<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant / /
Filed by a Party other than the Registrant /X/
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 Section 240.14a-11(c) or Section
240.14a-12
MORTON INTERNATIONAL, INC.
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(Name of Registrant as Specified In Its Charter)
MORTON INTERNATIONAL, INC.
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(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), 14a-6(i)(1), 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>
[LOGO]
S. JAY STEWART
CHAIRMAN AND CHIEF EXECUTIVE OFFICER
September 12, 1996
Dear Shareholder:
It is my pleasure to invite you to the 1996 Annual Meeting of Shareholders of
Morton International, Inc., which will be held on Thursday, October 24, 1996, at
the Mid-America Club, 200 East Randolph Drive (80th floor), Chicago, Illinois
commencing at 10:00 A.M. local time. Information relative to the matters to be
voted upon at the meeting is in the formal notice of the meeting and proxy
statement on the following pages.
It is important that your shares be represented at this meeting whether or not
you plan to attend in person. Therefore, please sign, date and return your proxy
promptly in the enclosed envelope. This will not limit your rights to vote in
person or attend the meeting.
A public news release covering voting results will be available immediately
after the meeting.
The Company's Annual Report for the fiscal year ended June 30, 1996, is being
distributed to shareholders with this proxy statement.
Sincerely,
[PASTE SIGNATURE]
<PAGE>
MORTON INTERNATIONAL, INC.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
The Annual Meeting of Shareholders of Morton International, Inc. (the "Company")
will be held on Thursday, October 24, 1996, at the Mid-America Club, 200 East
Randolph Drive (80th floor), Chicago, Illinois at 10:00 A.M. local time to
consider and vote upon:
1. Election of four directors (see pages 2-5).
2. Ratification of the appointment of Ernst & Young LLP as the Company's
independent auditing firm for the fiscal year ending June 30, 1997 (see
page 18).
3. Any other business that may properly come before the meeting.
The close of business August 26, 1996, has been fixed as the record date for the
meeting. All shareholders of record on that date are entitled to be present and
vote at the meeting.
Attendance at the annual meeting will be limited to shareholders of record,
beneficial owners of Company common stock entitled to vote at the meeting having
evidence of ownership, the authorized representative (one only) of an absent
shareholder, and invited guests of management. Any person claiming to be an
authorized representative of a shareholder must, upon request, produce written
evidence of such authorization.
The meeting will be conducted pursuant to the Company's by-laws and rules of
order prescribed by the chairman of the meeting.
By order of the Board of Directors
P. Michael Phelps
Vice President and Secretary
September 12, 1996
<PAGE>
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MORTON INTERNATIONAL, INC.
100 NORTH RIVERSIDE PLAZA
CHICAGO, ILLINOIS 60606-1596
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PROXY STATEMENT
September 12, 1996
SOLICITATION OF PROXIES
This Proxy Statement is furnished in connection with the solicitation by the
Company's Board of Directors (the "Board") of proxies for use at its Annual
Meeting of Shareholders, to be held on Thursday, October 24, 1996, and at any
adjournment thereof (the "1996 Annual Meeting" or the "meeting").
The shares represented by all properly executed and unrevoked proxies
received in proper form in time for the meeting will be voted. Shares will be
voted in accordance with shareholders' instructions in the accompanying proxy.
If no instructions are given, the shares will be voted in accordance with the
Board's recommendations, which are noted herein. Any proxy given may be revoked
at any time before it is voted at the meeting.
Directors will be elected by a plurality of the shares present at the
meeting in person or by proxy and entitled to vote thereon. Votes withheld as to
one or more nominees will not be counted as votes cast for such individuals. Any
other proposal brought before the meeting will be decided by a majority of votes
cast with respect thereto. Consequently, abstentions and broker non-votes (votes
withheld by brokers in the absence of instructions from street-name holders) are
not counted for purposes of determining whether a proposal has been approved,
but they are counted for purposes of establishing a quorum at the meeting.
The Company will bear the cost of the solicitation. In addition to
solicitation by mail, the Company will request banks, brokers and other
custodian nominees and fiduciaries to supply proxy material to the beneficial
owners of the Company's common stock of whom they have knowledge, and will
reimburse them for their expenses in so doing; and certain directors, officers
and other employees of the Company, not specially employed for the purpose, may
solicit proxies, without additional remuneration therefor, by personal
interview, mail, telephone or telegraph. In addition, the Company has retained
Georgeson & Co., Inc. to assist in the solicitation for a fee of $11,000 plus
expenses.
1
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1. ELECTION OF DIRECTORS
The Company's by-laws provide that the size of the Board shall be fixed from
time to time by Board resolution. The Board presently consists of twelve
members, divided into three classes. Directors in each class are elected, on a
rotating basis at the annual shareholders meeting at which the term for such
class expires, for terms expiring (except as noted herein) at the third
subsequent annual meeting of shareholders.
Listed on the following pages as nominees for election at the 1996 Annual
Meeting for three-year terms (except for Messrs. Fill and Schaefer) are the four
directors whose present terms will expire at that time. All nominees are
presently serving as directors, and the Company has not been advised by any
nominee that he will not serve if elected.
The Board recommends a vote FOR the nominees for director.
BOARD MEETING ATTENDANCE AND COMPENSATION OF DIRECTORS
The Board met six times during the fiscal year ended June 30, 1996 ("fiscal
1996"). All of the incumbent directors were present for 75% or more of the total
meetings of the Board and Board committees of which they were members.
Directors who are employees of the Company or any subsidiary thereof do not
receive any compensation for service on the Board or Board committees.
Non-employee directors receive for their services a retainer of $28,000 per
year, plus a fee of $1,500 for each Board meeting attended.
In addition, non-employee directors who are chairmen of the Audit and
Compensation Committees each receive additional annual retainers of $2,500; the
chairman of the Nominating & Organization Committee receives an additional
annual retainer of $1,500; and all committee chairmen and members receive $750
for attendance at each meeting of their particular committees.
Non-employee directors who are elected or continuing as such at annual
shareholders meetings also receive grants of 500 shares of Company common stock
as of the dates of each such meeting. The aggregate value of the 500 shares
received by each director as of the October 1995 annual meeting was $15,031.
The Company has a Non-Employee Directors Deferred Compensation Plan, under
which participants may elect to defer all or a portion of their cash (but not
stock) compensation. This Plan utilizes phantom Company stock, plus amounts
equivalent to dividends paid thereon, to value deferred balances, which as a
result fluctuate from time to time in accordance with the stock's market
performance. Distributions of Plan balances are made in cash following a
participant's death or termination of service as a director, in amounts based on
the stock's market value at the time of the particular distribution.
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2
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NOMINEES FOR DIRECTOR AT THE OCTOBER 1996 ANNUAL MEETING*
DENNIS C. FILL, age 67, is (since June 1992) Chairman and
Chief Executive Officer of Advanced Technology Laboratories,
Inc., formerly named Westmark International Incorporated, a
medical electronics systems manufacturer, where he held
corresponding offices since 1986. Mr. Fill has been a director
of the Company since 1989. He is also a director of Beckman
Instruments, Inc., Cytran, Inc. and Spacelabs Medical, Inc.
Mr. Fill attended Ealing College, the Institute of Export and
the Borough Polytechnic branch of London University. He also
served in the Royal Air Force.
