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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 COMMISSION
ONLY (AS PERMITTED BY RULE 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
</TABLE>
OGLEBAY NORTON COMPANY
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
N/A
(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 (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: ...........................................................
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<PAGE> 2
Oglebay Norton Company
1100 SUPERIOR AVENUE CLEVELAND, OHIO 44114-2598
Oglebay Norton Logo
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JULY 29, 1998
The Annual Meeting of Stockholders of Oglebay Norton Company ("Oglebay
Norton") will be held at Ciao Cucina, Cleveland Playhouse Square, 1515 Euclid
Avenue, Cleveland, Ohio, on Wednesday, July 29, 1998, at 10:00 a.m., Cleveland,
Ohio time. The purposes of the Annual Meeting are as follows.
I. To vote upon a proposal to approve the Oglebay Norton Company
Director Fee Deferral Plan, a copy of which is attached as Exhibit A to the
Proxy Statement.
II. To vote upon a proposal to approve the Performance Option
Agreement with Mr. John N. Lauer, a copy of which is attached as Exhibit B
to the Proxy Statement.
III. To elect three directors to serve for three-year terms expiring
in 2001.
IV. To hear reports and transact any other business that may properly
come before the Annual Meeting.
The Board of Directors has fixed the close of business on June 30, 1998 as
the record date (the "Record Date") for determining the stockholders entitled to
notice of the Annual Meeting and to vote at the Annual Meeting or any
postponement or adjournment thereof.
The Proxy Statement accompanies this Notice. The Annual Report to
Stockholders for the year ended December 31, 1997 (the "Annual Report") was
mailed to stockholders on May 1, 1998. Stockholders as of the Record Date who
were not stockholders as of the record date for the previous mailing will be
provided with a copy of the Annual Report with the Proxy Statement.
YOUR VOTE IS IMPORTANT
Please sign, date and return your Proxy card in the enclosed envelope.
By Order of the
Board of Directors
/s/ Rochelle F. Walk
ROCHELLE F. WALK
Secretary and Director
July 2, 1998 of Corporate Affairs
<PAGE> 3
OGLEBAY NORTON COMPANY
1100 SUPERIOR AVENUE
CLEVELAND, OHIO 44114-2598
(216) 861-3300
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
July 29, 1998
This Proxy Statement is being furnished in connection with the solicitation
of proxies by the Board of Directors of Oglebay Norton Company, a Delaware
corporation ("Oglebay Norton"), for use at the Annual Meeting of Stockholders to
be held on July 29, 1998 (the "Annual Meeting"), and at any adjournment or
postponement of the Annual Meeting. It is anticipated that the mailing of this
Proxy Statement and accompanying form of Proxy to stockholders will begin on or
about July 2, 1998. The date of this Proxy Statement is July 2, 1998.
PURPOSES OF THE ANNUAL MEETING
At the Annual Meeting, the stockholders of Oglebay Norton will be asked to:
(i) consider and vote upon a proposal to approve the Oglebay Norton Company
Director Fee Deferral Plan; (ii) consider and vote upon a proposal to approve
the Performance Option Agreement with Mr. John N. Lauer; (iii) elect three
directors to serve for three-year terms expiring in 2001; and (iv) hear reports
and transact any other business that may properly come before the Annual
Meeting.
A description of the proposal to approve the Oglebay Norton Company
Director Fee Deferral Plan is set forth below under the heading "PROPOSAL
I -- OGLEBAY NORTON COMPANY DIRECTOR FEE DEFERRAL PLAN," and a copy of the plan
is attached as Exhibit A to this Proxy Statement. Likewise, a description of the
proposal to approve the Performance Option Agreement with Mr. John N. Lauer
appears below under the heading "PROPOSAL II -- PERFORMANCE OPTION AGREEMENT
WITH MR. JOHN N. LAUER," and a copy of the agreement is attached as Exhibit B to
this Proxy Statement.
The nominees for election as directors, with information about each of
them, is set forth below under the heading "PROPOSAL III -- ELECTION OF
DIRECTORS -- Nominees for Terms Expiring in 2001."
VOTING RIGHTS AND PROXY INFORMATION
Record Date; Required Vote. The Board of Directors of Oglebay Norton has
fixed the close of business on June 30, 1998 as the record date (the "Record
Date") for determining the stockholders entitled to notice of the Annual Meeting
and to vote at the Annual Meeting or any postponement or adjournment thereof. As
of June 22, 1998, 4,764,796 shares of Common Stock of Oglebay Norton were
outstanding, each of which is entitled to one vote.
All matters that may properly come before the Annual Meeting, including the
approval of the Oglebay Norton Company Director Fee Deferral Plan, the approval
of the Performance Option Agreement with Mr. John N. Lauer and the election of
directors, require the affirmative vote of a majority of the outstanding shares
of Common Stock of Oglebay Norton present in person or represented by proxy at
the meeting and entitled to vote on such subject matter, assuming such majority
also constitutes at least a majority of the required quorum. The percentage of
outstanding shares of Common Stock of Oglebay Norton held by its directors and
executive officers and entitled to vote at the Annual Meeting is set forth below
under the heading "BENEFICIAL OWNERSHIP OF OGLEBAY NORTON COMMON STOCK."
Abstentions and broker non-votes are tabulated in determining
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votes present at the meeting. An abstention or broker non-vote has the same
effect as a vote against a proposal or a director nominee, as each abstention or
broker non-vote is one less vote in favor of a proposal or for a director
nominee.
In the election of directors, each stockholder has the right to cumulate
the stockholder's votes and to give one nominee a number of votes equal to the
number of directors to be elected multiplied by the number of votes which the
stockholder's shares are entitled, or the stockholder may distribute the
stockholder's votes on the same principle among two or more nominees. Cumulative
voting will be in effect if any stockholder gives notice in writing to the
President or the Corporate Secretary of Oglebay Norton at least 48 hours in
advance of the time set for the Annual Meeting and an announcement is made at
the beginning of the Annual Meeting by the President, Corporate Secretary or the
stockholder giving the notice. Oglebay Norton has not been advised of any
stockholder who intends to cumulate his votes.
Proxies. All shares of Common Stock of Oglebay Norton represented at the
Annual Meeting by properly executed Proxies will be voted in accordance with the
instructions on the Proxies. If no instructions are given, Proxies will be voted
FOR the approval of the Oglebay Norton Company Director Fee Deferral Plan, FOR
the approval of the Performance Option Agreement with Mr. John N. Lauer and FOR
the election as directors of the nominees listed under the heading "ELECTION OF
DIRECTORS -- Nominees for Terms Expiring in 2001." If cumulative voting is in
effect, shares represented by each properly signed Proxy card will also be voted
on a cumulative basis, with the votes distributed among the nominees in
accordance with the judgment of the persons named in the Proxy card. However,
the persons named in the Proxy card will not vote any shares cumulatively for
nominees for whom authority to vote was withheld. Oglebay Norton has no
knowledge of any other matters to be presented at the Annual Meeting but, in the
event that other matters do properly come before the Annual Meeting, the persons
named in the Proxies will also vote on these matters in accordance with their
best judgment.
A stockholder giving a Proxy pursuant to this solicitation may revoke the
Proxy at any time before it is voted. A Proxy may be revoked by filing with the
Corporate Secretary of Oglebay Norton, at the address set forth above, a written
notice of revocation bearing a later date than the Proxy, by duly executing a
subsequent Proxy relating to the same shares and delivering it to the Corporate
Secretary or by attending the Annual Meeting and voting in person (although
attendance at the Annual Meeting will not in and of itself constitute the
revocation of a Proxy).
Oglebay Norton will bear the cost of preparing and mailing the proxy
material to the stockholders of Oglebay Norton in connection with the Annual
Meeting. The cost of soliciting Proxies, in addition to a fee of $7,500 payable
to Georgeson & Company Inc., will be borne by Oglebay Norton.
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PROPOSAL I
OGLEBAY NORTON COMPANY DIRECTOR FEE DEFERRAL PLAN
The Compensation Subcommittee (on January 27, 1998) and the Board of
Directors (on January 28, 1998) adopted and recommended that the stockholders
approve the Oglebay Norton Company Director Fee Deferral Plan (the "Director
Plan") pursuant to which non-employee directors can elect to defer some or all
of the fees earned by them for services as a director of Oglebay Norton and can
choose to have amounts deferred denominated in Share Units or Deferred Cash, as
those terms are defined in the Director Plan. The Director Plan is intended to
attract and retain qualified individuals to serve as directors of Oglebay
Norton. The Compensation Subcommittee and the Board of Directors have determined
that the Director Plan will provide non-employee directors with a stronger
identity of interest with Oglebay Norton and its stockholders and will therefore
be in the best interests of Oglebay Norton and all of its stockholders. The
Director Plan does not amend or otherwise affect the Oglebay Norton Company
Director Stock Plan pursuant to which each non-employee director is awarded 200
shares of Common Stock of Oglebay Norton at the time of each annual meeting of
stockholders.
The complete text of the Director Plan is attached as Exhibit A to this
Proxy Statement. The following summary of the Director Plan does not purport to
be complete and is qualified in its entirety by reference to Exhibit A.
Election to Defer. Each non-employee director can elect under the Director
Plan to defer some or all or the cash portion of fees payable to him for service
as a director of Oglebay Norton, including the basic retainer and additional
fees for attending meetings and serving as head of committees. Elections are to
be made on or before the time necessary to defer inclusion of the cash portion
of fees in a director's gross income for federal income tax purposes. Elections
for the last eleven months of 1998 were made upon adoption of the Director Plan
by the Compensation Subcommittee. A director may elect, in 10% increments, (a)
to defer the cash portion of fees as Share Units, (b) to defer the cash portion
of fees as Deferred Cash, or (c) to receive fees as earned without any deferral.
In addition, a director who defers at least some fees as Share Units may elect
to either have any dividend equivalents with respect to the Share Units deferred
as additional deferred Share Units or to have those dividend equivalents paid to
him in cash as accrued.
Deferral, Crediting, and Deferral Period. Amounts deferred are credited to
book accounts maintained in the name of each participating non-employee
director, either as Share Units or as Deferred Cash. Amounts deferred as Share
Units are converted into Share Units at the fair market value of the shares of
Common Stock of Oglebay Norton as of the date on which the fees would otherwise
be paid. Amounts deferred in cash are credited with interest at the prime rate,
compounded annually, until distributed. Amounts deferred are deferred through
termination of service by the deferring director and are then paid out in shares
of Common Stock of Oglebay Norton (if deferred in Share Units) or in cash (if
Deferred Cash).
Dividend Equivalent. On each date on which dividends are paid on the
shares of Common Stock of Oglebay Norton, dividend equivalents are credited on
deferred Share Units and are either converted into additional deferred Share
Units based on the fair market value of shares of Common Stock of Oglebay Norton
on the dividend payment date or paid out to the director in cash.
Matching Contribution. Each Share Unit credited to a participating
director's account, whether credited as the result of a direct fee deferral or
as a result of a dividend equivalent being converted into additional deferred
Share Units, is matched at the rate of 25% by Oglebay Norton's contribution of
additional Share Units to the director's account.
Maximum Number of Shares. The maximum number of shares of Common Stock of
Oglebay Norton to be issuable under the Director Plan is 100,000, subject to
adjustment upon the occurrence of certain changes with respect to the shares.
Federal Income Tax Consequences of Deferrals. The following is a brief
general discussion of the anticipated income tax treatment of the deferrals and
distributions to be made pursuant to the Director Plan under current provisions
of the Internal Revenue Code. Fees deferred by a director and credited to his
account will not
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<PAGE> 6
be recognized as income to the director for income tax purposes until the
deferred fees are distributed to the director either in the form of cash or
shares of Common Stock of Oglebay Norton. Interest credited on Deferred Cash and
compounded and added to a director's account will not be recognized as income to
the director for income tax purposes until the accrued interest is distributed
to the director. Similarly, dividend equivalents converted into additional
deferred Share Units will not be recognized as income until the additional
Deferred Shares are distributed as shares of Common Stock of Oglebay Norton to
the director. Dividend equivalents paid in cash will be recognized as ordinary
income to the director when the cash is paid. At the time of distribution of
shares of Common Stock of Oglebay Norton in satisfaction of deferred Share Units
or cash in satisfaction of Deferred Cash, the recipient will have ordinary
income equal to the fair market value of the shares of Common Stock of Oglebay
Norton or the dollar amount of the cash distributed. Oglebay Norton will be
entitled to a deduction equal in amount to the amount taken into income by a
director during the same year that the amount is taken into income by the
director.
BOARD RECOMMENDATION
The favorable vote of the holders of a majority of the shares of Common
Stock of Oglebay Norton present in person or by Proxy at the meeting is required
to adopt the Director Plan. THE BOARD OF DIRECTORS OF OGLEBAY NORTON RECOMMENDS
A VOTE FOR APPROVAL OF THE OGLEBAY NORTON COMPANY DIRECTOR FEE DEFERRAL PLAN.
PROPOSAL II
PERFORMANCE OPTION AGREEMENT WITH MR. JOHN N. LAUER
In connection with the employment of Mr. John N. Lauer as President and
Chief Executive Officer of Oglebay Norton effective January 1, 1998, on December
17, 1997, the Compensation Subcommittee and the Board of Directors granted to
Mr. Lauer, subject to the approval of the stockholders of Oglebay Norton, an
option to acquire up to 380,174 shares of Common Stock of Oglebay Norton (the
"Performance Option"). The exercise price of the option is $38.00 per share,
which is $6.00 above the per share closing price as reported on the NASDAQ
National Market on December 16, 1997 (the last closing price available at the
time the option was granted). If approved by the stockholders, the option will
first become exercisable in the normal course of events on January 1, 2001.
