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SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/X/ Preliminary Proxy Statement
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
ASHLAND OIL, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
BOARD OF DIRECTORS OF ASHLAND OIL, INC.
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2)
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3)
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and 0-11
1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:*
------------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
* Set forth the amount on which the filing fee is calculated and state how it
was determined.
/ / 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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Ashland Oil, Inc.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JANUARY 26, 1995
TO OUR SHAREHOLDERS:
The Annual Meeting of Shareholders of Ashland Oil, Inc., a Kentucky
corporation ("Ashland"), will be held on Thursday, January 26, 1995, at 10:30
A.M., Eastern Standard Time, at the Ashland Petroleum Executive Office Building,
2000 Ashland Drive, Russell, Kentucky, and at any adjournment thereof, for the
purpose of acting upon the following matters as well as such other business as
may properly come before the Annual Meeting or any adjournment thereof:
(1) to elect six directors to Class III;
(2) to ratify the appointment of Ernst & Young as independent auditors
for fiscal year 1995;
(3) to amend Ashland's Second Restated Articles of Incorporation to
change Ashland's name to Ashland Inc.
(4) to approve the 1995 Performance Unit Plan (copy attached as Exhibit
A);
(5) to approve the Incentive Compensation Plan for Key Executives (copy
attached as Exhibit B);
(6) to approve the Deferred Compensation Plan (copy attached as Exhibit
C); and
(7) if presented at the Annual Meeting, to act upon a shareholder
proposal to request the Board of Directors to take steps necessary to
require that at future elections of directors all directors be elected
annually.
Only shareholders of record at the close of business on November 28, 1994
will be entitled to vote at the Annual Meeting or any adjournment thereof.
In order that your stock may be represented at the Annual Meeting, please
date and sign the enclosed proxy card and return it promptly in the accompanying
envelope. If you attend the Annual Meeting, you may vote in person even though
you have previously sent in your proxy card.
By Order of the Board of Directors,
THOMAS L. FEAZELL,
SENIOR VICE PRESIDENT,
GENERAL COUNSEL
AND SECRETARY
Russell, Kentucky
December 5, 1994
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Ashland Oil, Inc.
PROXY STATEMENT
FOR
ANNUAL MEETING OF SHAREHOLDERS
JANUARY 26, 1995
This Proxy Statement is furnished in connection with the solicitation by the
Board of Directors of Ashland Oil, Inc. ("Ashland" or the "Company") of proxies
to be voted at the Annual Meeting of Shareholders to be held on Thursday,
January 26, 1995, at 10:30 A.M., Eastern Standard Time, at the Ashland Petroleum
Executive Office Building, 2000 Ashland Drive, Russell, Kentucky, and at any
adjournment thereof, for the purposes set forth in the accompanying Notice. It
is expected that this Proxy Statement and the accompanying proxy card will be
mailed to shareholders commencing on or about December 5, 1994.
Only the holders of Ashland's Common Stock of record at the close of
business on November 28, 1994 will be entitled to vote at the Annual Meeting. At
that date there were shares of Ashland Common Stock outstanding. Each
shareholder is entitled to one vote for each share of Ashland Common Stock held
by him or her on the record date. Cumulative voting applies in the election of
directors. Under cumulative voting, a shareholder may multiply the number of
shares owned by the number of directors to be elected and cast this total number
of votes for any one nominee or distribute the total number of votes, in any
proportion, among as many nominees as the shareholder desires. The presence in
person or by proxy of shareholders holding a majority of the shares of Ashland
Common Stock will constitute a quorum for the transaction of business at the
Annual Meeting. Abstentions and broker non-votes will be included in the
computation of the number of shares of Ashland Common Stock that are present for
purposes of determining the presence of a quorum.
Whole shares of Ashland Common Stock credited to the account of a
participant in Ashland's Dividend Reinvestment Plan will be voted in accordance
with the proxy card returned by the participant to Ashland. The voting of shares
of Ashland Common Stock under Ashland's employee benefit plans is discussed
under "Stock Ownership of Certain Persons."
Ashland's address is Ashland Oil, Inc., 1000 Ashland Drive, Russell,
Kentucky 41169.
ITEM I. ELECTION OF DIRECTORS
The Board of Directors currently consists of seventeen directors, divided
into three classes. The number of directors to be elected at the 1995 Annual
Meeting is fixed at six. The directors who are nominated for election as Class
III directors by the shareholders at the 1995 Annual Meeting are Messrs.
Blanton, Butler, Fitzgerald, Hall, Jackson and Vandeveer.
All the nominees were recommended by the Nominating Committee of the Board
for election. All nominees with the exception of Mr. Jackson were elected by the
shareholders at the 1992 Annual Meeting for a three-year term. Mr. Jackson was
elected by the Board of Directors on May 19, 1994 to fill a vacancy on the
Board. With the exception of Messrs. Vandeveer and Fitzgerald, the nominees, if
elected, will hold office for a three-year term expiring in 1998. Under the
Board's current retirement policy, it is anticipated that Messrs. Vandeveer and
Fitzgerald will retire after serving one and two years, respectively, of their
three-year terms. Under Ashland's By-laws, a director elected to fill a vacancy
on the Board serves until the next annual meeting of shareholders and until his
or her successor has been elected and qualified.
Shareholders voting at the Annual Meeting may not vote for more than the
number of nominees listed in the Proxy Statement. Under Ashland's By-laws, those
nominees receiving the greatest number of votes, up to the number of directors
to be elected, shall be elected directors. It is the intention of the persons
named in the enclosed proxy card (Messrs. John R. Hall and Paul W. Chellgren),
unless otherwise instructed in any form of proxy, to vote FOR the election of
the six nominees. Such persons may also vote
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such shares cumulatively for less than the entire number of nominees if any
situation arises which, in the opinion of the proxy holders, makes such action
necessary or desirable. The Nominating Committee of the Board has no reason to
believe that any of the nominees will not be available for election as
directors.
NOMINEES FOR CLASS III DIRECTORS
(Term expiring in 1998)
<TABLE>
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JACK S. BLANTON
(PHOTO) Mr. Blanton, 67, is Chairman of the Board of Houston Endowment, Inc.
and President of Eddy Refining Company in Houston, Texas. He is a
Director of Baker Hughes Incorporated, Burlington Northern, Inc., Pogo
Producing Co., Southwestern Bell Corporation and Texas Commerce
Bancshares, Inc. He has served as a Director of Ashland since 1988 and
is Chairman of the Audit Committee and a member of the Public Policy -
Environmental Committee of the Board of Directors.
SHARES OF ASHLAND COMMON STOCK OWNED
BENEFICIALLY.............................................. 28,396(1)(2)
SAMUEL C. BUTLER
(PHOTO) Mr. Butler, 64, is a Partner of Cravath, Swaine & Moore, Attorneys in
New York, New York. He is a Director of GEICO Corporation, Millipore
Corporation and United States Trust Corporation. He has served as a
Director of Ashland since 1970 and is a member of the Personnel and
Compensation Committee and Audit Committee of the Board of Directors.
SHARES OF ASHLAND COMMON STOCK OWNED
BENEFICIALLY.......................................7,909(1)(2)(3)(4)(5)
COMMON STOCK UNITS............................................28,320(6)
EDMUND B. FITZGERALD
(PHOTO) Mr. Fitzgerald, 68, is the Managing Director of Woodmont Associates in
Nashville, Tennessee. From 1985 to 1990, he served as Chairman of the
Board of Directors and Chief Executive Officer of Northern Telecom Ltd.
He is a Director of Becton, Dickinson & Co. and G.T.I. Corporation. He
has served as a Director of Ashland since 1990 and is a member of the
Audit and Finance Committees of the Board of Directors.
SHARES OF ASHLAND COMMON STOCK OWNED
BENEFICIALLY................................................5,000(1)(7)
</TABLE>
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<TABLE>
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JOHN R. HALL
(PHOTO) Mr. Hall, 62, is Chairman of the Board of Directors and Chief Executive
Officer of Ashland, positions he has held since 1981. He is a Director
of Banc One Corporation, The Canada Life Assurance Company, CSX
Corporation, Humana Corporation and Reynolds Metals Company and is a
member of the American Petroleum Institute Executive Committee. He has
served as a Director of Ashland since 1968.
SHARES OF ASHLAND COMMON STOCK OWNED
BENEFICIALLY............................................. (1)(4)(8)
MANNIE L. JACKSON
(PHOTO) Mr. Jackson, 54, recently retired as Corporate Officer and Senior Vice
President of marketing and administration for Honeywell Inc. He will
remain a consultant with Honeywell, Advisor to the Chairman, and a
member of Honeywell's Southern Africa subsidiary's Board of Directors.
He is majority owner and Chairman of the Harlem Globetrotters,
International. He serves on the Board of Advisors of Florida A&M's
Entrepreneurial Development Center, Howard University Business School
and the Humphrey Institute at the University of Minnesota. He is a
Director of Jostens, Inc. He has served as a Director of Ashland since
May 1994 and is a member of the Audit and Public Policy - Environmental
Committees of the Board of Directors.
SHARES OF ASHLAND COMMON STOCK OWNED
BENEFICIALLY..................................................1,000 (7)
COMMON STOCK UNITS...............................................483(6)
JAMES W. VANDEVEER
(PHOTO) Mr. Vandeveer, 69, is an oil and gas producer in Dallas, Texas. He is
Chairman of the Board of Directors of Vantex Enterprises, Inc. and a
Director of Peak National Bank. He has served as a Director of Ashland
since 1964 and is a member of the Nominating and Finance Committees of
the Board of Directors.
SHARES OF ASHLAND COMMON STOCK OWNED
BENEFICIALLY.........................................15,832(1)(2)(4)(9)
COMMON STOCK UNITS............................................44,175(6)
</TABLE>
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CONTINUING CLASS I DIRECTORS
(Term expiring in 1996)
<TABLE>
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THOMAS E. BOLGER
(PHOTO) Mr. Bolger, 67, is a Director and Chairman of the Executive Committee
of the Board of Directors of Bell Atlantic Corporation, Philadelphia,
Pennsylvania. He also served as Chairman of the Board of Directors of
that company from 1984 to 1989. He is a Trustee of The National
Geographic Society. He has served as a Director of Ashland since 1987
and is Chairman of the Personnel and Compensation Committee and a
member of the Finance Committee of the Board of Directors.
SHARES OF ASHLAND COMMON STOCK OWNED
BENEFICIALLY................................................4,200(1)(2)
COMMON STOCK UNITS............................................12,391(6)
FRANK C. CARLUCCI
(PHOTO) Mr. Carlucci, 64, is Chairman of The Carlyle Group in Washington, D.C.
He was Secretary of Defense of the United States of America from 1987
to 1989. He is a Director of Bell Atlantic Corporation, CB Commercial
Real Estate Group, Inc., Connecticut Mutual Life Insurance Company,
General Dynamics Corporation, Kaman Corporation, Neurogen Corporation,
Northern Telecom Ltd., Quaker Oats Company, SunResorts, Ltd., Texas
Biotechnology Corporation, Upjohn Company and Westinghouse Electric
Corporation. He has served as a Director of Ashland since 1989 and is
Chairman of the Nominating Committee and a member of the Personnel and
Compensation Committee of the Board of Directors.
SHARES OF ASHLAND COMMON STOCK OWNED
BENEFICIALLY.............................................3,391(1)(2)(5)
COMMON STOCK UNITS.............................................8,363(6)
JAMES B. FARLEY
(PHOTO) Mr. Farley, 64, is the retired Chairman of Mutual Of New York, a
position held from 1989 until early 1993. Previously he had been
President of that company from 1988 to 1990. He is presently a Trustee
of Mutual of New York and a Director of The Promus Companies,
Incorporated. He has served as a Director of Ashland since 1984 and is
a member of the Nominating and Public Policy - Environmental Committees
of the Board of Directors.
SHARES OF ASHLAND COMMON STOCK OWNED
BENEFICIALLY................................................3,400(1)(2)
COMMON STOCK UNITS.............................................3,690(6)
</TABLE>
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<TABLE>
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JAMES R. RINEHART
(PHOTO) Mr. Rinehart, 64, is a business and labor consultant in Hiram, Ohio.
From 1987 to 1988 he served as Executive Vice President of Hiram
College. He previously served as the Chairman of the Board of
Directors, President and Chief Executive Officer of Clark Equipment
Company from 1981 to 1986. He has served as a Director of Ashland since
1985 and is a member of the Finance and Nominating Committees of the
Board of Directors.
SHARES OF ASHLAND COMMON STOCK OWNED
BENEFICIALLY................................................3,200(1)(2)
W. L. ROUSE, JR.
(PHOTO) Mr. Rouse, 62, is an investor in Lexington, Kentucky. He served as
Chairman of the Board of Directors, President and Chief Executive
Officer of First Security Corporation in Lexington, Kentucky from 1982
to 1992. He is a Director of Kentucky American Water Company and K.U.
Energy. He is a member of the Audit and Nominating Committees of the
Board of Directors.
SHARES OF ASHLAND COMMON STOCK OWNED
BENEFICIALLY............................................6,000(1)(2)(10)
COMMON STOCK UNITS.............................................9,927(6)
</TABLE>
CONTINUING CLASS II DIRECTORS
(Term expiring in 1997)
<TABLE>
<S> <C>
PAUL W. CHELLGREN
(PHOTO) Mr. Chellgren, 51, is President and Chief Operating Officer of Ashland,
positions he has held since 1992. He held the positions of Senior Vice
President and Chief Financial Officer of Ashland from 1988 to 1992 and
Group Operating Officer from 1980 to 1988. He is a Director of Ashland
Coal, Inc. He has served as a Director of Ashland since 1992 and is a
member of the Finance and Public Policy - Environmental Committees of
the Board of Directors.
SHARES OF ASHLAND COMMON STOCK OWNED
BENEFICIALLY................................................ (1)(8)
</TABLE>
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<S> <C>
RALPH E. GOMORY
(PHOTO) Mr. Gomory, 65, is President of Alfred P. Sloan Foundation in New York,
New York. He was Senior Vice President for Science and Technology of
International Business Machines Corporation (IBM) from 1985 to 1989. He
is a Director of The Bank of New York, LEXMARK International, Inc.,
Polaroid Corp. and The Washington Post Company. He has served as a
Director of Ashland since 1989 and is a member of the Audit and Public
Policy - Environmental Committees of the Board of Directors.
SHARES OF ASHLAND COMMON STOCK OWNED
BENEFICIALLY................................................4,000(1)(7)
PATRICK F. NOONAN
(PHOTO) Mr. Noonan, 52, is Chairman of the Board of Directors and Chief
Executive Officer of The Conservation Fund in Arlington, Virginia. He
is a Director of American Farmland Trust, International Paper, and Saul
Centers, Inc. and is a Trustee of The National Geographic Society. He
has served as a Director of Ashland since 1991 and is Chairman of the
Public Policy - Environmental Committee and a member of the Audit
Committee of the Board of Directors.
SHARES OF ASHLAND COMMON STOCK OWNED
BENEFICIALLY................................................2,000(1)(7)
COMMON STOCK UNITS...............................................795(6)
JANE C. PFEIFFER
(PHOTO) Mrs. Pfeiffer, 62, is a management consultant in Greenwich,
Connecticut. She is a Director of Bio-Technology General Corp.,
International Paper Company and J. C. Penney Company, Inc. and a
Trustee of Mutual Of New York. She has served as a Director of Ashland
since 1982 and is a member of the Personnel and Compensation Committee
and the Public Policy - Environmental Committee of the Board of
Directors.
SHARES OF ASHLAND COMMON STOCK OWNED
BENEFICIALLY.............................................4,738(1)(2)(5)
MICHAEL D. ROSE
(PHOTO) Mr. Rose, 52, is Chairman of the Board of Directors of The Promus
Companies, Incorporated. Prior to April 1994, Mr. Rose also served as
Chief Executive Officer of that company. He is a Director of First
Tennessee National Corporation and General Mills, Inc. He has served as
a Director of Ashland since 1988 and is Chairman of the Finance
Committee and a member of the Personnel and Compensation Committee of
the Board of Directors.
SHARES OF ASHLAND COMMON STOCK OWNED
BENEFICIALLY................................................3,200(1)(2)
COMMON STOCK UNITS.............................................8,529(6)
</TABLE>
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<TABLE>
<S> <C>
DR. ROBERT B. STOBAUGH
(PHOTO) Dr. Stobaugh, 67, is a Professor at the Harvard Business School in
Boston, Massachusetts. He is a Director of American International
Petroleum Corp. and National Convenience Stores, Inc. He has served as
a Director of Ashland since 1977 and is a member of the Nominating and
Finance Committees of the Board of Directors.
SHARES OF ASHLAND COMMON STOCK OWNED
BENEFICIALLY................................................5,000(1)(2)
COMMON STOCK UNITS............................................11,545(6)
<FN>
- ------------------------
(1) Includes shares of Ashland Common Stock with respect to which each of the
individuals has the right to acquire beneficial ownership within 60
calendar days after October 1, 1994 through the exercise of stock options:
as to Mr. Chellgren, 198,750 shares; Mr. Hall, 286,250 shares; and as to
all other directors except Mr. Jackson, 1,000 shares each.
(2) Includes 2,000 shares of Restricted Common Stock of Ashland as to which
the director has voting power.