[PHOTO]
WILLIAM E. JOHNSTON, age 56, was elected a director of the
Company in January 1996. He is President and Chief Operating
Officer of the Company (since October 1995), prior to which he
was (since 1993) its Executive Vice President, Administration
and (from 1981 until 1993) President of its Salt Group. Mr.
Johnston holds a B.A. degree from St. Joseph's College and an
M.B.A. degree from the University of Chicago.
[PHOTO]
EDWARD J. MOONEY, age 55, is Chairman (since July 1994),
Chief Executive Officer (since April 1994), President (since
1990) and a director (since 1988) of Nalco Chemical Company, a
producer of specialty chemicals and services for water and
industrial process treatment. Mr. Mooney was Chief Operating
Officer of Nalco from 1992 to 1994. He has been a director of
the Company since August 1995. In addition, he is a director
of Northern Trust Corporation and its subsidiary The Northern
Trust Company, and the Chemical Manufacturers Association. He
has a B.S. in Chemical Engineering and a J.D. degree from the
University of Texas.
[PHOTO]
GEORGE A. SCHAEFER, age 68, is a director (since 1983) of
Caterpillar Inc., a manufacturer of construction, earthmoving
and material handling machines and engines. He retired in 1990
as Chairman and Chief Executive Officer of Caterpillar,
positions he had held since 1985. Mr. Schaefer has been a
director of the Company since 1990. He is also a director of
Aon Corporation, Helmerich & Payne, Inc. and McDonnell Douglas
Corporation. Mr. Schaefer is a graduate of St. Louis
University.
[PHOTO]
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*Messrs. Fill and Schaefer have been nominated for terms which will expire,
respectively, in July 1999 and June 1998, when they will reach age 70. The
terms of the other two nominees named in this class will expire at the October
1999 Annual Meeting.
3
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INCUMBENT DIRECTORS -- TERMS EXPIRING AT THE OCTOBER 1997 ANNUAL MEETING
RALPH M. BARFORD, age 67, is President of Valleydene Corp.
Ltd., an investment company. He is also Chairman of GSW, Inc.,
a manufacturer of consumer products, and a director of Bank of
Montreal, Bell Canada, BCE Inc., Hollinger, Inc. and Northern
Telecom Inc. Mr. Barford has been a director of the Company
since 1989. He holds a Bachelor of Commerce degree from the
University of Toronto and an M.B.A. degree from Harvard
University.
[PHOTO]
JAMES R. CANTALUPO, age 52, was elected a director of the
Company in January 1996. He is President (since 1987) and
Chief Executive Officer -- International (since 1991) and a
director (since 1987) of McDonald's Corporation, a global
foodservice retailer. Mr. Cantalupo joined McDonald's as
Controller in 1974 and subsequently served in several senior
executive capacities before being promoted to his present
position. He is a graduate of the University of Illinois as
well as a certified public accountant.
[PHOTO]
WILLIAM T. CRESON, age 67, retired in 1986 from Crown
Zellerbach Corporation, a forest products and paper
manufacturer, where he had served as President, Chief
Executive Officer, and Chairman of the Board. Mr. Creson has
been a director of the Company since 1989. He holds a B.S.
degree in Mechanical Engineering from Purdue University and an
M.B.A. degree from the University of Pennsylvania.
[PHOTO]
S. JAY STEWART, age 57, became Chairman and Chief
Executive Officer of the Company in April 1994. Also, he has
been a director of the Company since 1989, and was its
President and Chief Operating Officer from 1989 through March
1994. In addition, he is a director of Household
International, Inc. Mr. Stewart holds a B.S. degree in
Chemical Engineering from the University of Cincinnati and an
M.B.A. degree from West Virginia University.
[PHOTO]
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4
<PAGE>
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INCUMBENT DIRECTORS -- TERMS EXPIRING AT THE OCTOBER 1998 ANNUAL MEETING*
W. JAMES FARRELL, age 54, was elected a director of the
Company in June 1996 effective in August 1996. He is Chairman
(since May 1996) and Chief Executive Officer and a director
(since 1995) of Illinois Tool Works Inc. (ITW), a
multinational manufacturer of fasteners, components,
assemblies and systems. Mr. Farrell joined ITW in 1965, and
since 1972 he has served in numerous senior executive
capacities before election to his present positions. In
addition, he is a director of Hon Industries Inc. and The
Private Bankcorp. He holds a degree in Electrical Engineering
from the University of Detroit.
[PHOTO]
RICHARD L. KEYSER, age 53, is President (since 1994),
Chief Executive Officer (since March 1995), a member of the
office of the Chairman, and a director (since 1992) of W. W.
Grainger, Inc., a distributor of maintenance, repair and
operating supplies. He joined Grainger in 1986 as a vice
president, and subsequently served in several senior executive
capacities before assuming his present positions. He has been
a Company director since January 1995. In addition, he is a
director of Evanston Hospital Corporation and the Lake Forest
Graduate School of Management. He has a B.S. in Nuclear
Science from the U.S. Naval Academy and an M.B.A. from Harvard
University.
[PHOTO]
FRANK W. LUERSSEN, age 69, retired on August 31, 1992, as
Chairman and Chief Executive Officer (since 1986) of Inland
Steel Industries, Inc. He has been a director of the Company
since 1989. Mr. Luerssen holds the following degrees: B.S. in
Physics (Pennsylvania State University); Master of Science,
Metallurgical Engineering (Lehigh University); Honorary Doctor
of Laws (Calumet College), and Honorary Doctor of Public
Service (St. Xavier University).
[PHOTO]
ROGER W. STONE, age 61, is Chairman of the Board (since
1983), President (since 1975), and Chief Executive Officer
(since 1979) of Stone Container Corporation, a multinational
producer and marketer of pulp, paper, and packaging products.
He has been a director of the Company since 1989. Mr. Stone is
also a director of McDonald's Corporation, and Option Care,
Inc. He is a graduate of the University of Pennsylvania
Wharton School of Finance.
[PHOTO]
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*Except for Mr. Luerssen, whose term will expire in August 1997, when he reaches
age 70.
5
<PAGE>
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COMMITTEES OF THE BOARD
There are four standing committees of the Board: Audit Committee,
Compensation Committee, Executive Committee, and Nominating and Organization
Committee.
The Audit Committee recommends to the Board the independent auditors to be
selected to audit the Company's annual financial statements, and reviews the
fees charged for such audits and for any special assignments given such
auditors. The committee also reviews the annual audit and its scope, including
the independent auditors' letter of comments and management's responses thereto;
possible violations of the Company's business ethics and conflicts of interest
policies; any major accounting changes made or contemplated; and the
effectiveness and efficiency of the Company's internal audit staff. In addition,
the committee confirms that no restrictions have been imposed by Company
personnel on the scope of independent auditors' examinations. Members of this
committee are Messrs. Luerssen (Chairman), Cantalupo, Creson, Keyser, Mooney and
Schaefer. The committee met twice in fiscal 1996.
The Compensation Committee annually reviews and reports to the Board on
pension plan investment performance, and makes recommendations to the Board with
respect to the creation and amendment of pension and welfare plans of the
Company and its subsidiaries. The committee also approves senior officers'
salaries and administers the Company's employee cash and stock incentive
compensation plan. Members of this committee are Messrs. Stone (Chairman),
Barford, Fill, Keyser and Mooney. The committee met four times in fiscal 1996.
