<PAGE>
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 [_] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[_] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
ASHLAND INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
--Enter Company Name Here--
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[x] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
-------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
-------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-------------------------------------------------------------------------
(5) Total fee paid:
-------------------------------------------------------------------------
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
-------------------------------------------------------------------------
(3) Filing Party:
-------------------------------------------------------------------------
(4) Date Filed:
-------------------------------------------------------------------------
Notes:
<PAGE>
ASHLAND INC.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JANUARY 29, 1998
To our Shareholders:
The Annual Meeting of Shareholders of Ashland Inc., a Kentucky corporation
("Ashland"), will be held on Thursday, January 29, 1998, 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 two directors to Class III;
(2) to ratify the appointment of Ernst & Young LLP as independent
auditors for fiscal year 1998;
(3) to approve an amendment of the Second Restated Articles of
Incorporation (the "Articles") of Ashland to increase the number of shares
of authorized Common Stock, par value $1.00, from 150,000,000 to
300,000,000 shares;
(4) to act upon a proposal to amend Ashland's Articles to provide for a
single class of directors, elected annually; and
(5) if presented at the Annual Meeting, to act upon a shareholder
proposal to request the Board of Directors to consider nominating a wage
roll employee who is a representative at his or her plant site to the Board
of Directors.
Only shareholders of record at the close of business on November 24, 1997
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 , 1997
<PAGE>
ASHLAND INC.
PROXY STATEMENT
FOR
ANNUAL MEETING OF SHAREHOLDERS
WHEN: 10:30 a.m., Eastern Standard Time, January 29, 1998
WHERE: Ashland Petroleum Executive Office Building, 2000 Ashland Drive,
Russell, Kentucky
This Proxy Statement is furnished in connection with the solicitation by the
Board of Directors of Ashland Inc. ("Ashland" or the "Company") of proxies to
be voted at the Annual Meeting of Shareholders 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 on or about December 3, 1997.
Only the holders of Ashland's Common Stock of record at the close of
business on November 24, 1997, 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. For purposes of determining the presence of a
quorum, abstentions and broker non-votes will be included in the computation
of the number of shares of Ashland Common Stock that are present.
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 held under Ashland's employee benefit
plans is discussed under the section of this Proxy Statement entitled "Stock
Ownership of Certain Persons."
Ashland's address is Ashland Inc., 1000 Ashland Drive, Russell, Kentucky
41169.
ITEM I. ELECTION OF DIRECTORS
The Board of Directors currently consists of thirteen directors, divided
into three classes. Two directors will be elected at the 1998 Annual Meeting.
The directors who are nominated for election as Class III directors at the
1998 Annual Meeting are Mr. Samuel C. Butler and Mr. Mannie L. Jackson.
The Committee on Directors of the Board recommended both nominees for
election. If elected, the nominees will hold office for a three-year term
expiring in 2001 unless the proposal described in Item IV is adopted, in which
case the nominees will serve for a one-year term expiring in 1999. Dr. Robert
B. Stobaugh and Messrs. Jack S. Blanton and Thomas E. Bolger, directors since
1977, 1988 and 1987, respectively, will retire on January 29, 1998.
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
1
<PAGE>
intention of the persons named in the enclosed proxy card (Messrs. Paul W.
Chellgren and Thomas L. Feazell), unless otherwise instructed in any form of
proxy, to vote FOR the election of the two nominees. Such persons may also
vote such shares cumulatively for only one nominee if any situation arises
which, in the opinion of the proxy holders, makes such action necessary or
desirable or if authority is withheld from one nominee. The Committee on
Directors of the Board has no reason to believe that either of the nominees
will not be available for election as directors.
NOMINEES FOR CLASS III DIRECTORS
(Term expiring in 2001)*
- ------------- SAMUEL C. BUTLER
[PHOTO OF Mr. Butler, 67, is a Partner of Cravath, Swaine & Moore,
SAMUEL C. Attorneys in New York, New York. He is a Director of Millipore
BUTLER Corporation and United States Trust Corporation. He has served
APPEARS as a Director of Ashland since 1970 and is a member of the
HERE] Audit Committee and Chairman of the Committee on Directors of
the Board of Directors.
Shares of Ashland Common Stock owned
beneficially..............................61,430(1)(2)(3)(4)(5)
- ------------- MANNIE L. JACKSON
[PHOTO OF Mr. Jackson, 58, is the majority owner and Chairman of the
MANNIE L. Board of the Harlem Globetrotters, International. He is a
JACKSON consultant with Honeywell, an Advisor to the Chairman, and a
APPEARS member of Honeywell's Southern Africa subsidiary's Board of
HERE] Directors. 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.; The Stanley
Works; and REEBOK Corporation. He has served as a Director of
Ashland since 1994 and is a member of the Committee on
Directors and the Personnel and Compensation Committee of the
Board of Directors.
Shares of Ashland Common Stock owned
beneficially....................................11,320(1)(2)(5)
CONTINUING CLASS I DIRECTORS
(Term expiring in 1999)
- ------------- FRANK C. CARLUCCI
[PHOTO OF Mr. Carlucci, 67, is Chairman of The Carlyle Group in
FRANK C. Washington, D.C. He was Secretary of Defense of the United
CARLUCCI States of America from 1987 to 1989. He is a Director of BDM
APPEARS International; Mass Mutual Life Insurance Company; Kaman
HERE] Corporation; Neurogen Corporation; Northern Telecom Ltd.;
Quaker Oats Company; SunResorts, Ltd.; Texas Biotechnology
Corporation; Pharmacia & Upjohn Inc.; and Westinghouse
Electric Corporation. He has served as a Director of Ashland
since 1989 and is a member of the Finance Committee and
Chairman of the Personnel and Compensation Committee of the
Board of Directors.
Shares of Ashland Common Stock owned
beneficially.................................25,529(1)(2)(4)(5)
* If elected, The Nominees for Class III Directors will serve
until 2001, unless the proposal described in Item IV is
adopted, in which case the nominees will serve for a one-year
term expiring in 1999.
2
<PAGE>
- ------------- JAMES B. FARLEY
[PHOTO OF Mr. Farley, 67, is the retired Chairman of Mutual Of New York.
JAMES B. He is presently a Trustee of Mutual of New York and a Director
FARLEY of Harrah's Entertainment Inc. and Walter Industries Inc. He
APPEARS has served as a Director of Ashland since 1984 and is Chairman
HERE] 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....................................17,615(1)(2)(5)
------------- W. L. ROUSE, JR.
[PHOTO OF Mr. Rouse, 65, is an investor in Naples, Florida. He was
W. L. Chairman of the Board of Directors, President and Chief
ROUSE, JR. Executive Officer of First Security Corporation in Lexington,
APPEARS Kentucky, from 1982 to 1992. He is a Director of Kentucky
HERE] American Water Company and K.U. Energy. He has served as a
Director of Ashland since 1986 and is a member of the Finance
------------- Committee and the Personnel and Compensation Committee of the
Board of Directors.
Shares of Ashland Common Stock owned
beneficially....................................27,843(1)(2)(5)
CONTINUING CLASS II DIRECTORS
(Term expiring in 2000)
- ------------- PAUL W. CHELLGREN
[PHOTO OF Mr. Chellgren, 54, is Chairman of the Board, Chief Executive
PAUL W. Officer and President of Ashland and has served in such
CHELLGREN capacities since 1997, 1996 and 1992, respectively. He was
APPEARS Chief Operating Officer of Ashland from 1992 to 1996. He is a
HERE] Director of PNC Bank Corp.; PNC Bank, Kentucky, Inc.;
Medtronic, Inc.; and Arch Coal, Inc. He has served as a
- ------------- Director of Ashland since 1992.