(3) Includes 3,880 shares owned in trust for the benefit of Mr. Butler.
(4) Includes the following shares of Ashland Common Stock as to which the
respective persons disclaim any beneficial ownership: Mr. Butler, 750
shares owned by his wife, Mr. Hall, 1,000 shares owned by his wife, and
Mr. Vandeveer, 97 shares owned by his wife.
(5) Includes shares of Ashland Common Stock held under the Ashland Dividend
Reinvestment Plan which provides participants with voting power with
respect to such shares.
(6) Common Stock Units held under the directors' deferred compensation plan.
These Stock Units are payable in cash or stock at the director's election
upon termination of service from the Board.
(7) Includes 1,000 shares of Restricted Common Stock of Ashland as to which
the director has voting power.
(8) Includes shares of Ashland Common Stock held under Ashland's Employee
Thrift Plan and/or Leveraged Employee Stock Ownership Plan which provide
participants with voting and investment power with respect to such shares.
(9) Includes the following shares of Ashland Common Stock as to which Mr.
Vandeveer disclaims any beneficial ownership: a life interest in a trust,
of which he is co-trustee, entitling him to income from 10,834 shares of
Ashland Common Stock and 1,901 shares of Ashland Common Stock held in a
trust for which he is co-trustee.
(10) Includes 2,000 shares of Ashland Common Stock as to which Mr. Rouse has
both voting and investment power by virtue of a power of attorney.
</TABLE>
Shares shown above for each nominee and continuing director indicate
beneficial ownership at October 1, 1994. No nominee or continuing director owns
beneficially more than % of any class of Ashland stock.
Except as otherwise indicated, the nominees and continuing directors have
held the principal occupations described above during the past five years.
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BOARD OF DIRECTORS
The standing committees of the Board of Directors are the Nominating
Committee, Audit Committee, Personnel and Compensation Committee, Public Policy
- - Environmental Committee and Finance Committee. During fiscal 1994, seven
meetings of the Board of Directors were held. The Nominating Committee met three
times, the Audit Committee met three times, the Personnel and Compensation
Committee met five times, the Public Policy - Environmental Committee met two
times and the Finance Committee met two times. Each director attended at least
75% of the total meetings of the Board and the Committees on which they served.
Overall attendance at Board and Committee meetings was 96%.
THE NOMINATING COMMITTEE is responsible for recommending nominees for
membership to the Board of Directors. Current members of the Committee are Mr.
Carlucci (Chairman), Mr. Farley, Mr. Rinehart, Mr. Rouse, Dr. Stobaugh and Mr.
Vandeveer.
Nominees for directors are selected on the basis of recognized achievements
and their ability to bring various skills and experience to the deliberations of
the Board. The Committee will consider candidates recommended by other
directors, employees and shareholders. Written suggestions for candidates to
serve as directors should be sent to the Secretary of Ashland at Ashland Oil,
Inc., 1000 Ashland Drive, Russell, Kentucky 41169. Ashland's By-laws require
that written notice of a shareholder's intention to nominate any person for
election as a director at a meeting of shareholders must be received by the
Secretary of Ashland not later than (i) 90 days in advance of such meeting
(provided that if the annual meeting of shareholders is held earlier than the
last Thursday in January, such notice must be given within 10 days after the
first public disclosure, which may include any public filing with the Securities
and Exchange Commission, of the date of the annual meeting), and (ii) with
respect to an election to be held at a special meeting of shareholders for the
election of directors, the close of business on the seventh day following the
date on which notice of such meeting is first given to shareholders. The notice
must contain: (a) the name and address of the shareholder who intends to make
the nomination and of the person or persons to be nominated; (b) a
representation that the shareholder is a holder of record of stock of Ashland
entitled to vote at such meeting and intends to appear in person or by proxy at
the meeting to nominate the person or persons specified in the notice; (c) a
description of all arrangements or understandings between the shareholder and
each nominee and any other person or persons (naming such person or persons)
pursuant to which the nomination or nominations are to be made by the
shareholder; (d) such other information regarding each nominee proposed by such
shareholder as would have been required to be included in a proxy statement
filed pursuant to the proxy rules of the Securities and Exchange Commission had
each nominee been nominated, or intended to be nominated, by the Board; and (e)
the consent of each nominee to serve as a director if so elected. The chairman
of any meeting of shareholders to elect directors and the Board may refuse to
acknowledge the nomination of any person not made in compliance with the
foregoing procedure. No shareholder nominations have been received by Ashland
for the January 26, 1995 Annual Meeting.
THE AUDIT COMMITTEE is responsible for recommending the selection of
Ashland's independent auditors, the audit fees and the services provided by the
independent auditors, reviewing the scope and findings of external and internal
audits and reviewing the adequacy of Ashland's policies, procedures and internal
controls. Current members of the Committee are Mr. Blanton (Chairman), Mr.
Butler, Mr. Fitzgerald, Mr. Gomory, Mr. Jackson, Mr. Noonan and Mr. Rouse.
THE PERSONNEL AND COMPENSATION COMMITTEE is responsible for approving
salaries of all corporate officers of Ashland and all awards and participation
under Ashland's incentive plans. It recommends the establishment of policies
dealing with compensation, position evaluations and personnel engagements,
transfers and terminations. In addition, it administers various Ashland employee
compensation plans and oversees Ashland's welfare and retirement and savings
plans, including the contribution levels, selection of investment managers,
determination of investment guidelines and the review of their performances.
Current members of the Committee are Mr. Bolger (Chairman), Mr. Butler, Mr.
Carlucci, Mrs. Pfeiffer and Mr. Rose.
THE PUBLIC POLICY-ENVIRONMENTAL COMMITTEE is responsible for the oversight
of policies, programs and practices in relation to public issues affecting
Ashland and the oversight of Ashland's environmental,
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health and safety compliance policies, programs and practices. Current members
of the Committee are Mr. Noonan (Chairman), Mr. Blanton, Mr. Chellgren, Mr.
Farley, Mr. Gomory, Mr. Jackson and Mrs. Pfeiffer.
THE FINANCE COMMITTEE is responsible for reviewing Ashland's fiscal
policies, financial and capital structure and its current and contemplated
financial requirements and evaluating significant financial matters and
decisions such as capital structure, dividend action, offerings of corporate
stock and debt securities and major borrowings. Current members of the Committee
are Mr. Rose (Chairman), Mr. Bolger, Mr. Chellgren, Mr. Fitzgerald, Mr.
Rinehart, Dr. Stobaugh and Mr. Vandeveer.
COMPENSATION OF DIRECTORS
Directors who are employees of Ashland are not compensated for service on
the Board or its Committees. Non-employee directors receive an annual retainer
of $30,000, $1,000 for each Board meeting attended, $1,000 per year for each
Committee assignment ($2,000 if Chairperson) and $1,000 for each Committee
meeting attended ($2,000 if Chairperson). Non-employee members of the Board may
additionally receive compensation at the rate of $1,000 per day for services for
special assignments as designated by the Chief Executive Officer from time to
time.
Pursuant to the Ashland Oil, Inc. Deferred Compensation and Stock Incentive
Plan (the "Directors' Plan") previously approved by Ashland's shareholders,
non-employee directors may receive their directors' fees in cash or Ashland
Common Stock and may defer receipt until termination of service. Deferred
amounts may earn income based either on the prime rate of interest or on a
hypothetical investment in Ashland Common Stock ("Stock Units"), or a
combination of both, at the director's election. Upon termination of service,
deferred amounts (together with accrued earnings, if any) may be received in
cash or Ashland Common Stock, or a combination of both, in a lump sum or
installments at the director's election. Upon a "change of control" of Ashland
(as defined in the Directors' Plan), each participating director will receive an
automatic cash distribution of all amounts in such director's account.
Under the Directors' Plan, each year following the Annual Meeting, each
non-employee director will be granted an option to purchase 1,000 shares of
Ashland Common Stock at an exercise price equal to the fair market value of the
stock on the date of grant if the return on common shareholders' equity of
Ashland for the preceding fiscal year is equal to or greater than 10%.
Pursuant to stock incentive plans previously approved by Ashland's
shareholders, upon becoming a director of Ashland, each non-employee director
receives an award of 1,000 shares of Restricted Stock of Ashland (the "initial
award"). In addition, each non-employee director has received or will receive an
award of 1,000 shares of Restricted Stock of Ashland upon the later of January
31, 1994 or the fifth anniversary of his or her initial award (the "subsequent
award"). As a condition to any award, the director is required to pay to Ashland
an amount equal to the par value of the shares of Restricted Stock awarded to
him or her. The Restricted Stock may not be sold, assigned, transferred or
otherwise encumbered until the earliest to occur of: (a) normal retirement from
the Board at age 70; (b) the death or disability of such director; (c) a 50%
change in the beneficial ownership of Ashland; or, also in the case of a
subsequent award, (d) voluntary early retirement to take a position in
governmental service. In the case of voluntary resignation or termination of the
director for any reason prior to the events described above, the grant of
Restricted Stock to such director will be forfeited.
Each non-employee director who retires at age 70, or earlier if the director
has at least five years of continuous service, is eligible to participate in a
director retirement plan for non-employee directors. Under this plan, upon
retirement at age 70 with at least ten years of continuous service as a director
of Ashland, the director will receive the annual retainer in effect on his or
her date of retirement, for life. Upon retirement at age 70 with less than ten
years of continuous service as a director of Ashland, or upon retirement as a
result of permanent or total disability, the director will receive, at his or
her election, either (1) for life, an amount equal to 10% of the annual retainer
in effect on the date of his or her retirement multiplied by the number of years
of continuous service as a director of Ashland, or (2) 100%
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of the annual retainer in effect on the date of his or her retirement for a
number of years equal to the number of years of continuous service as a director
of Ashland. Upon retirement prior to age 70, the director will receive,
commencing at age 65, the amount of the annual retainer in effect on the date of
his or her retirement for a number of years equal to the number of years of
continuous service as a director of Ashland. Ashland's obligations under this
plan have been funded with an initial deposit of $810,436 with the First
National Bank of Louisville, Kentucky which is serving as trustee.
Ashland maintains a Director Death Benefit Program for non-employee
directors. Under this program, Ashland will pay a one-time $50,000 death benefit
to the designated beneficiary of each active or retired director of Ashland who
was not an employee of Ashland on the date of his or her death.
Directors of Ashland participate in the Directors' Charitable Award Program.
Pursuant to the program, Ashland has purchased joint life insurance contracts in
the amount of $1 million on each incumbent director. Upon the death of a
director, Ashland will donate an amount equal to $1 million to one or more
charitable organizations recommended by the director. The donations are funded
with the proceeds Ashland receives from the joint life insurance contracts.
Directors derive no financial benefit from the program since all charitable
deductions accrue solely to Ashland.
The Board of Directors of Ashland considers stock ownership in the Company
by management to be of utmost importance. Such ownership enhances management's
commitment to the future of the Company and further aligns management's
interests with those of Ashland's shareholders. In keeping with this philosophy,
in fiscal 1993 the Board established minimum stock ownership guidelines for
directors and certain executive officers. These guidelines require directors to
own Ashland Common Stock having a value of at least five times their annual
retainer. Each director will have five years to reach this ownership level. For
further information as to these guidelines as they pertain to Ashland's
executive officers, see the Personnel and Compensation Committee Report on
Executive Compensation in this Proxy Statement.
STOCK OWNERSHIP OF CERTAIN PERSONS
The following table shows as of October 1, 1994, certain information
regarding those persons known by Ashland management to be the owners of more
than 5% of Ashland's outstanding Common Stock and the beneficial ownership of
each class of Ashland equity securities by each of the executive officers named
under "Executive Compensation" and all directors and executive officers as a
group.
<TABLE>
<CAPTION>
AMOUNT AND
NATURE OF PERCENT
CLASS OF BENEFICIAL OF
STOCK OWNERSHIP CLASS(6)
----------- ----------- ---------
<S> <C> <C> <C>
Society National Bank................................. Common (1) %
127 Public Square
Cleveland, Ohio 44114
James R. Boyd......................................... Common (2)(3)
John A. Brothers...................................... Common (2)(3)
Paul W. Chellgren..................................... Common (2)(3)
David J. D'Antoni..................................... Common (2)(3)
John R. Hall.......................................... Common (2)(3)(4)
All directors and executive
officers as a group.................................. Common %
Preferred
<FN>
- ------------------------
(1) Society National Bank ("Society") has advised Ashland that as of October 1,
1994, it was the record owner of shares of Ashland Common Stock or
% of the shares of Ashland Common Stock outstanding on such date. Society
has advised Ashland that these shares include shares held by it as
trustee under the Ashland Employee Thrift Plan ("Thrift Plan"),
shares held by it as trustee under the Ashland Leveraged Employee Stock
Ownership Plan ("LESOP"), and shares held by it as trustee under the
SuperAmerica Hourly Associates Savings Plan ("SA Plan"). Society has
informed Ashland that with regard to the proposals, it will vote shares
held for the
</TABLE>
10
<PAGE>
<TABLE>
<S> <C>
accounts of participants in the Thrift Plan and SA Plan in accordance with
instructions received from participants and, if no instructions are
received, Society will vote such shares in the same proportion as shares
for which instructions are received from other participants in those plans.
Further, Society has informed Ashland that with regard to the proposals, it
will vote shares allocated to the account of a participant in the LESOP in
accordance with instructions received from such participant and, if the
participant has not provided voting instructions, or where the shares have
not yet been allocated to a participant's account, Society will vote those
shares in the same proportion as shares for which instructions are received
from other participants in the LESOP. Society has advised Ashland that the
remaining shares of Ashland Common Stock held by it as of October 1,
1994 were held by it in a variety of fiduciary capacities.
(2) Includes shares of Ashland Common Stock held under Ashland's Employee
Thrift Plan and/or Leveraged Employee Stock Ownership Plan which provide
participants with voting and investment power with respect to such shares.
(3) Includes shares of Ashland Common Stock with respect to which each of the
individuals has the right to acquire beneficial ownership within 60
calendar days after October 1, 1994 through the exercise of stock options:
as to Mr. Boyd, 112,750 shares; Mr. Brothers, 163,750 shares; Mr.
Chellgren, 198,750 shares; Mr. D'Antoni, 66,000 shares; and Mr. Hall,
286,250 shares.
(4) Includes the following shares of Ashland Common Stock as to which the
respective person disclaims any beneficial ownership: Mr. Hall, 1,000
shares owned by his wife.
(5) Other than as indicated, share ownership does not exceed one percent of the
class so owned.
</TABLE>
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table is a summary of compensation information for each of the
last three fiscal years ended September 30, 1994, 1993, and 1992 for the Chief
Executive Officer and each of the other four most highly compensated executive
officers at September 30, 1994.
11
<PAGE>
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
----------------------
ANNUAL COMPENSATION
----------------------------------------- AWARDS PAYOUTS
OTHER -------- -----------
ANNUAL OPTIONS LTIP ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS(1) COMPENSATION(2) (#) PAYOUTS(3) COMPENSATION(4)
- ------------------------------------- ---- ---------- --------- ---------------- -------- ----------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
John R. Hall 1994 $ 797,262 $ 836,741 $ 8,042 50,000 $ 209,226 $
Chairman of the Board and 1993 752,416 458,059 4,292 100,000 0 72,337
Chief Executive Officer 1992 728,268 0 7,512 35,000 287,328 79,356
Paul W. Chellgren 1994 498,289 584,911 5,539 40,000 106,904
President and 1993 464,559 317,777 2,029 65,000 0 43,871
Chief Operating Officer 1992 420,862 0 3,140 30,000 143,664 45,200
John A. Brothers 1994 368,734 349,960 11,222 25,000 90,768
Senior Vice President and 1993 343,819 297,772 3,880 25,000 0 46,884
Group Operating Officer 1992 327,721 190,060 2,732 25,000 119,720 37,954
James R. Boyd 1994 308,939 368,338 4,218 25,000 65,472
Senior Vice President and 1993 275,056 198,642 2,379 25,000 0 31,360
Group Operating Officer 1992 262,177 80,434 4,242 25,000 64,199 29,833
David J. D'Antoni 1994 298,973 307,944 495 10,000 156,062
Senior Vice President and 1993 279,042 272,525 346 15,000 0 47,047
President of Ashland Chemical 1992 262,943 271,510 620 10,000 131,465 33,332
Company
<FN>
- ------------------------
(1) Amounts received under Ashland's Incentive Compensation Plan for each of
the fiscal years ended September 30, 1992 - 1994.
(2) None of the named executives received perquisites and other personal
benefits, securities or property in excess of the lesser of $50,000 or 10%
of his total salary and bonus. All amounts shown in this column reflect
reimbursement of taxes paid by the named executives.
(3) Amounts received under Ashland's Performance Unit Plan for the FY 1989-1992
and FY 1991-1994 performance periods.
(4) Amounts shown in this column reflect employer matching contributions under
Ashland's Thrift Plan and allocations of stock under Ashland's LESOP as
provided on the same basis for all employees and related ERISA forfeiture
payments. For fiscal 1994, these payments were as follows:
</TABLE>
<TABLE>
<CAPTION>
ERISA
FORFEITURE
THRIFT PLAN LESOP PAYMENTS
----------- ------- -----------
<S> <C> <C> <C>
John R. Hall $ $ $
Paul W. Chellgren
John A. Brothers
James R. Boyd
David J. D'Antoni
</TABLE>
12
<PAGE>
STOCK OPTION GRANTS
The following table sets forth certain information concerning stock options
granted in fiscal year 1994 to the named executive officers.