The Executive Committee has and may exercise all the powers and authority of
the Board in the management of its business and affairs, except that the
committee does not have the power to amend the Company's by-laws or articles of
incorporation (except to fix the designations, preferences and other terms of
any of its preferred stock), authorize the issuance of stock, authorize
distributions (other than pursuant to a formula set by the Board), adopt an
agreement of merger or consolidation, approve a plan of merger that does not
require a vote of shareholders under Indiana law, fill vacancies in the Board or
Executive Committee or recommend to shareholders action that Indiana law
requires be approved by shareholders. Members of this committee are Messrs.
Stewart (Chairman), Cantalupo, Farrell, Johnston, Luerssen and Stone. The
committee had no meetings in fiscal 1996.
The Nominating & Organization Committee identifies and evaluates individuals
for potential directorships and makes recommendations accordingly to the Board
to fill vacancies or new positions on the Board, as well as recommending to the
Board the management slate of nominees for election as directors at annual
shareholders meetings. The committee also makes recommendations to the Board
regarding the size and composition of the Board and Board committees;
compensation of non-employee directors; and management succession. In addition,
the committee reviews the development of the management organization structure.
Members of this committee are Messrs. Barford (Chairman), Creson, Farrell, Fill
and Schaefer. The committee met twice in fiscal 1996.
Written nominations by shareholders for directors will be considered by the
Nominating & Organization Committee provided they are received by the Corporate
Secretary of the Company at its principal executive offices pursuant to timely
advance written notice in accordance with its by-laws* and contain all
information specified in such by-laws. No such nominations were received for the
1996 Annual Meeting. For the Company's 1997 Annual Meeting, any such nominations
must be received by the Company between July 18 and August 18, 1997.
- - --------
*A copy of the Company's by-laws may be obtained by written request to its
Corporate Secretary.
6
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VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
On August 26, 1996, the record date for the 1996 Annual Meeting, there were
142,482,378 shares of common stock outstanding, each entitled to one vote. Only
shareholders of record on that date will be entitled to vote at the meeting. The
Company has no other class of equity securities outstanding. As of the date of
this proxy statement, there was no known beneficial ownership of more than 5% of
the Company's common stock.
The following table shows the Company's common stock beneficially owned as
of August 26, 1996, by each present director and each executive officer named in
the Summary Compensation Table on page 12; and by all present directors and
executive officers of the Company as a group. Each named person has sole voting
and investment power with respect to the shares shown (except for the shares
identified in footnotes (2) and (3) below).
<TABLE>
<CAPTION>
SHARES
BENEFICIALLY
OWNED(1)
------------
<S> <C>
Ralph M. Barford............................................................................... 101,000
James R. Cantalupo............................................................................. 2,000
William T. Creson.............................................................................. 4,000
W. James Farrell............................................................................... 0
Dennis C. Fill................................................................................. 12,900
Stephen A. Gerow............................................................................... 115,564
William E. Johnston............................................................................ 330,880
Richard L. Keyser.............................................................................. 3,372 (2)
Frank W. Luerssen.............................................................................. 4,000
Edward J. Mooney............................................................................... 900
Fred J. Musone................................................................................. 48,271
George A. Schaefer............................................................................. 7,000
James R. Stanley............................................................................... 223,327 (3)
S. Jay Stewart................................................................................. 826,631
Roger W. Stone................................................................................. 6,013 (2)
All directors, nominees and executive officers as a group (26 persons including those named)... 2,302,794
NOTE: The largest individual beneficial holding shown above represents less than 1% of the outstanding
shares; the holdings of the group represent less than 2% of the outstanding shares.
<FN>
- - --------
(1) Shares in this column include shares which the individuals have only the
right to acquire through the exercise of stock options which are
exercisable presently or within 60 days: Mr. Stewart (670,905 shares), Mr.
Johnston (263,692 shares), Mr. Gerow (113,600 shares), Mr. Musone (39,000
shares), Mr. Stanley (175,286 shares), and all directors and executive
officers as a group (1,740,619 shares).
(2) The total shares owned by Messrs. Keyser and Stone include, respectively,
1,872 and 2,013 shares of phantom stock credited as of June 30, 1996, to
their accounts under the Non-Employee Directors Deferred Compensation Plan
described on page 2 of this proxy statement.
(3) 15,000 of these shares are owned by Mr. Stanley's wife.
</TABLE>
7
<PAGE>
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COMPENSATION COMMITTEE INTERLOCKS
AND INSIDER PARTICIPATION
The Compensation Committee is comprised exclusively of directors who are not
and have never been Company employees. No Company executive officer serves on
the Compensation Committee or as a director of another company for which any
member of the Compensation Committee serves as a director or executive officer.
During fiscal 1996, the Company made purchases from and sales to Stone
Container Corporation and its subsidiaries of approximately $6.2 million and
$4.4 million, respectively; purchases from W. W. Grainger, Inc. of approximately
$1 million; purchases from and sales to GSW, Inc. of approximately $100,000 and
$339,000, respectively; and purchases from and sales to Nalco Chemical Company
of approximately $266,000 and $165,000, respectively.
Roger W. Stone, a director and Chairman of the Compensation Committee of the
Company, is Chairman, President and Chief Executive Officer of Stone Container
Corporation. Richard L. Keyser, a director and member of the Compensation
Committee of the Company, is President and Chief Executive Officer of W. W.
Grainger, Inc. Ralph M. Barford, a director and member of the Compensation
Committee of the Company, is Chairman of GSW, Inc. Edward J. Mooney, a director
of the Company, is Chairman, President and Chief Executive Officer of Nalco
Chemical Company.
The foregoing transactions were made in the ordinary course of business and
on terms no less favorable to the Company than those that would have prevailed
in similar transactions with any other customer or supplier.
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EXECUTIVE COMPENSATION
COMPENSATION COMMITTEE REPORT
As reported on page 6, the Compensation Committee of the Board (the
"Committee") approves senior officers' salaries and administers the Company's
cash and stock incentive compensation plan. The purpose of this plan and the
objectives of the Committee are to:
- pay for performance, motivating both long- and short-term performance on
behalf of Company shareholders,
- provide competitive compensation programs so as to be able to attract,
retain and motivate top management talent,
- place greater emphasis on at risk incentive compensation than on fixed
salaries, particularly for senior executives,
- base the incentive compensation of business unit executives in large part
on the performance of their operations, while including a component which
recognizes overall Company performance as well, and
- most importantly, join shareholder and management interests.
To further these objectives, the compensation of senior executive officers
includes four components: (1) base salaries, (2) annual bonus programs, (3) a
long-term incentive program, and (4) stock options.
8
<PAGE>
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Periodically, the Committee arranges for studies by independent compensation
consulting firms comparing total compensation of the Company's senior executive
officers with compensation of executives in similarly sized companies.* The last
such study, which was performed in August 1996, confirmed that base salaries are
somewhat lower than the averages in the study group. The study also showed that
the Company continues to place emphasis on performance based compensation, so
that total compensation is above such averages when goals are exceeded.
BASE SALARIES
The Committee approves salary changes for senior executive officers in
accordance with the Company's written salary administration policy. This policy
is a long-standing one designed and periodically reviewed in consultation with
external compensation consultants. Salary ranges are established for various
positions through job evaluation and comparison with competitive salary data.