Shares of Ashland Common Stock owned
beneficially................................392,263(1)(2)(4)(6)
- ------------- RALPH E. GOMORY
[PHOTO OF Mr. Gomory, 68, is President of the Alfred P. Sloan Foundation
RALPH E. in New York, New York. He is a Director of The Bank of New
GOMORY York; LEXMARK International, Inc.; Polaroid Corp.; and The
APPEARS Washington Post Company. He has served as a Director of
HERE] Ashland since 1989 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....................................22,377(1)(2)(5)
3
<PAGE>
- ------------- PATRICK F. NOONAN
[PHOTO OF Mr. Noonan, 55, is Chairman of The Conservation Fund in
PATRICK F. Arlington, Virginia. He is a Director of International Paper
NOONAN Company and Saul Centers, Inc., a Trustee of The National
APPEARS Geographic Society and serves on the Board of Advisors of the
HERE] Duke University School of the Environment. He has served as a
Director of Ashland since 1991 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....................................12,052(1)(2)(5)
- ------------- JANE C. PFEIFFER
[PHOTO OF Mrs. Pfeiffer, 65, is a management consultant in Greenwich,
JANE C. Connecticut. She is a Director of International Paper Company
PFEIFFER and J. C. Penney Company, Inc. and a Trustee of Mutual Of New
APPEARS York. She has served as a Director of Ashland since 1982 and
HERE] is a member of the Finance Committee and the Public Policy--
Environmental Committee of the Board of Directors.
- -------------
Shares of Ashland Common Stock owned
beneficially.................................14,723(1)(2)(4)(5)
- ------------- MICHAEL D. ROSE
[PHOTO OF Mr. Rose, 55, is Chairman of the Board of Directors of Promus
MICHAEL D. Hotel Corporation in Memphis, Tennessee. (Promus and Harrah's
ROSE Entertainment, Inc., formerly comprised The Promus Companies
APPEARS Incorporated of which Mr. Rose was Chairman of the Board of
HERE] Directors from 1984 to 1995). Mr. Rose retired as Chairman of
the Board of Harrah's Entertainment, Inc. on January 1, 1997.
- ------------- Prior to April 1994, Mr. Rose also served as Chief Executive
Officer of The Promus Companies Incorporated. He is a Director
of First Tennessee National Corporation; General Mills, Inc.;
and Darden Restaurants, Inc. He has served as a Director of
Ashland since 1988 and is a member of the Audit Committee and
the Public Policy--Environmental Committee of the Board of
Directors.
Shares of Ashland Common Stock owned
beneficially....................................22,894(1)(2)(5)
- ---------------------
(1) Includes shares of Ashland Common Stock with respect to which the director
has the right to acquire beneficial ownership within 60 calendar days
after September 30, 1997, through the exercise of stock options: as to Mr.
Chellgren, 282,500 shares; as to all other directors except Mr. Jackson,
3,000 shares; and as to Mr. Jackson, 2,000 shares.
(2) Includes shares of Restricted Common Stock of Ashland for which the
director has voting power: as to Mr. Chellgren, 60,000 shares; as to all
other directors except Mr. Jackson, 2,000 shares; and as to Mr. Jackson,
1,000 shares.
(3) Includes 3,880 shares of Ashland Common Stock owned in trust for the
benefit of Mr. Butler and includes 750 shares of Ashland Common Stock
owned by Mr. Butler's wife for which he disclaims beneficial ownership.
4
<PAGE>
(4) Includes shares of Ashland Common Stock held under the Ashland Dividend
Reinvestment Plan which provides participants with voting power with
respect to such shares.
(5) Includes Common Stock Units held under the Deferred Compensation and Stock
Incentive Plan For Non-Employee Directors. These Common Stock Units are
payable in cash or Ashland Common Stock upon termination of service from
the Board.
(6) Includes shares of Ashland Common Stock held under Ashland's Employee
Savings Plan and/or Leveraged Employee Stock Ownership Plan for which
participants have voting power with respect to such shares. Participants
have investment power with respect to the shares in the unrestricted
account of the Employee Savings Plan.
Shares shown above for each nominee and continuing director indicate
beneficial ownership at September 30, 1997. No nominee or continuing director
owns beneficially more than [.52]% of Ashland's Common Stock.
Except as otherwise indicated, the nominees and continuing directors have
held the principal occupations described above during the past five years.
COMMITTEES OF THE BOARD OF DIRECTORS
The committees of the Board of Directors are the Audit Committee, Committee
on Directors, Finance Committee, Personnel and Compensation Committee and
Public Policy-Environmental Committee. During fiscal 1997, nine meetings of
the Board of Directors were held. The Audit Committee met three times, the
Committee on Directors met three times, the Finance Committee met two times,
the Personnel and Compensation Committee met five times and the Public Policy-
Environmental Committee met one time. Each director attended at least 75% of
the total meetings of the Board and the Committees on which they served with
the exception of Ralph E. Gomory, who attended 61.5% of such meetings. Overall
attendance at Board and Committee meetings was 90.3%.
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. Gomory
(Chairman), Mr. Bolger, Mr. Butler, Mr. Rose and Dr. Stobaugh.
THE COMMITTEE ON DIRECTORS is responsible for (i) recommending nominees for
membership to the Board of Directors; (ii) recommending the desirable size and
composition of the Board; (iii) overseeing the Board's annual evaluation of
its directors' performance; and (iv) recommending to the Board the level of
directors' compensation and the mix of director compensation elements. Current
members of the Committee are Mr. Butler (Chairman), Mr. Bolger, Mr. Jackson
and Dr. Stobaugh.
Nominees for directors are selected based on recognized achievements and
their ability to bring various skills and experience to the Board's
deliberations. The Committee will consider candidates recommended by other
directors, employees and shareholders. Written suggestions for candidates
should be sent to Secretary of Ashland 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 90 days in advance
of the meeting, provided the meeting is held on the last Thursday in January.
If the meeting is held earlier than that date, the notice must be given within
10 days after the first public disclosure of the date of the annual meeting.
The first public disclosure may include any public filing with the Securities
and Exchange Commission.
5
<PAGE>
A different timetable applies with respect to an election to be held at a
special meeting of shareholders for the election of directors. In that case,
written notice of a shareholders's intention to nominate a candidate for
election must be received by the close of business on the seventh day
following the date when notice of the meeting was first given to shareholders.
The notice must contain the following information:
. The name and address of the shareholder who intends to make the
nomination and the name and address of the person(s) to be nominated;
. A representation that the shareholder is a shareholder of record of
Ashland stock entitled to vote at such meeting and that the shareholder
intends to appear in person or by proxy to make the nomination(s)
specified in the notice;
. A description of all arrangements or understandings between the
shareholder and each nominee and any other person(s) pursuant to which
the nomination(s) are to be made by the shareholder. The other person(s)
must be named in the notice;
. Information about each nominee that would be required in a proxy
statement, according to the rules of the Securities and Exchange
Commission, had the nominee been proposed by the Board;
. The consent of each nominee to serve as a director if so elected;
. A representation as to whether or not the shareholder will solicit
proxies in support of his or her nominee(s).
The chairman of any meeting of shareholders to elect directors and the Board
may refuse to acknowledge any nomination that is not made in compliance with
the procedure described above or if the shareholder fails to comply with the
representations set forth in the notice.
THE FINANCE COMMITTEE is responsible for reviewing Ashland's fiscal
policies, financial and capital structure and its current and contemplated
financial requirements. It also evaluates 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. Farley (Chairman), Mr. Blanton, Mr. Carlucci, Mrs. Pfeiffer
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. In
addition, it administers various Ashland employee compensation plans and
oversees Ashland's welfare and retirement and savings plans. Current members
of the Committee are Mr. Carlucci (Chairman), Mr. Farley, Mr. Jackson, Mr.
Noonan and Mr. Rouse.