Oglebay Norton is seeking stockholder approval of the Performance Option
Agreement to satisfy the requirements of Section 162(m) of the Internal Revenue
Code. The Performance Option is described in more detail as part of the terms of
Mr. Lauer's employment in the section below entitled "OFFICER
AGREEMENTS -- Employment Agreement with Mr. John N. Lauer." A copy of the
Performance Option Agreement with Mr. Lauer, pursuant to which the Performance
Option was granted, is attached to this Proxy Statement as Exhibit B.
BOARD RECOMMENDATION
The favorable vote of the holders of a majority of the shares of Common
Stock of Oglebay Norton present in person or by Proxy at the meeting is required
to approve the Performance Option Agreement. THE BOARD OF DIRECTORS OF OGLEBAY
NORTON RECOMMENDS A VOTE FOR APPROVAL OF THE PERFORMANCE OPTION AGREEMENT WITH
MR. LAUER.
PROPOSAL III
ELECTION OF DIRECTORS
Oglebay Norton's Board of Directors is composed of ten directors, divided
into two classes of three members and one class of four members. As of the date
of this Proxy Statement, the terms of these classes will expire in 1998, 1999
and 2000, respectively. Each of the directors serves for a term of three years
and until a successor is elected. The directors whose terms expire in 1998 were
nominated by the Board to stand for election to new terms which expire at the
Annual Meeting in 2001. Directors whose terms expire in 1999 and 2000 are
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also described below. THE BOARD OF DIRECTORS OF OGLEBAY NORTON RECOMMENDS A VOTE
FOR EACH OF MALVIN E. BANK, WILLIAM G. BARES AND JOHN D. WEIL AS DIRECTORS TO
SERVE FOR THREE-YEAR TERMS EXPIRING IN 2001.
NOMINEES FOR TERMS EXPIRING IN 2001
<TABLE>
<CAPTION>
DIRECTOR
NAME AGE PRINCIPAL OCCUPATION, BUSINESS EXPERIENCE AND OTHER DIRECTORSHIPS SINCE
---- --- ----------------------------------------------------------------- --------
<S> <C> <C> <C>
Malvin E. Bank.......... 67 Partner, Thompson Hine & Flory LLP, Cleveland, Ohio, attorneys, 1977
for more than five years. Mr. Bank also serves on the Board of
Directors of Metropolitan Financial Corp.
William G. Bares........ 56 Chairman, President and Chief Executive Officer, since April 1982
1996, President and Chief Executive Officer, from January 1996 to
April 1996, President and Chief Operating Officer, from 1987 to
1995, of The Lubrizol Corporation, Cleveland, Ohio, supplier of
chemical additives for use in lubricants and fuels. Mr. Bares
serves on the Boards of Directors of The Lubrizol Corporation,
Applied Industrial Technologies, Inc. and KeyCorp.
John D. Weil............ 57 President of Clayton Management Co., St. Louis, Missouri, invest- 1992
ments, for more than five years. Mr. Weil also serves on the
Boards of Directors of CleveTrust Realty Investors, Cliffs
Drilling Company, PICO Holdings Inc., Todd Shipyards Corporation,
Southern Investors Service Co. Inc., Allied Healthcare Products,
Inc. and Baldwin & Lyons, Inc.
PRESENT DIRECTORS WHOSE TERMS EXPIRE IN 2000
Brent D. Baird.......... 59 Private investor; formerly a Limited Partner of Trubee, Collins & 1990
Co., Buffalo, New York and a member of the New York Stock
Exchange, Inc. for more than five years. Mr. Baird serves on the
Boards of Directors of First Carolina Investors, Inc., First
Empire State Corporation, Todd Shipyards Corporation, Exolon-Esk,
Inc. and Merchants Group, Inc.
James T. Bartlett....... 61 Managing Director, Primus Venture Partners, Cleveland, Ohio, the 1996
fund manager for Primus Capital Fund and Primus Capital Funds II,
III and IV, venture capital limited partnerships, for more than
five years. Mr. Bartlett serves on the Boards of Directors of
Keithley Instruments, Inc. and Lamson & Sessions.
Albert C. Bersticker.... 63 Chairman and Chief Executive Officer, since January 1, 1996, 1992
President and Chief Executive Officer, from May 1991 to Decem-
ber 1995, of Ferro Corporation, producer of specialty coatings,
plastics, chemicals and ceramics. Mr. Bersticker also serves on
the Boards of Directors of Brush Wellman Corporation, Ferro
Corporation and KeyCorp.
William G. Pryor........ 58 President, since April 1993, of Van Dorn Demag Corporation, 1997
manufacturer of plastic injection molding equipment, President
and Chief Executive Officer, Van Dorn Corporation (predecessor to
Van Dorn Demag Corporation), January 1, 1992 to April 20, 1993.
PRESENT DIRECTORS WHOSE TERMS EXPIRE IN 1999
R. Thomas Green, Jr..... 60 Chairman of the Board of Directors, since April 1, 1992, and 1992
President and Chief Executive Officer, from April 1, 1992 to
December 31, 1997, of Oglebay Norton.
</TABLE>
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<TABLE>
<CAPTION>
DIRECTOR
NAME AGE PRINCIPAL OCCUPATION, BUSINESS EXPERIENCE AND OTHER DIRECTORSHIPS SINCE
---- --- ----------------------------------------------------------------- --------
<S> <C> <C> <C>
Ralph D. Ketchum........ 71 President and Chief Executive Officer of RDK Capital, Inc., 1992
general partner of RDK Capital Limited Partnership, investments,
and Chief Executive Officer of Heintz Corporation, manufacturer
of jet engine components, for more than five years. An August
1993 petition was filed by Heintz Corporation, a subsidiary of
RDK Capital Limited Partnership, for reorganization under the
federal bankruptcy laws. Prior to his election to Oglebay
Norton's Board of Directors, Mr. Ketchum was a long-term officer
and employee of General Electric, rising to the position of
Senior Vice President and Group Executive of the Lighting Group
at the time of his retirement in 1987. Mr. Ketchum serves on the
Boards of Directors of Thomas Industries, Inc., Pacific
Scientific Company, Lithium Technologies, Inc. and Metropolitan
Financial Corp.
John N. Lauer........... 59 President, Chief Executive Officer and Director of Oglebay 1998
Norton, since January 1, 1998, retired private investor, 1994 to
December 1997, President and Chief Operating Officer, The BF
Goodrich Company, Chemical and Aerospace Company, 1990 to 1994.
Mr. Lauer also serves on the Boards of Directors of Diebold,
Incorporated, Menasha Corporation and BorsodChem, Rt.
</TABLE>
BOARD AND COMMITTEE ATTENDANCE
The Board met 10 times during 1997. No director attended fewer than 75% of
the total of all 1997 meetings of the Board and those committees on which he
served.
STRUCTURE/COMMITTEES OF THE BOARD
The Board of Directors has the responsibility for establishing broad
corporate policies and for overseeing the overall performance of Oglebay Norton.
However, in accordance with the corporate principles, it is not involved in the
day-to-day operating details. Members of the Board are kept informed of Oglebay
Norton's business through discussions with the President and Chief Executive
Officer and other officers, by reviewing monthly analyses and reports, and by
participating in Board and committee meetings.
The Board has four committees, described as follows:
Executive Committee. The members of the Executive Committee are Messrs.
Bares (Chairman), Baird, Bank, Bersticker and Green. The Executive Committee may
exercise all of the authority of the Board of Directors subject to specific
resolutions of the Board and Delaware law. The Executive Committee meets only as
called by its Chairman. The Executive Committee met twice during 1997.
Audit Committee. The members of the Audit Committee are Messrs. Bersticker
(Chairman), Baird, Bartlett and Pryor. The Audit Committee (i) reviews the
proposed audit programs (including both independent and internal) for each
fiscal year, the results of these audits and the adequacy of Oglebay Norton's
internal systems and controls, (ii) recommends to the Board the appointment of
independent auditors for the year, and (iii) reviews activities conducted under
Oglebay Norton's Legal and Ethical Compliance Program. The Audit Committee met
twice during 1997.
Compensation and Organization Committee. The members of the Compensation
and Organization Committee are Messrs. Weil (Chairman), Bartlett, Bersticker and
Ketchum. The Compensation and Organization Committee fixes compensation for the
executive officers of Oglebay Norton and considers corporate organizational
matters and employee benefit programs generally. The Board has also established
a Compensation Subcommittee whose members are Messrs. Weil (Chairman), Bartlett
and Ketchum. The Compensation Subcommittee reviews and approves compensation
matters that include Oglebay Norton's stock or are calculated,
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in whole or part, with reference to the value of Oglebay Norton's stock. The
Compensation and Organization Committee met six times and the Compensation
Subcommittee met once during 1997.
Director Search and Governance Committee. The members of the Director
Search and Governance Committee are Messrs. Ketchum (Chairman), Bank, Pryor and
Weil. The Director Search and Governance Committee (i) considers, screens and
nominates candidates for election to the Board, (ii) reviews contributions of
current Board members, and (iii) reviews and makes recommendations on corporate
governance issues affecting the Board.
The Director Search and Governance Committee will consider nominees for the
Board of Directors submitted by stockholders. Recommendations by stockholders
should include the nominee's name, age, business and residence addresses,
principal occupation, a list of companies of which the nominee is an officer or
director, qualifications, a statement on whether the nominee is a United States
citizen, the name, address and number of shares of Common Stock of Oglebay
Norton owned by the nominee and the recommending stockholder and the nominee's
written consent to nomination. Nominations should be mailed to: Chairman,
Director Search and Governance Committee, c/o the Corporate Secretary, Oglebay
Norton Company, 1100 Superior Avenue, Cleveland, Ohio 44114-2598.
COMPENSATION OF DIRECTORS
Directors who are not employees of Oglebay Norton receive a fee of $3,000
per quarter ($12,000 per year), an annual award of 200 shares of Common Stock of
Oglebay Norton under the Director Stock Plan, and $900 for each Board and
committee meeting attended. Directors are also reimbursed for expenses they
incur in attending Board and committee meetings.
The Board has adopted, subject to stockholder approval, the Oglebay Norton
Company Director Fee Deferral Plan which permits directors to defer all or part
of the cash portion of their compensation into: (a) share units based upon the
market price of Common Stock of Oglebay Norton; or (b) an account as deferred
cash which is credited with a market rate of interest. Amounts deferred into
share units receive a 25% matching payment by Oglebay Norton, but amounts
deferred as cash do not receive any matching payment. See the proposal to
approve the Oglebay Norton Company Director Fee Deferral Plan in the section
above entitled "PROPOSAL I -- OGLEBAY NORTON COMPANY DIRECTOR FEE DEFERRAL
PLAN," for a summary of the Director Fee Deferral Plan.
DIRECTOR AGREEMENTS
Oglebay Norton has entered into separate standstill agreements with Brent
D. Baird and John D. Weil. These agreements limit to 11% the percentage of
Common Stock of Oglebay Norton which each of them and their respective
affiliates may own. The 11% limit is not affected if their ownership percentages
increase solely due to repurchases by Oglebay Norton of its Common Stock. The
standstill agreements also limit the rights of Messrs. Baird, Weil and their
respective affiliates to sell their shares of Common Stock of Oglebay Norton,
and prohibits them from voting their shares or participating in a proxy contest
against the recommendations of Oglebay Norton's Board. Pursuant to their
respective standstill agreements, the Board nominated Mr. Baird for election as
a director at the 1991 and 1994 Annual Meetings and Mr. Weil for election as a
director at the 1992 and 1995 Annual Meetings.
BENEFICIAL OWNERSHIP OF OGLEBAY NORTON COMMON STOCK
The following table shows the number of shares and percent of the
outstanding shares of Common Stock of Oglebay Norton beneficially owned on June
22, 1998, by each director of Oglebay Norton, each of the executive officers
named in the Summary Compensation Table set forth below, and by all directors
and executive officers as a group.
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<TABLE>
<CAPTION>
AMOUNT AND NATURE OF PERCENT
NAME BENEFICIAL OWNERSHIP OF CLASS
---- -------------------- --------
<S> <C> <C>
Brent D. Baird............................................. 451,000(1)(4) 9.47%
1350 One M&T Plaza
Buffalo, New York 14203
Malvin E. Bank............................................. 314,938(2)(4) 6.61%
3900 Key Center
127 Public Square
Cleveland, Ohio 44114
John D. Weil............................................... 549,800(3)(4) 11.54%
200 North Broadway, Suite 825
St. Louis, Missouri 63102-2573
William G. Bares........................................... 1,200(4) (7)
James T. Bartlett.......................................... 5,600(4) (7)
Albert C. Bersticker....................................... 1,300(4) (7)
R. Thomas Green, Jr........................................ 12,616(5)(6) (7)
Ralph D. Ketchum........................................... 5,300(4) (7)
John N. Lauer.............................................. 51,744 1.09%
William G. Pryor........................................... 400(4) (7)
Stuart H. Theis............................................ 2,506(5)(6) (7)
Mark P. Juszli............................................. 1,038(5)(6) (7)
Richard J. Kessler(8)...................................... 10,175(5)(6) (7)
Paul V. Gorman, Jr......................................... 4,783(5) (7)
Directors, nominees and executive officers as a group,
including those listed above (15 persons)................ 1,419,658(4)(5) 29.79%
</TABLE>
- ---------------
(1) Mr. Baird, together with other reporting persons, as a group, holds sole
voting and sole dispositive power as to 450,800 shares, of which Mr. Baird
holds 17,600 shares individually and 6,000 shares as a trustee.
