<PAGE> 1
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SCHEDULE 14A
(RULE 14A)
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:
<TABLE>
<S> <C>
/ / Preliminary Proxy Statement / / Confidential, for use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
</TABLE>
SPECIALTY CHEMICAL RESOURCES, INC.
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
SPECIALTY CHEMICAL RESOURCES, INC.
(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> 2
[LOGO] SPECIALTY CHEMICAL RESOURCES, INC.
9100 Valley View Road
Macedonia, Ohio 44056
----------------------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JUNE 6, 1996
----------------------------------------
To Our Stockholders:
The Annual Meeting (the "Annual Meeting") of Stockholders of Specialty
Chemical Resources, Inc. (the "Company") will be held at the offices of
Specialty Chemical Resources, Inc., 9100 Valley View Road, Macedonia, Ohio 44056
on June 6, 1996 at 10:00 a.m. (Cleveland time) for the following purposes:
I. To elect seven Directors of the Company for the ensuing year;
II. To ratify the appointment of Grant Thornton as the independent
accountants for the Company; and
III. To transact such other business as may properly come before the
Annual Meeting or any adjournments or postponements thereof.
Only stockholders of record as of the close of business on April 15, 1996
are entitled to notice of, and to vote at, the Annual Meeting.
By Order of the Board of Directors
EDWIN M. ROTH
Chairman of the Board
and President
May 3, 1996
PLEASE DATE AND EXECUTE THE ENCLOSED PROXY CARD AND PROMPTLY RETURN IT IN THE
ENCLOSED STAMPED ENVELOPE FOR WHICH NO ADDITIONAL POSTAGE IS REQUIRED IF MAILED
IN THE UNITED STATES.
<PAGE> 3
[LOGO] SPECIALTY CHEMICAL RESOURCES, INC.
9100 Valley View Road
Macedonia, Ohio 44056
------------------------------------
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JUNE 6, 1996
------------------------------------
INTRODUCTION
This Proxy Statement is being furnished to stockholders of Specialty
Chemical Resources, Inc., a Delaware corporation (the "Company"), in connection
with the solicitation of proxies by the Board of Directors of the Company from
the holders of the Company's common stock, par value $.10 per share ("Common
Stock"), for use at the Annual Meeting of Stockholders of the Company to be held
at 10:00 a.m., Cleveland time, on June 6, 1996 (the "Annual Meeting"), at the
offices of Specialty Chemical Resources, Inc., 9100 Valley View Road, Macedonia,
Ohio 44056.
Stockholders of record as of the close of business on April 15, 1996 are
entitled to notice of, and to vote at, the Annual Meeting and any adjournments
or postponements thereof. On that date there were outstanding 3,947,766 shares
of Common Stock. Each share of Common Stock is entitled to one vote on all
matters to come before the Annual Meeting. The Company has no other class of
voting securities outstanding.
Shares of Common Stock cannot be voted at the Annual Meeting unless the
holder thereof is present or represented by proxy. When proxies in the
accompanying form are returned, properly executed, the shares represented
thereby will be voted as specified on such proxies. All votes represented by the
enclosed proxy will be cast (i) for the seven nominees named herein, unless
authorization to do so is withheld by a stockholder, and (ii) in the manner
specified by a stockholder with respect to the proposal to ratify the
appointment of Grant Thornton as the independent accountants for the Company,
except that in the absence of such specification, the votes will be cast "FOR"
such proposal. Any stockholder giving a proxy has the right to revoke it at any
time prior to its exercise, either by delivering a notice in writing to the
Secretary of the Company or by voting in person at the Annual Meeting.
At the Annual Meeting, the results of stockholder voting will be tabulated
by the inspector of elections appointed for the Annual Meeting. Under Delaware
law and the Company's Restated Certificate of Incorporation and By-laws,
properly executed proxies that are (i) marked "abstain" or (ii) held in "street
name" by brokers and that are not voted on one or more particular proposals (if
otherwise voted on at least one proposal), will be counted for purposes of
determining whether a quorum has been achieved at the Annual Meeting.
