<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:
[_] Preliminary Proxy Statement [_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED
BY RULE 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S)240.14a-11(c) or (S)240.14a-12
ASHLAND INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
ASHLAND INC.
- --------------------------------------------------------------------------------
(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 28, 1999
To our Shareholders:
Ashland Inc. will hold its Annual Meeting of Shareholders on Thursday,
January 28, 1999 at 10:30 a.m. Eastern Standard Time. The meeting will be held
at the Metropolitan Club, 50 E. RiverCenter Boulevard, Covington, Kentucky.
Ashland's shareholders will act upon the following matters at the Annual
Meeting or any adjournment thereof:
(1) Election of five directors: Frank C. Carlucci, Dr. Ernest H. Drew,
James B. Farley, Dr. Bernadine P. Healy and W. L. Rouse, Jr.;
(2) Ratification of Ernst & Young LLP as independent auditors for fiscal
1999;
(3) If presented at the Annual Meeting, a shareholder proposal to spin-
off Ashland Chemical, APAC and Valvoline as three separate companies;
(4) If presented at the Annual Meeting, a shareholder proposal to
distribute Arch Coal, Inc. stock to Ashland's shareholders; and
(5) Transaction of any other business properly brought before the Annual
Meeting.
Only shareholders of record at the close of business on November 23, 1998
will be entitled to vote at the Annual Meeting or any adjournment of that
meeting. 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
enclosed envelope.
By Order of the Board of Directors
THOMAS L. FEAZELL
Senior Vice President,
General Counsel
and Secretary
Russell, Kentucky
December 11, 1998
<PAGE>
ASHLAND INC.
PROXY STATEMENT
FOR
ANNUAL MEETING OF SHAREHOLDERS
QUESTIONS AND ANSWERS ABOUT THE MEETING AND STOCK OWNERSHIP
Q:WHAT AM I VOTING ON?
A:(1) Election of five directors (Frank C. Carlucci, Dr. Ernest H. Drew,
James B. Farley, Dr. Bernadine P. Healy and W. L. Rouse, Jr.);
(2) Ratification of Ernst & Young as Ashland's independent auditors for
fiscal year 1999;
(3) A shareholder proposal to spin-off Ashland Chemical, APAC and Valvoline
into three separate companies; and
(4) A shareholder proposal to distribute Arch Coal, Inc. stock to Ashland's
shareholders.
Q:WHO IS ENTITLED TO VOTE AT THE ANNUAL MEETING?
A:Shareholders as of the close of business on November 23, 1998 (the "Record
Date") are entitled to vote at the Annual Meeting. Each share of Common Stock
is entitled to one vote. Cumulative voting applies to the election of
directors.
Q:HOW DO I CUMULATIVELY VOTE FOR DIRECTORS?
A:"Cumulative voting" for directors means that you can multiply the number of
shares that you own by the number of directors to be elected and vote the
resulting number of shares for any one or more of the nominees, distributed as
you wish.
Q:HOW DO I VOTE MY SHARES?
A:Sign and date your proxy card and return it in the enclosed prepaid
envelope. If you return your signed proxy card, but do not indicate your
voting preferences, Paul W. Chellgren and Thomas L. Feazell will, as proxy
holders named on the proxy card, vote FOR the election of five director
nominees, FOR the ratification of Ernst & Young, and AGAINST the two
shareholder proposals.
Q:CAN I CHANGE MY VOTE ONCE I SEND BACK A PROXY CARD?
A:You have the right to revoke your proxy at any time before the Annual
Meeting by (1) notifying Ashland's Secretary in writing, (2) voting in person
at the Annual Meeting or (3) returning a later-dated proxy.
Q:WHO COUNTS THE VOTE?
A:Representatives of Harris Trust & Savings Bank will tabulate the votes and
will act as the inspector of election.
Q:IS MY VOTE CONFIDENTIAL?
A:Yes. Voting tabulations are confidential. Only Harris Trust & Savings Bank
has access to shareholder votes.
1
<PAGE>
Q:WHAT SHARES ARE INCLUDED IN THE PROXY CARD?