(2) Mr. Bank's shares include 313,588 shares held in various trusts. As a
trustee, Mr. Bank has sole voting and dispositive power as to 210,118 shares
and, as to 104,820 shares, Mr. Bank shares the voting power and the
dispositive power with a co-trustee. In addition, Mr. Bank has sole voting
and dispositive power as to 1,350 shares held individually.
(3) Mr. Weil, together with other reporting persons, as a group, holds 549,800
shares, of which he holds sole voting and dispositive power as to 535,200
shares and shared voting and dispositive power as to 14,600 shares.
(4) Includes 200 shares which the individual (and 1,600 shares for directors and
executive officers as a group) will acquire, within 60 days, on the date of
the 1998 Annual Meeting of Stockholders pursuant to the Oglebay Norton
Company Director Stock Plan.
(5) Includes the following numbers of shares, rounded to the nearest whole
share, beneficially owned by the following executives under Oglebay Norton's
Employee Stock Ownership Plan as of December 31, 1997: Green -- 10,096
shares; Theis -- 2,106 shares; Juszli -- 1,038 shares; Kessler -- 8,975
shares; Gorman -- 4,783 shares; and directors and executive officers as a
group -- 27,392 shares.
(6) Additional stock rights held by executive officers: Each of Messrs. Green,
Theis, Kessler and Juszli are participants in Oglebay Norton's Long-Term
Incentive Plan (the "LTIP"), under which they have elected to forego a
portion of their annual compensation and invest it in share units, the value
of which are dependent upon the value of the shares of Common Stock of
Oglebay Norton. The share units are payable solely in the shares of Common
Stock of Oglebay Norton upon the named executive officer's retirement,
death, termination of employment or change in control, each as defined under
the LTIP. None of the share units held
8
<PAGE> 11
in the LTIP by the named executive officers are included in the above table.
Under the LTIP, as further described below (see "OFFICER AGREEMENTS -- Long-Term
Incentive Plan"), the total number of share units attributable to each named
executive officer, including Oglebay Norton matches and dividends, as of
June 22, 1998 is as follows:
<TABLE>
<CAPTION>
TOTAL NUMBER
NAME OF SHARE UNITS
---- --------------
<S> <C>
R. Thomas Green, Jr......................................... 17,544
Richard J. Kessler.......................................... 8,630
Mark P. Juszli.............................................. 8,030
Stuart H. Theis............................................. 1,440
</TABLE>
(7) Less than 1% of the outstanding shares of Common Stock of Oglebay Norton on
June 22, 1998.
(8) Mr. Kessler resigned from the positions of Vice President and Chief
Financial Officer effective March 9, 1998.
The following table shows certain information with respect to all persons
who, as of June 22, 1998, were known by Oglebay Norton to beneficially own more
than five percent of the outstanding shares of Common Stock of Oglebay Norton,
other than Mr. Baird, Mr. Bank and Mr. Weil whose beneficial ownership of shares
of Common Stock of Oglebay Norton is reported above.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF PERCENT
NAME OF OWNER BENEFICIAL OWNERSHIP OF CLASS
------------- -------------------- --------
<S> <C> <C>
KeyCorp 1,009,878(1) 21.19%
127 Public Square
Cleveland, Ohio 44114
Warburg Pincus Counsellors, Inc. 294,200(2) 6.17%
466 Lexington Avenue
New York, New York 10017-3147
Douglas N. Barr 289,040(3) 6.06%
3900 Society Center
127 Public Square
Cleveland, Ohio 44114-1216
Robert I. Gale, III 285,260(4) 5.98%
17301 St. Clair Avenue
Cleveland, Ohio 44110
Dimensional Fund Advisors, Inc. 265,056(5) 5.56%
1299 Ocean Avenue, 11th Floor
Santa Monica, California 90401
</TABLE>
- ---------------
(1) As of February 13, 1998, based upon information contained in a Schedule 13G
filed with the Securities and Exchange Commission, KeyCorp has sole voting
power as to 422,702 shares, shared voting power as to 230,768 shares, sole
dispositive power as to 701,240 shares, and shared dispositive power as to
292,038 shares.
(2) As of January 9, 1997, based upon information contained in a Schedule 13G
filed with the Securities and Exchange Commission, Warburg Pincus
Counsellors, Inc. has beneficial ownership of 294,200 shares. According to
the Schedule 13G filed, Warburg Pincus Counsellors, Inc. has sole voting and
dispositive power as to 244,600 shares.
(3) As of May 2, 1997, based upon information contained in a Schedule 13D filed
with the Securities and Exchange Commission, Mr. Barr has sole voting and
dispositive power as to 400 of these shares. As trustee,
9
<PAGE> 12
Mr. Barr has shared voting and dispositive power as to 57,200 of these
shares and, together with Mr. Robert I. Gale III, shared voting and
dispositive power as to 230,440 of these shares.
(4) As of May 2, 1997, based upon information contained in a Schedule 13D filed
with the Securities and Exchange Commission, Mr. Gale has sole voting and
dispositive power as to 54,820 shares, 4,198 shares of which he owns
individually and 50,622 shares of which he holds as trustee. Together with
Mr. Douglas N. Barr, Mr. Gale shares voting and dispositive power as to
230,440 of these shares.
(5) As of February 5, 1997, based upon information contained in a Schedule 13D
filed with the Securities and Exchange Commission, Dimensional Fund
Advisors, Inc. has sole voting power as to 178,656 shares. Certain persons
who are 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"), each an open-end management investment company
registered under the Investment Company Act of 1940. In their capacities as
officers of the Fund and the Trust, these persons have sole voting power as
to 50,000 additional shares owned by the Fund and 36,400 additional shares
owned by the Trust. Dimensional Fund Advisors, Inc. has sole dispositive
power as to 265,056 shares, including the shares held by the Fund and the
Trust.
PERFORMANCE GRAPH
The following is a graph which compares the five year cumulative return
from investing $100 on January 1, 1993 in each of Oglebay Norton Common Stock,
the S&P 500 Index of companies and the Valueline Composite Index of companies,
with dividends assumed to be reinvested when received.
<TABLE>
<CAPTION>
Valueline
Measurement Period Oglebay Composite
(Fiscal Year Covered) Norton S&P 500 Index
<S> <C> <C> <C>
1992 100 100 100
1993 100.345 109.99 113.22
1994 142.601 111.409 109.246
1995 180.237 153.265 132.941
1996 218.199 188.486 153.388
1997 420.543 251.364 187.532
</TABLE>
COMPENSATION OF EXECUTIVE OFFICERS
REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
Oglebay Norton's Board of Directors has delegated to its Compensation and
Organization Committee (the "C & O Committee"), none of whose members is a
former or current officer or employee of Oglebay Norton or any of its
subsidiaries, general responsibility for executive compensation matters. Oglebay
Norton has further delegated to the Compensation Subcommittee, which is
comprised of all of the members of the C & O Committee other than Mr.
Bersticker, responsibility for executive compensation actions to be taken by a
committee of "outside directors" as defined in the Treasury Regulations
promulgated under Section 162(m) of the Internal Revenue Code of 1986, as
amended (the "Internal Revenue Code"), and "non-employee directors" as defined
in Rule 16b-3 promulgated under the Securities Exchange Act of 1934, as amended.
10
<PAGE> 13
On December 17, 1997, Oglebay Norton entered into an Employment Agreement
with Mr. John N. Lauer, the terms of which had been negotiated on behalf of
Oglebay Norton by the C & O Committee, pursuant to which Mr. Lauer became
President and Chief Executive Officer of Oglebay Norton, succeeding Mr. Green in
these posts, effective January 1, 1998. Under the Employment Agreement, Mr.
Lauer will not be paid a salary during his tenure with Oglebay Norton. Rather,
as more fully described in this Proxy Statement under the heading "OFFICER
AGREEMENTS -- Employment Agreement with Mr. John N. Lauer," the primary elements
of his compensation under the Employment Agreement are a grant of restricted
shares, a grant of an option to purchase additional shares and an annual bonus
of up to $200,000 per year. The C & O Committee concluded that the largely
stock-based compensation package contained in the Employment Agreement is in the
best interests of Oglebay Norton and its stockholders. The remainder of this
report deals with compensation of executives other than Mr. Lauer, including,
specifically, compensation of Mr. Green, who held the post of Chairman,
President and Chief Executive Officer throughout 1997.
The C & O Committee seeks to compensate executive officers based on their
contributions to Oglebay Norton's success, and specifically to reward officers
who make significant contributions to Oglebay Norton's short-term and long-term
profitability. In 1997, executive officers' annual compensation packages were
comprised of an annual salary, an annual bonus and equity-based compensation.
Annual Salary. Executive officers' annual salaries for 1997 were set by the
C & O Committee after consideration of each executive officer's contribution to
Oglebay Norton's performance in 1996, Oglebay Norton's financial performance and
prospects, and the level of competitive salaries paid to executives in
comparable positions with companies whose sales and revenues were similar to
those of Oglebay Norton.
Bonuses. Executive officers were eligible to receive cash bonuses with
respect to 1997 under Oglebay Norton's Annual Incentive Plan (the "Incentive
Plan") pursuant to which the C & O Committee established corporate, business
unit, and individual performance goals for the year. The corporate and business
unit performance measures for 1997 under the Incentive Plan were corporate
income from operations and business unit operating profit, respectively. The
amount of the incentive award under the Incentive Plan, if any, to each
participant is based on the participant's target award level, the weightings
assigned to each business unit and individual performance goals applicable to
the participant and achievement of those goals.
Target awards are determined with reference to the participant's base
salary and range from 15% to 50% of base salary. Nominal awards may range from
0% to 150% of target awards, depending on the extent to which corporate,
business unit, and individual performance goals are met or exceeded. In
addition, the C & O Committee has the discretion to increase or decrease the
amount of any particular nominal award by a maximum of 25%. If threshold
performance goals are not achieved, no award may be made under the Incentive
Plan. Based on the extent to which the relevant goals were met during 1997,
actual awards for the year under the Incentive Plan ranged from 17% to 73% of
base salary.
Equity-Based Compensation. Oglebay Norton's Long-Term Incentive Plan
authorizes the Compensation Subcommittee to grant equity-based incentive
compensation (including stock options, stock appreciation rights, restricted
stock, performance units and share units) to executive officers and other key
employees for performance occurring over a period longer than one fiscal year.
The Compensation Subcommittee believes that Oglebay Norton is better able to
attract, retain and motivate its executives to achieve superior financial
performance if a portion of executive compensation is equity-based, thereby
promoting the ownership and holding of shares of Common Stock of Oglebay Norton
by its officers.
On October 29, 1997, the Compensation Subcommittee granted nonqualified
stock options to 21 executives and key employees covering an aggregate of 48,700
shares of Common Stock of Oglebay Norton, each at an exercise price of $30 5/8
(the fair market value of the shares on the grant date). In addition, the
Compensation Subcommittee made grants under the Long-Term Incentive Plan in
connection with executives' decisions to defer a portion of their bonuses
received under the Incentive Plan. Amounts so deferred are invested in "share
units" based on the fair market value of the shares of Common Stock of Oglebay
Norton on the date the bonus otherwise would be due. In addition, each executive
deferring a portion of a bonus for 1997 received a matching grant of additional
share units equal to 50% of the share units allocable to the bonus deferred,
with the
11
<PAGE> 14
executive's rights in the matching grant share units vesting over five years.
Deferred and matching amounts are paid in shares of Common Stock of Oglebay
Norton and are generally payable only upon termination of employment, death or
retirement. Executives receiving bonuses under the Incentive Plan for 1997
elected to defer from 20% to 100% of those bonuses.
Chief Executive Officer. During 1997, pursuant to the recommendation of the
C & O Committee, as approved by the Board of Directors, Mr. Green was paid a
base salary of $310,000, effective March 1, 1997, for his services as Oglebay
Norton's Chairman, President and Chief Executive Officer. In recommending Mr.
Green's 1997 base salary, the C & O Committee considered Mr. Green's performance
through the end of 1996 in executing Oglebay Norton's Corporate Strategic Plan,
Oglebay Norton's financial performance and Mr. Green's salary level relative to
the salary levels of other chief executive officers in companies that compete in
similar markets and businesses.
Mr. Green received a bonus for 1997 under the Incentive Plan which, taking
into account all factors (including the C & O Committee's discretion to vary any
award otherwise payable by up to an additional 25%), could have ranged from 0%
to 94% of his 1997 base salary. Based upon the extent to which Oglebay Norton
and Mr. Green attained corporate and performance goals during 1997, Mr. Green
was awarded a bonus of $225,000.
In connection with the general grant of nonqualified options to executives
and other key employees on October 29, 1997, the Compensation Subcommittee
granted Mr. Green a nonqualified option under the Long-Term Incentive Plan to
acquire 20,000 shares of Common Stock of Oglebay Norton at an exercise price of
$30 5/8. To afford Mr. Green an opportunity to defer a portion of his 1997 bonus
and receive a matching grant from Oglebay Norton comparable to the matching
grant received by other executives who elected to defer portions of their
bonuses and receive a matching grant under the Long-Term Incentive Plan, the C &
O Committee granted to Mr. Green a 50% match of the $180,000 of his 1997 bonus
that he elected to defer. Under this special arrangement, the amount deferred
and the match amount will be credited, until withdrawn, with earnings each year
at the annual rate earned by a specified fund maintained under Oglebay Norton's
Incentive Savings Plan. The match amount ($90,000) is subject to the same
vesting and distribution provisions as are applicable to matching share units
granted to other executives under the Long-Term Incentive Plan, except that
settlement of both the deferred and match amount will be in cash.
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 publicly
held corporation for compensation over $1 million paid in any year to any
individual who is either the corporation's Chief Executive Officer or one of the
four other most highly compensated executive officers of the corporation.