Abstentions will have the same effect as a vote against the proposal to which
such abstention applies. Broker non-votes will not be treated as either a vote
for or a vote against any of the proposals to which such broker non-votes apply.
The approximate date on which this Proxy Statement and the enclosed proxy
are first being sent to stockholders is May 3, 1996.
<PAGE> 4
I. ELECTION OF DIRECTORS
At the Annual Meeting, seven Directors are to be elected for the ensuing
year to hold office until the next Annual Meeting and until their successors
shall have been elected and shall have qualified. Pursuant to the Company's
By-laws, provided that a quorum is present, Directors are elected by a majority
of the votes cast in the election. Unless otherwise specified, the shares
represented by the enclosed proxy will be voted "FOR" the election of the seven
nominees named below. In the event that any nominee refuses or is unable to
serve as a Director (which is not now anticipated), the persons named as proxies
reserve full discretion to vote for such other person as may be nominated.
INFORMATION AS TO THE NOMINEES, THE BOARD OF DIRECTORS
AND THE EXECUTIVE OFFICERS OF THE COMPANY
Set forth below is information about each nominee for election as a
Director and each executive officer of the Company (based on information
supplied by him), including his name, age, positions with the Company (other
than as a Director) and principal occupations during the past five years.
<TABLE>
<CAPTION>
Name, Age and Positions
With the Company
Other than Director Occupation and Other Information
- ---------------------------------------- --------------------------------------------------
<S> <C>
NOMINEES
Edwin M. Roth, 68 Mr. Roth has been a Director and President of the
President and Chairman of Company and Chairman of the Board of Directors of
the Board of Directors the Company since its formation in June 1982. Mr.
Roth was Chief Executive Officer of Aerosol
Systems, Inc. ("ASI"), a former subsidiary of the
Company acquired effective December 31, 1988 and
merged into the Company effective December 30,
1992, from January 1989 until December 1992. Mr.
Roth is the father of Corey B. Roth, a Director
and executive officer of the Company.
Corey B. Roth, 38 Mr. Roth has been a Vice President of the Company
Vice President, Treasurer since June 1982, a Director since October 1984 and
and Assistant Secretary Treasurer and Assistant Secretary since June 1992.
Mr. Roth served as Secretary from October 1984
until June 1992 and Treasurer from November 1987
until January 1990. Mr. Roth was Vice President of
Administration of ASI from April 1989 until
December 1992. Mr. Roth is the son of Edwin M.
Roth.
George N. Aronoff, 62 Mr. Aronoff has been a Director of the Company
Secretary since May 1989 and Secretary since June 1992. Mr.
Aronoff was also a Director of the Company from
February 1982 until September 1984. Mr. Aronoff
has been a partner in the Cleveland law firm of
Benesch, Friedlander, Coplan & Aronoff P.L.L.,
counsel to the Company, for more than the past
five years. Mr. Aronoff is also a Director of
Bally Entertainment Corporation.
</TABLE>
2
<PAGE> 5
<TABLE>
<CAPTION>
Name, Age and Positions
With the Company
Other than Director Occupation and Other Information
- ---------------------------------------- --------------------------------------------------
<S> <C>
Victor Gelb, 69 Mr. Gelb has been a Director of the Company since
May 1989. Mr. Gelb is President and Chief
Executive Officer of Victor Gelb Inc., a
manufacturer of reinforcement fibers, a position
which he has held for more than five years. Mr.
Gelb is also a Director of Pioneer Standard
Electronics, Inc.
Leonard P. Judy, 56 Mr. Judy has been a Director of the Company since
July 1995. Mr. Judy was nominated to the Board of
Directors pursuant to an Agreement of Settlement
and Release dated July 21, 1995 (the "Settlement
Agreement") executed in connection with a proxy
contest in which a group of stockholders (the
"Committee") solicited proxies in opposition to
the Company's nominees for the Board of Directors
(the "Proxy Contest"). The purpose of the Proxy
Contest was to attempt to remove, by stockholder
vote, the then-current Board of Directors and to
replace them with a slate of new directors
nominated by the Committee. The Proxy Contest was
unsuccessful and the parties executed the
Settlement Agreement to settle matters related to
the Proxy Contest. From January 1986 until June
1994, Mr. Judy was Chief Executive Officer of
Rust-Oleum Corporation and from January 1988 to
January 1994, Mr. Judy was Chairman of the Board
of Directors of Rust-Oleum Corporation, a company
that manufactures and packages specialty coatings.
