<PAGE> 1
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
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
[X ] Definitive Proxy Statement Commission only (as permitted
[ ] Definitive Additional Materials by Rule 14a-b(e)(2))
[ ] Soliciting Material pursuant to Rule 14a-11(c) or Rule 14a-12
</TABLE>
SPECIALTY CHEMICAL RESOURCES, INC.
...............................................................................
(Name of Registrant as Specified In Its Charter)
...............................................................................
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11.
1) Title of each class of securities to which transaction applies:
......................................................................
2) Aggregate number of securities to which transaction applies:
......................................................................
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
......................................................................
4) Proposed maximum aggregate value of transaction:
......................................................................
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
SPECIALTY CHEMICAL RESOURCES, INC.
9055 Freeway Drive
Macedonia, Ohio 44056
----------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JUNE 11, 1998
----------------------------
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., 9055 Freeway Drive, Macedonia, Ohio 44056 on
June 11, 1998 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 28,
1998 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
April 30, 1998
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
SPECIALTY CHEMICAL RESOURCES, INC.
9055 Freeway Drive
Macedonia, Ohio 44056
----------------------------
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JUNE 11, 1998
----------------------------
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 11, 1998 (the "Annual Meeting"), at the
offices of Specialty Chemical Resources, Inc., 9055 Freeway Drive, Macedonia,
Ohio 44056.
Stockholders of record as of the close of business on April 28, 1998
are entitled to notice of, and to vote at, the Annual Meeting and any
adjournments or postponements thereof. On that date there were outstanding
3,947,762 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.
<PAGE> 4
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 April 30, 1998.
2
<PAGE> 5
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
----------------------- --------------------------------
NOMINEES
<S> <C>
Edwin M. Roth, 70 Mr. Roth has been a Director and Chairman of the Board of
Chairman of the Board Directors of the Company since its formation in June 1982.
of Directors and Chief Mr. Roth was President of the Company from June 1982
Executive Officer until June 1997. 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.
</TABLE>
3
<PAGE> 6
<TABLE>
<CAPTION>
Name, Age and Positions
With the Company
Other than Director Occupation and Other Information
----------------------- --------------------------------
<S> <C>
Corey B. Roth, 40 Mr. Roth has been President and Chief Operating Officer of
President and Chief Operating the Company since June 1997, and a Director since October
Officer 1984. Mr. Roth served as Treasurer and Assistant Secretary
from June 1992 until June 1997. Mr. Roth served as a Vice
President from June 1982 until June 1997. 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, 64 Mr. Aronoff has been a Director of the Company since May
Secretary 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 LLP, counsel to the Company, for more than the past
five years.
Geoffrey J. Colvin, 46 Mr. Colvin has been a Director of the Company since
August 1996. For more than the past five years,
Mr. Colvin has been a partner of CEW Partners, a private
investment partnership.
Terence J. Conklin, 41 Mr. Conklin has been a Director of the Company since
August 1996. For more than the past five years,
Mr. Conklin has been President of Trust Investments, Inc.,
which acts as the family office and private investment
company to the Martin Trust family.
Victor Gelb, 71 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.
Lionel N. Sterling, 60 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. Mr. Sterling is also a
Director of i-Stat Corporation.
</TABLE>
4
<PAGE> 7
<TABLE>
<CAPTION>
Name, Age and Positions
With the Company
Other than Director Occupation and Other Information
----------------------- --------------------------------
EXECUTIVE OFFICER
<S> <C>
David F. Spink, 47 Mr. Spink has been Vice President and Chief Financial
Vice President, Officer of the Company since June 1997. From January
Chief Financial Officer 1996 until June 1996, Mr. Spink was Vice President and
and Treasurer from June 1996 to June 1997 was Chief Financial Officer
of Aerosol Systems, a Division of the Company. From
November 1994 until January 1996, Mr. Spink was a self-
employed Strategic Planning and Financial Consultant.
From 1993 until 1994, Mr. Spink was Director of Planning
and Analysis for B.F. Goodrich and from 1992 until 1993
was Controller, Research Division for B.F. Goodrich. For
the fifteen years prior to 1992, Mr. Spink worked for B.F.
Goodrich in a progression of financial/analytical positions.
</TABLE>
Under an Agreement dated August 30, 1996 (the "Voting Agreement") among
CEW Partners, Martin Trust, Edwin M. Roth and Corey B. Roth, Edwin M. Roth and
Corey B. Roth agreed, among other things, to vote their shares of Common Stock
for the election of Messrs. Colvin and Conklin as Directors of the Company. Mr.
Colvin is a principal of CEW Partners, a 5% beneficial owner of the Company's
Common Stock. Mr. Conklin is President of Trust Investments, Inc., which acts as
the family office and private investment company to Martin Trust, a 5%
beneficial owner of the Company's Common Stock.