OPTION GRANTS IN FISCAL YEAR 1994
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
INDIVIDUAL GRANTS VALUE AT ASSUMED
- -------------------------------------------------------------------------------- ANNUAL RATES OF
% OF TOTAL STOCK PRICE
OPTIONS EXERCISE APPRECIATION FOR
OPTIONS GRANTED TO OR BASE OPTION TERM*
GRANTED EMPLOYEES IN PRICE EXPIRATION -----------------------
NAME (#) FISCAL YEAR ($/SH) DATE 5% 10%
- ------------------------------ ------- ------------ -------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
John R. Hall 50,000 5.9% $ 35.875 10/15/04 $1,139,984 $2,895,875
Paul W. Chellgren 40,000 4.7% 35.875 10/15/04 911,987 2,316,700
John A. Brothers 25,000 2.9% 35.875 10/15/04 569,992 1,447,938
James R. Boyd 25,000 2.9% 35.875 10/15/04 569,992 1,447,938
David J. D'Antoni 10,000 1.2% 35.875 10/15/04 227,997 579,175
<FN>
- ------------------------
*Option Value assuming stock price appreciation rates of 5% and 10% compounded
annually for 10 year and 1 month term of the options. At the 5% and 10% rates,
the stock price at 10/15/04 (the expiration date of the $35.875 options) would
be $58.67 and $93.79, respectively, and the potential realizable value for all
Ashland shareholders if all 60,646,858 shares outstanding on September 15, 1994
(the grant date of the $35.875 options) were held until 10/15/04 would be
$3,558,434,541 and $5,688,220,950, respectively. Actual gains will be dependent
on future stock market conditions and there can be no assurance that these
amounts will be achieved.
</TABLE>
STOCK OPTION EXERCISES
The following table sets forth certain information concerning stock options
exercised in fiscal year 1994 by each of the named executive officers and the
value of unexercised options held by such officers on September 30, 1994.
AGGREGATED OPTION EXERCISES IN FISCAL YEAR 1994
AND FISCAL YEAR END OPTION VALUES*
<TABLE>
<CAPTION>
VALUE OF
NUMBER OF UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS OPTIONS
AT FY-END (#) AT FY-END*
SHARES ACQUIRED VALUE EXERCISABLE/ EXERCISABLE/
NAME ON EXERCISE (#) REALIZED ($) UNEXERCISABLE UNEXERCISABLE
- ------------------------------ --------------- ------------ --------------- -------------------
<S> <C> <C> <C> <C>
John R. Hall 17,500 $ 179,375 273,750/108,750 $1,050,625/$425,625
Paul W. Chellgren 6,000 130,125 192,500/80,000 840,156/265,625
John A. Brothers 2,500 67,969 163,750/43,750 627,500/100,000
James R. Boyd 7,000 57,750 112,750/43,750 462,625/100,000
David J. D'Antoni 0 0 66,000/20,000 235,313/45,625
<FN>
- ------------------------
*Based on the closing price of Ashland Common Stock as reported on the Composite
Tape for New York Stock Exchange issues on September 30, 1994 of $35.375 per
share.
</TABLE>
13
<PAGE>
LONG-TERM INCENTIVE AWARDS IN FISCAL YEAR 1994
The following table shows all long term incentive awards to each of the
named executive officers in fiscal year 1994.
LONG-TERM INCENTIVE PLANS--AWARDS IN FISCAL YEAR 1994
<TABLE>
<CAPTION>
PERFORMANCE ESTIMATED FUTURE PAYOUTS UNDER
PERIOD UNTIL NON-STOCK PRICE-BASED PLANS
NUMBER OF MATURATION ----------------------------------
SHARES OR PAYOUT THRESHOLD TARGET MAXIMUM
NAME (#)(1)(3) (2)(3) (3) (3) (3)
- -------------------------------------------- ------------- ------------ ---------- --------- -----------
<S> <C> <C> <C> <C> <C>
John R. Hall 39,802 4 years -- -- 39,802
Paul W. Chellgren 24,876 4 years -- -- 24,876
John A. Brothers 18,091 4 years -- -- 18,091
James R. Boyd 15,378 4 years -- -- 15,378
David J. D'Antoni 11,943 4 years -- -- 11,943
<FN>
- ------------------------
(1) Performance shares awarded are based on the employee's salary level. The
original amount of any award cannot exceed 400% of the employee's then base
salary.
(2) Each award covers a four year performance cycle. For further discussion of
the performance objectives to be achieved before payment is made see the
"Long-Term Incentive Compensation -- Performance Shares/Units" section of
the Personnel and Compensation Committee Report on Executive Compensation.
(3) Payouts of share awards are contingent upon achievement of the performance
objectives referred to above. At the threshold, or minimum performance
level, payout will equal 1% of the award. At the target, or maximum,
performance level, payout will equal 100% of the award.
</TABLE>
14
<PAGE>
RETIREMENT PLANS
PENSION PLANS
Ashland maintains qualified pension plans (the "qualified plans") under
which executive officers are entitled to benefits on the same basis as other
employees. Upon a "change in control" of Ashland (as defined in the plans), the
qualified plans will automatically terminate and the funds in such plans,
together with any excess assets, will be distributed to the participants.
To the extent that benefits under the qualified plans exceed limits
established by the Internal Revenue Code of 1986, as amended (the "Code"), they
are payable under a nonqualified excess benefit pension plan (the "non-qualified
plan") which provides for the payment of benefits in excess of certain
limitations imposed by the provisions of the Employee Retirement Income Security
Act of 1974 as amended ("ERISA") or limitations on compensation or benefits that
may be imposed by the Code. The plan also provides that participants may, at the
discretion of the Personnel and Compensation Committee receive their retirement
benefit under the non-qualified plan in a lump-sum distribution. An irrevocable
letter of credit has been established to partially fund Ashland's obligations
under the plan.
The following table shows the estimated annual benefits payable under the
qualified and non-qualified plans assuming continued employment until the normal
date of retirement at age 65, based on a straight-life annuity form of
retirement income. The amounts in the table are not subject to any reductions
for social security benefits received by the participant but are subject to
reductions for the actuarial value of 50% of a participant's LESOP account and
the actuarial value of 50% of any shares forfeited under the LESOP because of
the limitations established by the Code.
<TABLE>
<CAPTION>
ESTIMATED ANNUAL RETIREMENT BENEFITS
----------------------------------------------------------------------------
AVERAGE YEARS OF PARTICIPATION
ANNUAL ----------------------------------------------------------------------------
EARNINGS* 10 15 20 25 30 35
- ------------- ----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
$ 100,000 $ 14,550 $ 21,825 $ 29,100 $ 36,376 $ 43,650 $ 50,925
200,000 29,550 44,325 59,100 73,876 88,650 103,425
300,000 44,550 66,825 89,100 111,376 133,650 155,925
400,000 59,550 89,325 119,100 148,876 178,650 208,425
500,000 74,550 111,825 149,100 186,376 223,650 260,925
600,000 89,550 134,325 179,100 223,876 268,650 313,425
700,000 104,550 156,825 209,100 261,376 313,650 365,925
800,000 119,550 179,325 239,101 298,876 358,651 418,427
900,000 134,550 201,825 269,101 336,376 403,651 470,927
1,000,000 149,550 224,325 299,101 373,876 448,651 523,427
<FN>
- ------------------------
* Average annual earnings includes a participant's salary during the highest
consecutive 36 month period of the final 120 month period prior to
retirement, but excludes other forms of compensation included in the
Summary Compensation Table.
</TABLE>
As of October 1, 1994, Messrs. Hall, Chellgren, Brothers, Boyd and D'Antoni
had credited service in the combined plans of 32, 19, 24, 12 and 20 years,
respectively.
SUPPLEMENTAL EARLY RETIREMENT PLAN
Under the Supplemental Early Retirement Plan, eligible key executive
employees may retire prior to their normal retirement date. Mr. Hall is
currently eligible to participate in the plan. The plan provides that the
maximum total annual benefit payable to a participant under the plan is an
amount equal to 50% of the final average annual compensation (salary plus
incentive compensation awards) received by the participant during the highest 36
months of the final 60 month period prior to retirement. The amount payable
under the plan is reduced to the extent payments are made under the qualified
and non-qualified pension plans of Ashland, subject to reductions for the
actuarial value of 50% of a participant's LESOP account and the actuarial value
of 50% of any shares forfeited under the LESOP because of the limitations
established by the Code. In addition, if the executive has entered into an
Executive Employment
15
<PAGE>
Agreement with Ashland, the amount payable under the plan is reduced to reflect
payments, if any, under such Agreement. An irrevocable letter of credit has been
established to partially fund Ashland's obligations under the plan.
The plan provides that participants may, at the discretion of the Committee,
receive their retirement benefit under the plan in a lump-sum distribution. The
retirement benefit received as a lump-sum distribution is equal to the actuarial
present value of all expected future payments if the participant received
monthly payments discounted at the Pension Benefit Guaranty Corporation ("PBGC")
rate used to value annuities in effect during the participant's last full
calendar month of employment. The estimated lump-sum value of the retirement
benefit under the plan to Mr. Hall at age 62 and using the current PBGC rate is
$1,871,383.
Upon a "change in control" of Ashland (as defined in the plan), eligible key
executive employees may, in their discretion, elect to retire at an earlier age
pursuant to the plan. Ashland normally enters into consulting agreements with
its retiring key executive employees who participate in the plan. Under these
agreements, a retiring employee receives payment of a mutually agreeable per
diem compensation for services rendered to Ashland.
EXECUTIVE EMPLOYMENT AGREEMENTS
Currently, the named executive officers have employment agreements with
Ashland which provide for continuation of their then-current salaries for two
years after termination of their employment by Ashland without "Cause". In the
event of termination without "Cause" or resignation for "Good Reason" within two
years after any "change in control" of Ashland, the executive officers would
receive a payment equal to three times their annual compensation, including
incentive payments, based on the average of the preceding five years. In
addition, the agreements provide for continuation of certain benefits for a
period of one year. The terms "Cause", "Good Reason" and "change in control" are
defined in the agreements. In no event shall the total payment to any executive
officer exceed an amount which would be deemed an "excess parachute payment"
under Section 280G of the Code.
PERSONNEL AND COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
PERSONNEL AND COMPENSATION COMMITTEE OF THE BOARD
The Personnel and Compensation Committee (the "Committee") is comprised
entirely of non-employee members of Ashland's Board of Directors (the "Board").
It is the Committee's responsibility to review, recommend and approve changes to
the Company's executive compensation policies and programs. It is also the
Committee's responsibility to review and approve all compensation payments to
the Chief Executive Officer and Ashland's other executive officers.
ASHLAND'S COMPENSATION POLICY AND OBJECTIVES
Ashland's executive compensation program is designed to enable the Company
to attract, retain and motivate the high caliber of executives required for the
success of its business. The purpose of this program and the specific objectives
of the Committee are to:
- Pay for performance, motivating both long-and short-term
performance for the benefit of Ashland's shareholders;
- Provide a total compensation program competitive with those of
companies with which Ashland competes for top management
talent;
- Place greater emphasis on variable incentive compensation
versus fixed or base pay, particularly for Ashland's executive
officers;
- Reward executives based primarily on the performance of their
particular business units, while including a component
recognizing corporate performance;
- Encourage significant Ashland Common Stock ownership by
Ashland's executive officers in order to align their interests
with those of Ashland's shareholders; and
16
<PAGE>
- Most importantly, join shareholder and management interests in
achieving superior performance which should translate into a
superior total return to Ashland's shareholders.
Overall, Ashland's executive compensation program is designed to be
performance-oriented, with a large portion of executive compensation "at risk".
The portion of total compensation represented by annual and long-term incentives
that relate directly to performance has grown significantly and now constitutes
over 60% of the total compensation of Ashland's executive officers.
In recent years, the Committee has expanded the number of individuals
eligible for annual incentives and option grants in order to enhance the
commitment of mid-level managers to the objectives of the Company, its principal
business units, and Ashland's shareholders. Today approximately 330 of Ashland's
management and professional employees participate in the Company's annual
incentive plan, and approximately 490 employees participate in the Company's
stock option program.
In fiscal year 1993, the Committee retained Frederic W. Cook & Co., Inc., an
independent nationally-known compensation consultant, to review Ashland's
Executive Compensation Program. After extensive study, Frederic W. Cook
concluded that Ashland's program is both reasonable and competitive.
ASHLAND'S COMPENSATION PROGRAMS
In order to further the Committee's objectives, the executive compensation
program for Ashland's executive officers includes three primary components: (1)
base pay; (2) an annual incentive bonus; and (3) a long-term incentive program
consisting of stock options and performance shares or units. The overall program
is designed to provide total compensation opportunities which are comparable to
the opportunities provided by a group of nineteen companies of similar size and
diversity to Ashland (the "Compensation Peer Group"). This Compensation Peer
Group contains a larger number of companies than the peer group of companies
selected for comparison in the Five-Year and Ten-Year Cumulative Total Return
Performance Graphs.
BASE SALARY
Annual salary is designed to compensate executives for their sustained
performance. Base salary levels for executive officers are reviewed each year by
the Committee and are generally less than the median of the Compensation Peer
Group. In addition, consideration is given to individual experience as well as
individual and corporate, subsidiary or division performance. Increases in
salaries are typically granted annually; however, executive salary increases
have been delayed to at least 14-month periods during two of the last three
fiscal years in recognition of less than satisfactory corporate performance
during these periods. Although salary increases were granted this year, the
Committee has determined that pay increases for executive officers will not be
considered again for a period of 15 months.
ANNUAL INCENTIVE BONUS
Incentive compensation is awarded annually based 20% upon the participant's
individual performance for the last fiscal year and 80% upon the Company's
operating performance as further described below. Within ninety days of the
beginning of each fiscal year, (i) corporate Return on Equity ("ROE") Hurdles
and Targets, (ii) division and subsidiary Return on Investment ("ROI") Hurdles
and Targets, and (iii) for the Chairman of the Board and Chief Executive Officer
and President and Chief Operating Officer, in addition to the ROE Hurdles and
Targets, a net income Target, are set by the Committee for the upcoming fiscal
year. "Hurdles" are the minimum objectives that must be reached in order to
trigger a bonus payout. If the applicable "Target(s)" is achieved, maximum
incentive payments may be earned. The Committee may adjust incentive awards
downward based on such factors as the Committee deems appropriate.
Awards for the Chairman of the Board and Chief Executive Officer, President
and Chief Operating Officer and senior vice presidents (other than group
operating officers and division and subsidiary presidents) are based upon
overall corporate performance. For Ashland group operating officers, awards are
based upon the performance of the business units for which they are responsible
in addition to a corporate performance component. Awards to corporate employees
are based equally upon general
17
<PAGE>
overall corporate performance and division performance and for division
employees are entirely based on division performance. A participant's maximum
potential payout is generally a fixed percentage of the midpoint of the annual
salary range for the position held by the participant and is dependent upon the
participant's level of participation in Ashland's Incentive Compensation Plan.
Historically, awards of incentive compensation have been paid solely in
cash. Payment of FY 1994 awards was generally made 80% in cash and 20% in shares
of Ashland Common Stock, in keeping with the Committee's belief that stock
ownership provides a direct relationship between an executive's compensation and
the shareholders' interests. It is anticipated that payment of any FY 1995
awards will also be made 80% in cash and 20% in shares of Ashland Common Stock.
LONG-TERM INCENTIVE COMPENSATION
PERFORMANCE SHARES/UNITS
The performance share/unit program is a long-term incentive plan primarily
tied to company performance. It is designed to motivate senior executives whose
work most affects Company earnings and to tie their compensation directly to
Ashland's long-term financial objectives. Historically, the Committee has
granted awards of performance shares or units to selected employees every two
years with each award covering a four-year performance cycle. The number of
performance shares or units awarded is based on the employee's responsibility
level, performance, and salary level. Awards granted to date under the plan have
generally ranged from 70% to 160% of an employee's base salary. Payment of an
award is made only if one or more of the established performance objectives are
met over the four-year performance period. In the past, awards were denominated
in cash and have been paid in cash. In keeping with the goal of enhancing stock
ownership by executives, performance awards for the FY 1995-1998 performance
period to certain of Ashland's executive officers were denominated in shares of
Ashland Common Stock. It is anticipated payment of these awards will be made in
shares of Ashland Common Stock.
Performance objectives are determined by the Committee at the beginning of
each performance period. Historically, awards made prior to fiscal year 1993 to
corporate employees were based 100% on the achievement of a minimum four-year
average ROE. Awards made for the performance periods beginning in fiscal years
1993 and thereafter to corporate employees are based on achievement of the
following performance objectives: (a) a minimum four-year average corporate ROE
(the "corporate objective"); (b) total return to shareholders ("TRS") at least
equal to or greater than the median of the TRS of a peer group of companies over
the four-year period (the "peer TRS objective"); and (c) TRS at least equal to
or greater than the median of the companies in the Standard & Poor's 500 over
the four-year period (the "S&P TRS objective"). These objectives are weighted
50%, 25%, and 25%, respectively. Historically, awards made prior to fiscal year
1993 to division and subsidiary personnel were based 50% on the achievement of
the corporate objective and 50% on the achievement of a minimum four-year
average ROI for the division or subsidiary in which the person was employed.