Mr. Judy is also a Director of Lawter
International and Banc One; Chicago.
Norton W. Rose, 67 Mr. Rose has been a Director of the Company since
May 1989. Since January 1994, Mr. Rose has been
Executive Vice President of Creativity for Kids, a
privately-owned toy company. Since 1991, Mr. Rose
has been Vice Chairman of Blue Coral, Inc., a
privately-owned consumer chemical company, and
Chairman of Premier Travel Partners, a
privately-owned travel management company. From
November 1991 until January 1993, Mr. Rose was
Chairman of Action Auto Rental, Inc., an
automobile leasing company from November 1991
until January 1993. Action Auto Rental, Inc. filed
for bankruptcy protection under Chapter 11 of the
Bankruptcy Code on January 28, 1993. From 1985
until August 1990, Mr. Rose was Vice Chairman of
Progressive Corporation, a liability and casualty
insurance company. Mr. Rose is also a Director of
Telxon Corporation, LDI Corporation and Cohesant
Technologies.
</TABLE>
3
<PAGE> 6
<TABLE>
<CAPTION>
Name, Age and Positions
With the Company
Other than Director Occupation and Other Information
- ---------------------------------------- --------------------------------------------------
<S> <C>
Lionel N. Sterling, 58 Mr. Sterling has been a Director of the Company
since May 1989. Mr. Sterling was also a Director
of the Company from February 1982 until September
1984. Since January 1987, Mr. Sterling has been
President of Equity Resources Inc., a private
investment company. From July 1988 to September
1992, Mr. Sterling was Managing Partner of
Whitehead/Sterling, an investment management firm.
Mr. Sterling is also a Director of i-Stat
Corporation.
EXECUTIVE OFFICER
John H. Ehlert, 43 Mr. Ehlert has been a Vice President of the
Vice President, and Company since April 1992. He was President of ASI
President of Aerosol from April 1992 until December 1992, when ASI was
Systems Division merged into the Company, at which time he became
President of the Aerosol Systems Division. From
February 1990 until April 1992, Mr. Ehlert was
Vice President of Marketing and Sales of ASI.
</TABLE>
The Board of Directors held six meetings during the fiscal year ended
December 31, 1995. The Board of Directors has an Audit Committee, a Nominating
Committee, and a Stock Option and Compensation Committee. The general functions
of such Board committees, the identity of each committee member and the number
of committee meetings held by each committee during the last fiscal year are set
forth below.
The Audit Committee acts as a liaison between the Company's independent
auditors and the Board of Directors, reviews the scope of the annual audit,
reviews the Company's annual and quarterly financial statements and reviews the
sufficiency of the Company's internal accounting controls. The Audit Committee
consists of Victor Gelb, Norton W. Rose and Lionel N. Sterling. The Audit
Committee held two meetings during the fiscal year ended December 31, 1995. Each
of the members of the Audit Committee attended the meetings.
The Nominating Committee is responsible for making recommendations to the
Board of Directors with respect to the organization and size of the Board and
its committees, for selecting candidates for election to the Board of Directors
and its committees and for considering the qualifications of Directors. There is
no established procedure for submission of nominations by stockholders. The
Nominating Committee consists of George N. Aronoff, Corey B. Roth and Edwin M.
Roth. The Nominating Committee held two meetings during the fiscal year ended
December 31, 1995. Each of the members of the Nominating Committee attended the
meetings.
The Stock Option and Compensation Committee is responsible for the approval
of grants of options under the Company's stock option plan for officers and key
employees of and consultants to the Company and makes recommendations regarding
the compensation of officers and key employees of the Company. The Stock Option
and Compensation Committee consists of George N. Aronoff, Victor Gelb and Norton
W. Rose. The Stock Option and Compensation Committee held two meetings during
the fiscal year ended December 31, 1995. Each of the members of the Stock Option
and Compensation Committee attended the meetings.