THE PUBLIC POLICY--ENVIRONMENTAL COMMITTEE is responsible for the oversight
of policies, programs and practices in relation to public issues affecting
Ashland, as well as the oversight of Ashland's environmental, health and
safety compliance policies, programs and practices. Current members of the
Committee are Mr. Blanton (Chairman), Mr. Gomory, Mr. Noonan, Mrs. Pfeiffer
and Mr. Rose.
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 Chairman of the Board
from time to time.
Pursuant to the Ashland Inc. Deferred Compensation and Stock Incentive Plan
for Non-Employee Directors (the "Directors' Plan") previously approved by
Ashland's shareholders, non-employee
6
<PAGE>
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 on a hypothetical investment in any of fourteen investment
alternatives, including Ashland Common Stock ("Stock Units"), or a combination
of those investment alternatives designated by a director at the director's
election. The number of available investment alternatives increased from
fourteen to 25 on October 1, 1997. 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 is 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 provided the return on common shareholders' equity of
Ashland for the preceding fiscal year is equal to or greater than 10%. Because
the return on equity for Ashland's 1996 fiscal year was greater than 10%,
options were issued pursuant to the Directors' Plan following the Annual
Meeting of Shareholders on January 30, 1997. The return on equity for
Ashland's 1997 fiscal year was also greater than 10%, and options will be
issued under the Directors' Plan following the Annual Meeting on January 29,
1998.
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 fifth
anniversary of his or her initial award and each fifth anniversary thereafter
(the "subsequent award"). As a condition to any award, the director may be
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:
. normal retirement from the Board at age 70;
. the death or disability of such director;
. a 50% change in the beneficial ownership of Ashland; or, in the case of a
subsequent award only,
. voluntary early retirement to take a position in governmental service.
Unless otherwise directed by the Personnel and Compensation Committee, 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.
Effective January 1, 1997, Ashland terminated its retirement plan for non-
employee directors (the "Director Retirement Plan") except for then-current
directors who were at least 69 years old and elected to remain covered by the
plan and non-employee directors who had previously retired. None of Ashland's
current directors will be covered under the terminated plan. Only one (now
retired) director elected to remain covered by the Director Retirement Plan.
In connection with termination of the Director Retirement Plan, Ashland also
prospectively terminated eligibility for the Director Death Benefit Program
under which Ashland pays 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. Retired directors and
current directors as of January 1, 1997, who were at least 69 years old and
who elected to remain covered under the Director Retirement Plan remained
eligible for the death benefit under the program. Only one (now retired)
director elected to remain covered by the Director Death Benefit Program.
However, the program was terminated for all other current directors and any
new directors elected
7
<PAGE>
to the Board. For directors not continuing in the Director Retirement Plan and
the Director Death Benefit Program, Ashland valued their existing benefit
under these plans and provided them with commensurate Stock Units in the
Directors' Plan. Those Stock Units will not be invested and will not increase
in number from the time of termination of the Director Retirement Plan and the
Director Death Benefit Program. The value of the Stock Units will increase or
decrease in tandem with an increase or decrease in the value of Ashland's
Common Stock.
Effective January 31, 1997, Ashland terminated its Directors' Charitable
Award Program other than for then-current directors. Pursuant to the program,
Ashland purchased joint life insurance contracts in the amount of $1 million
on each 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 because 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 year 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. All of Ashland's current directors have attained
the minimum stock ownership levels established by the Board. Each newly
elected director has five years from the year elected 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 September 30, 1997, certain information
regarding those persons known by Ashland management to be the owners of more
than 5% of Ashland's outstanding Common Stock. The table also reflects
beneficial ownership of such securities by each of the executive officers
named under "Executive Compensation" and all directors and executive officers
as a group.
<TABLE>
<CAPTION>
AMOUNT AND
CLASS OF NATURE OF PERCENT OF
STOCK BENEFICIAL OWNERSHIP CLASS (7)
-------- -------------------- ----------
<S> <C> <C> <C>
Key Trust Company of Ohio, NA......... Common (1)
127 Public Square....................
Cleveland, Ohio 44114
[Capital Research and Management
Company.............................. Common (2)]
333 South Hope St., 52nd Floor
Los Angeles, California 90071
James R. Boyd......................... Common 157,842(3)(4)(5)
John A. Brothers...................... Common 168,555(3)(4)(5)
Paul W. Chellgren..................... Common 392,263(3)(4)(5)
David J. D'Antoni..................... Common 128,479(3)(4)(5)(6)
J. Marvin Quin........................ Common 96,239(3)(4)(5)
All directors and executive officers
as a group........................... Common (3)(4)(5)
</TABLE>
- ---------------------
(1) Key Trust Company of Ohio, NA ("Key") has advised Ashland that as of
September 30, 1997 it was the record owner of shares of Ashland
Common Stock. Key has advised Ashland that these shares include
shares held by it as trustee under the Ashland Leveraged Employee Stock
Ownership Plan ("LESOP"). Key has informed Ashland that it will vote
shares allocated to the account of a participant in the LESOP in
accordance with instructions received
8
<PAGE>
from such participant and, if the participant has not provided voting
instructions, Key will vote those shares in the same proportion as shares
for which instructions are received from other participants in the LESOP.
Key has advised Ashland that the remaining shares of Ashland Common Stock
held by it as of September 30, 1997, were held by it in a variety of
fiduciary capacities.
[(2)Based upon a Form 13F filed with the Securities and Exchange Commission
on or about , Capital Research and Management Company ("Capital")
held in the aggregate shares of Ashland Common Stock as of September
30, 1997. Based upon information provided in the filing, Ashland
understands that Capital has no voting authority with respect to any of
these shares.]
(3) Includes shares of Ashland Common Stock held under Ashland's Employee
Savings Plan and/or Leveraged Employee Stock Ownership Plan for which
participants have voting power with respect to such shares and investment
power with respect to the shares in the unrestricted account of the
Employee Savings Plan.
(4) 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 September 30, 1997, through the exercise of stock
options: as to Mr. Boyd, 116,750 shares; Mr. Brothers, 116,250 shares; Mr.
Chellgren, 282,500 shares; Mr. D'Antoni, 95,750 shares; Mr. Quin, 58,750
shares; and all directors and executive officers as a group, 1,688,426
shares.
(5) Includes Stock Units held by executive officers under the Deferred
Compensation Plan. Upon termination of service with Ashland, these Stock
Units are payable in cash or Ashland Common Stock at the election of the
individual.
(6) Includes 500 shares of Ashland Common Stock held by Mr. D'Antoni as
custodian for his son, and as to which Mr. D'Antoni disclaims beneficial
ownership.
(7) Other than as indicated, share ownership does not exceed 1% of the class
so owned as of November 24, 1997.
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, 1997, 1996, and 1995, for the
Chief Executive Officer and each of the other four most highly compensated
executive officers at September 30, 1997.
9
<PAGE>
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
--------------------------- --------------------------------
AWARDS PAYOUTS
OTHER --------------------- ----------
ANNUAL RESTRICTED ALL OTHER
COMPEN- STOCK OPTIONS LTIP COMPEN-
PRINCIPAL POSITION YEAR SALARY BONUS(1) SATION(2) AWARDS ($) (#) PAYOUTS(3) SATION(4)
- ----------------------------- ---- -------- -------- --------- ---------- ------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Paul W. Chellgren 1997 $745,996 $978,566 $13,222 $2,769,375(5) 40,000 $ 0 $32,382
President and Chief 1996 580,699 514,782 14,041 50,000 347,760 32,871
Executive Officer 1995 548,118 0 10,252 40,000 0 76,017
John A. Brothers 1997 451,143 397,759 13,009 988,750(6) 30,000 0 19,998
Executive Vice President and 1996 411,664 344,513 19,674 25,000 266,616 22,446
Group Operating Officer 1995 398,631 210,158 11,468 25,000 0 28,656
James R. Boyd 1997 383,299 405,943 9,079 20,000 0 17,149
Senior Vice President and 1996 355,127 371,673 9,957 25,000 213,293 26,483
Group Operating Officer 1995 338,836 141,666 2,052 25,000 0 41,962
David J. D'Antoni 1997 368,351 354,043 5,635 20,000 0 16,521
Senior Vice President 1996 340,178 333,160 3,834 15,000 269,906 36,035
and President of Ashland 1995 323,888 326,727 2,590 15,000 0 37,843
Chemical Company
J. Marvin Quin 1997 345,161 362,472 3,525 20,000 0 15,547
Senior Vice President and 1996 320,246 259,093 3,587 25,000 193,200 16,164
Chief Financial Officer 1995 303,956 0 2,198 25,000 0 36,250
</TABLE>
- -----------
(1) Amounts received under Ashland's Incentive Compensation Plan for each of
the fiscal years ended September 30, 1997, 1996 and 1995.