A:Your proxy card or cards represent(s) all Common Stock of Ashland that you
own. A white proxy card represents shares of Common Stock for which you are the
record owner and any shares that you hold in Ashland's Dividend Reinvestment
Plan (the "DRIP"). A buff proxy card represents shares of Common Stock you hold
in Ashland's Leveraged Employee Stock Ownership Plan (the "LESOP") and for
Ashland's Employee Savings Plan. If your shares are held through a bank or
brokerage firm, you will receive either a voting form or a proxy card to vote
your shares.
Q:WHAT CONSTITUTES A QUORUM?
A:As of the Record Date, 74,852,025 shares of Ashland Common Stock were
outstanding. A majority of those outstanding shares, voting either in person or
by proxy, constitute a quorum for the purpose of taking action at the Annual
Meeting. If you return a properly executed proxy card, you will be considered a
part of that quorum. Broker non-votes (i.e., when a broker does not have
authority to vote on a specific issue) will not be counted toward establishing
a quorum.
Q:WHAT VOTE IS REQUIRED FOR PASSAGE OF EACH OF THE FOUR PROPOSALS UP FOR
CONSIDERATION AT THE ANNUAL MEETING?
A:(1) ELECTION OF DIRECTORS--Under Ashland's By-laws, the five nominees
receiving the greatest number of votes will be elected directors at the
Annual Meeting.
(2) APPROVAL OF AUDITORS--Submission of the appointment of Ernst & Young to
Ashland's shareholders is not required. However, the appointment will
be deemed ratified if votes cast in favor of the proposal exceed votes
cast against the proposal. Abstentions and broker non-votes are not
counted as votes cast either for or against the proposal.
(3) SHAREHOLDER PROPOSAL TO SPIN-OFF ASHLAND CHEMICAL, APAC, AND VALVOLINE
INTO THREE SEPARATE COMPANIES--This shareholder proposal will be
adopted if votes cast in favor exceed votes cast against it.
Abstentions and broker non-votes are not counted as votes cast either
for or against the proposal.
(4) SHAREHOLDER PROPOSAL TO DISTRIBUTE ARCH COAL STOCK TO ASHLAND'S
SHAREHOLDERS--This shareholder proposal will be adopted if votes cast
in favor exceed votes cast against it. Abstentions and broker non-votes
are not counted as votes cast either for or against the proposal.
Q:WHO CAN ATTEND THE ANNUAL MEETING?
A:All Ashland shareholders as of the Record Date are invited to attend the
Annual Meeting, although seating is limited.
Q:DOES ANY GROUP OR INDIVIDUAL OWN A SIGNIFICANT AMOUNT OF ASHLAND'S COMMON
STOCK?
A:As of September 30, 1998 Key Trust Company of Ohio, N.A. ("Key Trust") was
the record owner of 7,369,577 shares of Ashland Common Stock. These shares
include 7,284,093 shares held by it as trustee of the LESOP. Key Trust will
vote shares allocated to a participant's LESOP account as instructed by the
participant. If the participant does not provide specific voting instructions,
Key Trust will vote the participant's shares in proportion to other
participant's shares for which Key Trust has received instructions. The
remaining 85,484 shares held by Key Trust as of September 30, 1998 were held by
it in a variety of fiduciary capacities. Key Trust's record ownership equalled
9.8% of the Ashland shares outstanding as of November 23, 1998. Ashland is not
aware of any holder, other than Key Trust, of more than 5% of Ashland's
outstanding Common Stock.
2
<PAGE>
ITEMS TO BE VOTED UPON BY SHAREHOLDERS
ITEM 1: ELECTION OF DIRECTORS
Ashland's Board is made up of twelve directors, divided into three classes.
Five directors will be elected at the 1999 Annual Meeting, including three
continuing members of Class I of Ashland's Board: Frank C. Carlucci, James B.
Farley and W. L. Rouse, Jr. Dr. Bernadine P. Healy and Dr. Ernest H. Drew will
also be elected to the Board. Dr. Healy will be elected to Class I and Dr. Drew
will be elected to Class III. Upon election, Messrs. Carlucci, Farley, Rouse
and Dr. Healy will serve a three-year term, until the Annual Meeting in 2002.
Upon election, Dr. Drew will serve a two-year term, until the Annual Meeting in
2001, along with the other members of Class III, who were elected to a three-
year term at the 1998 Annual Meeting.
Drs. Healy and Drew have joined Ashland's Board since the 1998 Annual
Meeting. The Committee on Directors has confirmed that all five nominees will
be available for election as directors and recommends them for election.