4
<PAGE> 7
DIRECTOR REMUNERATION
Directors who are not employed by the Company received in 1995 an annual
fee of $12,000, reimbursement for travel expenses, a fee of $500 for each Board
meeting attended and a fee of $500 for each meeting of a committee of the Board
attended that was not held on the same day as a Board meeting.
During fiscal 1995, the Company retained the law firm of Benesch,
Friedlander, Coplan & Aronoff P.L.L. as counsel to the Company. Mr. Aronoff, a
Director of the Company, is a partner with this law firm. The Company plans to
retain this firm during the coming year.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
The Company is required to identify any director or executive officer who
failed to file, on a timely basis, with the Securities and Exchange Commission
(the "Commission") a required report relating to ownership and changes in
ownership of the Company's equity securities. Based on material provided to the
Company, it believes that during 1995, the Directors and executive officers of
the Company complied with all such filing requirements, except that Mr. Judy did
not timely file a Form 3 upon his becoming a Director of the Company. This
mistake was corrected upon its discovery.
5
<PAGE> 8
COMMON STOCK OWNERSHIP
The following table sets forth, as of April 11, 1996, based on information
provided to the Company by the persons named in the table, the number of shares
of Common Stock owned by each Director, each executive officer and by the
Directors and executive officers of the Company as a group, and the persons or
groups of persons known to the Company to be the beneficial owners of more than
5% of the Common Stock of the Company.
<TABLE>
<CAPTION>
Name, and Address if applicable, of Amount and Nature of Percentage
Beneficial Owner Beneficial Ownership(1) Ownership
- -------------------------------------- ----------------------- ---------
<S> <C> <C>
Edwin M. Roth 837,439(2)(3) 20.76%
Specialty Chemical Resources, Inc.
9100 Valley View Road
Macedonia, Ohio 44056 (4)
Corey B. Roth 161,610(2)(3) 4.04%
John H. Ehlert 60,714(3)(5) 1.52%
George N. Aronoff 33,241(3) *
Victor Gelb 14,881(3) *
Leonard P. Judy 1,000 *
Norton W. Rose 14,809(3) *
Lionel N. Sterling 44,631(3) 1.13%
All Directors and officers as a group 1,162,075(3) 27.72%
(eight individuals)
Pioneering Management Corporation (6) 381,300(7) 9.66%
60 State Street
Boston, Massachusetts 02109
Merrill Lynch Phoenix Fund, Inc. (6) 360,000(8) 9.12%
800 Scudders Mill Road
Plainsboro, New Jersey 08536
CEW Partners (6) 232,953 5.90%
30 Rockefeller Plaza
Suite 2500
New York, New York 10020
Martin Trust (6) 232,953 5.90%
c/o Trust Investments, Inc.
52 Stiles Road
Salem, New Hampshire 03079
Dimensional Fund Advisors Inc. (6) 218,700(9) 5.54%
1299 Ocean Avenue
Eleventh Floor
Santa Monica, California 90401
</TABLE>
- ---------------
* Less than one percent.
(1) Except as otherwise indicated, the persons listed as beneficial owners of
the shares of Common Stock have sole voting and investment power with
respect to those shares.
(2) Includes 6,250 shares of Common Stock owned by the Edwin M. Roth Family
Foundation, Inc., a not-for-profit Ohio corporation. Edwin M. Roth and Corey
B. Roth are both officers and trustees of such foundation and have shared
voting and investment power with respect to the shares of Common Stock owned
by such foundation.
(3) Includes the following number of shares of Common Stock which such persons
have or had within 60 days after April 11, 1996 the right to acquire upon
the exercise of options: Mr. Edwin M. Roth, 86,667; Mr. Corey B. Roth,
54,047; Mr. Ehlert, 45,714; Mr. Aronoff, 14,524; Mr. Gelb 14,524; Mr. Rose,
14,524; Mr. Sterling, 14,524; and all current officers and Directors as a
group, 244,524.
6
<PAGE> 9
(4) Mr. Roth also owned, as of April 11, 1996, 3,500 shares of the Company's
non-voting 7% Cumulative Convertible Preferred Stock, $.01 par value
("Cumulative Convertible Preferred Stock"), constituting all of the
authorized and outstanding shares of that class.