(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 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 1993--
1996 performance period.
(4) Amounts shown in this column reflect employer matching contributions under
Ashland's Employee Savings Plan and allocations of stock under Ashland's
LESOP as provided on the same basis for all employees and related
forfeiture payments under the Employee Retirement Income Security Act of
1974, as amended ("ERISA"). For fiscal 1997, these payments were $7,770
(Savings Plan) and $0 (LESOP) for each named executive officer and
$24,612, $12,228, $9,379, $7,777, and $8,751 for Messrs. Chellgren,
Brothers, Boyd, D'Antoni and Quin, respectively.
(5) Based on the closing price of Ashland Common Stock as reported on the New
York Stock Exchange Composite Tape on May 15, 1997, of $46.50 per share
and on September 18, 1997 of $50.4375 per share, and net of the $1.00 per
share par value purchase price.
(6) Based on the closing price of Ashland Common Stock as reported on the New
York Stock Exchange Composite Tape on September 18, 1997, of $50.4375 per
share, and net of the $1.00 per share purchase price.
10
<PAGE>
STOCK OPTION GRANTS
The following table sets forth certain information concerning stock options
granted in fiscal year 1997 to the named executive officers.
OPTION GRANTS IN FISCAL YEAR 1997
<TABLE>
<CAPTION>
POTENTIAL
INDIVIDUAL GRANTS REALIZABLE
- ----------------------------------------------------------------- VALUE AT ASSUMED
ANNUAL RATES OF
% OF TOTAL STOCK PRICE
OPTIONS EXERCISE APPRECIATION FOR
OPTIONS GRANTED TO OR BASE OPTION TERM*
GRANTED EMPLOYEES IN PRICE EXPIRATION ---------------------
NAME (#) FISCAL YEAR ($/SH) DATE 5% 10%
- ---- ------- ------------ -------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Paul W. Chellgren....... 40,000 5.0% $53.375 10/18/07 $1,356,859 $3,446,798
John A. Brothers........ 30,000 3.7% $53.375 10/18/07 1,017,644 2,585,099
James R. Boyd........... 20,000 2.5% $53.375 10/18/07 678,429 1,723,399
David J. D'Antoni....... 20,000 2.5% $53.375 10/18/07 678,429 1,723,399
J. Marvin Quin.......... 20,000 2.5% $53.375 10/18/07 678,429 1,723,399
</TABLE>
- ---------------------
* Option Value assuming stock price appreciation rates of 5% and 10%
compounded annually for the 10 year and 1 month term of the options. At the
5% and 10% rates, the stock price at October 18, 2007 (the expiration date
of the $53.375 options) would be $87.30 and $139.54, respectively, and the
potential realizable value for all Ashland shareholders if all 74,981,626
shares outstanding on September 18, 1997 (the grant date of the $53.375
options) were held until October 18, 2007 would be $6,545,630,829 and
$10,463,307,387, respectively. Actual gains will be dependent on future
stock market conditions and there can be no assurance that these amounts
will be achieved.
STOCK OPTION EXERCISES
The following table sets forth certain information concerning stock options
exercised in fiscal year 1997 by each of the named executive officers and the
value of unexercised options held by such officers on September 30, 1997.
AGGREGATED OPTION EXERCISES IN FISCAL YEAR 1997
AND FISCAL YEAR END OPTION VALUES(1)
<TABLE>
<CAPTION>
VALUE OF
NUMBER OF UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS OPTIONS
AT FY-END AT FY-END(1)
SHARES ACQUIRED VALUE EXERCISABLE/ EXERCISABLE/
NAME ON EXERCISE (#)(2) REALIZED ($) UNEXERCISABLE UNEXERCISABLE
- ------------------------ ------------------ ------------ -------------- -------------------
<S> <C> <C> <C> <C>
Paul W. Chellgren....... 2,087 $ 160,485 282,500/75,000 $6,098,125/$629,375
John A. Brothers........ 2,889 310,937 116,250/48,750 2,571,562/ 350,312
James R. Boyd........... 15,246 1,177,500 116,750/38,750 2,393,687/ 340,312
David J. D'Antoni....... 0 0 95,750/31,250 1,998,187/ 212,187
J. Marvin Quin.......... 4,915 489,063 58,750/38,750 1,072,499/ 340,312
</TABLE>
11
<PAGE>
- ---------------------
(1) Based on the closing price of Ashland Common Stock as reported on the New
York Stock Exchange Composite Tape on September 30, 1997 of $54.375 per
share.
(2) The number of stock options exercised in fiscal year 1997 resulting in the
indicated shares acquired on exercise were 9,876 stock options for Mr.
Chellgren, 25,000 stock options for Mr. Brothers, 65,000 stock options for
Mr. Boyd, 0 stock options for Mr. D'Antoni and 25,000 stock options for
Mr. Quin.
LONG-TERM INCENTIVE AWARDS IN FISCAL YEAR 1997
The following table shows all long-term incentive awards to each of the
named executive officers in fiscal year 1997.
<TABLE>
<CAPTION>
PERFORMANCE ESTIMATED FUTURE PAYOUTS
NUMBER OF PERIOD UNTIL UNDER NON-STOCK PRICE-BASED PLAN
SHARES MATURATION ---------------------------------
NAME (1)(3) OR PAYOUT(2)(3) THRESHOLD(3) TARGET(3) MAXIMUM(3)
- ----------------- --------- --------------- ------------ --------- ----------
<S> <C> <C> <C> <C> <C>
Paul W. Chellgren 30,094 4 years -- -- 30,094
John A. Brothers 16,852 4 years -- -- 16,852
James R. Boyd 14,652 4 years -- -- 14,652
David J. D'Antoni 11,410 4 years -- -- 11,410
J. Marvin Quin 13,241 4 years -- -- 13,241
</TABLE>
- ---------------------
(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 period 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.
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 upon the approval of the Personnel and Compensation Committee
under a nonqualified excess benefit pension plan (the "non-qualified plan").
That non-qualified plan provides for the payment of benefits in excess of
certain limitations imposed by the provisions of 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. The plan also provides that those
who are approved to receive a lump sum may defer the payment of all or any
part of it, in such increments as may from time to time be prescribed, through
the Ashland Inc. Deferred Compensation 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
12
<PAGE>
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. Such amounts are, however, 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>
$ 25,000 $ 3,300 $ 4,950 $ 6,601 $ 8,251 $ 9,901 $ 11,552
50,000 7,050 10,575 14,101 17,626 21,151 24,677
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
800,000 119,550 179,325 239,101 298,876 358,651 418,427
1,000,000 149,550 224,325 299,101 373,876 448,651 523,427
1,200,000 179,550 269,325 359,101 448,876 538,651 628,427
1,400,000 209,550 314,325 419,101 523,876 628,651 733,427
</TABLE>
- ---------------------
* 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.