Qualifying "performance-based compensation" will not be subject to the deduction
limit if certain requirements are met. At present, the Performance Option
granted to Mr. Lauer by the Compensation Subcommittee is the only compensation
element that provides a sufficiently large dollar amount of compensation to
bring the Section 162(m) limit into play. However, subject to stockholder
approval of the Performance Option, the Compensation Subcommittee believes that
compensation under the Performance Option will qualify as performance-based
compensation and that Oglebay Norton's deduction with respect to that
compensation will not be limited by Section 162(m).
COMPENSATION AND
ORGANIZATION COMMITTEE
John D. Weil, Chairman
James T. Bartlett
Albert C. Bersticker
Ralph D. Ketchum
February 20, 1998
12
<PAGE> 15
SUMMARY COMPENSATION TABLE
The following table sets forth individual compensation information for
Oglebay Norton's Chief Executive Officer and the four other most highly
compensated executive officers whose total annual salary and bonus for the
fiscal year ended December 31, 1997 exceeded $100,000.
<TABLE>
<CAPTION>
ANNUAL COMPENSATION
------------------------------------
OTHER ANNUAL ALL OTHER ANNUAL
NAME AND BONUS COMPENSATION COMPENSATION
PRINCIPAL POSITION YEAR SALARY($) ($)(1) ($)(2) ($)(3)
------------------ ---- --------- ------- ------------ ----------------
<S> <C> <C> <C> <C> <C>
R. Thomas Green, Jr.* 1997 $305,833 $45,000 $16,803 $55,441
Chairman of the Board 1996 283,600 30,000 19,026 45,250
1995 276,600 68,000 16,638 42,305
Stuart H. Theis 1997 153,167 80,000 16,760 44,195
Vice President -- 1996 142,767 24,300 -0- 12,430
Marine Transportation 1995 136,600 44,100 -0- 12,441
Richard J. Kessler** 1997 154,333 16,000 8,879 33,979
Vice President -- 1996 150,333 13,500 8,879 24,785
Finance and Planning 1995 147,000 18,600 8,879 25,088
Mark P. Juszli 1997 137,667 20,000 5,621 24,853
Vice President -- 1996 125,333 23,200 -0- 10,913
Industrial Sands 1995 117,300 17,500 -0- 6,682
Paul V. Gorman, Jr. 1997 105,833 44,000 -0- 15,278
Assistant Vice President -- 1996 97,500 15,763 -0- 8,079
Human Resources 1995 94,000 18,457 -0- 7,259
</TABLE>
- ---------------
* Mr. Green stepped down from the positions of President and Chief Executive
Officer on December 31, 1997.
** Mr. Kessler resigned from the positions of Vice President and Chief Financial
Officer effective March 9, 1998.
(1) Amounts shown for bonuses are the portion of the total bonuses of Messrs.
Green, Theis, Kessler and Juszli received in cash under Oglebay Norton's
Annual Incentive Plan. Total amounts of bonuses earned under the Annual
Incentive Plan and portions of that bonus elected to be deferred by the
following executives under the Oglebay Norton Company Long-Term Incentive
Plan ("LTIP") (or, in the case of Mr. Green's 1997 bonus, pursuant to the
special arrangement described above under the heading "COMPENSATION OF
EXECUTIVE OFFICERS -- Report of the Compensation Committee on Executive
Compensation") were, respectively, as follows: Green (1997 -- $225,000 and
$180,000; 1996 -- $150,000 and $120,000; 1995 -- $170,000 and $102,000);
Theis (1997 -- $100,000 and $20,000; 1996 -- $27,000 and $2,700; 1995 --
$49,000 and $4,900); Kessler (1997 -- $80,000 and $64,000; 1996 -- $45,000
and $31,500; 1995 -- $62,000 and $43,400); and Juszli (1997 -- $85,000 and
$65,000; 1996 -- $58,000 and $34,800; 1995 -- $50,000 and $32,500). Deferred
portions of bonuses of Messrs. Green, Theis, Kessler and Juszli, which were
automatically converted upon deferral into share units based on the fair
market value of shares of Common Stock of Oglebay Norton, are shown in the
LTIP Table below. Mr. Gorman was not eligible to participate in the Annual
Incentive Plan bonus deferral portion of the LTIP during the years
presented. The Annual Incentive Plan bonus deferral feature of the LTIP has
been discontinued effective for bonus payments earned in 1998.
(2) Represents "gross-up" for taxes in respect of payments by Oglebay Norton to
the named executives for life insurance premiums.
(3) Includes contributions by Oglebay Norton for the named executives under
Oglebay Norton's Incentive Savings Plan (the "Savings Plan") and Oglebay
Norton's Employee Stock Ownership Plan (the "ESOP"), respectively
(Green -- $3,200 and $19,897; Theis -- $3,063 and $19,047; Kessler -- $3,087
and $19,192; Juszli -- $2,753 and $17,120; and Gorman -- $2,117 and
$13,161); payments by Oglebay Norton to the
13
<PAGE> 16
named executive for life insurance premiums (Green -- $19,200; Theis -- $22,085;
Kessler -- $11,700; and Juszli -- $4,980); and contributions under the
Supplemental Savings and Stock Ownership Plan of $13,144 for Mr. Green.
STOCK OPTION GRANTS IN 1997
Options granted to the named executive officers will expire on the tenth
anniversary of the grant dates. Option exercise prices were in all cases equal
to the fair market value of a share of Common Stock of Oglebay Norton on the
date the option was granted. The options have no value unless Oglebay Norton's
stock price appreciates and the recipient satisfies the applicable vesting
requirements.
The following table shows the stock options granted to the named executive
officers during 1997, and the potential realizable value of those grants (on a
pre-tax basis) determined in accordance with Securities and Exchange Commission
rules. The information in this table shows how much the named executive officers
may eventually realize in future dollars under two hypothetical situations: if
the stock gains 5% or 10% in value per year, compounded over the ten-year life
of the options. These are assumed rates of appreciation and are not intended to
forecast future appreciation of the shares of Common Stock of Oglebay Norton.
Also included in this table is the increase in value to all common stockholders
of Oglebay Norton using the same assumed rates of appreciation.
For perspective, in ten years, one share of Common Stock of Oglebay Norton
valued at $30.625 on October 29, 1997 (the grant date) would be worth $49.88,
assuming the hypothetical 5% compounded growth rate, or $79.43, assuming the
hypothetical 10% compounded growth rate.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE VALUE AT
ASSUMED ANNUAL RATES OF STOCK PRICE
INDIVIDUAL GRANTS APPRECIATION FOR OPTION TERM(3)
------------------------------------------- ---------------------------------------
NUMBER OF % OF TOTAL
SHARES OPTIONS
UNDERLYING GRANTED TO
OPTIONS EMPLOYEES EXERCISE EXPIRATION
NAME GRANTED(#)(1) IN 1997(2) PRICE($/SH.) DATE 5% ($) 10% ($)
---- ------------- ------------ ------------ ---------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
R. T. Green, Jr...... 20,000 40.1% $30.625 10/29/07 $385,100 $976,100
S. H. Theis.......... 3,700 7.4% 30.625 10/29/07 71,244 180,579
R. J. Kessler........ 3,700 7.4% 30.625 10/29/07 71,244 180,579
M. P. Juszli......... 3,700 7.4% 30.625 10/29/07 71,244 180,579
P.V. Gorman, Jr...... 1,700 3.4% 30.625 10/29/07 32,734 82,960
INCREASE IN VALUE TO ALL COMMON STOCKHOLDERS(4)................................ $92.1MILLION $233.5MILLION
</TABLE>
- ---------------
(1) The options vest 25% each year commencing October 29, 1998. The options also
vest if the employee retires and is otherwise entitled to a normal, early or
shutdown pension under the Oglebay Norton Company Pension Plan for Salaried
Employees. In that event, the retired employee may exercise the options
within two years from the date of retirement, but not beyond the October 29,
2007 option expiration date.
(2) Percentage based on the total number of options granted to employees under
the Oglebay Norton Company Long-Term Incentive Plan. This percentage
calculation excludes the 380,174 options granted to Mr. Lauer, on December
17, 1997 under the Performance Option Agreement (see "OFFICER AGREEMENTS --
Employment Agreement with Mr. John N. Lauer"). If Mr. Lauer's options were
included, then each of the officers in the table would have received less
than 1% of the total options granted to employees. Mr. Lauer became the
President and Chief Executive Officer of Oglebay Norton on January 1, 1998.
(3) Calculated over a ten-year period representing the life of the options.
14
<PAGE> 17
(4) Calculated using a price of $30.625 per share of Common Stock of Oglebay
Norton, the closing price on the date the options were granted, and the
total weighted average number of shares of Common Stock of Oglebay Norton
outstanding for 1997 (4,784,892 shares).
LONG-TERM INCENTIVE PLANS -- AWARDS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
NUMBER OF PERFORMANCE OR
SHARES, UNITS OR OTHER PERIOD UNTIL
NAME OTHER RIGHTS(#)(1) MATURATION OR PAYOUT(2)
---- ------------------ -----------------------
<S> <C> <C>
R. Thomas Green, Jr............................. 7,448.28 5 years
Stuart H. Theis................................. 827.58 5 years
Richard J. Kessler.............................. 2,648.28 5 years
Mark P. Juszli.................................. 2,689.65 5 years
</TABLE>
- ---------------
(1) Reflects the total of: (a) the portion of the named executive's total 1997
bonus deferred under the Oglebay Norton Company Long-Term Incentive Plan
(the "LTIP") (or, in the case of Mr. Green's 1997 bonus, pursuant to the
special arrangement described above under the heading "COMPENSATION OF
EXECUTIVE OFFICERS -- Report of the Compensation Committee on Executive
Compensation"); and (b) the 50% company match of the deferred amounts under
that plan, respectively, as converted into share units based upon the fair
market value of the shares of Common Stock of Oglebay Norton, as follows:
Green -- 4,965.52 and 2,482.76; Theis -- 551.72 and 275.86;
Kessler -- 1,765.52 and 882.76; and Juszli -- 1,793.10 and 896.55. Mr.
Gorman was not eligible to participate in the bonus deferral portion of the
LTIP during 1997. Bonus and matching contribution amounts were automatically
converted into share units at the rate of $36.25 per share, the closing
price of Oglebay Norton's Common Stock on the date the 1997 bonuses were
paid and deferred as previously elected by such officers.
(2) Share units reflecting the portion of the total bonus elected to be deferred
by the named executive, and dividends paid on those share units, are fully
vested upon allocation to the named executive's LTIP account. Share units
reflecting the matching contribution, and dividends paid on those share
units, generally do not vest for five years, assuming the executive's
continuous service with Oglebay Norton for the five-year period. However,
distributions of vested amounts will generally be made only upon a
participant's retirement, death or other termination of employment. All
distributions under the LTIP will be made in shares of Common Stock of
Oglebay Norton.
15
<PAGE> 18
RETIREMENT PLANS
SALARIED EMPLOYEES PENSION PLAN
EXCESS AND TRA SUPPLEMENTAL BENEFIT RETIREMENT PLAN
The following table sets forth the annual pension payable under the Oglebay
Norton Company Pension Plan for Salaried Employees (the "Salaried Plan") and the
Oglebay Norton Company Excess and TRA Supplemental Benefit Retirement Plan (the
"Excess Benefit Retirement Plan") at normal retirement age:
<TABLE>
<CAPTION>
ESTIMATED ANNUAL BENEFIT
(ASSUMING RETIREMENT ON JANUARY 1, 1998)
----------------------------------------------------
FINAL YEARS OF SERVICE
ANNUAL AVERAGE ----------------------------------------------------
COMPENSATION 15 YEARS 20 YEARS 25 YEARS 30 YEARS 35 YEARS
- -------------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
$ 75,000 $ 16,875 $ 22,500 $ 28,125 $ 33,750 $ 39,375
100,000 22,500 30,000 37,500 45,000 52,500
150,000 33,750 45,000 56,250 67,500 78,750
200,000 45,000 60,000 75,000 90,000 105,000
250,000 56,250 75,000 93,750 112,500 131,250
300,000 67,500 90,000 112,500 135,000 157,500
350,000 78,750 105,000 131,250 157,500 183,750
400,000 90,000 120,000 150,000 180,000 210,000
450,000 101,250 135,000 168,750 202,500 236,250
500,000 112,500 150,000 187,500 225,000 262,500
550,000 123,750 165,000 206,250 247,500 288,750
600,000 135,000 180,000 225,000 270,000 315,000
650,000 146,250 195,000 243,750 292,500 341,250
</TABLE>
Benefits under the Salaried Plan and the Excess Benefit Retirement Plan are
based on average annual compensation for the highest five years during the last
10 years of employment prior to retirement ("Average Compensation"). Covered
compensation is equal to total base pay and incentive compensation (including
amounts deferred under the Long-Term Incentive Plan), which is substantially the
same as shown in the salary and bonus columns of the Summary Compensation Table
set forth above, (including total bonus referred to in footnote 1 to that
table). The annual benefit is calculated by multiplying the participant's
Average Compensation by a factor of 1 1/2% and the participant's years of
covered service (but not below a minimum benefit unrelated to compensation).
Benefits, which are paid in a straight life annuity form, are not subject to
reduction for Social Security or other offset. Certain surviving spouse benefits
are also available under the plans, as well as early retirement and facility
shutdown benefits. The Pension Plan Benefits table is prepared without regard to
benefit limitations imposed by the Internal Revenue Code. The years of benefit
service credited for executive officers named in the Summary Compensation Table
are: Mr. Green -- 32.6 years; Mr. Theis -- 5.0 years; Mr. Kessler -- 28.2 years;
Mr. Juszli -- 3.7 years; and Mr. Gorman -- 10.4 years.