(5) Includes 15,000 shares of Common Stock granted to Mr. Ehlert in July 1995 as
a restricted stock award of which 10,000 are subject to forfeiture until
certain restrictions lapse.
(6) All information contained in this table regarding the identified beneficial
owner and its security ownership, including related footnotes, is based
solely on the Schedule 13D or Schedule 13G filing made by such beneficial
owner as of the date of such filing.
(7) Pioneering Management Corporation has sole voting power over 381,300 shares,
sole investment power over 51,300 shares and shared investment power over
330,000 shares.
(8) Merrill Lynch Phoenix Fund, Inc. (the "Fund") is an investment company
advised by Fund Asset Management, LP. ("FAM"), an investment advisor.
Princeton Service, Inc. ("PSI") is the general partner of FAM and a
wholly-owned subsidiary of Merrill Lynch Group, Inc. ("MLG"). MLG is a
wholly-owned subsidiary of Merrill Lynch & Co., Inc. ("MLC"). The Fund, FAM,
PSI, MLG and MLC (together, the "Reporting Persons") have all made Schedule
13G filings with respect to all of the identified shares of Common Stock and
all of such Reporting Persons have expressly disclaimed beneficial ownership
of such shares. The Reporting Persons have shared voting power over 360,000
shares and shared investment power over 360,000 shares.
(9) Dimensional Fund Advisors Inc. has sole voting power over 155,000 shares and
sole investment power over 218,700 shares. Certain officers of Dimensional
Fund Advisors Inc. also serve as officers of DFA Investment Dimensions Group
Inc. (the "Fund") and The DFA Investment Trust Company (the "Trust"). In
their capacities as officers of the Fund and the Trust, these persons vote
25,900 additional shares which are owned by the Fund and 37,800 shares which
are owned by the Trust. These shares are included in the number of shares
over which Dimensional Fund Advisors Inc. has sole investment power.
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION
The following table sets forth the compensation paid to or deferred for the
executive officers of the Company at December 31, 1995.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
-----------------------------------
ANNUAL COMPENSATION AWARDS PAYOUTS
----------------------------------- ----------------------- -------
RESTRICTED
NAME AND OTHER ANNUAL STOCK OPTIONS/ LTIP ALL OTHER
PRINCIPAL SALARY BONUS COMPENSATION AWARD(S) SARS PAYOUTS COMPENSATION
POSITION YEAR ($) ($) ($) ($) (#)(1) ($) ($)(2)
- ----------------- ---- ------- ------ ------------ ---------- -------- ------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Edwin M. Roth, 1995 275,000 0 0 0 50,000 0 $ 0
President & 1994 250,000 75,000 0 0 20,000 0 0
Chairman 1993 225,000 75,000 0 0 30,000 0 0
Corey B. Roth, 1995 195,000 0 0 0 30,000 0 6,738
Vice President 1994 167,500 50,000 0 0 10,000 0 6,738
& Treasurer 1993 157,500 50,000 0 0 15,000 0 6,738
John H. Ehlert, 1995 185,000 0 0 15,000(3) 30,000 0 9,181
Vice President 1994 155,000 50,000 0 0 10,000 0 9,181
1993 142,500 50,000 0 0 10,000 0 9,181
</TABLE>
- ---------------
(1) There were no SAR grants by the Company in 1993 or 1994.
(2) Represents the dollar value of term life insurance premiums paid during each
fiscal year by the Company for the benefit of Messrs. Corey Roth and Ehlert.
(3) On July 25, 1995, the Company granted Mr. Ehlert a restricted stock award of
15,000 shares of Common Stock. The market value of such shares was $58,125
on the date of the grant. Mr. Ehlert has all of the rights of a stockholder
with respect to such shares, including the right to vote the shares and to
receive dividends with respect to the shares. Of the 15,000 shares of Common
Stock granted to Mr. Ehlert, 10,000 are currently subject to certain
specified transfer restrictions and forfeiture provisions. These transfer
and forfeiture provisions will lapse on July 25, 1996 with respect to 5,000
shares and on July 25, 1997 with respect to the remaining 5,000 shares, in
each case provided that Mr. Ehlert is employed by the Company on such date,
or, if earlier, such provisions will lapse upon a change in control of the
Company.
