimated to be as follows:
PENSION PLAN TABLE
<TABLE>
<CAPTION>
AVERAGE YEARS OF SERVICE
FINAL ------------------------------------------------------------
COMPENSATION 15 20 25 30 35
- ------------ -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
$100,000 $ 30,000 $ 40,000 $ 50,000 $ 50,000 $ 50,000
$200,000 $ 60,000 $ 80,000 $100,000 $100,000 100,000
$300,000 $ 90,000 $120,000 $150,000 $150,000 150,000
$400,000 $120,000 $160,000 $200,000 $200,000 200,000
$500,000 $150,000 $200,000 $250,000 $250,000 250,000
</TABLE>
Benefits shown in the foregoing table are straight life annuity amounts
(although benefits under the plan are actually payable in either an actuarially
equivalent lump sum or an actuarially equivalent series of equal installment
payments over ten years) and are subject to reduction by the sum of pension
benefits under any other plan of the Company, any mandatory or legally required
severance or termination benefit paid by the Company and Social Security or
other governmental pension. For Mr. Briels, as of December 31, 1993, average
final compensation is $203,827 and years of service are 29.
EXECUTIVE AND CONSULTING AGREEMENTS
The Company has agreements with seven of its senior executives, including
Messrs. Freeman, Aller, Briels and Miller which provide that the executives will
be entitled to a two-year term of employment with the Company following any
"Change-in-Control" of the Company (as defined). In the event that the
executive's employment with the Company terminates for any reason other than
Cause (as defined below), voluntary resignation (including retirement), death or
permanent disability prior to the end of the two-year period following a
Change-in-Control, the executive will receive severance pay equal to the total
compensation and benefits the executive would have received if the term of
employment had continued for the full two-year period. However, portions of the
severance pay will be reduced to the extent that such severance pay would be
non-deductible to the Company under Section 280G of the Internal Revenue Code of
1986 as amended. The restrictions under Section 280G will not apply if the
present value of all payments to be received by the executive (whether under the
agreement or otherwise) does not exceed three times the average compensation
received by the executive during the five years preceding the Change-in-Control.
Cause is defined as (a) a continued breach of the executive's duties of
employment after notice from the Company; or (b) willful misconduct by the
executive which is demonstratively and materially injurious to the Company. If
the executive's employment terminates for Cause, voluntary resignation, death or
disability, the executive receives no benefits under that agreement
17
<PAGE> 20
other than as accrued as of the date of such termination, and must look to the
Company's normal policies for any retirement, death or disability benefits.
The agreements provide that a Change-in-Control shall have occurred if: (a)
a Person (as defined) has the power to vote 30% or more of the common stock of
the Company; (b) a Person acquires or agrees to acquire all or substantially all
of the assets or business of the Company; (c) during any two year period, the
new members of the Board of Directors elected during that period constitute a
majority of the Board unless such new members are approved by at least a two-
thirds vote of the Board members in office at the beginning of such period; or
(d) the Board of Directors determines that a Person directly or indirectly
exercises a controlling influence over the Company. Henkel Corporation will not
constitute a Person under the above Change-in-Control provisions as long as the
Agreement dated May 23, 1985 between Henkel of America, Inc. (subsequently
assigned to Henkel Corporation) and the Company, which restricts the acquisition
by Henkel of America, Inc. or any affiliate of additional shares of the Company
prior to May 23, 1995, is still in effect and has not otherwise been waived by
the Board of Directors.
Effective April 23, 1993, the Company entered into an agreement (the
"Agreement") with Kenneth W. Butterworth, the Company's Chairman of the Board
and former Chief Executive Officer. Pursuant to the Agreement, Mr. Butterworth
served as Executive Chairman of the Company from April 23 through December 31,
1993, during which time he continued to receive his regular base compensation of
$500,000 per year. He retired from active employment with the Company on
December 31, 1993. Beginning in January 1994, Mr. Butterworth was retained as a
consultant to the Company and will receive payments of $17,000 per month until
December 31, 1995. Additionally, during his tenure as a director, Mr.
Butterworth will receive an amount equal to two times the retainer and meeting
fees paid to non-employee directors of the Company. As a result of his
retirement, Mr. Butterworth ceased participation in the Company's Management
Incentive Compensation Program and did not receive an award pursuant to this
plan for 1993. Although he is no longer an employee of the Company, Mr.
Butterworth will not participate in the Non-Employee Director Retirement Plan
and will not receive stock normally received by non-employee directors upon
their election or re-election to the Board. However, upon Mr. Butterworth's
retirement, 19,000 unvested shares held under the Company's Restricted Stock
Plan became vested.
18
<PAGE> 21
OWNERSHIP OF THE COMPANY'S SECURITIES
The following table sets forth as of March 11, 1994, the beneficial
ownership of the Company's Common Stock by each person known to the Company to
own beneficially more than 5% of the Company's outstanding Common Stock, the
Company's only class of voting securities.
<TABLE>
<CAPTION>
SHARES
NAME AND ADDRESS BENEFICIALLY PERCENT OF
OF BENEFICIAL OWNER OWNED CLASS
- -------------------------------------------------------- ---------- ----------
<S> <C> <C>
HC Investments, Inc.(1)................................. 10,485,560 29.6
1100 North Market Street
Wilmington, Delaware 19890
</TABLE>
- ---------------
(1) A wholly-owned U.S. subsidiary of Henkel KGaA, Germany, with which Drs. Dohr
and Manchot, Director nominees, are associated.
SECTION 16 REPORTS
Section 16 of the Securities Exchange Act of 1934 requires officers and
Directors and certain stockholders to file with the Securities and Exchange
Commission reports of their transactions in the Company's Common Stock. These
reports must be filed by specified due dates. In 1993, on the basis of copies of
such reports provided to the Company, all reports were timely filed except for
one report reporting one transaction by each of Mr. Trachtenberg and Mr.