Within the ranges, adjustments are recommended on the basis of position within
the range, individual performance, and a corporate merit salary percentage
factor. Consistent with the Company's overall objectives these adjustments,
combined with bonuses as outlined below, emphasize payment for performance.
ANNUAL BONUS PROGRAMS
Following fiscal 1996 (which ended on June 30, 1996), the Committee
considered annual bonus payments based on performance during that year. Under
the annual bonus program applicable to senior executive officers, award levels
may range from zero to 120% of their base salaries as of the beginning of the
performance period, depending on salary grade and attainment of Company and
applicable business unit profit targets as approved by the Committee. Based on
these factors and the terms of such annual bonus program, the Committee approved
bonus payments to senior executive officers ranging from 39% to 98% of their
salaries.
LONG-TERM INCENTIVE PROGRAM (LTIP)
Also following fiscal 1996, the Committee considered LTIP payments to senior
executive officers based on performance during the three-year period from fiscal
1994 through fiscal 1996. LTIP participants are selected by the Committee
annually prior to the beginning of each particular three-year performance
period. Depending on the participant's salary grade, possible award levels range
from zero if less than 5% compound annual growth in Company or applicable
business unit profit goals as approved by the Committee is realized over the
three year period to a maximum 240% of base salary if 20% or greater compound
annual growth is realized. Based on the terms of the LTIP for fiscal 1994
through fiscal 1996, the Committee approved LTIP payments to eight of the nine
participating executive officers ranging from 87% to 232% of their annual base
salaries as of the beginning of the performance period.
STOCK OPTIONS
In addition, the Committee authorizes stock option grants to selected
employees, currently including all executive officers, at approximate one-year
intervals. The Company's stock option guidelines were designed and have been
revised periodically with the assistance of external compensation consultants.
These guidelines provide for a specific number of options, the value of which
- - --------
*These companies do not necessarily include those in the Custom Composite (peer
group) Index in the performance graph on page 11, since the Company's
competitors for executive employees are not always the same as those for
shareholders' investments.
9
<PAGE>
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is derived from the midpoint of the salary range for each specific salary grade,
as periodically adjusted by means of a formula that utilizes the stock's average
market value during the last month of the most recent fiscal year. The formula
does not, however, consider an individual's previous option grants. All options
granted to executive officers in fiscal 1996 are for 10 year terms, with an
exercise price equal to the stock's market value on the date of grant, and
become exercisable after one year of continued employment following the grant
date. Executive officers received grants in August 1995 (fiscal 1996) ranging
from 5,800 shares to 57,200 shares.
CHIEF EXECUTIVE OFFICER
The fiscal 1996 compensation of the Company's Chairman and Chief Executive
Officer,
S. J. Stewart, was determined in accordance with the salary policy, bonus
programs and stock option guidelines previously discussed.
In August 1995 the Committee approved a stock option grant of 57,200 shares,
and a salary increase of $25,000 (effective September 1, 1995), for Mr. Stewart.
His resulting base salary, $665,000, is in the lower half of the salary range
established for this position.
Company earnings in fiscal 1996 increased 14% over the prior year, exceeding
fiscal 1996 earnings per share goals (as established in the annual bonus
program), and therefore, in August 1996, the Committee approved pursuant to the
terms of the program an annual bonus for Mr. Stewart of $654,528. In addition,
pursuant to the terms of the LTIP, the Committee approved a payment of
$1,070,000 to Mr. Stewart, since the Company greatly exceeded the goal of 10%
compound growth in earnings per share for the three year period from fiscal 1994
through fiscal 1996 by achieving an actual compounded growth rate of
approximately 34%.
LIMITATION ON DEDUCTIBILITY OF CERTAIN COMPENSATION
Section 162(m) of the Internal Revenue Code generally disallows a tax
deduction to public companies for annual compensation over $1 million paid to
their chief executive officers and the four other most highly compensated
executive officers that is not "performance-based" (as defined in the Code). The
Company became subject to this limitation beginning in fiscal 1995.
Consequently, the incentive compensation programs in which the Company's most
highly compensated officers participate during periods beginning after fiscal
1994 have been restructured to comply with the Code's definition of
performance-based compensation.
Roger W. Stone, CHAIRMAN
Ralph M. Barford
Dennis C. Fill
Richard L. Keyser
*Edward J. Mooney
- - --------
*appointed to the Compensation Committee on August 22, 1996.
10
<PAGE>
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STOCK PERFORMANCE GRAPH
The following graph compares the cumulative shareholder returns on the
Company's common stock; the Standard & Poor's-Registered Trademark- 500 Stock
Index; and a Custom Composite Index. The Custom Composite Index is a revenue
weighted composite of the Standard & Poor's-Registered Trademark- Specialty
Chemicals Index and a customized index prepared from the companies in the
ValueLine Auto Parts -- Original Equipment Industry group. The Custom Composite
Index is weighted at the beginning of each fiscal year according to the
Company's revenue for that year in its Specialty Chemicals and Automotive Safety
Products lines of business.
The ValueLine component of the Custom Composite Index consists of the
following companies: Arvin Industries Inc., Dana Corp., Eaton Corp., Excel
Industries, Hayes Wheels International Inc., ITT Industries Inc., Intermet
Corp., Lear Corp., Modine Manufacturing Co., OEA, Inc., Simpson Industries Inc.,
A.O. Smith Co., Standard Products Co., Superior Industries International Inc.,
Varity Corp., and Walbro Corp. The returns for each of these companies are
weighted in accordance with their respective market capitalizations on a
quarterly basis at the beginning of each quarter and are calculated beginning
June 30, 1991, or, if later, the first full quarter following initial public
offering.
<TABLE>
<CAPTION>
JUN-91 JUN-92 JUN-93 JUN-94 JUN-95 JUN-96
------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
Morton International $ 100 $ 105 $ 151 $ 155 $ 177 $ 228
S&P 500 $ 100 $ 113 $ 129 $ 131 $ 165 $ 208
Custom Composite Index $ 100 $ 117 $ 143 $ 136 $ 165 $ 182
</TABLE>
11
<PAGE>
- - --------------------------------------------------------------------------------
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
---------------------
PAYOUTS
ANNUAL COMPENSATION AWARDS
--------------------------------------------------- ---------------------
RESTRICTED SECURITIES
OTHER ANNUAL STOCK UNDERLYING LTIP ALL OTHER
NAME AND PRINCIPAL COMPENSATION AWARD(S) OPTIONS PAYOUTS COMPENSATION
POSITION FISCAL YEAR SALARY($) BONUS($) ($)(1) ($) (#) ($)(2) ($)(3)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
- - ----------------------------------------------------------------------------------------------------------------------------------
S. JAY STEWART 1996 $ 660,833 $ 654,528 $ 174,365 -0- 57,200 $1,070,000 $ 19,825
Chairman and Chief 1995 633,333 720,000 -0- -0- 61,000 1,000,000 19,000
Executive Officer(4) 1994 512,500 551,250 2,277,011 -0- 122,400 567,405 15,375
- - ----------------------------------------------------------------------------------------------------------------------------------
WILLIAM E. JOHNSTON 1996 $ 396,000 $ 299,992 $ 153,861 -0- 50,800 $500,000 $ 11,880
President and Chief 1995 326,750 310,500 181,117 -0- 22,200 340,000 9,802
Operating Officer(5) 1994 302,167 310,500 1,014,704 -0- 22,140 236,060 9,315
- - ----------------------------------------------------------------------------------------------------------------------------------
FRED J. MUSONE(6) 1996 $ 315,833 $ 163,312 $ -0- $ -0- 19,000 $ -0- $ 9,475
President, Automotive 1995 125,644 231,021 -0- 300,625(7) 20,000 -0- 3,100
Safety Products Group
- - ----------------------------------------------------------------------------------------------------------------------------------
JAMES R. STANLEY 1996 $ 244,333 $ 181,018 $ 136,041 -0- 11,400 $340,800 $ 7,330
Vice President for Legal 1995 234,000 201,600 -0- -0- 12,200 320,000 7,020
Affairs and General 1994 222,167 201,600 -0- -0- 12,150 191,657 6,665
Counsel
- - ----------------------------------------------------------------------------------------------------------------------------------
STEPHEN A. GEROW 1996 $ 248,167 $ 162,791 $ -0- -0- 11,400 $360,000 $ 7,445
President, Coatings 1995 236,667 185,288 -0- -0- 12,200 340,000 7,100
Group 1994 222,833 202,500 -0- -0- 12,150 304,000 6,685
- - ----------------------------------------------------------------------------------------------------------------------------------
<FN>
(1) Amounts in this column consist of cash payments to the indicated
individuals pursuant to pre-fiscal 1991 stock option agreement provisions
for reimbursement of their income tax liability upon exercise of the
related options (for a detailed description of such payments, see footnote
(2) to the option exercise table on page 14).