The Board of Directors held seven meetings during the fiscal year ended
December 31, 1997 and took action by unanimous written consent on one occasion.
All of the Directors were present at all of the meetings. 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 Geoffrey J. Colvin, Victor Gelb and Lionel N. Sterling. The Audit
Committee held two meetings during the fiscal year ended December 31, 1997. 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
5
<PAGE> 8
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, 1997. 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 (except
with respect to stock option matters), Terence J. Conklin and Victor Gelb. The
Stock Option and Compensation Committee held two meetings during the fiscal year
ended December 31, 1997. Each of the members of the Stock Option and
Compensation Committee attended the meetings.
DIRECTOR REMUNERATION
Directors who are not employed by the Company received in 1997 an
annual fee of $16,000, 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 1997, the Company retained the law firm of Benesch,
Friedlander, Coplan & Aronoff LLP 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 1997, the Directors and
executive officers of the Company complied with all such filing requirements.
COMMON STOCK OWNERSHIP
The following table sets forth, as of March 31, 1998, 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.
6
<PAGE> 9
<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 759,105(2)(3)(4) 18.85%
Specialty Chemical Resources, Inc.
9100 Valley View Road
Macedonia, Ohio 44056
Corey B. Roth 154,230(2)(3)(4) 3.86%
John H. Ehlert(5) 53,333(3)(4) 1.34%
David F. Spink 22,500(3)(4) *
George N. Aronoff 37,824(3) *
Victor Gelb 19,464(3) *
Geoffrey J. Colvin 235,453(3)(4)(7) 5.96%
Terence J. Conklin 4,500(3)(4) *
Lionel N. Sterling 30,107 1.24%
All Directors and officers as a group 2,123,994(3)(4) 26.13%
(nine individuals)(5)
CEW Partners(6) 232,953(4) 5.90%
30 Rockefeller Plaza
Suite 2500
New York, New York 10020
Martin Trust(6) 232,953(4) 5.90%
c/o Trust Investments, Inc.
52 Stiles Road
Salem, New Hampshire 03079
Pioneering Management Corporation (6) 387,000 9.80%
60 State Street
Boston, Massachusetts 02109
Dimensional Fund Advisors Inc.(6) 217,600(8) 5.51%
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.
7
<PAGE> 10
(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 March 31, 1998 the right to
acquire upon the exercise of options: Mr. Edwin M. Roth, 78,333; Mr.
Corey B. Roth, 46,667; Mr. Ehlert, 38,333; Mr. Spink, 15,000; Mr.
Aronoff, 19,107; Mr. Gelb 19,107; Mr. Sterling, 19,107; Mr. Colvin,
2,500; Mr. Conklin, 2,500; and all current officers and Directors as a
group, 240,654.
(4) Excludes shares of Common Stock issuable upon conversion of the
Company's 6% Convertible Subordinated Notes due 2006 (the "Convertible
Notes"), which are not convertible until December 31, 2001 unless there
is a change of control of the Company in which case the Convertible
Notes would be convertible upon the occurrence of a change of control.
If such Convertible Notes were currently convertible, then each of the
following would be entitled to receive the following number of shares
of Common Stock: Mr. Edwin M. Roth, 752,637; Mr. Corey B. Roth,
106,005; Mr. Spink, 141,340; Mr. Sterling, 21,342; Mr. Conklin,
53,003; Martin Trust, 864,297; and CEW Partners, 864,297. The
shares issuable upon conversion of the Convertible Notes owned by CEW
Partners may be attributable to Mr. Colvin by virtue of the fact that
Mr. Colvin is a partner of the General Partner of CEW Partners. Mr.
Colvin disclaims beneficial ownership of such shares.
(5) Mr. Ehlert resigned as an Executive Officer of the Company on February
3, 1998.
(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) Includes 232,953 shares of Common Stock held by CEW Partners of which
Mr. Colvin is a partner of the General Partner. Mr. Colvin disclaims
beneficial ownership of these shares.
(8) Dimensional Fund Advisors Inc. has sole voting power over 155,000
shares and sole investment power over 217,600 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 38,100 additional shares which
are owned by the Fund and 24,500 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.