Shareholders may vote for no more than five directors at the Annual Meeting,
and may distribute their votes between or among nominees for director as they
see fit. Pursuant to Ashland's By-laws, the five nominees receiving the
greatest number of votes will be elected. If you return your signed proxy card,
but do not indicate your voting preference, Paul W. Chellgren and Thomas L.
Feazell (named on the enclosed proxy card) will vote FOR the election of the
five nominees. Messrs. Chellgren and Feazell will vote shares cumulatively for
one or more directors if, in their discretion, a situation arises that would
make such a vote necessary or desirable, or if authority is withheld from one
or more nominees.
A description of each of Ashland's directors, and of the committees of the
Board, can be found at pages 7 through 11 of this Proxy Statement. For a report
on the stock ownership of Ashland's officers and directors, see the "Stock
Ownership" chart on page 13.
ITEM 2: RATIFICATION OF AUDITORS
The Audit Committee of the Board and the full Board of Directors have
approved the appointment of Ernst & Young LLP ("E&Y") to audit Ashland's
accounts for fiscal 1999. For auditing the books and records of Ashland for
fiscal 1998, Ashland paid E&Y auditing fees of approximately $2 million.
The Audit Committee and Board believe that E&Y has invaluable long-term
knowledge of Ashland. However, partners and employees of E&Y engaged in audits
of Ashland are periodically changed, giving Ashland access to new expertise and
experience. Representatives of E&Y will attend the Annual Meeting to respond to
appropriate questions from shareholders, and will be given the opportunity to
make a statement.
Although the Board is not required to submit the appointment of E&Y to a
shareholder vote, the Board will reconsider that appointment if it is not
ratified by the shareholders. The appointment will be deemed ratified if votes
cast in its favor exceed votes cast against it. Abstentions and broker non-
votes will not be counted as votes cast either for or against the proposal.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR THE RATIFICATION
OF E&Y AS ASHLAND'S INDEPENDENT AUDITORS FOR FISCAL 1999.
3
<PAGE>
ITEM 3: SHAREHOLDER PROPOSAL TO SPIN-OFF
ASHLAND CHEMICAL, APAC AND VALVOLINE
Ronald S. Fritz, of 6 Hamilton Road, White House Station, New Jersey 08889,
stating that he is the beneficial owner of 100 shares of Ashland Common Stock,
has notified Ashland in writing that he wishes the following proposal be placed
before the shareholders at the Annual Meeting:
RESOLVED, that the stockholders of record of Ashland Inc. assembled in
annual meeting in person and by proxy, hereby direct the Board of Directors
to spin-off Ashland Chemical, APAC, and Valvoline as three separate
companies.
Mr. Fritz has submitted the following statement in support of his proposal
(reproduced as written):
The Board should take this action because:
1) It would give Ashland's stockholders greater control over their
investment.
The spin-off of these three companies as separate entities would allow
the stockholders to make their own decisions as to whether they want to
hold ownership interests in these industries, and if so, to what
extent.
2) It would create companies that would be "pure plays" in their
industries.
As "pure plays" these companies would be easier to understand and
analyze. Therefore, they may attract more analysts and be more
accurately priced in the market. They would more readily respond to
changes in industry fundamentals and to company specific factors that
affect stock price. In addition, as "pure plays" they would be much
more attractive as candidates for mergers or acquisitions than they are
as parts of Ashland Inc.
3) It would eliminate an unnecessary layer of management.
The managers of Ashland Chemical, APAC, and Valvoline are fully capable
of conducting the business of those companies. There is no need for
another layer of management above them. It represents an unnecessary
expense.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE AGAINST THIS
SHAREHOLDER PROPOSAL FOR THE FOLLOWING REASONS:
Shareholder value will be best served by continuing to operate and, where
appropriate, grow Ashland Chemical, APAC and Valvoline as wholly-owned
units of Ashland. In December 1996, Ashland announced an ambitious multi-
point plan to improve profitability and strategic focus. That plan took a
long-term view of the steps most likely to enhance returns to shareholders.
Ashland has made great strides in accomplishing the goals set forth in the
plan, as evidenced by Ashland's joint venture with USX-Marathon, the sale
of the oil and gas exploration business, the reorganization of staff groups
and the move of corporate headquarters from Ashland, Kentucky to Covington,
Kentucky. The plan is not static. Strategic or tactical adjustments will be
made as needed.