As of October 1, 1997, Messrs. Chellgren, Brothers, Boyd, D'Antoni and Quin
had credited service in the combined plans of 22, 27, 15, 23 and 24 years,
respectively.
13
<PAGE>
Supplemental Early Retirement Plan
Under the Supplemental Early Retirement Plan, eligible key executive
employees may retire prior to their normal retirement date. 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. Amounts payable 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. In addition, if the
executive has entered into an Executive Employment Agreement with Ashland, the
amount payable under the plan is reduced to reflect payments, if any, under
such Agreement.
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 plan also provides that those who are approved to receive a lump sum may
defer the payment of all or any part of it, in such increments as may from
time to time be prescribed, through the Ashland Inc. Deferred Compensation
Plan. 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 average of the monthly published
Pension Benefit Guaranty Corporation ("PBGC") rates used to value annuities in
effect during the six month period ending on January 1 or July 1 immediately
preceding the calculation date.
Mr. Brothers is currently eligible to participate in the plan. The estimated
lump-sum value of the retirement benefit under the plan to Mr. Brothers,
assuming retirement at age 62, using the current PBGC rate is $1,824,356.
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 AND OTHER ARRANGEMENTS
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 that would be deemed an
"excess parachute payment" under Section 280G of the Code.
PERSONNEL AND COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
. DESCRIPTION OF THE PERSONNEL AND COMPENSATION COMMITTEE ("COMMITTEE") OF
ASHLAND'S BOARD OF DIRECTORS ("BOARD"):
. Comprised entirely of non-employee members;
. Key Executive Compensation responsibilities include:
. Review, recommend and approve changes to Ashland's executive
compensation policies and programs; and
14
<PAGE>
. Review and approve all compensation payments to the Chief Executive
Officer and Ashland's other executive officers.
. OBJECTIVES OF ASHLAND'S EXECUTIVE COMPENSATION PROGRAM:
. 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
. Most importantly, join shareholder and management interests in achieving
superior performance which should translate into a superior total return
to Ashland's shareholders.
. ASHLAND'S EXECUTIVE COMPENSATION PROGRAM IS DESIGNED TO:
. Be performance-oriented, with a significant portion of executive
compensation "at risk," with more than 60% of the maximum potential
executive compensation being provided by annual and long-term
incentives;
. Provide total compensation opportunities that are comparable to the
opportunities provided by a group of nineteen companies of similar size
and diversity to Ashland ("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 Cumulative Total
Return Performance Graph); and
. Include 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.
. DESCRIPTION OF THE PRIMARY COMPONENTS: BASE SALARY, ANNUAL INCENTIVE BONUS,
AND LONG-TERM INCENTIVES CONSISTING OF STOCK OPTIONS AND PERFORMANCE SHARES
OR UNITS:
. 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 at 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 base salaries typically occur annually.
. ANNUAL INCENTIVE BONUS
. Incentive compensation is awarded annually based 20% upon the
participant's individual performance for the last fiscal year and
80% upon Ashland's operating performance as further described below.
. Within 90 days after the beginning of each fiscal year,
-- corporate Return on Equity ("ROE") Hurdles and Targets,
-- division and subsidiary Return on Investment ("ROI") Hurdles
and Targets, and
-- for the Chairman of the Board and Chief Executive Officer, in
addition to the ROE Hurdles, a net income Target, are set by
the Committee for the upcoming fiscal year.
15
<PAGE>
The Committee may adjust incentive awards downward based on such
factors as the Committee deems appropriate.
. 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 for the operating performance element.
. 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.
. Awards for the Chief Executive Officer and senior vice presidents
(other than group operating officers and division and subsidiary
presidents) are based upon overall corporate performance.
. For the Executive Vice President, group operating officer, and
Senior Vice President and President of Ashland Chemical Company,
awards are based upon the performance of the business units for
which they are responsible in addition to a corporate performance
component.
. Awards to other corporate employees are based equally upon general
overall corporate performance and division performance. Awards for
division employees (including division and subsidiary presidents)
are based entirely on division performance.
. LONG-TERM INCENTIVE COMPENSATION
. Stock Options
. Ashland's employee stock option program is a long-term plan
designed to link executive compensation with increased
shareholder value over time.
. 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.
. All stock options are granted with an exercise price equal to
the fair market value of Ashland Common Stock on the date of
grant and are not re-valued or re-issued if the stock price
declines below the grant price.
. Vesting of awards generally occurs over a period of three years.
. Performance Shares/Units
. The performance share/unit program for senior executives is a
long-term incentive plan primarily tied to Ashland's
performance.
. 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 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.
. Awards are based on achievement of the following performance
objectives and corresponding weights established by the
Committee at the beginning of the performance period:
. Corporate employees
. a minimum four-year average corporate ROE (the
"corporate objective") (50%);
16
<PAGE>
. 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") (25%); and
. 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") (25%).
. Division and subsidiary employees
. a minimum four-year average ROI for the applicable
division or subsidiary (50%);
. the corporate objective (25%);
. the peer TRS objective (12.5%); and
. the S&P TRS objective (12.5%).
. In addition to the performance objectives above, certain 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 OWNERSHIP PHILOSOPHY
The Committee and Senior Management believe that linking a significant
portion of an executive's current and potential future net worth to
Ashland's success, as reflected in the stock price, gives the
executive a stake similar to that of Ashland's owners and results in
long-term management for the benefit of those owners.
. Consistent with this philosophy, the Committee has adopted Stock
Ownership Guidelines for Ashland's executive officers and designated
key managers. These guidelines establish minimum levels of stock
ownership as follows:
. the Chief Executive Officer--stock having a value equal to five
times base salary;
. the Executive Vice President, senior vice presidents, division
and subsidiary presidents and administrative vice presidents--
three times base salary; and
. designated key managers--one times base salary.
. In addition, payment of fiscal 1994, 1995, 1996 and 1997 incentive
compensation was made 20% in Ashland Common Stock.
. Further, fiscal 1995-1998 and fiscal 1997-2000 performance awards to
certain executive officers were denominated 100% in stock. It is
anticipated that any payment will be made 100% in stock. For other
key managers, performance awards will be paid 50% in stock.
. DEDUCTIBILITY OF COMPENSATION:
. Under Section 162(m) of the Internal Revenue Code, Ashland 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 Ashland
complies with certain conditions in the design and administration of
its compensation programs.
. The Committee will make every reasonable effort, consistent with
sound executive compensation principles and the needs of Ashland, to
ensure that all future amounts paid to its executive officers will
be fully deductible by Ashland.
. OTHER PLANS:
. Ashland also maintains an Employee Savings Plan and pension,
insurance and other benefit plans for its employees. Executives
participate in these plans on the same terms
17
<PAGE>
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
. Fiscal 1997 Performance
. Ashland made visible progress in all areas in fiscal 1997. The
table below shows key measures of performance. Excluding unusual
items, Ashland's net income for fiscal 1997 was at an all-time
high. Total debt declined materially; stockholders' equity
improved materially. As a result, the debt to capital ratio is
stronger than at any time since 1988. The price of Ashland's
common stock increased 37 percent during the fiscal year.
Ashland's total return to shareholders, including stock price
growth and dividends, was 40 percent.
<TABLE>
<CAPTION>
IN MILLIONS EXCEPT PER SHARE DATA AND % 1997 1996
--------------------------------------- ----- -----
<S> <C> <C>
Net income $ 279 $ 211
Net impact of unusual items and discontinued operations $ (33) $ (48)
Net income excluding unusual items $ 246 $ 163
Earnings per share $3.80 $2.97
Impact of unusual items and discontinued operations $(.47) $(.73)
Earnings per share excluding unusual items $3.33 $2.24
Total debt as a percent of total capital 43% 50%
Total return to shareholders 40% 23%
Return on common equity 15% 13%
</TABLE>
<TABLE>
<CAPTION>
ASHLAND COMMON STOCK
- --------------------
<S> <C>
Closing price September 30, 1996 $ 39.75
Closing price September 30, 1997 $54.375
</TABLE>
. Fiscal 1997 CEO Compensation
. Mr. Chellgren became Ashland's Chief Executive Officer on
October 1, 1996, and Chairman of the Board after the January 30,
1997, Annual Meeting. Consistent with his assumption of duties
as Chief Executive Officer, Mr. Chellgren received a base salary
increase of $150,000 effective October 1, 1996.