- ---------------------------
In September 1996, the Company issued $4,000,000 original principal
amount of 6% Convertible Subordinated Notes due 2006 (the "Convertible Notes")
in a rights offering to its stockholders. In connection with the rights
offering, CEW Partners, Martin Trust, Edwin M. Roth and Corey B. Roth acquired
Convertible Notes. If the Convertible Notes acquired by CEW Partners, Martin
8
<PAGE> 11
Trust, Edwin M. Roth and Corey B. Roth were currently convertible the aggregate
number of shares issuable upon conversion would be 2,587,236. On a fully
diluted basis, Edwin M. Roth, Corey B. Roth, Martin Trust and CEW Partners have
a controlling interest in the Company. In connection with the rights offering,
CEW Partners, Martin Trust, Edwin M. Roth and Corey B. Roth (Messrs. Roth
collectively being referred to as the "Roths") entered into the Voting
Agreement that provides, among other things, that neither CEW Partners nor
Martin Trust, on the one hand, and neither of the Roths, on the other hand, may
sell their shares of Common Stock of the Company or such Notes that they own
without extending to the others the right to purchase such shares and Notes on
the same terms as those being offered by a third party. Notwithstanding the
foregoing, CEW Partners and Martin Trust may make a disposition pursuant to (i)
a tender or exchange offer by a person other than CEW Partners and Martin Trust
or their respective affiliates if such person has been approved by the Roths,
(ii) a brokers' transaction meeting certain volume limitations, (iii) a bona
fide pledge of shares to a major brokerage firm or financial institution or an
affiliate thereof not affiliated with it for money borrowed, (iv) a transaction
involving the Company, or (v) a transaction involving any one of their
affiliates or a tax-exempt charitable institution, provided that any such
transferee must agree to be bound by the terms of the Voting Agreement. The
Voting Agreement expires on the earliest of (i) March 31, 2000, (ii) Edwin M.
Roth no longer being the Chief Executive Officer of the Company, or (iii) the
mutual agreement of the parties.
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, 1997.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
LONG-TERM COMPENSATION
--------------------------------
ANNUAL COMPENSATION AWARDS PAYOUTS
---------------------------------------- ---------------------- -------
NAME AND OTHER ANNUAL RESTRICTED OPTIONS/ LTIP ALL OTHER
PRINCIPAL SALARY BONUS COMPENSATION STOCK SARS PAYOUTS COMPENSATION
POSITION YEAR ($0) (5) ($) AWARD(S) (#)(2) ($) ($) (3)
- --------------- ------- ---------- ---------- ------------- ---------------------- ------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Edwin M. Roth, 1997 $295,000 0 0 0 75,000 0 0
Chairman 1996 $275,000 $35,000 0 0 0 0 0
1995 $275,000 0 0 0 50,000 0 0
Corey B. Roth, 1997 $215,000 0 0 0 50,000 0 0
President & Chief 1996 $195,000 $25,000 0 0 0 0 6,738
Operating Officer 1995 $195,000 0 0 0 30,000 0 6,738
John H. Ehlert, 1997 $205,000 0 0 0 25,000 0 0
Vice President (4) 1996 $185,000 $25,000 0 0 0 0 0
1995 $185,000 0 0 15,000(4) 30,000 0 9,181
David Spink 1997 $125,000 0 0 0 25,000 0 0
Vice President 1996 $ 76,120 $25,000 0 0 10,000 0 0
& Treasurer 1995(1) --- --- --- --- ---- --- ---
</TABLE>
- ---------------------------
9
<PAGE> 12
(1) Mr. Spink became an executive officer of the Company in June, 1996.
(2) There were no SAR grants by the Company in 1995, 1996 or 1997.
(3) 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.
(4) Mr. Ehlert resigned as an Executive Officer of the Company on February
3, 1998. 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 $58,125 on the date of the grant. Mr. Ehlert has all of the
rights of a stockholder with respect to such shares, including the
right to vote the shares and to receive dividends with respect to the
shares.
(5) Bonuses were paid in fiscal 1997 but were granted for services
performed in fiscal 1996.
OPTION AND SAR GRANTS
The following table summarizes options granted in the last fiscal year
to the executive officers of the Company and potential realizable value of the
options assuming a 5% and 10% annually compounded stock price appreciation.
There were no SAR grants by the Company in 1997.
<TABLE>
<CAPTION>
OPTION/SAR GRANTS IN LAST FISCAL YEAR
POTENTIAL REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES OF
STOCK PRICE
APPRECIATION FOR
INDIVIDUAL GRANTS OPTION TERM
- ----------------------------------------------------------------------------------------------- ------------------------
NUMBER OF
SECURITIES PERCENT OF
UNDERLYING TOTAL
OPTIONS/ OPTIONS/SARS EXERCISE
SARS GRANTED TO OR
GRANTED EMPLOYEES IN BASE PRICE EXPIRATION 5% 10%
NAME (#)(1) FISCAL YEAR ($/SH) DATE ($) ($)
- ----------------- ----------- ------------ ---------- ---------- ------- --------
<S> <C> <C> <C> <C> <C> <C>
Edwin M. Roth 75,000 29.8% $1.75 3/12/02 $36,263 $80,129
Corey B. Roth 50,000 19.8% $1.75 3/12/02 $24,175 $53,420
John H. Ehlert(2) 25,000 9.9% $1.75 3/12/02 $12,088 $26,711
David F. Spink 25,000 9.9% $1.75 3/12/02 $12,088 $26,711
</TABLE>
(1) Options are exercisable as to one-third of the shares covered on each
of the first, second and third anniversaries of the date of grant and
the term of each option grant is five years.