Beginning in fiscal year 1993 and thereafter, the awards made to division and
subsidiary personnel are based on achievement of the following performance
objectives: (a) a minimum four-year average ROI for the applicable division or
subsidiary; (b) the corporate objective; (c) the peer TRS objective; and (d) the
S&P TRS objective. These objectives are weighted 50%, 25%, 12.5%, and 12.5%,
respectively. For the performance period beginning in fiscal year 1995, in
addition to the performance objectives above, awards are based upon achievement
of an average net income objective for the four-year period. If the foregoing
objectives are met, the Committee may adjust any award payment downward based on
such factors as the Committee deems appropriate.
STOCK OPTIONS
Ashland's employee stock option program is a long-term plan designed to link
executive compensation with increased shareholder value over time. The Committee
believes that the use of stock is an important key employee retention tool and
results in long-term management for the benefit of Ashland's shareholders. In
determining the amount of stock options to be granted annually to key employees,
a target number of shares for each executive grade level is established. In
addition, the Committee
18
<PAGE>
considers the amount and terms of stock options currently held by the employee,
the employee's experience and performance, as well as the Company's expectations
of the executive's future contributions.
All stock options are granted with an exercise price equal to the fair
market value of Ashland Common Stock on the date of grant. Accordingly, the
upside or downside value of options granted to an executive corresponds
exclusively with Ashland's stock price performance. In the event that Ashland's
stock price declines to a level below the option grant price, options are not
re-valued or re-issued. Vesting of awards generally occurs over a period of
three years.
STOCK OWNERSHIP GUIDELINES
The Committee and Senior Management believe that linking a significant
portion of an executive's current and potential future net worth to the
Company's success, as reflected in the stock price, gives the executive a stake
similar to that of the Company's owners and results in long-term management for
the benefit of those owners.
Consistent with this philosophy, the Committee adopted Stock Ownership
Guidelines in fiscal 1993 for 17 of Ashland's executive officers. These
guidelines establish minimum levels of stock ownership as follows: the Chief
Executive Officer -- stock having a value equal to 5 times base salary; the
President -- 4 times base salary; senior vice presidents, division and
subsidiary presidents and administrative vice presidents -- 3 times base salary.
The Board has also adopted Stock Ownership Guidelines for non-employee members
of the Board of Directors described under "Compensation of Directors." In
keeping with this philosophy, payment of incentive compensation for FY 1994 was
generally made 20% in Ashland Common Stock and it is anticipated that payment of
fiscal 1995 incentive compensation will also be made 20% in stock. It is
anticipated that FY 1993-1996 performance unit awards will be paid 50% in stock,
with the remainder to be paid in cash. In addition, FY 1995-1998 performance
awards to certain executive officers were denominated 100% in stock and it is
anticipated that payment, if any, will be made 100% in stock.
DEDUCTIBILITY OF COMPENSATION
Under new Section 162(m) of the Internal Revenue Code, the Company is
subject to the loss of the deduction for compensation in excess of $1,000,000
paid to one or more of the executive officers named in this proxy statement. The
deduction can be preserved if the Company complies with certain conditions in
the design and administration of its compensation programs.
The Committee believes all compensation paid in FY 1994 is deductible by the
Company. Upon shareholder approval of the 1995 Performance Unit Plan and the
Incentive Compensation Plan for Key Executives as described in Items IV and V of
this proxy statement, the Committee anticipates that all compensation to be paid
in FY 1995 will be fully deductible. The Committee has determined that it will
make every reasonable effort, consistent with sound executive compensation
principles and the needs of the Company, to ensure that all future amounts paid
to its executive officers will be fully deductible by the Company.
OTHER PLANS
Ashland also has various broad-based employee benefit plans, including a
Leveraged Employee Stock Ownership and Employee Thrift Plan. Ashland also
maintains pension, insurance and other benefit plans for its employees.
Executives participate in these plans on the same terms as other eligible
employees, subject to any legal limits on the amounts that may be contributed or
paid to executives under the plans.
COMPENSATION OF THE CHIEF EXECUTIVE OFFICER
In determining Mr. Hall's base salary for FY 1994, incentive compensation,
performance share award and stock option grant, the Committee considered both
Ashland's overall performance and Mr. Hall's individual performance. It also
considered competitive compensation received by chief executive officers of the
Compensation Peer Group and Mr. Hall's thirteen years of experience as Chief
Executive Officer of Ashland.
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Ashland made important strides on all fronts in FY 1994, including a
substantial increase in earnings over the prior year, a significant improvement
in its balance sheet and financial position and the Advantage Ashland cost
reduction and effectiveness program which is anticipated to result in more than
$30 million overall in cost benefits. During this period, there was a 4.4%
increase in the price of Ashland Common Stock, a total return to shareholders of
7.4% and a return on average common shareholders' equity of 14.5%. Net income
for the year totaled $197 million or $2.94 a share. This compares to net income
of $142 million, or $2.26 a share, for FY 1993. At 1994 fiscal year end, total
debt accounted for 48% of total capitalization, compared to 51% at the end of FY
1993.
Considering these positive factors, Mr. Hall's base salary for FY 1994 was
$800,000, which was below the median of the Compensation Peer Companies. Mr.
Hall also received incentive compensation for FY 1994 of $836,741 paid in cash
as performance for the year exceeded the established Hurdle, although it did not
meet the Target. A performance unit award payout of $209,226 was received for
the achievement of a four-year average 9.45% ROE for the FY 1991-1994
performance period. In addition, Mr. Hall received a performance share award for
the FY 1995-1998 performance period of 39,802 shares. In September 1994, Mr.
Hall received a base salary increase of $80,000 and received an award of stock
options to purchase 50,000 shares of Ashland Common Stock at an exercise price
equal to the then fair market value of $35.875 per share.
PERSONNEL AND COMPENSATION
COMMITTEE
Thomas E. Bolger, Chairman
Samuel C. Butler
Frank C. Carlucci
Jane C. Pfeiffer
Michael D. Rose
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FIVE-YEAR AND TEN-YEAR CUMULATIVE TOTAL RETURN PERFORMANCE GRAPHS
The following graphs compare Ashland's five-year and ten-year cumulative
total shareholder return (assuming reinvestment of dividends) with the
cumulative total return of the Standard & Poor's 500 Index and a group of
company peers which consists of Diamond Shamrock, Inc.; FINA, Inc.; Pennzoil
Company; Sun Company, Inc.; Total Petroleum (North America) Ltd.; Union Carbide
Corporation and USX-Marathon Group.
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN
ASHLAND OIL, S&P 500 INDEX AND PEER GROUP
[Graph Appears Here]
<TABLE>
<CAPTION>
1989 1990 1991 1992 1993 1994
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Ashland 100 78 80 68 96 103
S&P 500 100 91 119 132 149 155
Peer Group 100 85 98 85 104 116
</TABLE>
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COMPARISON OF TEN-YEAR CUMULATIVE TOTAL RETURN
ASHLAND OIL, S&P 500 INDEX AND PEER GROUP
[Graph Appears Here]
<TABLE>
<CAPTION>
1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Ashland 100 133 250 280 292 362 284 289 245 346 372
S&P 500 100 115 151 217 190 253 229 301 334 377 391
Peer Group 100 114 117 162 147 186 159 183 158 195 217
</TABLE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The members of the Personnel and Compensation Committee of the Board of
Directors during fiscal year 1994 were Mr. Bolger (Chairman), Mr. Butler, Mr.
Carlucci, Mrs. Pfeiffer and Mr. Rose. During fiscal year 1994, the firm of
Cravath, Swaine & Moore, of which Mr. Butler is a member, was paid for legal
services rendered to Ashland and certain of its subsidiaries.
ITEM II. RATIFICATION OF AUDITORS
The Audit Committee of the Board of Directors recommended and the Board has,
subject to shareholder ratification, appointed Ernst & Young to audit the
accounts of Ashland and its subsidiaries for fiscal 1995. Ernst & Young has
audited the accounts of Ashland and its subsidiaries for many years.
The following resolution concerning the appointment of independent auditors
will be offered at the meeting:
"RESOLVED, that the appointment by the Board of Directors of the Company
of Ernst & Young to audit the accounts of the Company and its subsidiaries
for the fiscal year 1995 is hereby ratified."
Representatives of Ernst & Young will be present at the Annual Meeting with
the opportunity to make a statement and to respond to appropriate questions.
Submission of the appointment to shareholders is not required. However, the
Board will reconsider the appointment if it is not approved by the shareholders.
The appointment will be deemed ratified if the votes cast in favor of the
proposal exceed the votes cast against the proposal. Abstentions and broker
non-votes are not counted as votes cast either for or against the proposal.
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ITEM III. AMENDMENT OF SECOND RESTATED
ARTICLES OF INCORPORATION
The Board of Directors of Ashland has voted, subject to shareholder
approval, to amend Article I of Ashland's Second Restated Articles of
Incorporation, as amended, in order to change the name of Ashland to Ashland
Inc.
This change of name is believed by the Board of Directors to be desirable
and in the best interests of Ashland in order to identify the Company in a
manner which more clearly reflects its unified network of refining, energy and
chemical businesses and yet retains the historical name of Ashland.
The amendment will be adopted only if the votes cast in favor of such
amendment exceed the votes cast against such amendment. Abstentions and broker
non-votes are not counted as votes cast either for or against the amendment.
FOR THE REASONS STATED HEREIN, THE BOARD OF DIRECTORS RECOMMENDS THAT THE
SHAREHOLDERS VOTE FOR THIS PROPOSAL.
ITEM IV. APPROVAL OF THE
1995 PERFORMANCE UNIT PLAN
Ashland Oil, Inc.'s Performance Unit Plan was adopted by the Board of
Directors in November 1977 and approved by Ashland's shareholders at the 1978
Annual Meeting. The plan was subsequently amended by the Board in November 1984
and approved by the shareholders at the 1985 Annual Meeting (the "Amended
Plan"). The Amended Plan expired September 30, 1994.
The 1995 Performance Unit Plan (the "1995 Plan") was approved by the Board
on November 3, 1994 to be effective as of October 1, 1994, subject to the
approval of the shareholders at the January 26, 1995 Annual Meeting. The Board
has determined that a new performance unit plan is needed to promote the
interests of Ashland and its shareholders by offering a long-term incentive to
key employees who will be largely responsible for the long-term, profitable
growth of the Company. In addition, the Board feels the 1995 Plan will encourage
such employees to remain with Ashland and will also encourage qualified persons
to seek and accept employment with the Company.
As discussed in the Personnel and Committee Report on Executive Compensation
of this proxy statement, the Code was amended in 1993 to add a new Section
162(m), which disallows federal income tax deductions for certain executive
compensation in excess of $1 million per year per covered employee (the "$1
million limit"). Under Section 162(m), compensation that qualifies as
"performance-based compensation" is not subject to the $1 million limit. It is
intended that compensation granted pursuant to the 1995 Plan will qualify as
"performance-based compensation."
The principal features of the 1995 Plan are summarized below. This summary
is qualified in its entirety by reference to the full text of the 1995 Plan
attached as Exhibit A to this Proxy Statement.
ELIGIBILITY AND ADMINISTRATION. Performance Unit Awards (as defined under
the 1995 Plan) may only be granted to regular, full-time, salaried employees,
including officers, of Ashland, its subsidiaries and affiliates. Based on
participation in the Amended Plan, at September 30, 1994, it is anticipated that
approximately 134 employees will be eligible to participate in the 1995 Plan.
The 1995 Plan is administered by the Personnel and Compensation Committee. The
Committee may amend the 1995 Plan, but may not, without full Board and
shareholder approval, approve any amendment which would (i) increase the amount
of securities that may be issued under the 1995 Plan, (ii) materially modify the
requirements as to eligibility for participation, or (iii) materially increase
the benefits accruing to employees under the 1995 Plan.
SHARES SUBJECT TO THE 1995 PLAN. Up to 2,200,000 shares of Ashland Common
Stock are authorized for issuance under the 1995 Plan. The 1995 Plan provides
for appropriate adjustment in the number of shares available in the event of
certain corporate transactions, including stock dividends and splits.
PLAN BENEFITS GENERALLY. Performance Unit Awards may be made to an employee
contingent upon the future performance of Ashland and/or the division or company
in which the employee works. No later
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than ninety days after the commencement of a performance period applicable to a
particular Performance Unit Award, the Committee shall establish the performance
goals applicable to such award in writing and the time period over which the
performance shall be measured. Performance Unit Awards may be based upon a
variety of performance goals as described in the 1995 Plan. After establishment
of the performance measures applicable to a particular Performance Unit Award,
the Committee may not revise the measures to increase the amount of compensation
otherwise payable under the Performance Unit Award. However, the performance
goals and amounts payable upon attainment of the performance goals may be
adjusted during any performance period to reflect promotions, transfers or other
changes in an employee's employment so long as such changes are consistent with
the performance goals established for other employees in the same or similar
positions.
In making a Performance Unit Award, the Committee may take into account an
employee's responsibility level, performance, cash compensation level, incentive
compensation awards and other factors. Each Performance Unit Award will be
established in dollars or shares of Ashland Common Stock, or a combination of
both, as determined by the Committee and will be based on the employee's base
salary on the date of the award. The original amount of any Performance Unit
Award may not exceed 400% of the employee's then annual base salary. Payment of
a Performance Unit Award may not exceed the original amount of such award, and
the amount of all Performance Unit Awards for a performance period shall not
exceed 2% of stockholders' equity as shown in the Annual Report to Shareholders
at the end of the fiscal year immediately preceding the commencement of the such
performance period. In determining the amount of any Performance Unit Award
made, in whole or in part, in shares of Ashland Common Stock,
the value thereof shall be based on the fair market value of the stock on the
first day of the performance period or such date as the Committee otherwise
determines.
Payment of a Performance Unit Award may be made in cash, Ashland Common
Stock or a combination of both. Employees may be offered the opportunity to
defer the receipt of payment of a Performance Unit Award. Ashland Common Stock
may be granted (i) as a bonus for deferral, or (ii) as a bonus for retaining the
Common Stock received in payment of a Performance Unit Award for a specified
period of time. In no event shall the value of the Common Stock granted as a
bonus for deferral or retention exceed 20% of the amount deferred or retained.
An employee must be employed at the end of the performance period to receive
payment of an award. However, in the event that an employee's employment is
terminated by death, disability or retirement, the employee shall receive a pro
rata portion of the payment of his or her Performance Unit Award based upon the
portion of the performance period during which the employee was so employed so
long as the performance goals are subsequently achieved. In the event of a
"change in control" of Ashland (as defined in the 1995 Plan), (i) there shall be
an acceleration of any Performance Period relating to any Performance Unit
Award, and (ii) payment of any Performance Unit Award shall be made in cash as
soon as practicable after such change in control based upon achievement of the
Performance Goals applicable to such award up to the date of the change in
control. Further, Ashland's obligation with respect to such Performance Unit
Award shall be assumed, or new obligations substituted therefor, by the
acquiring or surviving corporation after such change in control. In addition,
prior to the date of such change in control, the Committee, in its sole judgment
may make such adjustments to any Performance Unit Award as may be appropriate to
reflect such change in control.
Unless terminated sooner by the Committee, the 1995 Plan shall terminate on,
and no Performance Unit Awards shall be granted after, the first meeting of
shareholders in 2000. Termination of the 1995 Plan shall not affect any
Performance Unit Awards outstanding prior to the plan's termination.
ADDITIONAL INFORMATION. No benefits or amounts have been awarded or
received under the 1995 Plan, nor are any such benefits or amounts now
determinable. For comparison purposes, please refer to the LTIP Payouts column
of the Summary Compensation Table on page 12 for amounts received for the FY
1991-1994 performance period. In addition to the data shown in that table, in
1994, all executive officers as a group received $1,200,035 and all employees
excluding executive officers, received $2,400,635 under the Amended Plan for
this same performance period.
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Approval of the 1995 Plan requires the affirmative vote of the holders of a
majority of the outstanding shares of Ashland Common Stock present or
represented at the 1995 Annual Meeting and voting together as one class.
Abstentions and broker non-votes are not counted as votes cast either for or
against the proposal.
FOR THE REASONS STATED HEREIN, THE BOARD OF DIRECTORS RECOMMENDS THAT THE
SHAREHOLDERS VOTE FOR THIS PROPOSAL.
ITEM V. APPROVAL OF THE
INCENTIVE COMPENSATION PLAN FOR KEY EXECUTIVES
Ashland Oil, Inc.'s Incentive Compensation Plan was first adopted by the
Board of Directors in January 1974. A new plan was subsequently adopted by the
Board in January 1982, as later amended from time to time (the "Existing Plan").
The principal purposes of the Existing Plan are to provide eligible employees
with incentives to earn annual incentive compensation through the achievement of
performance goals and to assist Ashland in attracting, motivating and retaining
key employees on a competitive basis.
In order for incentive compensation paid to certain Ashland executive
officers to qualify as a "performance-based compensation" under Section 162(m),
on November 3, 1994, the Board approved the Incentive Compensation Plan for Key
Executives (the "IC Plan"), subject to shareholder approval at the January 26,
1995 Annual Meeting. If approved and adopted by the shareholders, the IC Plan
will become effective as of September 14, 1994. Like the Existing Plan, which
will remain in place with respect to other eligible employees of Ashland, the IC
Plan provides for annual incentive award opportunities based upon the level of
performance of each of the participants.