(2) Amounts in this column consist of Long-Term Incentive Program (LTIP) awards
earned during three-year performance periods ending on the last day of the
indicated fiscal years and paid out approximately two months thereafter.
(3) Amounts in this column consist of Company contributions to the named
individuals' accounts in the Company's basic and supplemental Employee
Savings and Investment (defined contribution) Plans.
(4) Mr. Stewart's compensation for the first nine months of fiscal 1994 was
paid to him as President and Chief Operating Officer of the Company.
(5) Mr. Johnston's compensation for fiscal 1994, fiscal 1995 and the first four
months of fiscal 1996 was paid to him as Executive Vice President
Administration of the Company.
(6) Mr. Musone was employed by the Company effective February 6, 1995.
Consequently, he received no compensation from the Company during a portion
of fiscal 1995 and all of fiscal 1994.
(7) One-third of Mr. Musone's 10,000 share restricted stock award vests on each
anniversary of the grant date (February 6, 1995). At the end of fiscal
1996, 6,667 shares, valued at $247,512, remained restricted. Dividends are
paid on restricted stock.
</TABLE>
12
<PAGE>
- - --------------------------------------------------------------------------------
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
---------------------------------------- POTENTIAL REALIZABLE VALUE
NUMBER OF % OF TOTAL EXERCISE AT ASSUMED ANNUAL RATES OF
SECURITIES OPTIONS OR BASE STOCK PRICE APPRECIATION
UNDERLYING GRANTED TO PRICE FOR OPTION TERM
OPTIONS EMPLOYEES IN (PER EXPIRATION --------------------------------------
NAME(1) GRANTED(#) FISCAL YEAR SHARE)(2) DATE 0% 5%($)(3) 10%($)(3)
<S> <C> <C> <C> <C> <C> <C> <C>
- - --------------------------------------------------------------------------------------------------------------------------------
Mr. Stewart 57,200 6.7% $ 32.00 8/24/05 -0- $1,151,129 $2,917,186
Mr. Johnston 20,800 2.4% 32.00 8/24/05 -0- 418,592 1,060,795
30,000 3.5% 30.06 10/26/05 -0- 567,259 1,437,431
Mr. Musone 19,000 2.2% 32.00 8/24/05 -0- 382,368 968,995
Mr. Stanley 11,400 1.3% 32.00 8/24/05 -0- 229,421 581,397
Mr. Gerow 11,400 1.3% 32.00 8/24/05 -0- 229,421 581,397
All Shareholders N/A N/A N/A N/A -0- 2,858,842,951 7,244,869,338
All Optionees 852,110 100% 31.92 various(4) -0- 17,105,526 43,348,761
Optionee Gain as % of All N/A N/A N/A N/A N/A 0.6% 0.6%
Shareholders' Gain
- - --------------------------------------------------------------------------------------------------------------------------------
<FN>
(1) All options held by the named individuals include limited stock
appreciation rights (LSARs), which are issued in tandem with stock options.
LSARs give the holders thereof the right to receive cash in an amount equal
to the spread between the exercise price of the related options and the
stock's fair market value during the 90-day period following a change in
control of the Company (as such term may be defined from time to time by
the Compensation Committee) in lieu of exercising the related options,
which are cancelled upon exercise of LSARs.
(2) The exercise price shown for individual optionees is the fair market value
of the Company's common stock on the date of grant (calculated as the
average of its high and low sales prices on that date reported on the New
York Stock Exchange Composite Tape). The exercise price shown for all
optionees is the weighted average of all options granted in fiscal 1996.
Options become exercisable one year following the dates of grant, and
exercise prices may be paid in cash or previously owned shares of Company
common stock.
(3) The amounts shown in these two columns represent potential realizable
values using the options granted and the exercise prices. The assumed rates
of stock price appreciation are set by SEC rules and are not intended to
forecast the future appreciation of Company common stock.
(4) The expiration dates of options granted during fiscal 1996 are 8/24/05,
10/26/05, 1/25/06, and 6/27/06.
</TABLE>
13
<PAGE>
- - --------------------------------------------------------------------------------
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR END OPTION
VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED
OPTIONS AT FISCAL VALUE OF UNEXERCISED IN-THE-
YEAR END(#) MONEY OPTIONS AT FISCAL YEAR
---------------------------- END($)
SHARES ACQUIRED VALUE ----------------------------
NAME ON EXERCISE (#) REALIZED($)(1) EXERCISABLE(2) UNEXERCISABLE EXERCISABLE(3) UNEXERCISABLE
<S> <C> <C> <C> <C> <C> <C>
- - ---------------------------------------------------------------------------------------------------------------------------
Mr. Stewart 8,709 $ 221,470 613,705 57,200 $ 10,700,045 $ 293,150
Mr. Johnston 7,839 195,426 242,892 50,800 4,758,808 318,550
Mr. Musone -0- N/A 20,000 19,000 141,300 97,375
Mr. Stanley 6,966 172,792 163,886 11,400 3,322,539 58,425
Mr. Gerow -0- N/A 102,200 11,400 1,852,532 58,425
- - ---------------------------------------------------------------------------------------------------------------------------
<FN>
(1) The average of the Company stock's high and low sales prices reported on
the New York Stock Exchange Composite Tape for the particular exercise
dates, minus the applicable exercise prices, multiplied by the number of
option shares exercised.
(2) Options in this column that were granted to the named individuals prior to
fiscal 1991 (provided they were executive officers on the grant dates)
include supplemental cash payment rights, pursuant to which payments are
made to optionees upon exercise of such options or the related LSARs
described in note (1) on page 13 in reimbursement of their income tax
liability from such exercises and payments.
(3) The average of the Company stock's high and low trading prices (calculated
as in note (1) above) on the last trading day of fiscal 1996 ($37.13 per
share), minus the applicable exercise prices, multiplied by the number of
option shares held. Such values do not include the supplemental cash
payment rights described in note (2) above.