The Internal Revenue Code limits the benefits provided under the Salaried
Plan. The Excess Benefit Retirement Plan provides for the payment, out of
Oglebay Norton's general funds, of the amount that a participant would have
received under the Salaried Plan but for the Internal Revenue Code limits. The
above table, which does not reflect those limits, shows the total annual pension
benefits payable under both the Salaried Plan and the Excess Benefit Retirement
Plan. The Excess Benefit Retirement Plan also provides supplemental benefits
under provisions in effect under the Salaried Plan prior to 1989 if the current
provisions would result in a lesser benefit. Since the pre-1989 benefit formula
has been grandfathered, Mr. Green will be the only participant receiving such a
supplemental benefit from the Excess Benefit Retirement Plan. That lifetime
benefit is estimated at $10,229 annually, commencing at normal retirement age.
16
<PAGE> 19
SUPPLEMENTAL SAVINGS AND STOCK OWNERSHIP PLAN
As with the Salaried Plan, the Internal Revenue Code limits the amount that
Oglebay Norton can contribute for an employee under its Savings Plan and
Employee Stock Ownership Plan ("ESOP"). The Supplemental Savings and Stock
Ownership Plan (the "Supplemental Plan"), provides for the payment, out of
Oglebay Norton's general funds, of the amount by which certain participants'
benefits under the Savings Plan and ESOP would exceed the limitations applicable
to those plans. The terms of the Supplemental Plan provide a benefit equal to
that which the participants would have received under the Savings Plan and ESOP
but for the Internal Revenue Code limitations. Benefits under the Supplemental
Plan are payable in cash only at such time and in such manner as the
Compensation and Organization Committee of the Board of Directors may select
from those available under the Savings Plan and ESOP. The terms of the
Supplemental Plan also prohibit a participant from competing with Oglebay Norton
for 10 years or wrongfully disclosing a trade secret. Based upon current
compensation levels and the period of time during which Mr. Green (six years)
and Mr. Kessler (less than one year) have accrued benefits under the
Supplemental Plan (other than benefits relating solely to dividends on Oglebay
Norton Common Stock), the only named executive officers eligible for
supplemental benefits are Messrs. Green and Kessler, who would be entitled to
benefits of $139,507 and $51, respectively.
OFFICER AGREEMENTS
SEPARATION AGREEMENT WITH MR. R. THOMAS GREEN, JR.
On December 17, 1997, Oglebay Norton entered into an agreement with Mr.
Green pursuant to which he was retained to provide services to Oglebay Norton
through June 30, 1999. The agreement provides for Mr. Green's stepping down as
President and Chief Executive Officer of Oglebay Norton effective as of December
31, 1997, his service as Chairman of the Board of Oglebay Norton through the
1998 Annual Meeting of Stockholders and his continued service thereafter as a
director through completion of his current term in April 1999. Whether Mr. Green
is nominated as a candidate for election as a director after April 1999 will be
determined by him and the Board of Directors at that time. While Mr. Green
provides services to Oglebay Norton, Oglebay Norton is to pay compensation to
him at the rate of not less than $465,000 per year and to provide to him all
other benefits that are provided to full-time salaried employees of Oglebay
Norton. In addition, Oglebay Norton is to (i) pay such premiums as may be
required to have fully paid at age 65 a $720,000 face amount life insurance
policy on Mr. Green's life owned by him, (ii) provide Mr. Green with up to
$5,000 of retirement planning consultation (plus a "gross-up" amount sufficient
to enable Mr. Green to pay all taxes on the value of the consultation and on the
gross-up amount), (iii) provide Mr. Green with a furnished office and related
support and secretarial services through June 30, 2004, and (iv) continue to pay
Mr. Green's club membership dues and assessments for as long as Mr. Green
desires to maintain his membership.
EMPLOYMENT AGREEMENT WITH MR. JOHN N. LAUER
On December 17, 1997, Oglebay Norton entered into an employment agreement
(the "Employment Agreement") with Mr. Lauer pursuant to which he (i) became
employed by Oglebay Norton immediately upon execution of the Employment
Agreement, and (ii) became President and Chief Executive Officer of Oglebay
Norton effective January 1, 1998. The Employment Agreement contemplates Mr.
Lauer's election as Chairman of the Board of Directors at the time of the 1998
Annual Meeting of Stockholders and his continued employment as Chairman,
President and Chief Executive Officer of Oglebay Norton thereafter through
January 2, 2003. The Employment Agreement was negotiated with Mr. Lauer on
behalf of Oglebay Norton by the Compensation and Organization Committee of the
Board of Directors and was approved by the full Board of Directors at its
regularly scheduled meeting held on December 17, 1997.
The compensation arrangements embodied in the Employment Agreement are
intended to tie Mr. Lauer's compensation for services directly to the
performance of Oglebay Norton -- and particularly the price of shares of Common
Stock of Oglebay Norton -- over the term of Mr. Lauer's employment. Mr. Lauer
will not be paid a salary during his tenure with Oglebay Norton. Rather, the
primary elements of his compensation under the Employment Agreement are (i) a
grant of restricted shares of Common Stock of Oglebay Norton, (ii) a grant of
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<PAGE> 20
an option to purchase additional shares of Common Stock of Oglebay Norton, and
(iii) an annual bonus of up to $200,000 per year depending upon the performance
of Oglebay Norton during the year. The Board of Directors determined that these
compensation arrangements are appropriate in that the ultimate value of the
compensation package provided to Mr. Lauer will depend in large part upon the
ultimate value achieved by Oglebay Norton under Mr. Lauer's management. The
Board of Directors believes that the direct, largely stock-based relationship
between performance and reward is in the best interests of Oglebay Norton and
its stockholders. Each of the primary elements of Mr. Lauer's compensation
arrangements is described in more detail below.
Restricted Stock. On January 19, 1998, Oglebay Norton granted to Mr. Lauer
25,744 shares of Common Stock of Oglebay Norton subject to restrictions set
forth in the Employment Agreement (the "Restricted Shares"). The making of this
grant was contingent upon Mr. Lauer's personal investment of at least $1,000,000
in shares of Common Stock of Oglebay Norton. As provided in the Employment
Agreement, the number of Restricted Shares granted is equal to the number of
shares acquired by Mr. Lauer for his $1,000,000 investment. Of the 25,744
Restricted Shares granted, 20% (5,148 shares) were fully vested and
nonforfeitable as of the grant date. Assuming Mr. Lauer continues in the employ
of Oglebay Norton, another 20% of the total number of Restricted Shares will
vest and become nonforfeitable on January 1 of each of 1999, 2000, 2001, and
2003 (i.e., on each of the first, second, third, and fifth anniversaries of
January 1, 1998). However, if Mr. Lauer reduces his personal investment by
disposing of any of the shares he acquired for his $1,000,000 investment at any
time before January 1, 2003, any Restricted Shares that have not become fully
vested and nonforfeitable will be forfeited at the time of the reduction in Mr.
Lauer's personal investment. For these purposes, shares as to which (i) the
beneficial interest is held by any of certain members of Mr. Lauer's family, and
(ii) the voting rights are controlled by Mr. Lauer, will be treated as held by
Mr. Lauer.
If, before the restrictions on all of the Restricted Shares have lapsed,
Mr. Lauer's employment with Oglebay Norton is terminated by Oglebay Norton
without "Cause," Mr. Lauer is "Constructively Terminated," or Mr. Lauer
terminates his employment by notice to the Board of Directors within 90 days
after the occurrence of a "Change of Control" (with each such term defined as
provided in the Employment Agreement), Mr. Lauer's rights to all of the
Restricted Shares will become fully vested and nonforfeitable. If Mr. Lauer's
employment with Oglebay Norton is terminated by death or disability during 1998
or 1999, an aggregate of 12,872 Restricted Shares (50% of the entire grant) will
be fully vested and nonforfeitable; if his employment is terminated by death or
disability during 2000, an aggregate of 18,021 Restricted Shares (70% of the
entire grant) will be fully vested and nonforfeitable; if his employment is
terminated by death or disability during 2001, an aggregate of 21,882 Restricted
Shares (85% of the entire grant) will be fully vested and nonforfeitable; and if
his employment is terminated by death or disability after December 31, 2001, all
25,744 of the Restricted Shares will be fully vested and nonforfeitable (in each
case including any Restricted Shares that had previously become fully vested and
nonforfeitable). If Mr. Lauer's employment is terminated by Oglebay Norton for
Cause or by Mr. Lauer other than as a result of a Constructive Termination, any
Restricted Shares that were not already fully vested and nonforfeitable will be
forfeited at the time of termination.
Mr. Lauer elected under Section 83(b) of the Internal Revenue Code to
recognize the entire value of the shares of Common Stock of Oglebay Norton
subject to the grant as current income as of the date of the grant and without
regard to the restrictions on those shares. Mr. Lauer has also made arrangements
to satisfy the obligations to pay federal, state and local income tax in
connection with the grant and the income recognized in connection with the
grant.
Performance Option. As provided by the Employment Agreement, the
Compensation Subcommittee granted to Mr. Lauer, on December 17, 1997, subject to
the approval of the stockholders of Oglebay Norton, an option to acquire up to
380,174 shares at an exercise price of $38.00 per Share. The total of 380,174
shares subject to the Performance Option equals 8% of the entire number of
shares outstanding both on the grant date and on January 1, 1998. The $38.00 per
share exercise price is $6.00 above the per share closing price as reported on
the NASDAQ National Market on December 16, 1997 (the last closing price
available at the time the Employment Agreement was executed). The Performance
Option will not be exercisable by Mr. Lauer unless and until the approval of
Oglebay Norton's stockholders is obtained.
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<PAGE> 21
In the normal course, the Performance Option will first become exercisable
on January 1, 2001, after Mr. Lauer has been employed by Oglebay Norton for
three full years. If Mr. Lauer remains in the employ of Oglebay Norton
throughout the term contemplated by the Employment Agreement (i.e., through
January 2, 2003), the Performance Option, to the extent not previously exercised
by him, will remain exercisable through June 30, 2005. Any part of the
Performance Option not earlier exercised or terminated will terminate at the
close of business on June 30, 2005.
The exercise price under the Performance Option may be paid by Mr. Lauer in
cash or in such other form of consideration as the Compensation Subcommittee may
determine to accept including (i) delivery of instructions to a broker to
deliver to Oglebay Norton sale or loan proceeds to pay the exercise price, (ii)
delivery of shares, (iii) surrender of a portion of the Performance Option
itself, or (iv) any combination of these various methods. The Compensation
Subcommittee may permit or require Mr. Lauer to satisfy, by such means as the
Compensation Subcommittee may determine, any withholding tax obligation arising
from any exercise of the Performance Option.
If, before January 2, 2003, Mr. Lauer's employment with Oglebay Norton is
terminated by Oglebay Norton without Cause, Mr. Lauer is Constructively
Terminated, or Mr. Lauer terminates his employment by notice to the Board of
Directors within 90 days after the occurrence of a Change of Control, the
Performance Option, to the extent not previously exercised, will become
immediately exercisable and will remain exercisable thereafter through January
2, 2004, at which time it will be terminated.
If Mr. Lauer dies or his employment is terminated by Oglebay Norton on
account of his disability before January 1, 2001, the Performance Option will be
terminated as of the date of his death or termination due to disability without
ever having become exercisable. If Mr. Lauer dies or his employment is
terminated by Oglebay Norton on account of his disability after December 31,
2000 and before January 2, 2003, the Performance Option will remain exercisable
through the first anniversary of the date of his death or termination due to
disability and will be terminated as of the close of business on that first
anniversary.
If, before January 2, 2003, Mr. Lauer's employment is terminated by Oglebay
Norton for Cause or by Mr. Lauer voluntarily (and not in response to a
Constructive Termination), the Performance Option will be terminated on the date
of termination of employment.
Under currently applicable provisions of the Internal Revenue Code, the
grant of the Performance Option had no immediate tax consequences to Oglebay
Norton or to Mr. Lauer. Mr. Lauer will recognize compensation income at the time
of exercise of the Performance Option in an amount equal to the difference
between the exercise price and the fair market value on the exercise date of the
acquired shares. Oglebay Norton will be entitled to a deduction in the same
taxable year and in the same amount as Mr. Lauer recognizes compensation income
as a result of the exercise of the Performance Option, provided Oglebay Norton
satisfies applicable withholding requirements.
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<PAGE> 22
NEW PLAN BENEFITS -- PERFORMANCE OPTIONS
<TABLE>
<CAPTION>
NUMBER OF SHARES
UNDERLYING
NAME AND OPTIONS
PRINCIPAL POSITION GRANTED(#)
------------------ ----------------
<S> <C>
R. Thomas Green, Jr......................................... --
Chairman of the Board
Stuart H. Theis............................................. --
Vice President -- Marine Transportation
Richard J. Kessler.......................................... --
Vice President -- Finance and Planning
Mark P. Juszli.............................................. --
Vice President -- Industrial Sands
Paul V. Gorman, Jr.......................................... --
Assistant Vice President -- Human Resources
Executive Officers as a Group(1)............................ 380,174(2)
Non-Executive Officer Directors as a Group.................. --
Non-Executive Officer Employees as a Group.................. --
</TABLE>
- ---------------
(1) John N. Lauer, who became Oglebay Norton's President and Chief Executive
Officer on January 1, 1998, is the sole member of this group who has
received a Performance Option grant.
(2) The expiration date, which is dependent on various factors, and the material
conditions to the exercise of the Performance Option granted to Mr. Lauer
are described in this section above.