Below is a summary of the principal features of the IC Plan. This summary is
qualified in its entirety by reference to the full text of the IC Plan attached
as Exhibit B to this Proxy Statement.
ELIGIBILITY AND ADMINISTRATION. The Chief Executive Officer and the Chief
Operating Officer of the Company, as well as any other executive officer as may
be chosen by the Committee (the "Eligible Officers"), shall be eligible to
receive Incentive Awards under the IC Plan. The IC Plan is administered by the
Committee which may amend the IC Plan, but may not, without full Board and
shareholder approval, approve any amendment which would (i) increase the number
of securities that may be issued under the IC Plan, (ii) materially modify the
requirements for eligibility, or (iii) otherwise materially increase the
benefits to plan participants.
SHARES SUBJECT TO THE IC PLAN. Up to 150,000 shares of Ashland Common Stock
are authorized for issuance under the IC Plan. The IC Plan provides for
appropriate adjustment in the number of shares available in the event of certain
corporate transactions, including stock dividends and splits.
PLAN BENEFITS GENERALLY. No later than ninety days after the commencement
of the performance period applicable to an Incentive Award, the Committee shall
establish in writing one or more performance goals, including the Hurdle and
Target (as defined below), that must be reached by the Eligible Officers in
order to receive an Incentive Award for the applicable performance period.
"Hurdle" means the minimum performance goal(s) that must be reached in order for
the participant to receive any Incentive Award. "Target" means the performance
goal(s) that must be reached in order for the participant to receive the maximum
Incentive Award. The maximum Incentive Award is a fixed percentage of the
midpoint of the salary range for the position held by the participant and is
based upon the participant's level of employment. No participant may receive a
maximum Incentive Award of more than 150% of their salary range midpoint.
Performance goals may be based on a variety of measures as more fully set
forth in the IC Plan. After establishment of the performance goals applicable to
a particular award, the Committee may not revise the measures to increase the
amount of compensation otherwise payable under the award. Notwithstanding,
performance goals and the amounts payable upon attainment of the performance
goals may be
25
<PAGE>
adjusted during any performance period to reflect promotions, transfers or other
changes in a participant's employment so long as such changes are consistent
with the performance goals established for other participants in the same or
similar positions.
At the end of each performance period, Incentive Awards may be paid based
upon the achievement of the applicable performance goals and the participant
achieving the highest possible individual performance rating for the performance
period. To the extent that a participant does not achieve the highest possible
individual performance rating, the Committee shall have the discretion to reduce
the amount payable to the participant; provided that no payment for individual
performance shall be made unless the performance goals are achieved. Payment of
an award may be made in cash, Ashland Common Stock or a combination of both.
Participants may be offered the opportunity to defer the receipt of payment of
an Incentive Award. Common Stock may be granted (i) as a bonus for deferral or
(ii) as a bonus for retaining Common Stock received in payment of an Incentive
Award for a specified period of time, all under such terms as may be established
by the Committee from time to time. In no event shall the value of the Common
Stock granted as a bonus for deferral or retention exceed 20% of the value of
the Incentive Award so deferred or retained.
A participant must be employed at the end of the performance period to
receive payment of an award; provided, however, in the event that a
participant's employment is terminated by death, disability or retirement, the
participant shall receive a pro rata portion of the payment of his or her award
based upon the portion of the performance period during which the participant
was so employed so long as the performance goals are subsequently achieved. In
the event of a "change in control" of Ashland (as defined in the IC Plan), (i)
there shall be an acceleration of any performance period relating to any
Incentive Award, and (ii) payment of any Incentive Award shall be made in cash
as soon as practicable after such change in control based upon achievement of
the Performance Goals applicable to such award up to the date of the change in
control. Further, the Company's obligation with respect to such Incentive Award
shall be assumed, or new obligations substituted therefor, by the acquiring or
surviving corporation after such change in control. In addition, prior to the
date of such change in control, the Committee, in its sole judgment may make
such adjustment to any Incentive Award as may be appropriate to reflect such
change in control.
Unless terminated sooner by the Committee, the IC Plan shall terminate on,
and no awards shall be granted after, the first meeting of shareholders in 2000.
Termination of the IC Plan shall not affect any awards outstanding prior to the
plan's termination.
ADDITIONAL INFORMATION. Messrs. Hall and Chellgren have been approved for
participation in the IC Plan for the FY 1995 performance period. However, no
benefits or amounts have been awarded or received under the IC Plan, nor are any
such benefits or amounts now determinable. For comparison purposes, please refer
to the Bonus column of the Summary Compensation Table on page 12 for amounts
received for the FY 1994 performance period by Messrs. Hall and Chellgren.
Approval of the IC Plan requires the affirmative vote of the holders of a
majority of the outstanding shares of Ashland Common stock present or
represented at the 1995 Annual Meeting and voting together as one class.
Abstentions and broker non-votes are not counted as votes cast either for or
against the proposal.
FOR THE REASONS STATED HEREIN, THE BOARD OF DIRECTORS RECOMMENDS THAT THE
SHAREHOLDERS VOTE FOR THIS PROPOSAL.
ITEM VI. APPROVAL OF THE
DEFERRED COMPENSATION PLAN
The Ashland Oil, Inc. Deferred Compensation Plan for Key Employees was
initially adopted by Ashland's Board of Directors in September 1985. This plan
currently provides certain Ashland employees as designated by the Committee the
opportunity to defer all or part of their Incentive Compensation Award and
Performance Unit Award payments into a deferred account. Amounts deferred earn
income based on the prime rate of interest. In September 1987, the Board adopted
the Deferred Compensation Plan for ERISA Forfeitures. Under this plan, eligible
employees may defer amounts paid under Ashland's
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ERISA Forfeiture Plan. Deferred amounts may earn additional income based on a
hypothetical investment in various investment options available under Ashland's
Employee Thrift Plan, including a hypothetical investment in Ashland Common
Stock ("Stock Units"). Under these deferral plans (hereinafter the "Original
Plans"), deferred amounts plus earnings thereon, if any, are payable in cash to
the employee or his or her estate upon termination of service over the time
period designated by the employee.
On September 15, 1994, the Board of Directors approved the Ashland Oil, Inc.
Deferred Compensation Plan (the "Deferral Plan") which will replace the Original
Plans. The Company is seeking shareholder approval of the Deferral Plan at the
January 26, 1995 Annual Meeting to qualify the Deferral Plan and the crediting
of Stock Units under the Deferral Plan for an exemption from the liability
provisions of Section 16 of the Securities and Exchange Act of 1934. If approved
and adopted by the shareholders, the Deferral Plan will become effective as of
October 1, 1994.
The principal features of the Deferral Plan are summarized below. This
summary is qualified in its entirety by reference to the full text of the
Deferral Plan attached as Exhibit C to this Proxy Statement.
PURPOSE. The principal purpose of the Deferral Plan is to provide eligible
Ashland employees with an opportunity to defer receipt of compensation until
retirement or termination of employment for any other reason. In addition, the
Board believes the Deferral Plan will promote the interests of Ashland by
providing further stock ownership opportunities to eligible employees by giving
them the ability to defer compensation in the form of Stock Units.
ELIGIBILITY AND ADMINISTRATION. Any employee selected by the Committee may
participate in the Deferral Plan. Based on the Original Plans, at September 30,
1994, approximately 330 employees who (i) had amounts forfeited under various
qualified benefit plans under the provisions of ERISA, and/or (ii) received
incentive compensation awards or Amended Performance Unit Plan awards in FY 1994
were eligible to participate in the Deferral Plan. The Deferral Plan is
administered by the Committee which may amend the Deferral Plan, but may not,
without Board and shareholder approval, (i) increase the number of shares of
Ashland Common Stock which may be issued under the Deferral Plan, (ii)
materially modify the requirements as to eligibility to participate, or (iii)
otherwise materially increase the benefits accruing to participants under the
Deferral Plan.
SHARES SUBJECT TO THE PLAN. Up to 500,000 shares of Ashland Common Stock
are authorized for issuance under the Deferral Plan. The Deferral Plan provides
for appropriate adjustment in the number of shares available in the event of
certain corporate transactions, including stock dividends and splits.
PLAN BENEFITS GENERALLY. Under the terms of the Deferral Plan, an eligible
employee may elect, on or before the dates specified in the Deferral Plan to
defer receipt of all or a portion of compensation deemed deferrable by the
Committee. Currently, Incentive Compensation Awards, Performance Unit Awards and
ERISA forfeiture payments are eligible for deferral under the Deferral Plan.
Deferred amounts may earn additional income based on a hypothetical
investment in any one or more of the investment options available under the
Deferral Plan as prescribed by the Committee, including but not limited to an
investment in an Ashland Common Stock Fund ("Common Stock Fund"). Currently,
deferred Incentive Compensation Awards and Performance Unit Awards may earn
income based on the prime rate of interest and/or based on a hypothetical
investment in Stock Units in the Common Stock Fund. Payments under the ERISA
Forfeiture Plan which are deferred may earn income based upon hypothetical
investments in investment options offered under Ashland's Thrift Plan, including
the Common Stock Fund. Participants may transfer amounts among the investment
options available under the Deferral Plan.
Amounts allocated or transferred to a participant's Common Stock Fund will
be converted into Stock Units, with each Stock Unit representing one share of
Ashland Common Stock. The number of Stock Units credited to the Common Stock
Fund will be determined by dividing (i) the dollar value of the allocation or
transfer amount by (ii) the fair market value of a share of Ashland Common Stock
on the effective date of the allocation or transfer, as applicable.
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Each participant's Common Stock Fund, if any, will be credited with
additional Stock Units in the event the Company declares any dividends on the
Ashland Common Stock. The number of additional Stock Units credited in respect
of any cash dividend will be determined by dividing (i) the product of (a) the
dollar value of the dividend declared in respect of a share of Ashland Common
Stock multiplied by (b) the number of Stock Units credited to the participant's
Common Stock Fund as of the dividend record date by (ii) the fair market value
of a share of Ashland Common Stock on the dividend payment date.
Upon termination of service, payment of deferred amounts will be made, in a
lump sum or in annual or quarterly installments, in shares of Ashland Common
Stock or cash, or a combination of both, at the participant's election. The
amount of any cash distribution to be made in installments with respect to Stock
Units will be determined by (i) multiplying the number of Stock Units
attributable to such installment (determined as hereinafter provided) by (ii)
the closing price of the Ashland Common Stock on the last day of the quarter
immediately prior to the date on which such installment is to be paid. The
number of Stock Units attributable to an installment shall be determined by (i)
multiplying the current number of Stock Units in the Common Stock Fund by (ii) a
fraction, the numerator of which is one and the denominator of which is the
number of installments in which distributions remain to be made (including the
current distribution). The amount of any stock distribution to be made in
installments with respect to the participant's deferral account will be
determined by dividing (i) the amount of cash attributable to such installment
(determined as hereinafter provided) by (ii) the closing price of the Ashland
Common Stock on the last day of the quarter immediately prior to the date on
which the stock distribution is to be made. The amount of cash attributable to
an installment shall be determined by multiplying (i) the current cash balance
in such deferral account (minus any amounts in the Common Stock Fund) by (ii) a
fraction, the numerator of which is one and the denominator of which is the
number of installments in which distributions remain to be made (including the
current distribution).
Upon request of a Participant or a Participant's legal representative and a
finding by the Committee that continued deferral will result in financial
hardship to a Participant, the Committee may accelerate payment of the deferral
account.
CHANGE OF CONTROL. In the event of a Change of Control as defined in the
Deferral Plan, each Participant shall immediately receive a full cash
distribution of the balance in his or her deferral account.
Approval of the Deferral Plan requires the affirmative vote of the holders
of a majority of the outstanding shares of Ashland Common Stock present or
represented at the 1995 Annual Meeting and voting together as one class.
Abstentions and broker non-votes are not counted as votes cast either for or
against the proposal.
FOR THE REASONS STATED HEREIN, THE BOARD OF DIRECTORS RECOMMENDS THAT THE
SHAREHOLDERS VOTE FOR THIS PROPOSAL.
ITEM VII. SHAREHOLDER PROPOSAL
John J. Gilbert of 29 East 64th St., New York, New York 10021-7043, owner of
124 shares of Ashland Common Stock, stating that he (i) represents the Lewis D.
and John J. Gilbert Foundation, the owner of 100 shares of Ashland Common Stock,
(ii) is a co-trustee under the will of Minnie D. Gilbert for 400 shares of
Ashland Common Stock ,and (iii) represents an additional family interest of
1,112 shares of Ashland Common Stock, and John C. Henry, owner of 2,850 shares
of Ashland Common Stock (Messrs. Gilbert and Henry hereinafter collectively the
"Proponents"), have notified Ashland in writing that they intend to present the
following resolution at the Annual Meeting:
"RESOLVED: That the stockholders of Ashland Oil, Inc., assembled in
annual meeting in person and by proxy, hereby request that the Board of
Directors take the needed steps to provide that at future elections of
directors new directors be elected annually and not by classes as is now
provided and that on expiration of present terms of directors their
subsequent election shall also be on an annual basis."
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The Proponents have submitted the following statement in support of their
proposal (reproduced as written):
"Continued strong support along with the lines we suggest were shown at the
last annual meeting when 37%, an increase over the previous years 24%, 2,533
owners of 18,647,405 shares, were cast in favor of this proposal. The vote
against included 2,360 unmarked proxies.
Last year ARCO, to its credit, voluntarily ended theirs stating that when a
very high percentage, 34.6%, desired it to be changed to an annual election it
was reason enough for them to change it. Several other companies have also
followed suit such as Pacific Enterprises, Hanover Direct and others.
Because of normal need to find new directors and because of environmental
problems and the recent avalanche of derivative losses and many groups desiring
to have directors who are qualified on the subjects we think that ending the
stagger system of electing directors is the answer. In addition, some
recommendations have been made to carry out the Valdez 10 points. The 11th, in
our opinion, should be to end the stagger system of electing directors and to
have cumulative voting. Ashland does have the latter, to its credit.
In spite of our differences, due to weather conditions and not being able to
attend the meeting, my questions about potholes etc. were the only questions
raised at the meeting and the vote on my resolution, while not technically
presented, was an enormous increase in favor of ending the stagger system, as
disclosed in the post-meeting report.
Recently Equitable Life Insurance Company, which is now called Equitable
Companies, converted from a policy owned company to a public stockholder
meeting, Thanks to AXA, the comptrolling French insurance company not wanting it
they now do not have a staggered board.
Maybe, ending the stagger system of electing directors at Ashland Oil would
have helped the company in its past losses.
The Orange and Rockland Utility Company had a terrible time with the stagger
system and its 80% clause to recall a director. The chairman was involved in a
scandal effecting the company interest. Not having enough votes the meeting to
get rid of the chairman had to be adjourned. Finally at the adjourned meeting
enough votes were counted to recall him.
If you agree, please mark your proxy for this resolution; otherwise it is
automatically cast against it, unless you have marked to abstain."
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE AGAINST THIS
PROPOSAL FOR THE FOLLOWING REASONS:
The identical proposal was presented by the Proponents and defeated at
Ashland's 1994, 1993 and 1992 Annual Meetings of Shareholders when more than
63%, 70% and 71%, respectively, of the shares of Common Stock voted were voted
against it.
Ashland's directors, elected by the shareholders, are fully accountable to
serve the shareholders' interests throughout their term of office, whether that
term is three years or one year. The Board of Directors believes there is no
reason to change the current procedure of electing a classified Board of
Directors with a staggered system of election (the "Classified Board"), adopted
by Ashland's shareholders in 1986 with more than 75% of the votes cast in favor
of the procedure. Further, similar Classified Board provisions exist at
approximately 290 of the 500 companies comprising the 1994 Standard & Poor's 500
Stock Price Index.
The Board of Directors continues to believe that the Classified Board
structure is a sound one. Under this structure approximately one-third of the
Board of Directors is elected annually for a three-year term. The Classified
Board requires that at least two annual meetings, rather than one, be held
before a change in control of the Board could be effected through the normal
election process. This longer time period assures the continuity and stability
of management that Ashland has traditionally enjoyed.
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The shareholder proposal will be adopted only if the votes cast in favor of
such proposal exceed the votes cast against such proposal. Abstentions and
broker non-votes are not counted as votes cast either for or against the
proposal. The adoption of this proposal would not in itself reinstate the annual
election of directors but would simply amount to a request that the Board take
the "needed steps" to accomplish such reinstatement.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE AGAINST THIS
SHAREHOLDER PROPOSAL.
MISCELLANEOUS
The expenses of solicitation of proxies for the Annual Meeting, including
the cost of preparing and mailing this Proxy Statement and the accompanying
material, will be paid by Ashland. Such expenses may also include the charges
and expenses of banks, brokerage houses and other custodians, nominees or
fiduciaries for forwarding proxies and proxy material to beneficial owners of
shares. Solicitation may be made by mail, telephone, telegraph and personal
interview, and by regularly engaged officers and employees of Ashland, who will
not be additionally compensated therefor. Ashland has arranged for the services
of Morrow & Co., Inc. ("Morrow") to assist in the solicitation of proxies. The
fees of Morrow, estimated at $35,000 excluding out-of-pocket expenses, will be
paid by Ashland.