</TABLE>
14
<PAGE>
- - --------------------------------------------------------------------------------
LONG-TERM INCENTIVE PROGRAM (LTIP) -- AWARDS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
ESTIMATED FUTURE PAYOUTS UNDER
PERFORMANCE OR NON-STOCK PRICE-BASED PROGRAM
OTHER PERIOD -------------------------------
UNTIL MATURATION
NAME OR PAYOUT THRESHOLD TARGET MAXIMUM
<S> <C> <C> <C> <C>
- - ------------------------------------------------------------------------------------------------------
Mr. Stewart 3 years $ 332,500 $665,000 $1,330,000
Mr. Johnston 3 years 212,500 425,000 850,000
Mr. Musone 3 years 127,000 254,000 508,000
*Mr. Stanley N/A N/A N/A N/A
Mr. Gerow 3 years 100,000 200,000 400,000
</TABLE>
- - --------------------------------------------------------------------------------
* Does not participate due to scheduled retirement on October 31, 1996.
Individual target incentive awards under the LTIP are percentages of
participants' salaries ranging from 60% to 100%, depending on their salary
grades, subject to 20% plus or minus adjustments authorized prior to the
beginning of the applicable performance period by the Compensation Committee.
The target awards reported in the foregoing table require a 10% compound annual
growth in Company or applicable business unit profits and the achievement of
return on net assets ("RONA") goals over the three-year performance period
beginning on July 1, 1996, and ending on June 30, 1999. Maximum awards can be up
to two times target award levels to reflect 20% or greater compound earnings
growth and full achievement of RONA goals over the performance period, but are
zero if compound earnings growth is less than the 5% threshold level and minimum
RONA goal levels are not achieved.
Upon the occurrence of a change in control of the Company (as defined in the
LTIP), the performance periods with respect to all outstanding incentive awards
will terminate and the related incentive awards will be payable. The amount
payable with respect to any award will be equal to the percent of target based
upon the greater of (x) 100% or (y) the weighted average of (i) the percent of
target earned to the most recent fiscal quarter prior to the change of control
("Measurement Date") and (ii) 100% of target from the Measurement Date to the
end of the performance period.
15
<PAGE>
- - --------------------------------------------------------------------------------
EMPLOYMENT AGREEMENTS
All individuals named in the Summary Compensation Table except Mr. Stewart
have change of control employment agreements with the Company ("agreements")
which are effective for 3-year periods and are automatically extended annually
for additional 1-year periods unless notice to the contrary is given. The
agreements are otherwise terminable during their periods of effectiveness only
by termination of the executives' employment. Such termination in connection
with a change in control of the Company (as defined in the agreements) will
entitle an executive to benefits under the agreements. The agreements require
continued employment of the executive following a change of control on an
equivalent basis to employment immediately before such change of control. In the
event that during the three-year period following a change of control, the
executive terminates the executive's employment for good reason (as defined in
the agreements) or, during the 30-day period commencing one year after the
change of control, for any reason, or the Company terminates the executive's
employment without cause (as defined in the agreements), the executive would be
entitled to receive an immediate lump sum payment in an amount equal to three
times the sum of such executive's then current salary, average long-term bonus
and highest annual bonus plus service and earnings credits under any Company
retirement plan, which would have been earned over, and the continuance of
fringe benefits during, the three years after such termination (except as
reduced by payments under long-term bonus plans made to an executive upon a
change of control which relate to performance periods subsequent to such
termination). The agreements provide that executives are to be made whole on an
after-tax basis with respect to excise taxes payable under Section 4999 of the
Internal Revenue Code of 1986 (the "Code") as a consequence of any payments made
to them (whether or not under the agreements) being classified as "parachute
payments" as defined in Section 280G of the Code.
Mr. Musone has an additional change of control agreement which would provide
benefits similar to those described in the preceeding paragraph in the event of
a change in control of the Automotive Safety Products Group. Mr. Musone also has
an employment agreement which, in addition to confirming his participation in
the benefit plans applicable to other named executive officers as described in
this proxy statement, provides certain severance payments and benefits to Mr.
Musone if his employment is terminated for reasons other than cause or change of
control (as described above) within five years of his date of employment with
the Company.
Mr. Stewart's employment agreement extends for an initial term beginning
April 1, 1994, and ending March 31, 1999, provided three years' advance notice
of termination is given by the Company. Unless and until such notice is given,
the employment agreement will continue on a year-to-year basis through September
30, 2003 (Mr. Stewart's normal retirement date). Mr. Stewart's agreement
provides that in the event of his voluntary or involuntary termination without
cause following a change in control of the Company, he would be entitled to
receive an immediate payment of salary and bonuses plus credits and benefits
similar to those described in the preceding paragraph through the then current
term of his agreement.
- - --------------------------------------------------------------------------------
SURVIVOR INCOME BENEFITS PLAN
All individuals named in the Summary Compensation Table participate in this
plan, under which benefits are payable to participants' surviving spouses (or
dependent children if there is no spouse) if a participant dies prior to age 65
while employed by the Company. The benefit is approximately 50% of the
participant's base pay at death and continues until the participant would have
attained age 65. Accruals were made in fiscal 1996 for aggregate potential
benefits payable under this plan, but no specific amounts for individual
participants were calculated.
- - --------------------------------------------------------------------------------
16
<PAGE>
- - --------------------------------------------------------------------------------
POST-RETIREMENT LIFE INSURANCE PLAN
Three individuals named in the Summary Compensation Table (Messrs. Stewart,
Johnston and Stanley) participate in this plan, under which life insurance after
retirement is provided at no cost to retirees in amounts equal to their base
salaries at retirement. Such coverage is in addition to that provided under the
Company's regular life insurance program. Accruals were made in fiscal 1996 for
aggregate potential benefits payable under all Company life insurance plans, but
no specific amounts for individual participants were calculated.
PENSION PLANS
The following table contains estimated annual retirement benefits payable
under the Company's basic and excess defined benefit pension plans.
<TABLE>
<CAPTION>
YEARS OF SERVICE
-----------------------------------------------------
REMUNERATION 15 20 25 30 35
- - ------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$ 200,000 $ 48,749 $ 64,999 $ 81,249 $ 97,513 $ 115,013
400,000 101,248 134,997 168,747 202,511 237,511
600,000 153,749 204,998 256,248 307,512 360,012
800,000 206,249 274,999 343,749 412,513 482,513
1,000,000 258,748 344,997 431,247 517,511 605,011
1,200,000 311,249 414,998 518,748 622,512 727,512
1,400,000 363,749 484,999 606,249 727,513 850,013
1,600,000 416,248 554,997 693,747 832,511 972,511
1,800,000 468,749 624,998 781,248 937,512 1,095,012
</TABLE>
All individuals named in the Summary Compensation Table participate in the
Company's pension plans. The number of full years of credited service at June
30, 1996, for each is as follows: Mr. Stewart, 23 years; Mr. Johnston, 19 years;
Mr. Musone, 1 year; Mr. Gerow, 6 years; and Mr. Stanley, 24 years.
Upon reaching age 65, pension plan participants are eligible to receive
annual retirement income, on a straight-life annuity basis, in monthly
installments for life equal to 1.75% of salary plus annual bonus (as reported in
the Summary Compensation Table), averaged over the five consecutive calendar
years during which such compensation was highest out of the last ten years
completed before age 65, for each year of credited service, less 1.67% of
primary social security for each year of credited service (up to 30 years).