7
<PAGE> 10
OPTION AND SAR GRANTS
The following table summarizes options granted in the last fiscal year to
the executive officers of the Company and potential realizable value of the
options assuming a 5% and 10% annually compounded stock price appreciation.
There were no SAR grants by the Company in 1995.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE VALUE AT
ASSUMED
ANNUAL RATES OF STOCK PRICE
INDIVIDUAL GRANTS APPRECIATION FOR OPTION TERM
- ------------------------------------------------------------------------------------------- -----------------------------------
NUMBER OF PERCENT OF
SECURITIES TOTAL
UNDERLYING OPTIONS/SARS
OPTIONS/SARS GRANTED
GRANTED TO EMPLOYEES IN EXERCISE OR BASE 5% 10%
NAME (#)(1) FISCAL YEAR PRICE ($/SH) EXPIRATION DATE ($) ($)
- -------------- ------------ --------------- ---------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Edwin M. Roth 50,000 21.1% $ 3.75 4/25/00 $ 51,805 $ 114,470
Corey B. Roth 30,000 12.7% $ 3.75 4/25/00 $ 31,083 $ 68,682
John H. Ehlert 30,000 12.7% $ 3.75 4/25/00 $ 31,083 $ 68,682
</TABLE>
- ---------------
(1) Options are exercisable as to one-third of the shares covered on each of the
first, second and third anniversaries of the date of grant and the term of
each option grant is five years.
OPTION AND SAR EXERCISES
The following table summarizes the exercise of options for the Company's
Common Stock by the executive officers of the Company during the last fiscal
year and the year-end balances of exercisable and unexercisable options of the
executive officers. The Company has no outstanding SARs.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
NUMBER OF VALUE OF UNEXERCISED
UNEXERCISED OPTIONS/SARS IN-THE-MONEY OPTIONS/SARS
SHARES ACQUIRED VALUE AT FISCAL YEAR-END AT FISCAL YEAR-END
ON EXERCISE REALIZED (#) ($)
NAME (#) ($) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
- -------------- --------------- -------- ------------------------- --------------------------
<S> <C> <C> <C> <C>
Edwin M. Roth 0 $0 86,667/73,333 $0/$0
Corey B. Roth 0 $0 54,047/41,667 $0/$0
John H. Ehlert 0 $0 45,714/41,429 $0/$0
</TABLE>
REPORT OF THE STOCK OPTION AND COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
The 1995 compensation of Mr. Edwin M. Roth and the other executive officers
of the Company was recommended to the Board of Directors by the Stock Option and
Compensation Committee (the "Committee") which is composed of three non-employee
Directors. The Committee is responsible for approval (or recommendation to the
Board of Directors) of the compensation arrangements for senior management,
Directors and other key employees; review of benefit plans in which officers and
Directors are eligible to participate; periodic review of the equity
compensation plans of the Company and grants under such plans; and oversight of
management development to insure continuity of senior management.
While the Company does not have specific annual goals for each executive
officer upon which to base compensation decisions, the Committee believes that
there should be a strong correlation between executive compensation and
compensation paid by comparable companies as well as overall Company
performance, both to reward outstanding executive effort and to encourage it in
the future. In this way maximum stockholder return can be expected. The Company
presently uses a flexible array of salary, bonus and stock option plans to
compensate and motivate its executive officers. The nature and manner of
application of these various compensation tools for executive officers is
determined subjectively by the Board of Directors upon the recommendation of the
Committee.
8
<PAGE> 11
In 1995 the Company strived to provide an overall compensation package for
each executive officer that fairly reflected that officer's contribution in
relation to overall Company performance and that would motivate that officer to
improve such performance in the future. The bases used to determine Mr. Edwin M.
Roth's compensation were the same as those for the other executive officers of
the Company. Base salary was determined subjectively upon consideration of
salary history, expected individual contribution and the Committee's belief that
Mr. Roth's base salary is in line with executive compensation paid by comparable
companies. No bonuses were paid to the Company's executive officers with respect
to fiscal 1995.