. On May 15, 1997, Mr. Chellgren received 50,000 shares of
Restricted Common Stock and on September 18, 1997, he received
10,000 shares of Restricted Common Stock. Such shares shall vest
and become freely salable and transferable on September 30,
2002, assuming achievement of an average net income objective
for the restricted period. Notwithstanding, the shares shall
completely vest before such date in the event of (i) Mr.
Chellgren's termination without "cause," (ii) Mr. Chellgren's
retirement at the request of the Board, or (iii) a "change of
control" of Ashland. In addition, the shares shall vest before
such date in a predetermined amount in the event of Mr.
Chellgren's death or disability.
. Considering Ashland's excellent performance for fiscal 1997, Mr.
Chellgren received an annual bonus for fiscal 1997 of $978,566.
. SUMMARY
. The Committee believes that the compensation provided to Ashland's
executive officers will create a strong linkage and alignment with
the long-term best interests of Ashland and its shareholders.
18
<PAGE>
. In fiscal year 1997, the Committee retained Frederic W. Cook & Co.,
an independent nationally-known compensation consultant, to review
the competitiveness and appropriateness of Ashland's executive
compensation program. After extensive study, Frederic W. Cook
concluded that Ashland's program is well designed, professionally
administered and competitive.
PERSONNEL AND COMPENSATION
COMMITTEE
Frank C. Carlucci, Chairman
James B. Farley
Mannie L. Jackson
Patrick F. Noonan
W. L. Rouse, Jr.
19
<PAGE>
FIVE-YEAR TOTAL RETURN PERFORMANCE GRAPH
The following graph compares Ashland's five-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.
The peer group consists of Diamond Shamrock, Inc. (now Ultramar Diamond
Shamrock); FINA, Inc.; Pennzoil Company; Sun Company, Inc.; Total Petroleum
(North America) Ltd.; Union Carbide Corporation and USX-Marathon Group.
[LINE GRAPH APPEARS HERE]
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
ASHLAND, S&P 500 INDEX AND PEER GROUP
<TABLE>
<CAPTION>
1992 1993 1994 1995 1996 1997
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Ashland 100 141 152 148 181 253
S&P 500 100 113 117 152 183 257
Peer Group 100 123 137 151 172 252
</TABLE>
PERSONNEL AND COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The members of the Personnel and Compensation Committee of the Board of
Directors for the period October 1, 1996 - January 29, 1997 were Mr. Bolger
(Chairman), Mr. Carlucci, Mrs. Pfeiffer, Mr. Rose and Mr. Rouse. From January
29, 1997 to the end of fiscal year 1997, the members of the Personnel and
Compensation Committee of the Board of Directors were Mr. Carlucci (Chairman),
Mr. Farley, Mr. Jackson, Mr. Noonan and Mr. Rouse.
BUSINESS RELATIONSHIPS
During fiscal 1997, 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.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
The Company believes that during fiscal year 1997 its executive officers and
directors have complied with Section 16(a) of the Securities Exchange Act of
1934, and the rules and regulations adopted thereunder.
20
<PAGE>
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 LLP to audit the
accounts of Ashland and its subsidiaries for fiscal 1998. Ernst & Young LLP
has audited the accounts of Ashland and its subsidiaries for many years. In
fiscal year 1997, Ashland paid Ernst & Young auditing fees of approximately $2
million.
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 LLP to audit the accounts of the Company and its
subsidiaries for the fiscal year 1998 is hereby ratified."
Representatives of Ernst & Young LLP will be present at the Annual Meeting
and will have 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.
ITEM III. INCREASE IN NUMBER OF AUTHORIZED SHARES
The Board recommends amendment to Ashland's Articles to increase the number
of shares of authorized Common Stock from 150,000,000 to 300,000,000 shares.
The increase in the number of authorized shares of Common Stock is believed by
the Board of Directors to be desirable to ensure there will be additional
authorized shares available for such matters as acquisitions, dividends,
splits, shareholder and employee investment plans, stock options and other
employee benefit plans, and other general corporate purposes. The additional
authorized shares of Common Stock are also desirable and in the best interest
of Ashland to assure Ashland's flexibility to act in the future. The
additional shares of Common Stock, together with any presently authorized but
unissued and unreserved shares of Common Stock, may be issued at such times,
to such persons and for such consideration as the Board may, consistent with
law, determine to be in Ashland's best interests. Except as the Board may
otherwise determine, the additional shares of Common Stock may be issued
without the prior offering of such shares to the shareholders. The shares may
be offered without further authority from the shareholders, unless such
authority is otherwise required by statute or stock exchange rules. The
shareholders do not have preemptive rights under Ashland's Articles and will
not have such rights with respect to the additional authorized shares of
Common Stock. The proposed amendment is attached hereto as Exhibit I and the
discussion hereunder is qualified in its entirety by reference to that
Exhibit.
The increase in authorized shares could, under certain circumstances, have
an anti-takeover effect. For example, the increase could allow an issuance of
shares that would dilute the stock ownership of a person seeking to effect a
change in the composition of the Board or contemplating a tender offer or
other transaction for the combination of Ashland with another company.
However, this proposal is not being made in response to any effort of which
Ashland is aware to accumulate its Common Stock or seek to obtain control of
Ashland. Ashland does not presently have any plans, agreements, commitments or
understandings with respect to the issuance of additional shares of Common
Stock (except in connection with existing employee benefit and incentive
plans).
Vote Required for Adoption of an Amendment of the Articles
The adoption of the proposed amendment of Ashland's Articles requires the
affirmative vote of the holders of a majority of the outstanding shares of
Common Stock.
21
<PAGE>
FOR THE REASONS STATED HEREIN, THE BOARD OF DIRECTORS RECOMMENDS THAT
SHAREHOLDERS VOTE FOR THE PROPOSED AMENDMENT OF THE ARTICLES.
ITEM IV. SINGLE CLASS OF DIRECTORS
The Board of Directors is submitting for a shareholder vote an amendment to
Ashland's Articles to authorize the annual election of the Board of Directors.
The Articles currently divide the Board into three classes of directors.
Directors are elected for three-year terms with one class elected each year.
If amended, the Articles will provide that in future years, as directors'
current terms expire, all directors will be elected each year at the Annual
Meeting. Following a phase-in period that permits present directors to
continue to serve for their elected terms, beginning with the annual meeting
of shareholders in the year 2000, all directors will be elected annually for a
term expiring at the next annual meeting or until their successors are elected
and qualified. The proposed amendment is attached hereto as Exhibit II and the
discussion hereunder is qualified in its entirety by reference to that
Exhibit.
In 1986, the shareholders of Ashland voted to amend the Articles to provide
for classifying the Board into three classes. The amendment was approved by a
vote of over 75% of the shares voted. At each Annual Meeting from 1992 to
1996, the shareholders have voted on a shareholder proposal submitted by
Messrs. John J. Gilbert, John C. Henry and others urging that the Board take
the necessary steps to declassify the Board. The Board of Directors
recommended a vote against the proposal, and stated the following reasons in
support of its recommendation:
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.
At the 1996 Annual Meeting, 43.5% of the votes cast were in favor of the
shareholder proposal to declassify the Board. This shareholder proposal was
refiled for inclusion in the 1996 Proxy Statement for the 1997 Annual Meeting.