Annual Bonus. Under the Employment Agreement, Mr. Lauer is eligible to
receive a cash bonus with respect to each calendar year during which he is
employed by Oglebay Norton with the amount of the bonus ranging in value from $0
to $200,000, depending upon the extent to which Oglebay Norton and Mr. Lauer
achieve such goals as may be specified in an incentive plan to be adopted by the
Compensation Subcommittee by the end of February during each calendar year. Any
cash bonus earned during a calendar year will be paid by March 15 of the
immediately following year.
Other Benefits. Oglebay Norton will provide to Mr. Lauer the same
perquisites as it has customarily provided to its top executives. Oglebay Norton
will also provide to Mr. Lauer a supplemental retirement benefit plan that will
provide to him retirement benefits that, when added to any benefits payable to
him under the Salaried Plan, will equal the benefits he would have been entitled
to under the Salaried Plan if (i) in addition to any bonuses received by him,
there had been included in his covered compensation, throughout the period of
his employment with Oglebay Norton, salary earned by him at the rate of $350,000
per year, and (ii) there were no limits on the amount of covered compensation
that could be taken into account in determining the benefit payable to him under
the Salaried Plan. If Mr. Lauer remains in the employ of Oglebay Norton through
January 2, 2003 and receives maximum (i.e., $200,000) annual bonuses, the
aggregate retirement benefit under the Salaried Plan and the supplemental plan
will be the equivalent of an annual lifetime benefit of $38,250 per annum.
The Employment Agreement obligates Mr. Lauer to refrain from competing with
Oglebay Norton while he is employed by Oglebay Norton and for a period of two
years after his employment with Oglebay Norton is terminated.
OFFICER AGREEMENTS EFFECTIVE UPON "CHANGE IN CONTROL"
Oglebay Norton has entered into separate agreements (collectively, the
"Officer Agreements") with the executive officers listed in the Summary
Compensation Table set forth above. The Officer Agreements are designed to
retain these individuals and provide for continuity of management in the event
of any actual or
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<PAGE> 23
threatened "Change in Control" (as defined in the Officer Agreements) of Oglebay
Norton. None of the Officer Agreements will become effective unless, and until,
there is a Change in Control.
There are two "triggers" which apply to the Officer Agreements. The first
"trigger" requires that a "Change in Control" occur. Following a Change in
Control, the officer is entitled to continued employment at a compensation rate
equal to the greatest of that in effect (i) immediately before the Change in
Control, (ii) two years before the Change in Control, or (iii) such greater rate
determined by Oglebay Norton, plus continued participation in specified benefit
plans as an executive officer ("Contract Compensation"). The second "trigger" is
tripped if, following a Change in Control, the officer is terminated without
"Cause," or the officer terminates his employment for "Good Reason" (as defined
in the Officer Agreements). If the second "trigger" is tripped, then the officer
is entitled to receive Contract Compensation in lieu of employment, but only for
the longer of the time remaining in the original 30-month contract term
(following the Change in Control) or six months. Following employment
termination, the officer is obligated to endeavor to mitigate damages by seeking
comparable employment elsewhere and, to the extent the officer is successful,
Contract Compensation is reduced, dollar-for-dollar, for compensation and
benefits received from the subsequent employer. In addition, for as long as
Contract Compensation is received, the officer agrees neither to compete against
Oglebay Norton nor to disclose any of its trade secrets. Finally, Contract
Compensation under the Officer Agreements will be reduced if and to the extent
necessary to prevent any portion from being treated as excess parachute payments
under the Internal Revenue Code.
"POUR-OVER" AND IRREVOCABLE TRUSTS
Oglebay Norton has made commitments under various plans and agreements for
supplemental pension benefits, deferred and executive compensation arrangements,
and obligations arising in the event of a change in control, which it has not
been required to fund on a current basis (collectively, "Benefit Plans"). In
order to provide assurances that those commitments will be honored, Oglebay
Norton has established three trusts with independent trustees to fund those
Benefit Plan obligations in the event of a Change in Control (as defined in the
trust documents).
Irrevocable Trust Agreement I ("Trust I") exists to provide additional
assurances for benefits under a 1974 Supplemental Retirement Plan, all
participants of which have retired from Oglebay Norton. Irrevocable Trust
Agreement II ("Trust II") provides additional assurances for benefits and
payments due under the Excess Benefit Retirement Plan, the Supplemental Plan,
the Officer Agreements, the 1991 Executive Life Program and the 1996 Executive
Life Plan, pursuant to which Oglebay Norton pays life insurance premiums on
behalf of its executive officers.
The Oglebay Norton Company Pour-Over Trust ("Pour-Over Trust") provides
that in the event of a threatened Change in Control, Oglebay Norton shall
deposit in the Pour-Over Trust, on an irrevocable basis, 125% of the aggregate
unfunded obligations of such Benefit Plans subject to Trust I and Trust II. The
Pour-Over Trust becomes revocable if, following the threat, no Change in Control
occurs. If a Change in Control does occur, the Pour-Over Trust remains
irrevocable, and the assets in the Pour-Over Trust are transferred to Trusts I
and II. Although Oglebay Norton has contributed certain company-owned life
insurance policies to the trust held under Trust I, it has not contributed
significant assets to any of the three trusts, although Oglebay Norton has the
right to make additional discretionary contributions into the trusts. Assets
held in the trusts are subject at all times to claims of Oglebay Norton's
general creditors. If funds in the trusts are insufficient to pay amounts due
under a plan or agreement, Oglebay Norton remains obligated to pay those
amounts. No employee has any right to assets in the trusts until and to the
extent benefits are paid from the trusts.
LONG-TERM INCENTIVE PLAN
Oglebay Norton established its Long-Term Incentive Plan ("LTIP") on
December 18, 1995, which was approved by Stockholders at the 1996 Annual
Meeting. The Compensation Subcommittee administers the LTIP and selects those
officers and other key employees to participate in the plan. Participants are
eligible to defer a portion of their annual incentive award or are eligible to
be granted awards under the LTIP, as determined by the Compensation
Subcommittee. Each of the named executive officers currently participates in the
LTIP. During
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years 1995 through 1997, the LTIP consisted of two programs, the "Annual
Incentive Deferral Program" and the "Long-Term Incentive Program." The Annual
Incentive Deferral Program will not be in effect for compensation earned in 1998
and thereafter.
Under the Annual Incentive Deferral Program, each participant is able to
defer all or a portion (as determined by the Compensation Subcommittee) of any
incentive award payable under Oglebay Norton's Annual Incentive Plan. The
deferred amounts are converted into "share units" based upon the fair market
value of the shares of Common Stock of Oglebay Norton on the date of deferral.
Oglebay Norton will make a matching contribution to the participant's deferred
incentive award in an amount determined by the Compensation Subcommittee. For
amounts deferred for 1997, Oglebay Norton's match was 50% of the portion of each
participant's annual incentive award for 1997. An amount equal to dividends paid
on the shares of Common Stock of Oglebay Norton is also credited to the
participant's deferral account and Oglebay Norton match and is also converted
into share units based upon the fair market value of the shares of Common Stock
of Oglebay Norton on the dividend payment date. All annual incentive award
deferrals (and related dividends) are one hundred percent (100%) vested at all
times. Matching contributions (and related dividends) are vested on the fifth
anniversary of the date they are allocated to a participant's account, assuming
the employee has been in continuous service with Oglebay Norton for the entire
five-year period. Prior to the fifth anniversary of a particular allocation, a
matching contribution may become one hundred percent (100%) vested upon the
occurrence of certain events, including, without limitation, a participant's
early retirement or disability or a "Change of Control" (as defined in the
LTIP). All distributions under the LTIP are made in shares of Common Stock of
Oglebay Norton. Distributions of vested amounts are made upon a participant's
retirement, death or other termination of employment, upon a "Change in Control"
(as defined in the LTIP), or upon any other event deemed appropriate by the
Compensation Subcommittee. A participant may elect an in-service withdrawal of
all or a portion of his incentive award deferrals (and related dividends),
provided that the withdrawn deferrals have been allocated to the participant's
account for at least a five-year period prior to the withdrawal. However, upon
taking such an in-service withdrawal, all of the participant's matching
contributions are immediately forfeited. As noted above, the Annual Incentive
Deferral Program of the LTIP is no longer in effect for compensation earned in
1998 and thereafter.
The LTIP also provides for awards by the Compensation Subcommittee,
including a grant of options (which may be "incentive stock options" within the
meaning of Section 422 of the Internal Revenue Code, or nonqualified options),
stock appreciation rights, restricted stock and performance awards
(collectively, the "Incentive Awards"). The Compensation Subcommittee has the
discretion to set performance objectives as it deems appropriate respecting any
performance awards or restricted stock grants. The performance objectives may
vary from participant to participant and between groups of participants and will
be based upon such company, business unit and/or individual performance factors
and criteria as the Compensation Subcommittee may deem appropriate. As discussed
above under the heading "COMPENSATION OF EXECUTIVE OFFICERS -- Stock Option
Grants in 1997," on October 29, 1997, Oglebay Norton granted stock options to
certain of its executive officers and key employees under the LTIP.
The Compensation Subcommittee also has the authority, in its discretion, to
provide at the time of grant of any award under the LTIP, that the terms of the
grant or date on which an award vests or becomes exercisable may be modified in
the event of a change of control, as defined under the LTIP.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Malvin E. Bank, formerly a member of the Compensation and Organization
Committee of Oglebay Norton, is a partner of the law firm of Thompson Hine &
Flory LLP, Cleveland, Ohio, which provided legal services to Oglebay Norton in
1997 and continues to provide such services in 1998. Mr. Bank has not served on
the Compensation and Organization Committee since April 30, 1997.
Mr. Bersticker serves on the Compensation and Organization Committee of
Oglebay Norton, and is the Chairman and Chief Executive Officer of Ferro
Corporation. As discussed in the immediately following section, a wholly-owned
subsidiary of Oglebay Norton sells to, and purchases from, Ferro Corporation
various items in the
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<PAGE> 25
ordinary course of business pursuant to arm's length negotiations. Mr.
Bersticker is not a member of the Compensation Subcommittee.
RELATED PARTY TRANSACTIONS
Oglebay Norton Industrial Sands, Inc. ("ONIS"), a wholly-owned subsidiary
of Oglebay Norton, sells ground silica to, and purchases heavy density grinding
media and ceramic mill lining from, Ferro Corporation. Mr. Bersticker is
Chairman of the Board and Chief Executive Officer of Ferro Corporation. During
the year ended December 31, 1997, total sales to and purchases from Ferro
Corporation by ONIS were $627,603 and $528,067, respectively. These transactions
were entered into by ONIS pursuant to arm's length negotiations in the ordinary
course of business and on terms that Oglebay Norton believes to be fair.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Based on the records and information of Oglebay Norton, Oglebay Norton
believes that all Securities and Exchange Commission filing requirements
applicable to directors and executive officers under Section 16(a) of the
Securities Exchange Act of 1934, as amended, for 1997 were met.
INDEPENDENT AUDITORS
A representative of Ernst & Young LLP, the independent auditor of Oglebay
Norton for the year ended December 31, 1997, is expected to be present at the
Annual Meeting and will have the opportunity to make a statement if the
representative desires to do so and to respond to appropriate questions with
respect to the firm's examination of the consolidated financial statements and
records of Oglebay Norton for the year ended December 31, 1997. The Board of
Directors of Oglebay Norton has not yet considered the appointment of
independent auditors for the year ending December 31, 1998.
FINANCIAL STATEMENTS
Oglebay Norton's Annual Report for the year ended December 31, 1997 (the
"Annual Report"), including financial statements for such year, was mailed to
stockholders on May 1, 1998. Stockholders as of the Record Date who were not
stockholders as of the record date for the previous mailing will be provided
with a copy of the Annual Report with this Proxy Statement. Stockholders may
obtain a copy of Oglebay Norton's Annual Report on Form 10-K as filed with the
Securities and Exchange Commission free of charge upon oral or written request
to the Corporate Secretary, Oglebay Norton Company, 1100 Superior Avenue,
Cleveland, Ohio 44114-2598, Telephone Number (216) 861-3300.
1999 ANNUAL MEETING
The 1999 Annual Meeting of Stockholders of Oglebay Norton is presently
scheduled to be held on April 28, 1999. The deadline for stockholders to submit
proposals to be considered for inclusion in the proxy statement for that meeting
is November 25, 1998.
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OTHER MATTERS
The management of Oglebay Norton does not know of any business to be acted
upon at the Annual Meeting other than the matters described above, but if any
other matter properly comes before the Annual Meeting, the persons named on the
enclosed Proxy card will vote thereon in accordance with their best judgment.
Stockholders are urged to sign and return their proxies without delay.
By Order of the
Board of Directors
/s/ David H. Kelsey
David H. Kelsey
Vice President and
Chief Financial Officer
July 2, 1998
24
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EXHIBIT A
OGLEBAY NORTON COMPANY
DIRECTOR FEE DEFERRAL PLAN
ARTICLE I
ESTABLISHMENT OF PLAN, PURPOSE, SHARES AUTHORIZED
SECTION 1.1 ESTABLISHMENT OF PLAN. This Oglebay Norton Company Director Fee
Deferral Plan (the "Plan") is established effective as of February 1, 1998,
subject to approval by its Stockholders at its 1998 Annual Meeting of
Stockholders.
SECTION 1.2 PURPOSE. The Plan is intended to attract and retain qualified
individuals to serve as Directors of the Company by offering them the
opportunity to defer some or all of the Fees earned by them for services as a
Director of the Company.
SECTION 1.3 SHARES AUTHORIZED. The aggregate number of shares of Common
Stock of the Company that may be issued and distributed under the Plan shall be
100,000 shares, subject to adjustment as, provided in Section 7.5, which may be
authorized and unissued shares, treasury shares, or shares acquired on the open
market specifically for distribution under the Plan, as the Board of Directors
may from time to time determine.