Finally, during 1995 the Committee awarded stock options to the executive
officers. In determining the size of stock option awards, the Committee
considered, among other things, previous awards made to executive officers. Such
an incentive was meant to keep experienced executives with the Company while at
the same time motivating them to contribute to improvements in the stock
performance of the Company and to encourage and create ownership and retention
of the Company's stock.
COMPLIANCE WITH SECTION 162(m) OF THE INTERNAL REVENUE CODE
Section 162(m) of the Internal Revenue Code generally disallows a tax
deduction to a public corporation for compensation over $1 million paid to the
corporation's chief executive officer and four other most highly compensated
executive officers. Qualifying performance-based compensation will not be
subject to the cap if certain requirements are met. The Committee and the Board
of Directors intend to structure the compensation of its executive officers in a
manner that should insure that the Company does not lose any tax deductions
because of the $1 million compensation limit. The Committee does not expect that
this cap will cause the Company to lose any tax deductions in the foreseeable
future. The Company's salaries for its highest paid executives, when added to
annual bonus awards, do not approach $1 million.
Stock Option and Compensation
Committee
Victor Gelb
Norton W. Rose
George N. Aronoff
PERFORMANCE GRAPH
The following graph compares the performance of the Common Stock ("CHM") to
the Value Line Chemical Specialty Industry Index ("Industry Group") and the
Russell 2000 Index ("Russell 2000") for the period commencing December 31, 1990,
the last trading day before the beginning of the Company's fifth preceding
fiscal year, and ending December 31, 1995. The results assume that $100 was
invested on December 31, 1990 in CHM, Industry Group and Russell 2000 and that,
in the case of Industry Group and Russell 2000, dividends have been reinvested.
No dividends were paid on the Common Stock during this period.
9
<PAGE> 12
COMPARISON OF CUMULATIVE TOTAL RETURN
CHM, INDUSTRY GROUP, RUSSELL 2000
<TABLE>
<CAPTION>
MEASUREMENT PERIOD RUSSELL 2000 INDUSTRY
(FISCAL YEAR COVERED) CHM INDEX GROUP
<S> <C> <C> <C>
1990 100.00 100.00 100.00
1991 24.00 146.05 141.56
1992 27.43 172.94 162.13
1993 31.43 205.64 180.79
1994 13.71 201.56 178.85
1995 9.14 258.89 221.00
</TABLE>
Notes: (1) CHM data has been adjusted to reflect a one-for-fourteen reverse
stock split effected in December 1991.
(2) CHM data for the period commencing December 31, 1990 and ending
December 31, 1991 reflects the closing bid prices on the Interdealer
Quotation System of NASDAQ and the closing bid quotations as reported
in the National Daily Quotation Bureau Pink Sheets ("Pink Sheets").
CHM data for the periods ending December 31, 1992 and 1993 reflects
the closing price of the Common Stock as reported in the
AMEX-Composite Transactions.
(3) CHM data for the period ended December 31, 1991 reflects the closing
bid quotation reported in the Pink Sheets on August 1, 1991, the last
day during 1991 for which trading of the Common Stock was reported.
TRANSACTIONS WITH MANAGEMENT
In October 1995, Mr. Edwin Roth purchased 3,500 shares of Cumulative
Convertible Preferred Stock at a price per share equal to $100, for an aggregate
purchase price of $350,000. The Cumulative Convertible Preferred Stock pays
quarterly dividends of $1.875 per share and each share may be converted, at the
option of the holder, into 20 shares of Common Stock at an effective conversion
price of $5.00 per share. The Company may redeem the Cumulative Convertible
Preferred Stock, in whole or in part, after October 6, 1998 for $100 per share
plus accrued dividends and unpaid dividends. Mandatory redemption of all
outstanding Cumulative Convertible Preferred Stock is required on November 6,
2000 at $100 per share plus accrued and unpaid dividends. In the event of
dissolution, liquidation or winding up of the Company, the holders of Cumulative
Convertible Preferred Stock will be entitled to receive a distribution of $100
per share plus accrued and unpaid dividends.