The Board of Directors knows of no other matters to be voted upon at the
Annual Meeting. If any other matters properly come before the Annual Meeting, it
is the intention of the persons named in the enclosed proxy card to vote on such
matters in accordance with their judgment.
Any shareholder who executes a proxy card may revoke it by giving written
notice to the Secretary of Ashland or by giving to the Secretary a duly executed
form of proxy bearing a date later than the proxy card being revoked, at any
time before such proxy is voted. Attendance at the meeting shall not have the
effect of revoking a proxy unless the shareholder so attending shall, in
writing, so notify the Secretary of the meeting prior to the voting of the
proxy.
A proxy card which is properly signed, dated and not revoked will be voted
in accordance with the instructions contained thereon. If no instructions are
given, the persons named on the proxy card solicited by the Board of Directors
intend to vote FOR the (i) election of the six nominees for directors, (ii)
ratification of the appointment of independent auditors for the 1995 fiscal
year, (iii) amendment to Ashland's Second Restated Articles of Incorporation,
(iv) approval of the 1995 Performance Unit Plan, (v) approval of the Incentive
Compensation Plan for Key Executives and (vi) approval of the Deferred
Compensation Plan and AGAINST the shareholder proposal requesting the Board to
require that at future elections of directors all directors be elected annually.
Any shareholder may strike out the names of the proxies designated by the
Board of Directors on the proxy card and may write in and substitute the name of
any other person and may deliver the revised proxy card to such other person
whom the shareholder may wish to designate as proxy for the purpose of
representing such shareholder at the meeting.
SHAREHOLDER PROPOSALS: Proposals which are the proper subject for inclusion
in the proxy statement and for consideration at an annual meeting may be
presented by shareholders. Any proposals by shareholders intended to be
presented at the 1996 Annual Meeting of Shareholders must be received by Ashland
at its Executive Headquarters, 1000 Ashland Drive, Russell, Kentucky, 41169 no
later than August 8, 1995 in order to be included in Ashland's proxy statement
and proxy card. In addition, Ashland's By-laws currently require that for
business to be properly brought before an annual meeting by a shareholder,
regardless of whether included in Ashland's proxy statement, the shareholder
must give written notice of his or her intent to propose such business, either
by personal delivery or by United States mail, postage prepaid, to the Secretary
of Ashland, at least 90 days in advance of such meeting. Such notice must set
forth as to each matter the shareholder proposes to bring before the annual
meeting: (i) a brief description of the business desired to be brought before
the meeting and the reasons for conducting such business at the meeting and, in
the event that such business includes a proposal to amend either the Second
Restated Articles of Incorporation or By-laws of Ashland, the language of the
proposed amendment, (ii) the name and address of the shareholder proposing such
business, (iii) a representation that the shareholder is a holder of record of
stock of Ashland entitled to vote at such
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meeting and intends to appear in person or by proxy at the meeting to propose
such business, and (iv) any material interest of the shareholder in such
business. The By-laws further provide that no business shall be conducted at any
annual meeting of shareholders except in accordance with the foregoing
procedures and that the chairman of any such meeting may refuse to permit any
business to be brought before an annual meeting without compliance with the
foregoing procedures.
Please fill in, sign and date the enclosed form of proxy and return it in
the accompanying addressed envelope which requires no further postage if mailed
in the United States. If you attend the Annual Meeting and wish to vote your
shares in person, you may do so. Your cooperation in giving this matter your
prompt attention will be appreciated.
THOMAS L. FEAZELL,
SENIOR VICE PRESIDENT,
GENERAL COUNSEL AND SECRETARY
Russell, Kentucky
December 5, 1994
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GRAPHIC MATERIAL CROSS-REFERENCE PAGE
Photographs of the directors and nominees for directors appear to the left
of each respective name on pages 2 through 7.
Stock Performance graphs comparing Ashland's five-year and ten-year
cumulative total shareholder return with the cumulative total return of the
Standard & Poor's 500 Composite Stock Price Index and a peer group index appears
on pages 21 and 22.
<PAGE>
EXHIBIT INDEX
<TABLE>
<S> <C>
Exhibit A................ Ashland Oil, Inc. 1995 Performance Unit Plan
Exhibit B................ Ashland Oil, Inc. Incentive Compensation Plan for Key Executives
Exhibit C................ Ashland Oil, Inc. Deferred Compensation Plan
</TABLE>
<PAGE>
EXHIBIT A
ASHLAND OIL, INC.
1995 PERFORMANCE UNIT PLAN
1. PURPOSE
The purpose of this Ashland Oil, Inc. 1995 Performance Unit Plan (the
"Plan") is to further the long-term profitable growth of Ashland by offering a
long-term incentive in addition to current compensation to eligible employees
who will be largely responsible for such growth to the benefit of the Ashland
shareholders. It is expected that this plan will encourage such employees to
remain with Ashland and will also encourage qualified persons to seek and accept
employment with Ashland.
2. DEFINITIONS
Terms not otherwise defined herein shall have the following meanings:
(a) "Ashland" means Ashland Oil, Inc., its divisions and subsidiaries.
(b) "Board" means the Board of Directors of Ashland Oil, Inc.
(c) "Change in Control" shall be deemed to occur (1) upon the approval of
the shareholders of Ashland (or if such approval is not required, upon the
approval of the Board) of (A) any consolidation or merger of Ashland in which
Ashland is not the continuing or surviving corporation or pursuant to which
shares of Common Stock would be converted into cash, securities or other
property other than a merger in which the holders of Common Stock immediately
prior to the merger will have the same proportionate ownership of Common Stock
of the surviving corporation immediately after the merger, (B) any sale, lease,
exchange, or other transfer (in one transaction or a series of related
transactions) of all or substantially all the assets of Ashland or (C) adoption
of any plan or proposal for the liquidation or dissolution of Ashland, (2) when
any "person" (as defined in Section 3(a)(9) or 13(d) of the Exchange Act), other
than Ashland Oil, Inc. or any subsidiary or employee benefit plan or trust
maintained by Ashland Oil, Inc. or any of its subsidiaries, shall become the
"beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly
or indirectly, of more than 20% of the Common Stock outstanding at the time,
without the prior approval of the Board, or (3) if at any time during a period
of two consecutive years, individuals who at the beginning of such period
constituted the Board shall cease for any reason to constitute at least a
majority thereof, unless the election or the nomination for election by
Ashland's shareholders of each new director during such two-year period was
approved by a vote of at least two-thirds of the directors then still in office
who were directors at the beginning of such two-year period.
(d) "Code" means the Internal Revenue Code of 1986, as amended from time to
time.
(e) "Committee" means the Personnel and Compensation Committee of the Board
of Directors."
(f) "Common Stock" means the common stock, $1.00 par value, of Ashland Oil,
Inc.
(g) "Employee" means an employee selected for participation in the Plan as
set forth in Section 5.
(h) "Exchange Act" means the Securities Exchange Act of 1934, as amended.
(i) "Fair Market Value" means, as of any specified date (or, if a weekend or
holiday, the next preceding business day), the closing price of a share of
Common Stock, as reported on the Composite Tape for New York Stock Exchange
issues.
(j) "Participant" means any Employee who receives a Performance Unit Award
under the Plan for a Performance Period.
(k) "Performance Goals" mean performance goals as may be established in
writing by the Committee which may be based on earnings, stock price, return on
equity, return on investment, total return to shareholders, economic value
added, debt rating or achievement of business or operational goals, such as
drilling or exploration targets or profit per barrel. Such goals may be absolute
in their terms or
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measured against or in relationship to other companies comparably or otherwise
situated. Such performance goals may be particular to an Employee or the
division, department, branch, line of business, subsidiary or other unit in
which the Employee works and/or may be based on the performance of Ashland
generally.
(l) "Performance Period" means the period of time designated by the
Committee applicable to a Performance Unit Award during which the Performance
Goals shall be measured.
(m) "Performance Unit Award" means an award made pursuant to the provisions
of this Plan, the payment of which is contingent upon attainment of Performance
Goals.
3. SHARES: ADJUSTMENTS IN THE EVENT OF CHANGES IN CAPITALIZATION
(a) SHARES AUTHORIZED FOR ISSUANCE. There shall be reserved for issuance
under the Plan 2,200,000 shares of Common Stock, subject to adjustment pursuant
to subsection (b) below. Such shares shall be authorized but unissued shares of
Common Stock.
(b) ADJUSTMENTS IN CERTAIN EVENTS. In the event of any change in the
outstanding Common Stock by reason of any stock split, share dividend,
recapitalization, merger, consolidation, reorganization, combination, or
exchange or reclassification of shares, split-up, split-off, spin-off,
liquidation or other similar change in capitalization, or any distribution to
common shareholders other than cash dividends, the number or kind of shares that
may be issued under the Plan shall be automatically adjusted to that the
proportionate interest of the Employees shall be maintained as before the
occurrence of such event.
4. ADMINISTRATION
Subject to the express provisions of this Plan, the Committee shall have
full authority to construe, interpret and administer this Plan, to prescribe,
amend and rescind rules and regulations relating to the Plan, to make
Performance Unit Awards, to determine the terms, provisions and conditions of
the respective Performance Unit Awards (which need not be identical) and to make
all other determinations necessary or advisable for the Plan's administration.
Decisions of the Committee shall be final, conclusive and binding upon all
parties.
5. ELIGIBILITY
Performance Unit Awards may be made only to regular, full-time, salaried
employees of Ashland as selected by the Committee. Any Employee may receive one
or more Performance Unit Awards as the Committee shall from time to time
determine, and such determinations may be different as to different Employees
and may vary as to different awards. Nothing contained in this Plan shall be
construed to limit the right of Ashland to grant other forms of incentive
compensation otherwise than under this Plan. The Plan or the receipt of a
Performance Unit Award shall not confer on any individual any right to continue
in the employ of Ashland or interfere in any way with the right of Ashland to
terminate his or her employment at any time, with or without cause, despite the
fact that such termination may have an adverse impact on the Participant's
receipt of payment of a Performance Unit Award.
6. PERFORMANCE UNIT AWARDS
(a) The Performance Goals and Performance Period applicable to a Performance
Unit Award shall be set forth in writing by the Committee no later than 90 days
after the commencement of the Performance Period and shall be communicated to
the Employee. The Committee shall have the discretion to later revise the
Performance Goals solely for the purpose of reducing or eliminating the amount
of compensation otherwise payable upon attainment of the Performance Goals;
provided that the Performance Goals and the amounts payable upon attainment of
the Performance Goals may be adjusted during any Performance Period to reflect
promotions, transfers or other changes in an Employee's employment so long as
such changes are consistent with the Performance Goals established for other
Employees in the same or similar positions.
(b) In making a Performance Unit Award, the Committee may take into account
an Employee's responsibility level, performance, cash compensation level,
incentive compensation awards and such other considerations as it deems
appropriate. Each Performance Unit Award shall be established in
A-2
<PAGE>
dollars or shares of Common Stock, or a combination of both, as determined by
the Committee, and shall be based on the Employee's base salary on the date of
the Performance Unit Award. The original amount of any Performance Unit Award
shall not exceed 400% of the Employee's then annual base salary; the amount paid
out upon meeting the Performance Goals shall not exceed the amount of such
Performance Unit Award; and the total amount of all Performance Unit Awards for
a Performance Period shall not exceed 2% of shareholders' equity as shown in
Ashland's Annual Report to Shareholders at the end of the fiscal year next
preceding the commencement of such Performance Period. In determining the amount
of any Performance Unit Award made, in whole or in part, in shares of Common
Stock, the value thereof shall be based on the Fair Market Value on the first
day of the Performance Period or on such other date as the Board shall
determine.
(c) A Performance Unit Award shall terminate for all purposes if the
Employee does not remain continuously employed and in good standing with Ashland
until payment of such Performance Unit Award. An Employee (or his or her
beneficiaries or estate) whose employment was terminated because of death,
disability or retirement will receive a pro rata portion of the payment of his
or her award based upon the portion of the Performance Period during which he or
she was so employed so long as the Performance Goals are subsequently achieved.
(d) Payment with respect to Performance Unit Awards will be made to
Employees on a date or dates fixed by the Committee. The amount of such payment
shall be determined by the Committee and shall be based on the original amount
of such Performance Unit Award adjusted to reflect the attainment of the
Performance Goals during the Performance Period. Payment may be made in one or
more installments and may be made wholly in cash, wholly in shares of Common
Stock or partly in cash and partly in such shares, all at the discretion of the
Committee.
In addition, Employees may be offered the opportunity to defer the receipt
of payment of a Performance Unit Award. Common Stock may be granted (i) as a
bonus for deferral, or (ii) as a bonus for retaining for a specified period of
time. Common Stock received in payment of a Performance Unit Award, all under
such terms as may be established by the Committee from time to time.
Notwithstanding, in no event shall the value of the Common Stock granted as a
bonus for deferral or retention exceed 20% of the value of the Performance Unit
Award so deferred or retained. Any and all payments made under the Plan shall be
subject to the applicable federal, state or local taxes required by law to be
withheld.
If payment of a Performance Unit Award established in dollars is to be made
in shares of Common Stock or partly in such shares, the number of shares of
Common Stock to be delivered to an Employee on any payment date shall be
determined by dividing (x) the amount payable by (y) the Fair Market Value on
the date the Board approves the Committee's decision to pay the Performance Unit
Award or on such other date as the Board shall determine.
If payment of a Performance Unit Award established in shares of Common Stock
is to be made in cash or partly in cash, the amount of cash to be paid to an
Employee on any payment date shall be determined by multiplying (x) the number
of shares of Common Stock to be paid in cash on such payment date with respect
to such Performance Unit Award, by (y) the Fair Market Value on the date the
Board approves the Committee's decision to pay the Performance Unit Award or on
such other date as the Board shall determine. Any payment may be subject to such
restrictions and conditions as the Committee may determine.
7. NONTRANSFERABILITY AND NO SHAREHOLDER RIGHTS
The right to receive payment of a Performance Unit Award shall not be
assigned or transferred in whole or in part, either directly or by operation of
law or otherwise (except by will or the laws of descent and distribution)
including, but not by way of limitation, execution, levy, garnishment,
attachment, pledge, bankruptcy or any other manner. The holder of a Performance
Unit Award payable in whole or in
A-3
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part in shares of Common Stock shall have none of the rights of a shareholder
with respect to such award until shares of Common Stock shall have been
registered in the name of the person or persons receiving payment of such award
on the transfer books of Ashland upon such payment.
8. CHANGE IN CONTROL
Upon a Change in Control, in order to maintain a Participant's rights under
the Plan, there shall be an acceleration of any Performance Period relating to
any Performance Unit Award, and payment of any Performance Unit Award shall be
made in cash as soon as practicable after such Change in Control based upon
achievement of the Performance Goals applicable to such award up to the date of
the Change in Control. If such Performance Unit Award was established in shares
of Common Stock, the amount of cash to be paid to an Employee with respect to
the Performance Unit Award shall be determined by multiplying (x) the number of
shares of Common Stock relating to such Performance Unit Award, by (y) the Fair
Market Value on the date of the Change in Control. Further, Ashland's obligation
with respect to such Performance Unit Award shall be assumed, or new obligations
substituted therefor, by the acquiring or surviving corporation after such
Change in Control. In addition, prior to the date of such Change in Control, the
Committee, in its sole judgment may make adjustment to any Performance Unit
Award as may be appropriate to reflect such Change in Control.
9. GOVERNING LAW
The provisions of this Plan shall be interpreted and construed in accordance
with the laws of the Commonwealth of Kentucky.
10. AMENDMENT AND TERMINATION
The Plan shall be submitted to the shareholders for approval and adoption on
January 26, 1995 or such other date fixed for the next meeting of shareholders
or any adjournment or postponement thereof. Upon shareholder approval, the Plan
will become effective as of October 1, 1994. Unless terminated sooner by the
Committee, to the extent necessary to ensure that Performance Unit Award
payments be deductible under the Code, this Plan shall terminate on, and no
Performance Unit Awards shall be granted after, the first meeting of
shareholders occurring in calendar year 2000. Termination of the Plan shall not
affect any awards made hereunder which are outstanding on the date of
termination and such awards shall continue to be subject to the terms of the
Plan notwithstanding its termination. The Committee may amend, alter or
terminate this Plan at any time without the prior approval of the Board;
provided, however, that the Committee may not, without approval by the Board and
the shareholders:
(i) increase the amount of securities that may be issued under the Plan
(except as provided in Section 3(b));
(ii) materially modify the requirements as to eligibility for
participation in the Plan; or
(iii) otherwise materially increase the benefits accruing the Employees
under the Plan.
A-4
<PAGE>
EXHIBIT B
ASHLAND OIL, INC.
INCENTIVE COMPENSATION PLAN FOR KEY EXECUTIVES
1. PURPOSE
The principal purposes of the Ashland Oil, Inc. Incentive Compensation Plan
for Key Executives (the "Plan") are to provide to Eligible Officers incentives
to earn annual incentive compensation through the achievement of performance
goals and to assist the Company in attracting, motivating and retaining key
employees on a competitive basis.
2. DEFINITIONS
Terms not otherwise defined herein shall have the following meanings:
(a) "Board" means the Board of Directors of Ashland Oil, Inc.