ARTICLE II
DEFINITIONS
For purposes of the Plan, the following terms, when used with initial
capital letters, shall have the meanings as set forth below:
"Account" means the bookkeeping account established by the Company for a
Participant who elects to defer any portion of his Fees pursuant to the Plan.
"Board" means the Board of Directors of the Company.
"Committee" means the Committee authorized by the Board to administer the
Plan.
"Common Stock" or "Stock" means common stock, one dollar ($1.00) par value
per share, of the Company.
"Company" means Oglebay Norton Company, a corporation organized under the
laws of the State of Delaware, or any successor organization.
"Deferred Cash" means Deferred Fees that are credited with interest based
on the Prime Rate in accordance with Section 4.5.
"Deferred Compensation Election" means a written election delivered to the
Company pursuant to which a Participant elects to defer Fees under the Plan.
"Deferred Fee" means any portion of Fees deferred pursuant to the Plan.
"Designated Beneficiary" means one or more beneficiaries designated by the
Participant in accordance with Section 7.2.
"Fair Market Value," with respect to a share of Stock as of any given day,
means the last reported closing price for a share of Stock on the National
Association of Securities Dealers Automated Quotation System ("NASDAQ") for that
day or, if there was no sale of Stock so reported for that day, on the most
recently preceding day on which there was such a sale. If the Stock is not
listed or admitted to trading on NASDAQ on any given day, the Fair Market Value
on that day will be as determined by the Committee.
"Fees" means any and all compensation payable, but for an election made
under the Plan, to a Participant in the form of cash for services as a Director
of the Company.
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<PAGE> 28
"Matching Contributions" mean the additional Share Units credited by the
Company to the Account of a Participant who (i) elects to defer a portion of his
Fees in the form of Share Units, or (ii) elects to defer a portion of dividend
equivalents attributable to Share Units as provided in Section 4.03.
"Participant" means a Director who is or hereafter becomes eligible to
participate in the Plan and does participate by electing, in the manner
specified herein, to defer Fees pursuant to the Plan.
"Prime Rate" means the Prime Rate as reported in The Wall Street Journal in
effect as of the date of each Annual Meeting of Stockholders.
"Share Units" mean Deferred Fees that are converted into share units in
accordance with Section 4.3.
"Termination of Service" means an individual's termination of service as a
Director for any reason whatsoever.
ARTICLE III
ELIGIBILITY AND PARTICIPATION
SECTION 3.1 ELIGIBILITY AND PARTICIPATION. Any Director of the Company who
is not employed by the Company shall be eligible to participate under the Plan
and will become a Participant upon submission to the Company of a properly
completed and executed Deferred Compensation Election.
SECTION 3.2 DEFERRAL OPTIONS. For the period beginning February 1, 1998 and
ending December 31, 1998, and each calendar year thereafter, a Participant may
elect to defer the receipt of all or part of his or her Fees (in ten-percent
increments) in the form of Share Units or Deferred Cash. Once a Participant has
made an effective election, he may not thereafter change that election or change
any allocation between Share Units or Deferred Cash with respect to such
calendar year.
SECTION 3.3 ELECTION DEADLINE. To be in effect, a Participant's election
must be completed, signed and filed with the Secretary of the Company on or
before such date as is necessary to defer inclusion of the Fees in the
Director's gross income for Federal income tax purposes.
ARTICLE IV
DEFERRED FEES
SECTION 4.1 CREDITING OF DEFERRED FEES. Deferred Fees shall be credited to
the Participant's Account on the dates the Fees would have been paid to the
Participant if there had been no valid deferral election.
SECTION 4.2 DEFERRAL PERIODS. Payment of the amount of Fees allocated to
Share Units or Deferred Cash will be deferred to Termination of Service. Such
Fees shall be credited to the Participant on the date such amounts would have
been paid to him if there had been no valid deferral election.
SECTION 4.3 SHARE UNITS. Fees deferred in the form of Share Units shall be
converted into that number of Share Units equal to the amount of the Fees being
deferred divided by the Fair Market Value of one share of Stock on the date the
Fees are credited to the Participant's Account. On each Company Stock dividend
payment date, dividend equivalents equal to the actual Company Stock dividends
shall either, based upon the written election of the Participant, (i) be
credited to the Share Units in the Participant's Account, and shall in turn be
converted into Share Units based upon the Fair Market Value of the Stock on that
date, or (ii) be paid to the Participant in cash.
SECTION 4.4 MATCHING CONTRIBUTION. The Company shall credit to the
Participant's Account in the form of additional Share Units (a) at the time the
Fees are credited to the Account a Matching Contribution equal to twenty-five
percent (25%) of the Deferred Fees credited in the form of Share Units, and (b)
at each Company Stock dividend payment date, to the extent the Participant has
elected to defer dividend equivalents in Share Units, a Matching Contribution
equal to twenty-five percent (25%) of the dividends deferred by the Participant
on that date.
A-2
<PAGE> 29
SECTION 4.5 DEFERRED CASH. Fees deferred as Deferred Cash shall be credited
with interest at the Prime Rate, compounded annually effective as of the end of
each calendar year, until distributed.
ARTICLE V
DISTRIBUTIONS
SECTION 5.1 TIMING. Following a Participant's Termination of Service, all
Share Units and Deferred Cash in the Participant's Account shall be distributed
in the manner described in Section 5.2. Such distributions shall be made or
commence as soon as administratively feasible following the event that entitles
the Participant to a distribution.
SECTION 5.2 FORM OF DISTRIBUTION. Any Share Units standing to the
Participant's credit shall be converted to the same number of common shares of
Stock for distribution to the Participant in a single distribution, except that
any fractional Share Units shall be paid in cash. Any Deferred Fees credited to
the Participant's Account in the form of Deferred Cash shall be automatically
distributed in three substantially equal annual installments of principal in the
form of cash, with interest continuing to accrue on the undistributed balance in
the Participant's Account.
ARTICLE VI
ADMINISTRATION, AMENDMENT AND TERMINATION
SECTION 6.1 ADMINISTRATION. The Plan shall be administered by the
Committee.
SECTION 6.2 AUTHORITY OF THE COMMITTEE. The Committee shall have the
authority to:
(a) interpret the terms and provisions of the Plan and any deferral
made hereunder (and any agreements relating thereto), and otherwise settle
all claims and disputes arising under the Plan;
(b) delegate responsibility and authority for the operation and
administration of the Plan, appoint employees and officers of the Company
to act on its behalf, and employ persons to assist in fulfilling its
responsibilities under the Plan; and
(c) adopt, alter and repeal such administrative rules, guidelines, and
practices governing the Plan as it shall, from time to time, deem
advisable, and otherwise supervise the administration of the Plan.
All decisions made by the Committee pursuant to the provisions of the Plan shall
be final and binding on all persons, including the Company and Participants.
SECTION 6.3 AMENDMENTS AND TERMINATION. The Board may amend, alter, or
discontinue the Plan at any time and from time to time, but no amendment,
termination, or discontinuation shall be made that would impair the rights of a
Participant with respect to any outstanding deferral under the Plan without the
Participant's consent, or that, without the approval of the Company's
stockholders, would (a) except as expressly provided in this Plan, increase the
total number of shares reserved for the purpose of the Plan; or (b) otherwise
cause the Plan to fail to satisfy the requirements of any applicable securities
or tax law or the applicable rules and regulations promulgated under NASDAQ.
SECTION 6.4 UNFUNDED STATUS OF PLAN. The Plan is intended to constitute an
"unfunded" plan for deferral of compensation. Payments shall be made from the
general funds of the Company, and the Company shall not be required to establish
or maintain any special or separate fund, to purchase or acquire life insurance
on a Participant's life, or otherwise to segregate assets to assure that such
payments shall be made, and neither a Participant nor Designated Beneficiary
shall have any interest in any particular assets of the Company by reason of its
obligations hereunder. With respect to any payments not yet made to a
Participant by the Company, nothing contained herein shall give any such
Participant any rights that are greater than those of a general creditor of the
Company. In its sole discretion, the Committee may authorize the creation of
trusts or other arrangements to meet the obligations created under the Plan to
deliver Stock or payments in lieu of or with respect to deferrals hereunder;
provided, however, that, unless the Committee otherwise determines with the
consent of the affected
A-3
<PAGE> 30
Participant, the existence of such trusts or other arrangements shall be
consistent with the "unfunded" status of the Plan.
ARTICLE VII
MISCELLANEOUS
SECTION 7.1 NON-ALIENATION OF BENEFITS. Subject to any federal statute to
the contrary, no right or benefit under the Plan shall be subject to
anticipation, alienation, sale, assignment, pledge, encumbrance, or charge, and
any attempt to anticipate, alienate, sell, assign, pledge, encumber, or charge
any right or benefit under the Plan shall be void. No right or benefit hereunder
shall in any manner be liable for or subject to the debts, contracts,
liabilities, or torts of the person entitled to such benefits. If a Participant
or a Designated Beneficiary (if entitled to benefits under the Plan) shall
become bankrupt, or attempt to anticipate, alienate, sell, assign, pledge,
encumber, or charge any right hereunder, then such right or benefit shall, in
the discretion of the Committee, cease and terminate, and in such event, the
Company may hold or apply the same or any part thereof for the benefit of the
Participant, Designated Beneficiary, or his spouse, children, or other
dependents, or any of them, in such manner and in such amounts and proportions
as the Committee may deem proper.
SECTION 7.2 DESIGNATION OF BENEFICIARY. A Participant may designate one or
more Designated Beneficiaries on a form prescribed by the Committee, to whom
payments otherwise due to or for the benefit of the Participant hereunder shall
be made in the event of his death prior to the commencement or completion of
benefit payments hereunder. In the event no such written designation is made by
a Participant or if no Designated Beneficiary shall be in existence at the time
of the Participant's death or if each Designated Beneficiary predeceases the
Participant, the estate of the Participant shall be his Designated Beneficiary.
SECTION 7.3 NO EMPLOYMENT AGREEMENT. The Plan shall not be deemed to
constitute a contract of employment between the Company and a Participant.
Neither shall the execution of the Plan nor any action taken by the Company
pursuant to the Plan be held or construed to confer on a Participant any legal
right to be continued as Director of the Company or in any other capacity with
the Company whatsoever; nor shall any provision herein restrict the right of any
Participant to resign as a Director.
SECTION 7.4 BINDING EFFECT. Obligations incurred by the Company pursuant to
the Plan shall be binding upon and inure to the benefit of the Company, its
successors and assigns, and the Participant or his Designated Beneficiary.
SECTION 7.5 ENTIRE PLAN This document and any amendments hereto contain
all the terms and provisions of the Plan and shall constitute the entire Plan,
any other alleged terms or provisions being of no effect.
SECTION 7.6 ADJUSTMENT UPON CHANGE IN COMMON STOCK. In the event of any
stock dividend, stock split, or share combination with respect to the Common
Stock or any reclassification, recapitalization, merger, consolidation, other
form of business combination, liquidation, or dissolution involving the Company
or any spin-off or other distribution to stockholders of the Company (other than
normal cash dividends), (a) the Committee shall make appropriate adjustments to
the maximum number of shares of Common Stock that may be issued under the Plan,
and (b) the Committee shall adjust the number and such other aspects of the
Share Units then outstanding as may be necessary and in such manner that the
benefits of Participants under all then outstanding Share Units shall be
maintained substantially as before the occurrence of such event. Any adjustment
so made by the Committee shall be conclusive and binding for all purposes of the
Plan as of such date as the Committee may determine.
ARTICLE VIII
CONSTRUCTION
SECTION 8.1 GOVERNING LAW. The Plan shall be construed and governed in
accordance with the laws of the State of Ohio.
A-4
<PAGE> 31
SECTION 8.2 GENDER. The masculine gender, where appearing in the Plan,
shall be deemed to include the feminine gender, and the singular may include the
plural, unless the context clearly indicates to the contrary.
* * *
EXECUTED at Cleveland, Ohio, effective as of the date described herein.
OGLEBAY NORTON COMPANY
By: /s/ Richard J. Kessler
----------------------------------
Richard J. Kessler
Vice President -- Finance &
Planning
By: /s/ Paul V. Gorman, Jr.
----------------------------------
Paul V. Gorman, Jr.
Assistant Vice President -- Human
Resources
A-5
<PAGE> 32
EXHIBIT B
OGLEBAY NORTON COMPANY
PERFORMANCE OPTION AGREEMENT
This Agreement between OGLEBAY NORTON COMPANY ("Oglebay") and JOHN LAUER
("Lauer") memorializes the grant made on December 17, 1997 by Oglebay's
Compensation Subcommittee to Lauer of a nonqualified stock option as
contemplated by the Employment Agreement entered into between Oglebay and Lauer
on that same date (the "Employment Agreement"). Capitalized terms used in this
Agreement and not otherwise defined have the meanings assigned to them in the
Employment Agreement.
1. GRANT OF OPTION. The Compensation Subcommittee hereby grants to Lauer,
as of December 17, 1997, an option (the "Performance Option") to purchase all or
any number of an aggregate of 380,174 shares of Oglebay Common Stock, $1.00 par
value ("Shares"), at an exercise price of $38.00 per Share (the "Exercise
Price"). (The Exercise Price is equal to the closing per Share sales price for
December 16, 1997 as reported on the National Association of Securities Dealers
Automated Quotation System ("NASDAQ") National Market plus $6.00 per Share.) The
Performance Option shall be a nonqualified stock option and shall not be treated
as an incentive stock option. The Performance Option is granted subject to
approval of Oglebay's shareholders, which approval will be sought at Oglebay's
1998 Annual Meeting of Shareholders.
2. TERM OF OPTION. Unless earlier terminated pursuant to any of Sections
6.1, 6.2, or 6.3, the Performance Option shall terminate at the close of
business on, and shall not be exercisable at any time after, June 30, 2005.