Two individuals named in the Summary Compensation Table, Messrs. Stewart and
Stanley, participated in a predecessor company's pension plan prior to 1984.
Upon retirement, they will receive 2% of compensation (calculated as described
in the preceding paragraph), less 1.67% of primary social security, for each
year of credited service prior to 1984. For subsequent credited service, they
will receive benefits as described in the preceding paragraph. Consequently,
their benefits will slightly exceed those in the above table in amounts varying
with the extent of their pre-1984 credited service.
One individual named in the Summary Compensation Table, Mr. Johnston,
participates in a supplemental executive retirement program (SERP). Under the
SERP, participants are entitled, upon normal or approved early retirement, to
receive amounts which, together with standard Company pensions (including
pensions of prior employers), equal 50% of their average compensation (salary
plus standard annual bonus) with respect to the five consecutive highest
earnings years out of the final ten
17
<PAGE>
- - --------------------------------------------------------------------------------
years' service prior to retirement. Consequently, unless reduced as described
below, the estimated total annual pension benefits of a SERP participant will
approximate those shown in the column of the foregoing pension table which sets
forth benefits for employees with 30 years of credited service.
If approved early retirement occurs prior to age 62, the SERP pension is
reduced by 0.33% for each full month from the early retirement date to age 62.
If a change in control of the Company occurs and thereafter the employment of
the SERP participant is terminated by the Company (other than for cause as
defined in the employment agreements) or the individual's status as a SERP
participant is terminated, the SERP pension vests as though the individual had
retired early with approval on the date of such termination.
In addition, SERP participants' rights under employment agreements
concerning pension benefits following a change of control are preserved.
- - --------------------------------------------------------------------------------
2. RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
Upon recommendation by the Audit Committee, the Board has appointed Ernst &
Young LLP as the independent auditing firm for the Company's fiscal year ending
June 30, 1997. The Company has been advised that Ernst & Young LLP has no
relationship with the Company or its subsidiaries other than that arising from
the firm's employment as auditors.
In accordance with a resolution of the Board, this selection is being
presented to the shareholders for ratification at the 1996 Annual Meeting. While
ratification by shareholders of this appointment is not required by law or the
Company's articles of incorporation or by-laws, management believes that such
ratification is desirable. In the event this appointment is not ratified by a
majority vote of shareholders, the Board will consider that fact when it
appoints independent auditors for the next fiscal year.
Ernst & Young LLP has been the independent auditing firm for the Company
since its formation in 1989. Audit services provided to the Company by Ernst &
Young LLP during fiscal 1996 consisted of the examination of the financial
statements of the Company and its subsidiaries for that year and the preparation
of various reports based thereon, as well as services relating to filings with
the SEC and employee benefit plan audits.
Representatives of Ernst & Young LLP are expected to be present at the 1996
Annual Meeting with the opportunity to make a statement if they so desire and to
be available to respond to appropriate questions relating to that firm's
examination of the Company's financial statements for fiscal 1996.
The Board recommends a vote FOR the proposal to ratify the appointment of
Ernst & Young LLP.
18
<PAGE>
- - --------------------------------------------------------------------------------
3. DISCRETIONARY VOTING OF PROXIES ON OTHER MATTERS
Management does not now intend to bring before the 1996 Annual Meeting any
matters other than those disclosed in the notice of the meeting. Should any
matter requiring a vote of the shareholders be properly brought before the
meeting by or at the direction of the Board, the proxies in the enclosed form
confer upon the person or persons entitled to vote the shares represented by
such proxies discretionary authority to vote such shares in respect of any such
matter in accordance with their best judgment.
For business to be properly brought before an annual shareholders meeting by
a shareholder, timely advance written notice thereof must be received by the
Corporate Secretary of the Company at its principal executive offices in
accordance with the Company's by-laws.* One such notice was received for the
1996 Annual Meeting and subsequently withdrawn. For the Company's 1997 Annual
Shareholders Meeting, any such notices must be received by the Company between
July 25 and August 25, 1997.
SHAREHOLDER PROPOSALS FOR 1997 ANNUAL MEETING
Shareholder proposals intended for the proxy statement for the 1997 Annual
Shareholders Meeting must be received by the Corporate Secretary of the Company
at its principal executive offices no later than May 20, 1997.
By Order of the Board
P. Michael Phelps
Vice President and Secretary
Chicago, Illinois
September 12, 1996
- - --------
*A copy of the Company's by-laws may be obtained by written request to its
Corporate Secretary.
19
<PAGE>
MORTON INTERNATIONAL, INC. PROXY/VOTING INSTRUCTION CARD
CHICAGO, ILLINOIS
- - --------------------------------------------------------------------------------
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS FOR THE ANNUAL
MEETING ON OCTOBER 24, 1996.
The undersigned hereby appoints Ralph M. Barford, William T. Creson, James R.
Stanley, or any of them, each with power of substitution, as proxies to vote as
specified on this card all shares of common stock of Morton International, Inc.
(the "Company") registered in the name(s) of the undersigned on August 26, 1996,
or in the name(s) of agents for the benefit of the undersigned in the Company's
Book Entry Ownership Program, Dividend Reinvestment Plan, and/or Employee
Savings & Investment Plan, at the Company's Annual Meeting of Shareholders on
October 24, 1996, and at any adjournment thereof. Said proxies are authorized to
vote in their discretion as to any other business which may properly come before
the meeting. If a vote is not specified, said proxies will vote FOR proposals 1
and 2.
Receipt is acknowledged of the Company's Annual Report to Shareholders for the
fiscal year ended June 30, 1996, and Notice and Proxy Statement for the above
Annual Meeting.
Nominees for Election as Directors:
Dennis C. Fill, William E. Johnston, Edward J. Mooney,
George A. Schaefer
YOU ARE ENCOURAGED TO SPECIFY YOUR CHOICES BY MARKING THE APPROPRIATE
BOXES (SEE REVERSE SIDE) BUT YOU NEED NOT MARK ANY BOXES IF YOU WISH
TO VOTE IN ACCORDANCE WITH THE BOARD OF DIRECTORS' RECOMMENDATIONS.
THE PROXIES CANNOT VOTE YOUR SHARES UNLESS YOU SIGN AND RETURN THIS
CARD.
SEE REVERSE SIDE
- - --------------------------------------------------------------------------------
^FOLD AND DETACH HERE^ 5057
/X/ Please mark your
votes as in this
example.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED SHAREHOLDER(S). IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR PROPOSALS 1 AND 2.
- - --------------------------------------------------------------------------------
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSALS 1 AND 2.
- - --------------------------------------------------------------------------------
FOR WITHHELD AS TO
ALL NOMINEES
1. Election of To withhold authority to vote
Directors. / / / / for any nominee(s), mark the
(see reverse "FOR" box and write the name
side) of each such nominee on the
line below.
2. Proposal to ratify appointment of FOR AGAINST ABSTAIN
Ernst & Young LLP as / / / / / /
independent auditors for fiscal
1997.
- - --------------------------------------------------------------------------------
DATE ,1996
---------
SIGNATURE(S) /
----------------------- --------------------------------------------
NOTE: Please date and sign exactly as name(s) appears hereon. If shares are held
jointly or by two or more persons, each shareholder named should sign.