The proponents agreed to withdraw the proposal if the amendment to the
Articles attached as Exhibit II was submitted by management to a shareholder
vote at the 1998 Annual Meeting.
The Board continues to regard the classified board as advantageous to
Ashland and its shareholders. This position is supported by many shareholders
as evidenced by the fact that 56.5% of the shares voted at the 1996 Annual
Meeting were against the shareholder proposal to declassify the Board.
However, the Board also recognizes that a large number of shareholders voted
at the 1996 Annual Meeting to declassify the Board and that many institutional
shareholders believe that the annual election of all directors is appropriate.
With such divergent views among the shareholders on the classified board
issue, the Board has determined to place the required amendment to the
Articles before the Annual Meeting for a shareholder vote. Because of the
split in shareholder opinion on this issue and the Board's belief that a
classified Board has certain advantages as described above, the Board has
decided to make no recommendation to the shareholders as to whether they
should vote for or against this amendment to the Articles.
Adoption of the proposed amendment to the Articles will require the
affirmative vote of eighty percent (80%) of the outstanding shares of Common
Stock of the Company.
THE BOARD OF DIRECTORS RECOMMENDS NEITHER A VOTE FOR NOR AGAINST THIS ITEM.
PROXIES SOLICITED BY THE BOARD OF DIRECTORS WILL NOT BE VOTED FOR OR AGAINST
THIS ITEM UNLESS SHAREHOLDERS SPECIFY OTHERWISE. ANY PROXY NOT SPECIFICALLY
VOTED ON THIS ITEM WILL BE VOTED AN ABSTENTION. AN ABSTENTION WILL HAVE THE
EFFECT OF A VOTE AGAINST THE PROPOSAL.
22
<PAGE>
ITEM V. SHAREHOLDER PROPOSAL
John F. Brown, Sr. of 169 Maple Drive, Beaver, Pennsylvania 15009, stating
that he is the beneficial owner of over 100 shares of Ashland Common Stock,
has notified Ashland in writing that he intends to present the following
resolution at the Annual Meeting:
"RESOLVED that the stockholders of Ashland, Inc. assembled in annual
meeting in person and by proxy, hereby request that the Board of Directors
give consideration to having an Ashland wage roll employee who is currently
serving as a representative of the employees at his or her plant site to be
nominated for election to the Board of Directors."
Mr. Brown has submitted the following statement in support of his proposal
(reproduced as written):
"At this time, the Board of Directors is composed of 16 individuals who
have the following qualifications and experience:
-- Executives of Ashland
-- Executives and retired executives of other major corporations
-- A management consultant
-- A chairperson of a conservation organization
-- A professor at the Harvard School of Business
-- A business and labor consultant and former CEO of a Fortune 500
company
I believe it would be of great benefit to Ashland for a wage roll Ashland
employee who is currently serving as a representative of the workers at his
or her site to serve on the Board of Directors.
A wage roll employee, who has spent years working in a factory, and who as
an employee representative, has listened first-hand to employees, learning
what motivates them positively and negatively would provide the Board with
knowledge and insight that is not now present on the Board.
Moreover, such an addition to the Board would be viewed by the wage roll
employees who comprise the vast majority of the Ashland workforce as a
sincere effort by Ashland to recognize and understand their concerns. This
is particularly important at a time when there have been so many reductions
in the number of employees and a resulting increase in each employee's work
load and responsibility.
Chairman Hall has credited the employees as being a key factor in the
success and performance of Ashland. In its 1995 Annual Report, the Company
states that "Ashland is united in its commitment to shareholders,
customers, employees and communities." In view of the importance of Ashland
employees to corporate success, and in view of Ashland's commitment to
shareholders and employees alike, it is necessary that the wage roll
employees' voice be present at the highest decision-making level of the
Company on the Board of Directors.
IF YOU AGREE, I URGE YOU TO VOTE FOR THE PROPOSAL."
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE AGAINST THIS
SHAREHOLDER PROPOSAL FOR THE FOLLOWING REASONS:
For many years, Ashland's Proxy Statement has indicated the clear and
unambiguous commitment of the Board and its Committee on Directors (the
"Committee") to consider candidates recommended by directors, employees or
shareholders for nomination to the Board. This continuing and long-standing
commitment has again been confirmed in this proxy statement. (See the
description of the Committee on Directors on page .)
While it will consider recommended candidates, the Board believes that any
potential candidate for the Board should be appraised based on individual
achievements, skills and experience. The Board
23
<PAGE>
is against considering a person for inclusion on (or exclusion from) the Board
based primarily on a position or membership in a particular constituency group.
The Board believes that qualifications and not status should be the criteria
for Board membership.
Moreover, the Board believes that each director should represent all
shareholders. It is opposed to electing a director to represent a particular
point of view or particular constituency other than shareholders as a whole. In
this regard, it is important to the Board that its members possess a breadth of
experience, insight and knowledge to exercise independent judgment in carrying
out responsibilities for broad corporate policy and the overall performance of
Ashland.
In the Board's view, the interests of shareholders are best served when the
Committee and the Board can exercise discretion to consider potential qualified
nominees. Qualified nominees will bring broad experience, skills and
perspectives to bear on Ashland's efforts to achieve continued business success
and increase shareholder value.
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 require a wage roll
employee to be added to the Board but would request the Board to consider such
an employee for nomination to the Board.
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 for this purpose. Ashland has arranged for the
services of Morrow & Co., Inc. ("Morrow") to assist in the solicitation of
proxies. The fees of Morrow will be paid by Ashland and are estimated at
$35,000 excluding out-of-pocket expenses.
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.
This can be done 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 it contains. If no instructions are given, the
persons named on the proxy card solicited by the Board of Directors intend to
vote: (i) FOR the election of the two nominees for directors; (ii) FOR the
ratification of the appointment of independent auditors for the 1998 fiscal
year; (iii) FOR the increase in authorized shares; and (iv) AGAINST the
shareholder proposal requesting the Board of Directors to consider nominating a
wage roll employee who is a representative at his or her site to the Board of
Directors. PERSONS NAMED ON THE PROXY CARD WILL NOT VOTE FOR OR AGAINST THE
PROPOSED AMENDMENT TO ESTABLISH A SINGLE CLASS OF DIRECTORS UNLESS THE
SHAREHOLDER
24
<PAGE>
SPECIFIES THE MANNER IN WHICH HIS OR HER SHARES ARE TO BE VOTED. A
SHAREHOLDER'S FAILURE TO VOTE ON THE PROPOSED AMENDMENT TO ESTABLISH A SINGLE
CLASS OF DIRECTORS WILL RESULT IN HIS OR HER SHARES BEING VOTED TO ABSTAIN ON
THIS ITEM. AN ABSTENTION WILL HAVE THE EFFECT OF A VOTE AGAINST THE PROPOSAL.
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. Such shareholder 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 1999 Annual Meeting of Shareholders must be received by
Ashland at its Executive Headquarters, 1000 Ashland Drive, Russell, Kentucky,
41169 no later than August 17, 1998 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:
. 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,
. the name and address of the shareholder proposing such business,
. 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 propose such business,
. any material interest of the shareholder in such business, and
. a representation as to whether or not the shareholder will solicit
proxies in support of his proposal.
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 , 1997
25
<PAGE>
EXHIBIT 1
---------
PROPOSED AMENDMENT TO SECOND RESTATED
ARTICLES OF INCORPORATION
OF ASHLAND INC.
ARTICLE IV
The aggregate number of shares which the Company is authorized to issue is
30,000,000 shares of Cumulative Preferred Stock (hereinafter called the
"Preferred Stock") and 300,000,000 shares of Common Stock, par value $1.00 per
share (hereinafter called the "Common Stock").