(2) Mr. Ehlert resigned as an Executive Officer of the Company on February
3, 1998.
OPTION AND SAR EXERCISES
The following table summarizes the exercise of options for the
Company's Common Stock by the executive officers of the Company during the last
fiscal year and the year-end balances of
10
<PAGE> 13
exercisable and unexercisable options of the executive officers. The Company has
no outstanding SARs.
<TABLE>
<CAPTION>
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR-END OPTION/SAR VALUES
NUMBER OF VALUE OF UNEXERCISED
UNEXERCISED OPTIONS/SARS IN-THE-MONEY OPTIONS/
SHARES ACQUIRED VALUE AT FISCAL YEAR-END SARS AT FISCAL YEAR-
ON EXERCISE REALIZED (#) END ($)
NAME (#) ($) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
- -------------------- ------------------ ------------- ------------------------- -------------------------
<S> <C> <C> <C> <C>
Edwin M. Roth 0 $0 83,333/175,000 $0/$0
Corey B. Roth 0 $0 45,000/105,000 $0/$0
John H. Ehlert (1) 0 $0 40,000/75,000 $0/$0
David F. Spink 0 $0 3,333/35,000 $0/$0
</TABLE>
(1) Mr. Ehlert resigned as an Executive Officer of the Company on February 3,
1998.
REPORT OF THE STOCK OPTION AND COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
The 1997 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.
In 1997, as in prior years, 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 and bonus compensation were
determined subjectively upon consideration of compensation 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. There were
no bonuses declared for Mr. Edwin M. Roth or any of the other executive officers
for services performed in 1997. The Committee awards stock options as incentives
to keep valuable executives, to motivate them, to contribute to improvements in
the stock
11
<PAGE> 14
performance of the Company and to encourage and create ownership and retention
of the Company's stock. In March 1997, the Board of Directors amended the
Company's stock option plan to provide that awards granted under the plan
terminate on the second anniversary of the date of the grant if the average of
the fair market value (as defined in the plan) of the Company's Common Stock on
such anniversary date does not equal or exceed the option price on the date of
grant. The Committee awarded options to purchase 75,000 shares of Common Stock
to Edwin M. Roth and options to purchase 100,000 shares of Common Stock in the
aggregate to the other executive officers in March, 1997.
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
Terence Conklin
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, 1992, the last trading day before the beginning of the Company's fifth
preceding fiscal year, and ending December 31, 1997. The results assume that
$100 was invested on December 31, 1992 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.
12
<PAGE> 15
COMPARISON OF CUMULATIVE TOTAL RETURN
CHM, INDUSTRY GROUP, RUSSELL 2000
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
CHM 100.00 114.58 50.00 33.33 25.00 17.71
Russell 2000 Index 100.00 118.91 116.55 149.70 174.30 213.00
Chemical (Specialty) 100.00 115.74 121.11 155.90 186.62 231.62
</TABLE>
Notes:
(1) CHM data for the period ended December 31, 1992 and thereafter reflects
the closing price of the Common Stock as reported in the AMEX -
Composite Transactions.
13
<PAGE> 16
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. On October 16, 1996, the Company issued $4,000,000
original principal amount of 6% Convertible Subordinated Notes due 2006 in a
rights offering to its stockholders, $350,000 of which was used to repurchase,
for the original purchase price, such shares of the Company's Cumulative
Convertible Preferred Stock.
II. INDEPENDENT PUBLIC ACCOUNTANTS
The public accounting firm of Grant Thornton was the Company's
independent public accountants for fiscal 1997 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, 9055 Freeway Drive,
Macedonia, Ohio 44056, not later than January 1, 1999.
14
<PAGE> 17
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
Cleveland, Ohio
April 30, 1998
15
<PAGE> 18
<TABLE>
<S> <C>
SPECIALTY CHEMICAL RESOURCES, INC.
9055 Freeway Drive
Macedonia, Ohio 44056
THIS PROXY IS SOLICITED ON
BEHALF
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 11, 1998, at 10:00 a.m. (Cleveland
time), at the offices of Specialty Chemical Resources, Inc., 9055
Freeway Drive, Macedonia, Ohio 44056, or at any adjournment(s) or
postponement(s) thereof, as follows:
I. Election of directors
[ ] FOR the seven nominees listed below [ ] WITHHOLD AUTHORITY
(except as marked to the contrary below) to vote for the
nominees listed below
EDWIN M. ROTH, COREY B. ROTH, GEORGE N. ARONOFF, GEOFFREY J.
COLVIN, TERENCE J. CONKLIN, VICTOR GELB, 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: ______________ , 1998
____________________________
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.
</TABLE>