Executors, administrators, trustees, etc., should so indicate when
signing. If the signer is a corporation, please sign full corporate name
by duly authorized officer. If a partnership, please sign in partnership
name by authorized person.
- - --------------------------------------------------------------------------------
^ FOLD AND DETACH HERE^
<PAGE>
MORTON INTERNATIONAL, INC. PROXY/VOTING INSTRUCTION CARD
Chicago, Illinois
- - -----------------------------------------------------------------------------
This proxy is solicited on behalf of the Board of Directors for the Annual
Meeting on October 24, 1996.
The undersigned hereby appoints Ralph M. Barford, William T. Creson, James R.
Stanley, or any of them, each with power of substitution, as proxies to vote as
specified on this card all shares of common stock of Morton International, Inc.
(the "Company") registered in the name(s) of the undersigned on August 26, 1996,
or in the name(s) of agents for the benefit of the undersigned in the Company's
Book Entry Ownership Program, Dividend Reinvestment Plan, and/or Employee
Savings & Investment Plan, at the Company's Annual Meeting of shareholders on
October 24, 1996, and at any adjournment thereof. Said proxies are authorized to
vote in their discretion as to any other business which may properly come before
the meeting. If a vote is not specified, said proxies will vote FOR proposals 1
and 2.
Receipt is acknowledged of the Company's Annual Report to Shareholders for the
fiscal year ended June 30, 1996, and Notice and Proxy Statement for the above
Annual Meeting.
Nominees for Election as Directors:
Dennis C. Fill, William E. Johnston, Edward J. Mooney, George A. Schaefer
YOU ARE ENCOURAGED TO SPECIFY YOUR CHOICES BY MARKING THE APPROPRIATE
BOXES (SEE REVERSE SIDE) BUT YOU NEED NOT MARK ANY BOXES IF YOU WISH TO
VOTE IN ACCORDANCE WITH THE BOARD OF DIRECTORS' RECOMMENDATIONS. THE
PROXIES CANNOT VOTE YOUR SHARES UNLESS YOU SIGN AND RETURN THIS CARD.
See Reverse side
- - -----------------------------------------------------------------------------
fold and detach here
<PAGE>
/X/ Please mark your 4856
votes as in this example.
This proxy when properly executed will be voted in the manner directed
herein by the undersigned shareholder(s). If no direction is made, this
proxy will be voted FOR proposals 1 and 2.
- - -----------------------------------------------------------------------------
The Board of Directors recommends a vote FOR proposals 1 and 2.
- - -----------------------------------------------------------------------------
WITHHELD as to
FOR ALL Nominees
1. Election of Directors. (see reverse side) / / / /
To withhold authority to vote for any nominee(s), mark the "FOR" box and
write the name of each such nominee on the line below.
FOR AGAINST ABSTAIN
2. Proposal to ratify appointment of / / / / / /
Ernst & Young LLP as independent auditors
for fiscal 1997.
- - -----------------------------------------------------------------------------
Date ,1996
Shareholder name and address _____________________________________________
_____________________________________________
Signature(s) ______________________________ / _____________________________
Note: Please date and sign exactly as name(s) appears hereon. If shares are
held jointly or by two or more persons, each shareholder named should
sign. Executors, administrators, trustees, etc., should so indicate when
signing. If the signer is a corporation, please sign full corporate name
by duly authorized officer. If a partnership, please sign in partnership
name by authorized person.
- - -----------------------------------------------------------------------------
fold and detach here
<PAGE>
MORTON INTERNATIONAL, INC. PROXY/VOTING INSTRUCTION CARD
CHICAGO, ILLINOIS
- - --------------------------------------------------------------------------------
- - --------------------------------------------------------------------------------
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS FOR THE
ANNUAL MEETING ON OCTOBER 24, 1996.
The undersigned hereby appoints Ralph M. Barford, William T. Creson, James R.
Stanley, or any of them, each with power of substitution, as proxies to vote as
specified on this card all shares of common stock of Morton International, Inc.
(the "Company") registered in the name(s) of the undersigned on August 26, 1996,
or in the name(s) of agents for the benefit of the undersigned in the Company's
Book Entry Ownership Program, Dividend Reinvestment Plan, and/or Employee
Savings & Investment Plan, at the Company's Annual Meeting of Shareholders on
October 24, 1996, and at any adjournment thereof. Said proxies are authorized to
vote in their discretion as to any other business which may properly come before
the meeting. If a vote is not specified, said proxies will vote FOR proposals 1
and 2.
Receipt is acknowledged of the Company's Annual Report to Shareholders for the
fiscal year ended June 30, 1996, and Notice and Proxy Statement for the above
Annual Meeting.
Nominees for Election as Directors:
Dennis C. Fill, William E. Johnston, Edward J. Mooney,
George A. Schaefer
YOU ARE ENCOURAGED TO SPECIFY YOUR CHOICES BY MARKING THE APPROPRIATE
BOXES (SEE REVERSE SIDE) BUT YOU NEED NOT MARK ANY BOXES IF YOU WISH
TO VOTE IN ACCORDANCE WITH THE BOARD OF DIRECTORS' RECOMMENDATIONS.
THE PROXIES CANNOT VOTE YOUR SHARES UNLESS YOU SIGN AND RETURN THIS
CARD.
SEE REVERSE
SIDE
^ FOLD AND DETACH HERE ^
SHAREHOLDER BOOK-ENTRY OWNERSHIP PROGRAM
This program enables current shareholders to transfer their Morton stock
certificates into electronic accounts in their own names (similar to mutual
funds) on the books of Morton's stock transfer Agent, First Chicago Trust. In
Addition, non-shareholders may make initial investments in Morton Stock through
the program. In contrast with physical certificates (which can be misplaced or
stolen), these uncertificated accounts provide a cost-free safekeeping facility,
as well as a convenient way to make gifts of other transfers of stock -- with or
without the issuance of certificates.
The program also includes several fee-based options, such as purchasing and
selling stock, reinvesting dividends, and establishing individual retirement
accounts (IRAs).
For more information, including how to enroll in the program, CURRENT
SHAREHOLDERS should call First Chicago Trust at 1-800-4466-2617.
NON-SHAREHOLDERS should call First Chicago at 1-800-990-1010.
<PAGE>
X PLEASE MARK YOUR VOTES AS IN THIS EXAMPLE. 5057
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED SHAREHOLDER(S). IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR PROPOSALS 1 AND 2.
- - --------------------------------------------------------------------------------
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSALS 1 AND 2.
- - --------------------------------------------------------------------------------
FOR WITHHELD as to ALL Nominees
1. Election of / / / / To withhold authority to vote for
Directors. any nominee(s), mark the
(see reverse "FOR" box and write the name
side) of each such nominee on the
line below.
- - --------------------------------------------------------------------------------
FOR AGAINST ABSTAIN
2. Proposal to ratify appointment of
Ernst & Young LLP as / / / / / /
independent auditors for fiscal
1997.
SHAREHOLDER NAME AND ADDRESS
DATE_______________,1996
SIGNATURE(S) /
------------------- ----------------------------------------------
NOTE: Please date and sign exactly as name(s) appears hereon. If shares are held
jointly or by two or more persons, each shareholder named should sign.
Executors, administrators, trustees, etc., should so indicate when
signing. If the signer is a corporation, please sign full corporate name
by duly authorized officer. If a partnership, please sign in partnership
name by authorized person.
^ FOLD AND DETACH HERE ^