(b) "Change in Control" shall be deemed to occur (1) upon the approval of
the shareholders of the Company (or if such approval is not required, upon the
approval of the Board) of (A) any consolidation or merger of the Company in
which the Company is not the continuing or surviving corporation or pursuant to
which shares of Common Stock would be converted into cash, securities or other
property other than a merger in which the holders of Common Stock immediately
prior to the merger will have the same proportionate ownership of Common Stock
of the surviving corporation immediately after the merger, (B) any sale, lease,
exchange, or other transfer (in one transaction or a series of related
transactions) of all or substantially all the assets of the Company or (C)
adoption of any plan or proposal for the liquidation or dissolution of the
Company, (2) when any "person" (as defined in Section 3(a)(9) or 13(d) of the
Exchange Act), other than the Company or any subsidiary or employee benefit plan
or trust maintained by the Company or any of its subsidiaries, shall become the
"beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly
or indirectly, of more than 20% of the Common Stock outstanding at the time,
without the prior approval of the Board, or (3) if at any time during a period
of two consecutive years, individuals who at the beginning of such period
constituted the Board shall cease for any reason to constitute at least a
majority thereof, unless the election or the nomination for election by the
Company's shareholders of each new director during such two-year period was
approved by a vote of at least two-thirds of the directors then still in office
who were directors at the beginning of such two-year period.
(c) "Code" means the Internal Revenue Code of 1986, as amended from time to
time.
(d) "Committee" means the Personnel and Compensation Committee of the Board.
(e) "Common Stock" means the common stock, $1.00 par value, of Ashland Oil,
Inc.
(f) "Company" means Ashland Oil, Inc., its divisions and subsidiaries.
(g) "Eligible Officer" means an executive officer described in Section 4.
(h) "Exchange Act" means the Securities Exchange Act of 1934, as amended.
(i) "Executive Officer" means an executive officer as defined in Rule 3b-7
under the Exchange Act.
(j) "Fair Market Value" means, as of any specified date (or, if a weekend or
holiday, the next preceding business day), the closing price of a share of
Common Stock, as reported on the Composite Tape for New York Stock Exchange
issues.
(k) "Hurdle" means the minimum Performance Goal(s) that must be reached in
order for the Eligible Officer to receive any Incentive Award.
(l) "Incentive Award" means the amount determined by the Committee to be
payable to a Participant upon the achievement of the Performance Goals for the
particular Performance Period.
(m) "Participant" means any Eligible Officer who receives an Incentive Award
under the Plan for a Performance Period.
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(n) "Performance Goals" mean performance goals as may be established in
writing by the Committee which may be based on earnings, stock price, return on
equity, return on investment, total return to shareholders, economic value
added, debt rating or achievement of business or operational goals, such as
drilling or exploration targets or profit per barrel. Such goals may be absolute
in their terms or measured against or in relationship to other companies
comparably or otherwise situated. Such performance goals may be particular to an
Eligible Officer or the division, department, branch, line of business,
subsidiary or other unit in which the Eligible Officer works and/or may be based
on the performance of the Company generally.
(o) "Performance Period" means an annual period based upon the Company's
fiscal year, except to the extent the Committee determines otherwise.
(p) "Target" means the Performance Goal(s) that must be reached in order for
the Eligible Officer to receive the maximum Incentive Award. The maximum
Incentive Award is a fixed percentage of the midpoint of the salary range for
the position held by the Eligible Officer and is based upon the Eligible
Officer's level of employment. No Eligible Officer may receive a maximum
Incentive Award more than 150% of their salary range midpoint.
3. SHARES; ADJUSTMENTS IN THE EVENT OF CHANGES IN CAPITALIZATION
(a) SHARES AUTHORIZED FOR ISSUANCE. There shall be reserved for issuance
under the Plan 150,000 shares of Common Stock, subject to adjustment pursuant to
subsection (b) below. Such shares shall be authorized but unissued shares of
Common Stock.
(b) ADJUSTMENTS IN CERTAIN EVENTS. In the event of any change in the
outstanding Common Stock by reason of any stock split, share dividend,
recapitalization, merger, consolidation, reorganization, combination, or
exchange or reclassification of shares, split-up, split-off, spin-off,
liquidation or other similar change in capitalization, or any distribution to
common shareholders other than cash dividends, the number or kind of shares that
may be issued under the Plan shall be automatically adjusted so that the
proportionate interest of the Eligible Officers shall be maintained as before
the occurrence of such event.
4. ELIGIBILITY
The Chief Executive Officer and the Chief Operating Officer of the Company,
plus any other Executive Officers chosen by the Committee, shall be eligible to
participate in the Plan. An individual who becomes eligible to participate in
the Plan during the Plan Year may be approved by the Committee for a partial
year of participation.
5. ADMINISTRATION
Full power and authority to construe, interpret and administer the Plan
shall be vested in the Committee. Decisions of the Committee shall be final,
conclusive and binding upon all parties.
6. AWARDS; PAYMENT
(a) No later than 90 days after the commencement of each Performance Period,
the Committee shall establish in writing one or more Performance Goals,
including the Hurdle and Target, that must be reached by an Eligible Officer in
order to receive an Incentive Award for such Performance Period. The Committee
shall have the discretion to later revise the Performance Goals and the amount
to be paid out upon the attainment of these goals solely for the purpose of
reducing or eliminating the amount of compensation otherwise payable upon
attainment of the Performance Goals; provided that the Performance Goals and the
amounts payable upon attainment of the Performance Goals may be adjusted during
any Performance Period to reflect promotions, transfers or other changes in a
Participant's employment so long as such changes are consistent with the
Performance Goals established for other Participants in the same or similar
positions.
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(b) The amount payable to a Participant shall be based upon the achievement
of the Performance Goals and the Participant achieving the highest possible
individual performance rating for the Performance Period. To the extent that a
Participant does not achieve the highest possible individual performance rating
for the Performance Period, the Committee shall have the discretion to reduce
the amount payable to such Participant; provided, however, that no payment for
individual performance shall be made unless the Performance Goals are achieved.
(c) Payment of Incentive Awards shall be made on a date or dates fixed by
the Committee. Payment may be made in one or more installments and may be made
wholly in cash, wholly in shares of Common Stock or a combination thereof as
determined by the Committee.
In addition, Participants may be offered the opportunity to defer the
receipt of payment of an Incentive Award. Common Stock may be granted (i) as a
bonus for deferral or (ii) as a bonus for retaining for a specified period of
time, Common Stock received in payment of an Incentive Award, all under such
terms as may be established by the Committee from time to time. Notwithstanding,
in no event shall the value of the Common Stock granted as a bonus for deferral
or retention exceed 20% of the value of the Incentive Award so deferred or
retained. Any and all payments made under the Plan shall be subject to
applicable federal, state or local taxes required by law to be withheld.
If payment of an Incentive Award shall be made all or partially in shares of
Common Stock, the number of shares of Common Stock to be delivered to a
Participant on any payment date shall be determined by dividing (x) the original
dollar amount to be paid on the payment date (or the part thereof determined by
the Committee to be delivered in shares of such Incentive Award) by (y) the Fair
Market Value on the date the Board approves the Committee's decision to pay an
Incentive Award.
(d) An Incentive Award shall terminate for all purposes if the Participant
does not remain continuously employed and in good standing with the Company
until the date of payment of such award. In the event an Eligible Officer's
employment is terminated because of death, disability or retirement, the
Eligible Officer (or his or her beneficiaries or estate) shall receive a pro
rata portion of the payment of an Incentive Award for which the Eligible Officer
would have otherwise been eligible based upon the portion of the Performance
Period during which he or she was so employed so long as the Performance Goals
are subsequently achieved.
7. INALIENABILITY OF BENEFITS
Incentive Awards may not be assigned or transferred in whole or in part,
either directly or by operation of law or otherwise (except by will or pursuant
to the laws of descent and distribution) including, but not by way of
limitation, execution, levy, garnishment, attachment, pledge, bankruptcy or any
other manner.
8. GOVERNING LAW
The provisions of this Plan shall be interpreted and construed in accordance
with laws of the Commonwealth of Kentucky.
9. AMENDMENTS
The Committee may amend, alter or terminate this Plan at any time without
the prior approval of the Board; provided, however, that the Committee may not,
without approval by the Board and the shareholders of the Company:
(a) increase the amount of securities that may be issued under the Plan
(except as provided in Section 3(b));
(b) materially modify the requirements as to eligibility for participation
in the Plan; or
(c) otherwise materially increase the benefits accruing to participants
under the Plan.
10. CHANGE IN CONTROL
Upon a Change in Control, in order to maintain an Eligible Officer's rights
under the Plan, there shall be an acceleration of any Performance Period
relating to any Incentive Award, and payment of any Incentive Award shall be
made in cash as soon as practicable after such Change in Control based upon
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<PAGE>
achievement of the Performance Goals applicable to such award up to the date of
the Change in Control. Further, the Company's obligation with respect to such
Incentive Award shall be assumed, or new obligations substituted therefor, by
the acquiring or surviving corporation after such Change in Control. In
addition, prior to the date of such Change in Control, the Committee, in its
sole judgment may make adjustment to any Incentive Award as may be appropriate
to reflect such Change in Control.
11. EFFECTIVE DATE; TERM OF THE PLAN
This Plan shall be submitted to the shareholders of the Company for their
approval and adoption on January 26, 1995 or such other date fixed for the next
meeting of shareholders or any adjournment or postponement thereof. If approved
and adopted by the shareholders, the Plan will become effective as of September
14, 1994. Unless terminated sooner by the Committee, to the extent necessary to
ensure that Incentive Award payments be deductible under the Code, the Plan
shall terminate on, and no Incentive Awards shall be granted after, the first
meeting of shareholders occurring in calendar year 2000.
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<PAGE>
EXHIBIT C
ASHLAND OIL, INC.
DEFERRED COMPENSATION PLAN
1. PURPOSE
The purpose of this Ashland Oil, Inc. Deferred Compensation Plan (the
"Plan"), is to provide eligible key employees of the Company with an opportunity
to defer compensation to be earned by them from the Company as a means of saving
for retirement or other future purposes.
2. DEFINITIONS
The following definitions shall be applicable throughout the Plan:
(a) "Accounting Date" means each December 31, March 31, June 30 and
September 30.
(b) "Beneficiary" means the person(s) designated by the Participant in
accordance with Section 11.
(c) "Board" means the Board of Directors of Ashland Oil, Inc.
(d) "Change in Control" shall be deemed to occur (1) upon the approval of
the shareholders of the Company (or if such approval is not required, upon the
approval of the Board) of (A) any consolidation or merger of the Company in
which the Company is not the continuing or surviving corporation or pursuant to
which shares of Common Stock would be converted into cash, securities or other
property other than a merger in which the holders of Common Stock immediately
prior to the merger will have the same proportionate ownership of Common Stock
of the surviving corporation immediately after the merger, (B) any sale, lease,
exchange, or other transfer (in one transaction or a series of related
transactions) of all or substantially all the assets of the Company, or (C)
adoption of any plan or proposal for the liquidation or dissolution of the
Company, (2) when any "person" (as defined in Section 13(a)(9) or 13(d) of the
Exchange Act), other than Ashland Oil, Inc. or any subsidiary or employee
benefit plan or trust maintained by Ashland Oil, Inc. or any of its
subsidiaries, shall become the "beneficial owner" (as defined in Rule 13d-3
under the Exchange Act), directly or indirectly, of more than 20% of the Common
Stock outstanding at the time, without the prior approval of the Board, or (3)
if at any time during a period of two consecutive years, individuals who at the
beginning of such period constituted the Board shall cease for any reason to
constitute at least a majority thereof, unless the election or the nomination
for election by the Company's shareholders of each new director during such
two-year period was approved by a vote of at least two-thirds of the directors
then still in office who were directors at the beginning of such two-year
period.
(e) "Committee" means the Personnel and Compensation Committee of the Board.
(f) "Common Stock" means the common stock, $1.00 per value, of Ashland Oil,
Inc.
(g) "Common Stock Fund" means that investment option in which a
Participant's Compensation Account may be invested and may earn income based on
a hypothetical investment in Common Stock.
(h) "Company" means Ashland Oil, Inc., its divisions and subsidiaries.
(i) "Compensation" means any employee compensation determined by the
Committee to be properly deferrable under the Plan.
(j) "Compensation Account" means the account to which the Participant's
Deferred Compensation is credited.
(k) "Corporate Human Resources" means the Corporate Human Resources
Department of the Company.
(l) "Credit Date" means such date as designated by the Committee that
Deferred Compensation shall be credited to the Compensation Account.
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(m) "Deferred Compensation" means the Compensation elected by the
Participant to be deferred pursuant to the Plan.
(n) "Election" means a Participant's delivery of a written notice of
election to Corporate Human Resources electing to defer payment of all or a
portion of his or her Compensation.
(o) "Employee" means a full-time, regular salaried employee (which term
shall be deemed to include officers) of the Company and of its present and
future subsidiary corporations as defined in Section 424 of the Internal Revenue
Code of 1986, as amended.
(p) "Exchange Act" means the Securities Exchange Act of 1934, as amended.
(q) "Fair Market Value" means, as of any specified date (or, if a weekend or
holiday, the next preceding business day), the closing price of a share of
Common Stock, as reported on the Composite Tape for New York Stock Exchange
issues.
(r) "Fiscal Year" means that annual period commencing October 1 and ending
the following September 30.
(s) "Participant" means an Employee selected by the Committee to participate
in the Plan and who has elected to defer payment of all or a portion of his or
her Compensation under the Plan. "Participant" shall also include any Employee
who had an account under the Prior Plans which has been transferred to this
Plan.
(t) "Plan" means this Ashland Oil, Inc. Deferred Compensation Plan.
(u) "Prime Rate of Interest" means the rate of interest quoted by Citibank,
N.A. as its prime commercial lending rate on the latest date practicable prior
to the date of actual distribution under Section 12.
(v) "Prior Plans" mean the Ashland Oil, Inc. Deferred Compensation Plan for
ERISA Forfeitures and the Ashland Oil, Inc. Deferred Compensation Plan for Key
Employees, which are being replaced by this Plan as of the effective date of
this Plan identified in Section 16.
(w) "Section 16(b) Participant" means a Participant who is subject to
Section 16(b) of the Exchange Act.
(x) "Service Year" means the Fiscal Year or portion thereof during which the
services have been rendered for which Compensation is payable.
(y) "Stock Unit(s)" means the share equivalents credited to the Common Stock
Fund of a Participant's Compensation Account pursuant to Section 6.
(z) "Termination" means retirement from the Company or termination of
services as an Employee for any other reason.
3. SHARES; ADJUSTMENTS IN EVENT OF CHANGES IN CAPITALIZATION
(a) SHARES AUTHORIZED FOR ISSUANCE. There shall be reserved for issuance
under the Plan 500,000 shares of Common Stock, subject to adjustment pursuant to
subsection (c) below.
(b) UNITS AUTHORIZED FOR CREDIT. The maximum number of Stock Units that
may be credited to Participant's Compensation Accounts under the Plan is
1,500,000, subject to adjustment pursuant to subsection (c) below.
(c) ADJUSTMENTS IN CERTAIN EVENTS. In the event of any change in the
outstanding Common Stock of the Company by reason of any stock split, share
dividend, recapitalization, merger, consolidation, reorganization, combination,
or exchange or reclassification of shares, split-up, split-off, spin-off,
liquidation or other similar change in capitalization, or any distribution to
common shareholders other than cash dividends, the number or kind of shares or
Stock Units that may be issued or credited under the Plan shall be automatically
adjusted so that the proportionate interest of the Participants shall be
maintained as before the occurrence of such event. Such adjustment shall be
conclusive and binding for all purposes of the Plan.
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<PAGE>
4. ELIGIBILITY
The Committee shall have the authority to select among any Employee those
Employees who shall be eligible to participate in the Plan.
5. ADMINISTRATION
Full power and authority to construe, interpret and administer the Plan
shall be vested in the Committee. This power and authority includes, but is not
limited to, selecting compensation eligible for deferral, establishing deferral
terms and conditions and adopting modifications, amendments and procedures as
may be deemed necessary, appropriate or convenient by the Committee. Decisions
of the Committee shall be final, conclusive and binding upon all parties.
Day-to-day administration of the Plan shall be the responsibility of Corporate
Human Resources.
6. PARTICIPANT ACCOUNTS
Upon election to participate in the Plan, there shall be established a
Compensation Account for the Participant to which there shall be credited any
Deferred Compensation, as of each Credit Date. Each Participant's Compensation
Account shall be credited (or debited) on each Accounting Date with income (or
loss) based on a hypothetical investment in any one or more of the investment
options available under the Plan, as prescribed by the Committee, including (but
not limited to) a Common Stock Fund, as elected by the Participant under the
terms of Section 8. Gains, losses and other elements of determining value shall
be determined substantially on the basis of a hypothetical investment in the
various investment options, as determined and applied in the manner deemed
appropriate by the Committee.
If a Participant elects to invest all or any portion of his or her
Compensation Account in the Common Stock Fund, that portion of the Participant's
Compensation Account shall be credited on each Credit Date with Stock Units
equal to the number of shares of Common Stock (including fractions of a share)
that could have been purchased with the amount of such Deferred Compensation at
the Fair Market Value on the Credit Date. As of any dividend payment date for
the Common Stock, the portion of a Participant's Compensation Account invested
in the Common Stock Fund as of the dividend record date shall be credited with
additional Stock Units. The number of Stock Units credited to the Common Stock
Fund will be determined by dividing (i) the product of (a) the dollar value of
the dividend declared in respect of a share of Ashland Common Stock multiplied
by (b) the number of Stock Units credited to the Participant's Common Stock Fund
as of the dividend record date by (ii) the Fair Market Value of a share of
Ashland Common Stock on the dividend payment date.