<PAGE>
EXHIBIT II
----------
PROPOSED AMENDMENT TO SECOND RESTATED
ARTICLES OF INCORPORATION
OF ASHLAND INC.
ARTICLE VI
Subject to the restriction that the number of directors shall not be less
than the number required by the laws of the Commonwealth of Kentucky, the number
of directors may be fixed, from time to time, pursuant to the By-laws of the
Company.
The members of the Board of Directors (other than those who may be elected
by the holders of any class or series of capital stock of the Company having a
preference over the Common Stock as to dividends or upon liquidation pursuant to
the terms of these Articles of Incorporation or of such class or series of
stock) shall be classified (so long as the Board of Directors shall consist of
at least nine members pursuant to the By-laws), with respect to the time for
which they severally hold office, into three classes, as nearly equal in number
as possible, as shall be provided in the By-laws of the Company. Beginning with
the annual meeting of shareholders to be held in 1998, the Board of Directors
will transition from three classes (in 1998) to two classes (in 1999) to one
class (in 2000). The class elected at the 1998 annual meeting shall have a term
expiring at the annual meeting of shareholders to be held in 1999 and the
classes elected at the 1999 annual meeting shall have terms expiring at the
annual meeting of shareholders to be held in 2000. Beginning with the annual
meeting of shareholders to be held in 2000, the date of which shall be fixed by
or pursuant to the By-laws of the Company, all directors shall be elected
annually to hold office for a term expiring at the next annual meeting of
shareholders or until their successors are elected and qualified.
....
<PAGE>
PROXY PROXY
[LOGO OF ASHLAND INC. APPEARS HERE]
THE SOLICITATION OF THIS PROXY IS MADE ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints PAUL W. CHELLGREN and THOMAS L. FEAZELL, 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 INC. to be
held at the Ashland Petroleum Executive Office Building, Ashland Drive, Russell,
Kentucky, at 10:30 a.m. on January 29, 1998, or any adjournment thereof, and to
vote the stock of the undersigned with all powers the undersigned would possess
if present upon the matters described on the reverse side of this form and upon
any other business that may properly come before the meeting or any adjournment
thereof.
PLEASE MARK, SIGN, DATE AND MAIL THE PROXY CARD PROMPTLY
USING THE ENCLOSED ENVELOPE
(Continued and to be signed on reverse side.)
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
[_] To vote for ITEMS 1,2,3, AND 5 as RECOMMENDED BY THE BOARD OF DIRECTORS,
mark this box, sign, date and return the Proxy. IN ORDER TO VOTE FOR OR
AGAINST ITEM 4, YOU MUST MARK YOUR VOTE.
- --------------------------------------------------------------------------------
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR
---
1. Election of directors to Class III --
Nominees are: Samuel C. Butler and Mannie L. Jackson.
FOR BOTH (Except
FOR WITHHOLD Nominee
BOTH BOTH written below)
[_] [_] [_]
- --------------------------------------------------------------------------------
2. Ratification of Ernst & Young LLP as independent
auditors for 1998 fiscal year.
FOR AGAINST ABSTAIN
[_] [_] [_]
3. Amendment of Articles to Increase Authorized Shares.
FOR AGAINST ABSTAIN
[_] [_] [_]
THE BOARD OF DIRECTORS MAKES NO
RECOMMENDATION ON THE FOLLOWING ITEM
4. Amendment of Articles to authorize the annual election
of the Board of Directors.
FOR AGAINST ABSTAIN
[_] [_] [_]
THE BOARD OF DIRECTORS RECOMMENDS A VOTE
AGAINST
5. Request that the Board of Directors give consideration
to having a wage roll employee who is a representative
of his/her site be nominated for election to the Board.
FOR AGAINST ABSTAIN
[_] [_] [_]
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, administration,
trustee, guardians, and others signing in a representative capacity should give
their full title.
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, 2 and
3, to ABSTAIN on proposal 4 and AGAINST proposal 5.
- --------------------------------------------------------------------------------
. FOLD AND DETACH HERE .
YOUR VOTE IS IMPORTANT.
PLEASE MARK, SIGN, DATE AND MAIL THE PROXY CARD PROMPTLY
USING THE ENCLOSED ENVELOPE
<PAGE>
[LOGO OF ASHLAND INC. APPEARS HERE]
THE SOLICITATION OF THESE CONFIDENTIAL VOTING INSTRUCTIONS IS
MADE ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned, as a participant in the Employee Savings Plan or the Leveraged
Employee Stock Ownership Plan, or any combination, hereby instructs the Trustee
of the respective Plans to appoint PAUL W. CHELLGREN or THOMAS L. FEAZELL, and
each of them, with full power of substitution, the attorney and proxy of the
said Trustees to represent the interests of the undersigned in Ashland Common
Stock ("Common Stock") held under the terms of said Plan(s), at the Annual
Meeting of Shareholders of ASHLAND INC. to be held at the Ashland Petroleum
Executive Office Building, Ashland Drive, Russell, Kentucky, at 10:30 a.m. on
January 29, 1998, or any adjournment thereof, and to vote, with all powers the
Trustee would possess if present (a) all shares of Common Stock credited to the
undersigned's account(s) under said Plan(s) as of the record date for the Annual
Meeting ("Directed Shares") and (b) the proportionate number of Non-Directed
Shares of Common Stock as to which the undersigned is entitled to direct the
vote 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
Directed Shares as well as Non-Directed Shares of Common Stock the same way. Any
Participant wishing to vote the Non-Directed Shares differently from the
Directed Shares or not wishing to vote the Non-Directed Shares at all may do so
by requesting a separate voting instruction card from Harris Trust and Savings
Bank, 311 W. Monroe St., 11th Floor, Chicago, IL 60606, 312-461-5160, Susan
Hogan.
Non-Directed Shares are those shares of Common Stock for which a voting
instruction card is not timely received by the Trustees.
PLEASE MARK, SIGN, DATE AND MAIL THE VOTING INSTRUCTION CARD PROMPTLY, USING THE
ENCLOSED ENVELOPE.
(Continued and to be signed on reverse side.)
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
[_] To vote for ITEMS 1, 2, 3, AND 5 as RECOMMENDED BY THE BOARD OF DIRECTORS,
mark this box, sign, date and return the Proxy. IN ORDER TO VOTE FOR OR
AGAINST ITEM 4, YOU MUST MARK YOUR VOTE.
- --------------------------------------------------------------------------------
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR
---
1. Election of directors to Class III --
Nominees are: Samuel C. Butler and Mannie L. Jackson.
FOR BOTH (Except
FOR WITHHOLD Nominee
BOTH BOTH written below)
[_] [_] [_]
----------------------------------------------------
2. Ratification of Ernst & Young LLP as independent
auditors for 1998 fiscal year.
FOR AGAINST ABSTAIN
[_] [_] [_]
3. Amendment of Articles to Increase Authorized Shares.
FOR AGAINST ABSTAIN
[_] [_] [_]
THE BOARD OF DIRECTORS MAKES NO
RECOMMENDATION ON THE FOLLOWING ITEM
4. Amendment of Articles to authorize the annual election
of the Board of Directors
FOR AGAINST ABSTAIN
[_] [_] [_]
THE BOARD OF DIRECTORS RECOMMENDS A VOTE
AGAINST
5. Request that the Board of Directors give consideration
to having a wage roll employee who is a representative
of his/her site be nominated for election to the Board.
FOR AGAINST ABSTAIN
[_] [_] [_]
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.
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, 2 and
3, to ABSTAIN on proposal 4 and AGAINST proposal 5.
- --------------------------------------------------------------------------------
. FOLD AND DETACH HERE .
YOUR VOTE IS IMPORTANT.
PLEASE MARK, SIGN, DATE AND MAIL THE VOTING INSTRUCTION CARD PROMPTLY,
USING THE ENCLOSED ENVELOPE