In February 1996, the Company entered into a Commercial Demand Note to
borrow an additional $750,000 from its senior lender. The Demand Note is secured
by, among other things, the collateralized guarantee of Mr. Edwin Roth.
10
<PAGE> 13
II. INDEPENDENT PUBLIC ACCOUNTANTS
The public accounting firm of Grant Thornton was the Company's independent
public accountants for fiscal 1995 and has been appointed, subject to
stockholder ratification at the Annual Meeting, to continue in such capacity for
the current fiscal year. A representative of Grant Thornton is expected to be
present at the Annual Meeting and will have an opportunity to respond to
appropriate questions and make a statement if he or she so desires.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR RATIFICATION OF THE
APPOINTMENT OF GRANT THORNTON AS THE INDEPENDENT ACCOUNTANTS FOR THE COMPANY.
OTHER MATTERS
All expenses of the Company in connection with this solicitation will be
borne by the Company. Solicitation will be made principally by mail, but
officers and regular employees may solicit proxies by telephone or personal
contact with nominal expense to the Company. The Company will request brokers
and other nominees who hold Common Stock in their names to solicit proxies from
the beneficial owners and will pay the standard charges and expenses associated
therewith.
In order for a stockholder proposal to be included in next year's proxy
statement for presentation at next year's meeting, it must be received by the
Secretary of the Company at its principal executive offices, 9100 Valley View
Road, Macedonia, Ohio 44056, not later than January 3, 1997.
Management of the Company knows of no other matter that may come before the
Annual Meeting. If other matters properly come before the Annual Meeting, it is
intended that proxies in the accompanying form will be voted thereon in
accordance with the best judgment of the person voting the proxies.
By Order of the Board of Directors
EDWIN M. ROTH
Chairman of the Board
and President
Cleveland, Ohio
May 3, 1996
11
<PAGE> 14
SPECIALTY CHEMICAL RESOURCES, INC.
9100 Valley View Road THIS PROXY IS SOLICITED ON BEHALF
Macedonia, Ohio 44056 OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Edwin M. Roth and Corey B. Roth, or either
of them, proxies of the undersigned with full power of substitution, to vote for
the undersigned at the Annual Meeting of Stockholders to be held on June 6,
1996, at 10:00 a.m. (Cleveland time), at the offices of Specialty Chemical
Resources, Inc., 9100 Valley View Road, Macedonia, Ohio 44056, or at any
adjournment(s) or postponement(s) thereof, as follows:
I. Election of directors
<TABLE>
<S> <C>
/ / FOR the seven nominees listed below / / WITHHOLD AUTHORITY
(except as marked to the contrary below) to vote for the nominees listed below
</TABLE>
EDWIN M. ROTH, COREY B. ROTH, GEORGE N. ARONOFF,
VICTOR GELB, LEONARD P. JUDY, NORTON W. ROSE, LIONEL N. STERLING
(INSTRUCTION: To withhold authority to vote for any individual nominee, write
that nominee's name on the space provided below.)
- --------------------------------------------------------------------------------
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE SEVEN NOMINEES LISTED ABOVE.
---
II. Ratification of the appointment of Grant Thornton as the independent
accountants for Specialty Chemical Resources, Inc.
/ / FOR / / AGAINST / / ABSTAIN
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSAL NUMBER II.
---
III. In their discretion on all other matters that may properly come before the
meeting.
(Continued on the reverse side)
(Continued from other side)
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR THE SEVEN NOMINEES LISTED ABOVE AND FOR PROPOSAL II.
--- ---
PLEASE DATE, SIGN EXACTLY AS NAME APPEARS BELOW, AND RETURN THIS PROXY IN THE
ENCLOSED POSTAGE PREPAID ENVELOPE.
Dated:_________________________, 1996
-------------------------------------
Signature
-------------------------------------
Signature, if held jointly
(If signing as attorney, administrator,
executor, trustee, guardian, etc.,
please add your title as such.)
No additional postage need be affixed to
the enclosed envelope if mailed in the
United States. Your prompt attention
will be of assistance.