Krieble.
PROPOSAL 2
CONFIRMATION OF APPOINTMENT OF INDEPENDENT ACCOUNTANTS
The Board of Directors of the Company has appointed Price Waterhouse,
independent accountants, to examine the accounts of the Company for the current
fiscal year and to report on the Company's financial statements for that period.
The firm of Price Waterhouse has acted as independent accountants for the
Company since 1966. Representatives of Price Waterhouse will be present at the
Annual Meeting to make a statement if they desire to do so and to respond to
appropriate questions.
The Audit and Finance Committee reviews annually the services that Price
Waterhouse may be requested to provide from time-to-time and considers the
effect that the performance of these services may have on their audit
independence. It establishes guidelines, including dollar limitations, under
which Price Waterhouse may be retained to perform nonaudit services. The
Committee annually reviews the services actually performed to determine that
they were in accordance with the guidelines it established.
19
<PAGE> 22
There is no requirement that the appointment of Price Waterhouse as the
Company's independent accountants be submitted to the stockholders for their
approval. However, the Board of Directors believes that stockholders should be
provided an opportunity to express their views on the subject. The Board of
Directors will not be bound by a negative vote, but will take that vote into
consideration in future years.
The Board of Directors unanimously recommends a vote FOR confirmation of
the appointment of Price Waterhouse as independent accountants of the Company
for the current fiscal year.
OTHER MATTERS
The Board of Directors and management of the Company know of no matters to
be presented at the Annual Meeting other than those set forth in the Notice of
Annual Meeting of Stockholders. However, if any other matters properly come
before the meeting, the persons named in the enclosed proxy intend to vote the
shares to which the proxy relates on such matters in accordance with their best
judgment.
STOCKHOLDER PROPOSALS
Proposals intended for inclusion in the 1995 Proxy Statement should be sent
to the Secretary, Loctite Corporation, 10 Columbus Boulevard, Hartford, 06106
and must be received by November 18, 1994. The Company's next Annual Meeting is
scheduled to take place on April 26, 1995. In addition, the Company's By-laws
permit stockholders to bring proposals before the Annual Meeting if the
stockholder has given timely notice of the proposal in writing to the Secretary.
For a stockholder's notice to be timely, it must be delivered to or mailed and
received at the foregoing address not less than 60 nor more than 90 days prior
to the scheduled Annual Meeting, regardless of any postponements, deferrals or
adjournments of that meeting to a later date. If less than 70 days notice or
prior public disclosure of the date of the scheduled Annual Meeting is given or
made, the stockholder's notice must be delivered or received not later than the
close of business on the 10th day following the earlier of the day on which
notice of the date of the scheduled Annual Meeting was mailed or the day on
which the public disclosure was made. A stockholder's notice must include (1) a
brief description of the proposal desired to be brought before the Annual
Meeting, (2) the name and address as they appear on the Company's books of the
stockholder proposing such business, (3) the class and number of shares which
are beneficially owned by the stockholder on the date of the stockholder's
notice and (4) any material interest of the stockholder in the proposal.
By Order of the Board of Directors
EUGENE F. MILLER
Secretary
Hartford, Connecticut
March 18, 1994
20
<PAGE> 23
PROXY
<TABLE>
<S> <C>
THIS PROXY IS SOLICITED BY AND ON BEHALF OF
THE BOARD OF DIRECTORS OF
LOCTITE CORPORATION Loctite Corporation Proxy
P
R PROXY FOR ANNUAL MEETING OF STOCKHOLDERS APRIL 27, 1994
O
X
Y The undersigned hereby appoints Eugene F. Miller and William V. Grickis, Job-1: 2/18/94
Jr., or either of them, proxies, with full power of substitution, to act for
and to vote the shares of stock of Loctite Corporation which the undersigned
would be entitled to vote if personally present at the Annual Meeting of
Stockholders of said Company to be held on April 27, 1994, and at any and all
adjournments thereof. 2 Proposals
Receipt of the Company's Notice of the Annual Meeting of Stockholders
and Proxy Statement is acknowledged.
IMPORTANT -- THIS PROXY MUST BE SIGNED AND DATED ON THE REVERSE SIDE.
-----------
CONTINUED AND TO BE SIGNED ON REVERSE SIDE SEE REVERSE
SIDE
-----------
</TABLE>
<PAGE> 24
<TABLE>
<S> <C>
/X/ PLEASE MARK Loctite Corporation Proxy
VOTES AS IN
THIS EXAMPLE. Job-1: 2/18/94
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR 2 Proposals *
1. ELECTION OF DIRECTORS: FOR AGAINST ABSTAIN
Nominees: R.E. Ix, F.B. Krieble, K.W. Butterworth, 2. APPOINTMENT OF PRICE / / / / / /
Dr. R. Dohr, Dr. J. Manchot, J.K. Armstrong, S.J. WATERHOUSE as Independent
Trachtenberg, Wallace Barnes and David Freeman. Accountants:
FOR WITHHELD 3. In their discretion, the Proxies are authorized to
vote upon such other business as may properly come
/ / / / before the meeting.
/ / MARK HERE
----------------------------------- FOR ADDRESS / /
For all nominees except as noted here CHANGE AND
NOTE AT LEFT
(Please date and sign exactly as name appears on this
proxy. Joint owners should each sign. When signing
as attorney, executor, administrator, trustee,
guardian, etc. give title as well.)
This proxy when properly executed will be voted
as directed hereon, or if no direction is Signature: Date
indicated, will be voted FOR the election of the ------------------------------ -------
Board of Directors' nominees for Directors and Signature: Date
FOR proposal 2. ------------------------------ -------
</TABLE>