A Participant who had an existing account under the Prior Plans shall
automatically have such account transferred to a Compensation Account under this
Plan to be maintained and administered pursuant to the terms and conditions of
this Plan.
Amounts credited to a Compensation Account shall remain a part of the
general funds of the Company and nothing contained in this Plan shall be deemed
to create a trust or fund of any kind or create any fiduciary relationship.
Nothing contained herein shall be deemed to give any Participant any ownership
or other proprietary, security or other rights in any funds, stock or assets
owned or possessed by the Company, whether or not earmarked for the Company's
own purposes as a reserve or fund to be utilized by the Company for the
discharge of its obligations hereunder. To the extent that any person acquires a
right to receive payments or distributions from the Company under this Plan,
such right shall be no greater than the right of any unsecured creditor of the
Company.
7. FINANCIAL HARDSHIP
Upon the written request of a Participant or a Participant's legal
representative and a finding that continued deferral will result in financial
hardship to the Participant, the Committee (in its sole discretion) may
authorize (a) the payment of all or a part of a Participant's Compensation
Account in a single installment prior to his or her ceasing to be a Participant,
or (b) the acceleration of payment of any
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<PAGE>
multiple installments thereof. If, in the sole discretion of the Committee, a
delay in any distribution pursuant to this Section 7 shall be necessary to avoid
liability of the Participant under Section 16(b) of the Exchange Act, any such
distribution shall be so postponed.
8. MANNER OF ELECTION
(a) GENERAL. Any Employee selected by the Committee to participate in the
Plan may elect to do so in any Fiscal Year by delivering to Corporate Human
Resources a written notice on a form prescribed by Corporate Human Resources
electing to defer payment of all or a portion (in 25% increments or other
increments so prescribed by the Committee) of his or her Compensation (an
"Election"). The Election must be filed on or before September 30 in order to be
effective for amounts earned in the immediately succeeding Fiscal Year. An
effective Election may not be revoked or modified (except as otherwise stated
herein) with respect to a Service Year for which such Election is effective.
(b) INVESTMENT ALTERNATIVES -- EXISTING BALANCES. A Participant may elect
to change an existing selection as to the investment alternatives in effect with
respect to his or her existing Compensation Account (in 25% increments or other
increments so prescribed by the Committee) one (1) time during any three-month
period by filing with Corporate Human Resources a new Election, at least fifteen
(15) days prior to the commencement of the quarter in which the Participant
desires the change to become effective. The change will be deemed effective as
of the first business day of the next quarter subsequent to the filing of such
Election. Notwithstanding the foregoing, a Section 16(b) Participant may elect
to change an existing selection involving the Common Stock Fund during the
"window period" beginning on the third business day following the public release
of quarterly financial results by the Company and ending on the twelfth day
following such release. Such change will be deemed effective as of the last day
of the month in which the Election was filed.
(c) CHANGE OF BENEFICIARY. A Participant may, at any time, elect to change
the designation of a Beneficiary.
(d) PAYMENT PERIOD; FORM OF PAYMENT. A Participant will be allowed to
change the Election as to the applicable payment period or form of payment for
all amounts previously deferred pursuant to such Election one time, subject to
approval by the Committee. Such change must be made no later than eighteen
months prior to such Participant's Termination.
9. MANNER OF PAYMENT UPON TERMINATION
In accordance with the Participant's Election and subject to Committee
approval upon payout, amounts credited to a Participant's Compensation Account
will be paid in a lump sum or in the form of annual or quarterly installments,
in shares of Common Stock or cash, or a combination of both, to the Participant
following his or her Termination or, in the event of his or her death, to a
Beneficiary. If a Participant elects to receive payment in installments, the
payment period shall not exceed ten years following the date of the
Participant's Termination.
The amount of any cash distribution to be made in installments with respect
to the Compensation Account will be determined by multiplying (i) the balance in
such Compensation Account on the Accounting Date immediately preceding the cash
distribution (minus any amounts in the Common Stock Fund) by (ii) a fraction,
the numerator of which is one and the denominator of which is the number of
installments in which distributions remain to be made (including the current
distribution). The amount of any cash distribution to be made in installments
with respect to Stock Units will be determined by (i) multiplying the number of
Stock Units attributable to such installment (determined as hereinafter
provided) by (ii) the closing price of the Common Stock on each Accounting Date
immediately prior to the date on which such installment is to be paid. The
number of Stock Units attributable to an installment shall be determined by
multiplying (i) the current number of Stock Units in the Common Stock Fund by
(ii) a fraction, the numerator of which is one and the denominator of which is
the number of installments in which distributions remain to be made (including
the current distribution).
The amount of any stock distribution to be made in installments with respect
to the Compensation Account shall be determined by dividing the amount of cash
attributable to such installment (determined as hereinafter provided) by the
closing price of the Common Stock on each Accounting Date
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<PAGE>
immediately prior to the date on which such installment is to be paid. The
amount of cash attributable to an installment shall be determined by multiplying
(i) the current balance in such Compensation Account on the Accounting Date
immediately preceding the stock distribution (minus any amounts in the Common
Stock Fund) by (ii) a fraction, the numerator of which is one and the
denominator of which is the number of installments in which distributions remain
to be made (including the current distribution). The amount of any stock
distribution to be made in installments with respect to the amount of a
Compensation Account invested in the Common Stock Fund shall be determined by
multiplying (i) the current number of Stock Units by (ii) a fraction, the
numerator of which is one and the denominator of which is the number of
installments in which distributions remain to be made (including the current
distribution). Only whole number of shares of Common Stock will be issued, with
any fractional shares to be paid in cash.
10. COMMENCEMENT OF PAYMENTS
Payments of amounts deferred pursuant to a valid Election shall commence
after a Participant's Termination (i) with respect to a lump sum, as soon as
reasonably practicable after the first business day of the calendar year
selected by a Participant in his or her Election, (ii) with respect to annual
installments, as soon as reasonably practicable after the first business day of
the first calendar year of deferred payment selected by a Participant in his or
her Election, and (iii) with respect to quarterly installments, as soon as
reasonably practicable after the first business day of the first calendar
quarter of deferred payment selected by a Participant in his or her Election. If
a Participant dies prior to the first deferred payment specified in an Election,
payments shall commence to the Participant's Beneficiary on the first payment
date so specified.
11. BENEFICIARY DESIGNATION
A Participant may designate one or more persons to whom payments are to be
made if the Participant dies before receiving payment of all amounts due
hereunder. A designation of Beneficiary will be effective only after the signed
Election is filed with Corporate Human Resources while the Participant is alive
and will cancel all designations of Beneficiary signed and filed earlier. If the
Participant fails to designate a Beneficiary as provided above, the remaining
unpaid amounts shall be paid in one lump sum to the estate of such Participant.
If all Beneficiaries of the Participant die before the Participant or before
complete payment of all amounts due hereunder, the remaining unpaid amounts
shall be paid in one lump sum to the estate of the last to die of such
Beneficiaries.
12. CHANGE IN CONTROL
Notwithstanding any provision of this Plan to the contrary, in the event of
a Change in Control, each Participant in the Plan shall receive an automatic
lump sum cash distribution of all amounts accrued in the Participant's
Compensation Account (including interest at the Prime Rate of Interest from the
date of the Change of Control through the business day immediately preceding the
date of distribution) not later than fifteen (15) days after the date of the
Change in Control. For this purpose, the balance in the portion of a
Participant's Compensation Account invested in the Common Stock Fund shall be
determined by multiplying the number of Stock Units by the higher of (a) the
highest Fair Market Value on any date within the period commencing 30 days prior
to such Change in Control, or (b) if the Change in Control of the Company occurs
as a result of a tender or exchange offer or consummation of a corporate
transaction, then the highest price paid per share of Common Stock pursuant
thereto. Any consideration other than cash forming a part or all of the
consideration for Common Stock to be paid pursuant to the applicable transaction
shall be valued at the valuation price thereon determined by the Board.
In addition, the Company shall reimburse a Participant for the legal fees
and expenses incurred if the Participant is required to seek to obtain or
enforce any right to distribution. In the event that it is determined that such
Participant is properly entitled to a cash distribution hereunder, such
Participant shall also be entitled to interest thereon payable in an amount
equivalent to the Prime Rate of Interest from the date such distribution should
have been made to and including the date it is made. Notwithstanding any
provision of this Plan to the contrary, this Section 12 may not be amended after
a Change in Control occurs without the written consent of a majority in number
of Participants.
C-5
<PAGE>
13. INALIENABILITY OF BENEFITS
The interests of the Participants and their Beneficiaries under the Plan may
not in any way be voluntarily or involuntarily transferred, alienated or
assigned, nor subject to attachment, execution, garnishment or other such
equitable or legal process. A Participant or Beneficiary cannot waive the
provisions of this Section 13.
14. GOVERNING LAW
The provisions of this plan shall be interpreted and construed in accordance
with the laws of the Commonwealth of Kentucky, except to the extent preempted by
Federal law.
15. AMENDMENTS
The Committee may amend, alter or terminate this Plan at any time without
the prior approval of the Board; provided, however, that the Committee may not,
without approval by the Board and the shareholders:
(a) increase the number of securities that may be issued under the Plan
(except as provided in Section 3(c));
(b) materially modify the requirements as to eligibility for
participation in the Plan; or
(c) otherwise materially increase the benefits accruing to Participants
under the Plan.
16. EFFECTIVE DATE
The Plan shall be submitted to the shareholders of the Company for their
approval and adoption on January 26, 1995, or such other date fixed for the next
meeting of shareholders or any adjournment or postponement thereof. If approved
and adopted by the shareholders, the Plan will become effective as of October 1,
1994.
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[LOGO] ASHLAND OIL, INC.
THE SOLICITATION OF THESE CONFIDENTIAL VOTING INSTRUCTIONS IS MADE ON BEHALF OF
THE BOARD OF DIRECTORS
The undersigned, as a participant in the Employee Thrift Plan, the Leveraged
Employee Stock Ownership Plan or the SuperAmerica Hourly Associates Savings
Plan, or any combination, hereby instructs Society National Bank, Trustee, to
appoint JOHN R. HALL and PAUL W. CHELLGREN, and each of them, with full power of
substitution, the attorney and proxy of the said Trustee to represent the
interests of the undersigned in Ashland Common Stock held under the terms of
said Plan(s), at the Annual Meeting of Shareholders of ASHLAND OIL, INC. to be
held at the Ashland Petroleum Executive Office Building, Ashland Drive, Russell,
Kentucky, 10:30 a.m. on January 26, 1995, or any adjournment thereof, and to
vote, with all powers the Trustee would possess if present, (a) all shares of
Ashland Common Stock ("Common Stock") credited to the undersigned's account(s)
under said Plan(s) as of the record date for the Annual Meeting ("Allocated
Shares") and (b) the proportionate number of Non-Directed and Unallocated Shares
of Common Stock as to which the undersigned is entitled to direct the voting in
accordance with the provisions of the Plan(s), upon the following matters and
upon any other business that may properly come before the meeting or any
adjournment thereof.
By completing, signing and returning this voting instruction card you will be
acting as a named fiduciary under the Employee Retirement Income Security Act of
1974, as amended, for the Plans in which you participate and will be voting all
Allocated Shares as well as all Non-Directed and Unallocated Shares of Common
Stock the same way. Any participant wishing to vote the Non-Directed and
Unallocated Shares differently from the Allocated Shares or not wishing to vote
the Non-Directed and Unallocated Shares at all may do so by requesting a
separate voting instruction card from Society National Bank at P.O. Box 94717,
Cleveland, Ohio 44101, (800) 982-3811 Ext. 3685 Maria Martin.
Non-Directed Shares are those shares of Common Stock, allocated to a participant
account, but for which a voting instruction card is not timely received by the
Trustee. Unallocated Shares are those shares of Common Stock which remain
unallocated under the Plan(s).
Election of 6 Directors to Class III of the Board of Directors of Ashland:
Nominees: Jack S. Blanton, Samuel C. Butler, Edmund B. Fitzgerald, John R. Hall,
Mannie L. Jackson, James W. Vandeveer.
/ / To vote for all items AS RECOMMENDED BY THE BOARD OF DIRECTORS,
mark this box, sign, date and return this proxy.
(continued and to be signed on reverse side.)
(NO ADDITIONAL VOTE IS NECESSARY)
SEE REVERSE SIDE
<PAGE>
/X/ PLEASE MARK YOUR VOTES AS IN THIS EXAMPLE.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSALS 1 THROUGH 6
FOR WITHHELD
1. Election of Six Directors (SEE REVERSE) / / / /
(Except Nominee(s) written below)
-------------------------------------- FOR AGAINST ABSTAIN
2. Ratification of Ernst & Young as auditors / / / / / /
for 1995 fiscal year.
FOR AGAINST ABSTAIN
3. Amendment to the Second Restated Articles / / / / / /
of Incorporation to change Ashland's name
to Ashland Inc.
FOR AGAINST ABSTAIN
4. Approval of the 1995 Performance Unit Plan. / / / / / /
FOR AGAINST ABSTAIN
5. Approval of the Incentive Compensation Plan / / / / / /
for Key Executives.
FOR AGAINST ABSTAIN
6. Approval of the Deferred Compensation Plan. / / / / / /
THE BOARD OF DIRECTORS RECOMMENDS A
VOTE AGAINST SHAREHOLDER PROPOSAL 7:
- ------------------------------------
FOR AGAINST ABSTAIN
7. To request the Board to require that at
future elections of directors all directors / / / / / /
be elected annually.
SIGNATURE DATE
----------------------------------------------- ----------------
INSTRUCTIONS: Please date and sign these voting instructions exactly as name
appears hereon. The shares represented by these voting
instructions will be voted as specified by the participant. If no
voting instructions are received by the Trustee, the Trustee will
vote shares in accordance with the above instructions. These
instructions, when properly executed, are voted in the manner
directed herein by the undersigned. If no direction is made,
these instructions will be voted FOR the election of Directors
and FOR Proposals 2 thru 6 and AGAINST Proposal 7.
<PAGE>
PROXY [Logo] ASHLAND OIL, INC. PROXY
THE SOLICITATION OF THIS PROXY IS MADE ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints JOHN R. HALL and PAUL W. CHELLGREN, and each of
them, with full power of substitution, the attorney and proxy of the undersigned
to attend the Annual Meeting of Shareholders of ASHLAND OIL, INC. to be held at
the Ashland Petroleum Executive Office Building, Ashland Drive, Russell,
Kentucky, 10:30 a.m. on January 26, 1995, or any adjournment thereof, and to
vote the stock of the undersigned with all powers the undersigned would possess
if present upon the following matters and upon any other business that may
properly come before the meeting or any adjournment thereof.
Election of 6 directors to Class III of the Board of Directors of Ashland:
NOMINEES: Jack S. Blanton, Samuel C. Butler, Edmund B. Fitzgerald, John R.
Hall, Mannie L. Jackson, James W. Vandeveer.
SEE REVERSE SIDE.
/ / To vote for all items AS RECOMMENDED BY THE BOARD OF
DIRECTORS, mark this box, sign, date and return this proxy.
(NO ADDITIONAL VOTE IS NECESSARY.)
PLEASE MARK, SIGN, DATE AND MAIL THE PROXY CARD
PROMPTLY, USING THE ENCLOSED ENVELOPE.
(CONTINUED AND TO BE SIGNED ON REVERSE SIDE.)
<PAGE>
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR:
----
ALL
FOR WITHHOLD EXCEPT
1. Election of Six Directors--(see reverse) / / / / / /
----------------------------------------
(Except Nominee(s) written above)
FOR AGAINST ABSTAIN
2. Ratification of Ernst & Young as independent
auditors for the 1995 fiscal year. / / / / / /
FOR AGAINST ABSTAIN
3. Amendment to the Second Restated Articles of
Incorporation to change Ashland's name to
Ashland Inc. / / / / / /
FOR AGAINST ABSTAIN
4. Approval of the 1995 Performance Unit Plan. / / / / / /
FOR AGAINST ABSTAIN
5. Approval of the Incentive Compensation Plan / / / / / /
for Key Executives.
FOR AGAINST ABSTAIN
6. Approval of the Deferred Compensation Plan. / / / / / /
THE BOARD OF DIRECTORS RECOMMENDS A FOR AGAINST ABSTAIN
VOTE AGAINST SHAREHOLDER PROPOSAL 7:
-------------------------------
7. To request the Board of Directors to take steps / / / / / /
necessary to require that at future elections of
directors all directors be elected annually.
Shares represented by this proxy will be voted as directed by the stockholder.
If no such choice is specified, the proxy will be voted FOR proposals 1-6 and
AGAINST proposal 7.
Dated:
----------------
Signature(s)
-------------------------------------------------------------------
- -------------------------------------------------------------------------------
Please date and sign exactly as your name or names appear(s) hereon. If stock is
held jointly, signature should include both names. Executors, administrators,
trustees, guardians and others signing in a representative capacity should give
their full title.