3. FULL VESTING IF LAUER REMAINS IN EMPLOY OF OGLEBAY THROUGH JANUARY 2,
2003. If Lauer remains in the employ of Oglebay through January 2, 2003, the
Performance Option, to the extent not previously exercised by Lauer, shall
remain exercisable thereafter through June 30, 2005.
4. EXERCISE OF OPTION.
4.1 First Exercise Date. Unless accelerated as provided in Section
6.1, the Performance Option will first become exercisable on January 1,
2001.
4.2 Exercise in Whole or in Part. Once exercisable, the Performance
Option may be exercised by Lauer in whole or in part (but not for any
fractional Shares) and from time to time until the expiration or
termination of the Performance Option.
4.3 Method of Exercise. The Performance Option will be exercisable by
delivery of (a) the Exercise Price (payable in accordance with Section
4.4), and (b) a written notice to Oglebay identifying this Agreement and
specifying the number of Shares as to which the Performance Option is being
exercised. Upon any exercise of the Performance Option, Lauer shall provide
Oglebay the means to satisfy Oglebay's withholding obligation in accordance
with Section 5. Oglebay shall deliver to Lauer certificates representing
the Performance Option Shares as soon as administratively feasible
following any exercise made in conformance with all of the terms of this
Agreement.
4.4 Payment for Shares. Upon exercise of the Performance Option, Lauer
shall pay the Exercise Price in cash or in such other form of consideration
as the Compensation Subcommittee may determine to be acceptable, including,
without limitation, (a) by delivery by Lauer (with the written notice of
election to exercise) of irrevocable instructions to a broker registered
under the Securities Exchange Act of 1934, as amended, to promptly deliver
to Oglebay the amount of sale or loan proceeds to pay the Exercise Price,
(b) in Shares (including through an attestation procedure) surrendered to
Oglebay, (c) by the surrender of all or part of the Performance Option, or
(d) by a combination of the foregoing methods, as and to the extent
permitted by the Compensation Subcommittee. Shares surrendered in
connection with the exercise of the Performance Option shall be valued at
their Fair Market Value on the date of exercise. Except as otherwise
determined by the Compensation Subcommittee, the term "Fair Market Value"
with respect to Shares means the closing sales price of Shares as reported
on NASDAQ National Market on the date for which the determination of fair
market value is made or, if there are no sales of Shares on that date, then
on the next
B-1
<PAGE> 33
preceding date on which there were any sales of Shares. If the Shares cease
to be traded on the NASDAQ National Market, the "Fair Market Value" of
Shares shall be determined in such similar manner as may be prescribed by
the Compensation Subcommittee.
5. WITHHOLDING OF TAXES. The Compensation Subcommittee may, in its
discretion, permit or require Lauer to satisfy, in whole or in part, any
applicable federal, state, and local withholding tax obligation that may arise
in connection with the acquisition of Shares pursuant to the Performance Option,
by such means as the Compensation Subcommittee may determine including, without
limitation, by having Oglebay hold back some portion of the Shares that would
otherwise be delivered pursuant to the Performance Option or by delivering to
Oglebay an amount equal to the withholding tax obligation arising with respect
to such acquisition in (a) cash, (b) Shares, or (c) such combination of cash and
Shares as the Compensation Subcommittee may determine. The Fair Market Value of
the Shares to be so held back by Oglebay or delivered by Lauer shall be
determined as of the date on which the obligation to withhold first arose.
Oglebay may apply the provisions of this Section 5 based upon generally
applicable withholding rates and without regard to any statutory minimum rate
applicable to special payments.
6. EFFECT OF TERMINATION OF LAUER'S EMPLOYMENT BEFORE JANUARY 2, 2003. The
provisions of this Section 6 shall apply only if the date on which Lauer's
employment with Oglebay terminates (the "Termination Date") occurs before
January 2, 2003.
6.1 Termination Without Cause, etc., Constructive Termination, or
Termination by Lauer after a Change of Control. If, before January 2, 2003,
Lauer's employment is terminated by Oglebay for any reason other than
Cause, disability, or death or Lauer is Constructively Terminated or Lauer
terminates his employment by notice to the Board of Directors within 90
days of the occurrence of a Change of Control, the Performance Option, (a)
to the extent not already exercisable, will become immediately exercisable,
(b) will remain exercisable through January 2, 2004, and (c) will be
terminated at the close of business on January 2, 2004.
6.2 Termination by Death or Disability. If, before January 2, 2003,
Lauer's employment with Oglebay is terminated by his death or by Oglebay on
account of Lauer's disability:
(a) if the Termination Date occurs before January 1, 2001, the
Performance Option will be terminated as of the Termination Date; and
(b) if the Termination Date occurs after December 31, 2000, the
Performance Option, to the extent not previously exercised, will remain
exercisable for a period of one year after the Termination Date and will
be terminated at the close of business on the first anniversary of the
Termination Date.
6.3 Termination for Cause or Voluntarily by Lauer. If, before January
2, 2003, Lauer's employment is terminated by Oglebay for Cause or by Lauer
other than as a result of a Constructive Termination, the Performance
Option will be terminated as of the Termination Date.
7. TRANSFERABILITY. The Performance Option may not be transferred by Lauer
other than by will or by the laws of descent and distribution. During Lauer's
lifetime, only Lauer himself (or, in the case of his incapacity, his attorney in
fact or legal guardian) may exercise the Performance Option.
8. ADJUSTMENT UPON CHANGES IN SHARES. In the event of any stock dividend,
stock split, or share combination of the Shares or any reclassification,
recapitalization, merger, consolidation, other form of business combination,
liquidation, or dissolution involving Oglebay or any spin-off or other
distribution to shareholders of Oglebay (other than normal cash dividends), the
Compensation Subcommittee shall adjust the number and kind of shares subject to,
the price per share under, and the terms and conditions of the Performance
Option to the extent necessary and in such manner that the benefits to Lauer
under the Performance Option shall be maintained substantially as before the
occurrence of that event. Any adjustment so made by the Compensation
Subcommittee shall be conclusive and binding for all purposes of this Agreement
as of such date as the Compensation Subcommittee may determine.
B-2
<PAGE> 34
9. ADMINISTRATION. The Compensation Subcommittee shall have the authority
to make all determinations necessary for the administration of this Agreement.
The construction and interpretation by the Compensation Subcommittee of any
provision of this Agreement and any determination made by the Compensation
Subcommittee pursuant to any provision hereof shall be final and conclusive. No
member or alternate member of the Committee shall be liable for any action or
determination made in good faith. The Compensation Subcommittee may authorize
any one or more members of the Compensation Subcommittee or any officer of
Oglebay to execute and deliver documents on behalf of the Compensation
Subcommittee and the Compensation Subcommittee may delegate to one or more
employees, agents, or officers of Oglebay, or to one or more third party
consultants, accountants, lawyers, or other advisors, such ministerial duties
related to the operation of the Agreement as it may deem appropriate.
10. MISCELLANEOUS. Nothing contained in this Agreement shall be understood
as conferring on Lauer any right to continue as an employee of Oglebay or any
affiliate. This Agreement shall be governed by and construed in accordance with
the laws of the State of Ohio. This Agreement shall inure to the benefit of and
be binding upon its parties and their respective heirs, executors,
administrators, successors, and assigns, but the Performance Option shall not be
transferable by Lauer other than as provided in Section 7.
IN WITNESS WHEREOF, Oglebay has caused this Agreement to be executed on its
behalf by its duly authorized Chairman of the Compensation Subcommittee, and
Lauer has hereunto set his hand, all as of the day and year first written above.
OGLEBAY NORTON COMPANY
By /s/ JOHN D. WEIL
--------------------------------------
John D. Weil, Chairman, Compensation
Subcommittee
/s/ JOHN LAUER
--------------------------------------
John Lauer
B-3
<PAGE> 35
Oglebay Logo
<PAGE> 36
DETACH CARD
- --------------------------------------------------------------------------------
OGLEBAY NORTON COMPANY -- PROXY
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON JULY 29, 1998
At the Annual Meeting of Stockholders of Oglebay Norton Company to be held at
10:00 a.m. on JULY 29, 1998, at Ciao Cucina, Cleveland Playhouse Square, 1515
Euclid Avenue, Cleveland, Ohio, and at any adjournment thereof, Brent D. Baird,
John N. Lauer and William G. Pryor, and each of them, with full power of
substitution (the "Proxy Committee"), are hereby authorized to represent me and
to vote my shares on the following:
<TABLE>
<C> <S> <C>
1. Approve the Oglebay Norton Company Director Fee
Deferral Plan FOR [ ] AGAINST [ ] ABSTAIN [ ]
2. Approve the Performance Option Agreement with
Mr. John N. Lauer FOR [ ] AGAINST [ ] ABSTAIN [ ]
3. Electing three directors to serve for three-year terms expiring in 2001. The nominees of the Board of Directors
are: Malvin E. Bank, William G. Bares and John D. Weil. In the event of the unavailability of any of the
nominees, such other person(s) as the Board of Directors may recommend.
FOR all nominees listed below [ ] WITHHOLD AUTHORITY [ ]
(except as indicated to the contrary below) to vote for all nominees listed below
Malvin E. Bank, William G. Bares and John D. Weil
INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ONE OR MORE NOMINEES WRITE THE NAME OF SUCH NOMINEE(S) IN THE
SPACE PROVIDED BELOW.
----------------------------------------------------------------------------------------------------------------
4. Any other business which may properly come before the Annual Meeting and all adjournments thereof, in accordance
with the judgment of the Proxy Committee on such business.
(CONTINUED, AND TO BE SIGNED ON OTHER SIDE)
</TABLE>
<PAGE> 37
DETACH CARD
- --------------------------------------------------------------------------------
PROXY NO. SHARES
(Continued from the other side)
<TABLE>
<C> <S> <C>
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY THE STOCKHOLDERS SIGNING BELOW. IF
NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR APPROVAL OF THE OGLEBAY NORTON COMPANY DIRECTOR FEE DEFERRAL PLAN,
FOR APPROVAL OF THE PERFORMANCE OPTION AGREEMENT WITH MR. JOHN N. LAUER AND FOR THE ELECTION OF THE NOMINEES FOR
DIRECTORS LISTED ABOVE.
</TABLE>
Dated , 1998
----------------
---------------------------
Signature
---------------------------
Signature
NOTE: Please sign exactly
as name appears hereon.
Joint owners should each
sign. When signing as
attorney, executor,
administrator, trustee or
guardian, please give full
title as such.
CHANGE OF ADDRESS:
Please indicate change of
address below:
---------------------------
---------------------------
---------------------------
PLEASE SIGN, DATE AND RETURN THIS PROXY FORM PROMPTLY
<PAGE> 38
DETACH CARD
- --------------------------------------------------------------------------------
OGLEBAY NORTON COMPANY -- VOTING INSTRUCTIONS
EMPLOYEE STOCK OWNERSHIP PLAN
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON JULY 29, 1998
TO: NATIONAL CITY BANK, TRUSTEE (THE "TRUSTEE") UNDER TRUST AGREEMENT FOR
OGLEBAY NORTON COMPANY EMPLOYEE STOCK OWNERSHIP PLAN AND TRUST, AS AMENDED
(THE "PLAN")
Pursuant to Article VI, Section 6.6 of the Plan, the undersigned, as a
Participant or Beneficiary under the Plan, hereby instructs the Trustee to vote
(in person or by proxy) all allocated shares of Common Stock of Oglebay Norton
Company held in the General Fund under the Plan on the undersigned's behalf on
the record date ("Shares") in the following manner:
1. Approve the Oglebay Norton Company Director Fee Deferral Plan.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
2. Approve the Performance Option Agreement with Mr. John N. Lauer.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
3. Electing three directors to serve for three-year terms expiring in 2001. The
nominees of the Board of Directors are: Malvin E. Bank, William G. Bares and
John D. Weil. In the event of the unavailability of any of the nominees, such
other person(s) as the Board of Directors may recommend.
<TABLE>
<S> <C>
Election of Directors
FOR all nominees listed below [ ] WITHHOLD AUTHORITY [ ]
(except as indicated to the contrary below) to vote for all nominees listed below
</TABLE>
Malvin E. Bank, William G. Bares, John D. Weil
INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ONE OR MORE NOMINEES WRITE THE
NAME OF SUCH NOMINEE(S) IN THE SPACE PROVIDED BELOW
- --------------------------------------------------------------------------------
4. Any other business which may properly come before the Annual Meeting and all
adjournments thereof, in accordance with the judgment of the Trustee.
(CONTINUED, AND TO BE SIGNED ON OTHER SIDE)
<PAGE> 39
DETACH CARD
- --------------------------------------------------------------------------------
(Continued from the other side)
I UNDERSTAND THAT, UNLESS OTHERWISE SPECIFIED BELOW, THE SHARES HELD ON MY
BEHALF UNDER THE PLAN WILL BE VOTED FOR APPROVAL OF THE DIRECTOR FEE DEFERRAL
PLAN, FOR APPROVAL OF THE PERFORMANCE OPTION AGREEMENT WITH MR. JOHN N. LAUER
AND FOR THE ELECTION OF NOMINEES FOR DIRECTORS LISTED ABOVE.
YOU MUST SIGN THESE INSTRUCTIONS PROMPTLY AND RETURN THEM TO THE TRUSTEE IN THE
ENCLOSED ENVELOPE TO DIRECT THE VOTING OF THE SHARES HELD ON YOUR BEHALF UNDER
THE PLAN.
Dated
---------------------------------------------------------------------------
, 1998
---------------------------
Signature