Ashland's strategy is to operate a related array of businesses, with a
goal to deliver top-quartile total returns to shareholders. Since
implementation of the profitability improvement plan two years ago, Ashland
has moved aggressively to improve its competitive position in progressing
towards its high performance aspirations.
A major element in the performance strategy is to have all business units
hold first-tier, if not clear leadership, positions in their markets. With
that in mind, Ashland's joint venture with USX-Marathon was formed, and
separately, Ashland Coal was merged with Arch Mineral to form Arch Coal. In
each instance, market leadership positions were achieved. Similarly, most
businesses of Ashland Chemical, APAC and Valvoline are positioned as
leaders in their
4
<PAGE>
respective markets. Moreover, if a business cannot reasonably achieve a
market leadership position in a value creating way it will be evaluated for
sale, merger or other actions that will produce results. Market leadership
considerations were a major factor in Ashland's decision in 1997 to sell
its oil and gas exploration business.
Clearly, Ashland has demonstrated a willingness to acquire or divest
businesses and to implement other forms of corporate reorganization where
value can be created for shareholders. However, at this time Ashland's
Board and Management believe that value will continue to be created by
retaining Ashland Chemical, APAC and Valvoline as wholly-owned units of
Ashland.
The shareholder proposal will be adopted if votes cast in its favor exceed
votes cast against it. Abstentions and broker non-votes will not be counted as
votes cast either for or against the proposal. Counsel has advised Ashland's
Board that, under Kentucky law, ultimate responsibility to manage the business
and affairs of the corporation rests with the Board. Therefore, the adoption of
this proposal would not require Ashland to spin-off Ashland Chemical, APAC and
Valvoline, but would simply amount to a request that the Board consider such a
proposal.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE AGAINST THIS
SHAREHOLDER PROPOSAL.
ITEM 4: SHAREHOLDER PROPOSAL TO DISTRIBUTE ARCH COAL STOCK
R. Brian Fritz, of 292 Bellefonte Circle, Ashland, Kentucky 41101 (who, as of
September 2, 1998, legally changed his name to Brian Kendenthal), stating that
he is the beneficial owner of over 1,100 shares of Ashland Common Stock, has
notified Ashland in writing that he wishes the following proposal be placed
before the shareholders at the Annual Meeting:
RESOLVED, that the stockholders of record of Ashland Inc. assembled in
annual meeting in person and by proxy, hereby direct the Board of Directors
to distribute the shares of Arch Coal, Inc. currently held by Ashland Inc.
to the stockholders.
Mr. Kendenthal has submitted the following statement in support of his
proposal (reproduced as written):
The Board should take this action because:
1) It would give Ashland's shareholders greater control over their
investment.
A spin-off of the stock of Arch Coal, Inc. held by Ashland Inc. would
allow Ashland's stockholders to make their own decisions as to whether
they want to hold an ownership position in the coal industry, and if
so, to what extent.
2) It would reduce the complexity of Ashland Inc.
As a company involved in several widely different industries, Ashland
Inc. is difficult and time consuming to analyze. A simplified Ashland
Inc. may be more attractive to analysts and investors.
3) It would increase the liquidity of Arch Coal, Inc. stock.
The available float of Arch Coal, Inc. stock would approximately
double, leading to greater trading activity that should be attractive
to both traders and long-term investors.
4) It would eliminate an unnecessary layer of management.
The management of Arch Coal, Inc. is fully capable of conducting the
business of that company. There is no need for another layer of
management over that of Arch Coal, Inc. It represents an unnecessary
expense.
5
<PAGE>
5) It would eliminate double taxation of dividends.
Ashland Inc. pays about $700,000 in income taxes annually on the
dividends received from Arch Coal, Inc. Those taxes would be eliminated
if the stock of Arch Coal, Inc. were held directly by the stockholders.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE AGAINST THIS
SHAREHOLDER PROPOSAL FOR THE FOLLOWING REASONS:
. Ashland's coal investments have historically benefited Ashland's
shareholders. Ashland's investments in the coal industry date back to the
formation of Arch Mineral in the late 1960s. Shortly after the formation of
Arch Mineral and later, Ashland Coal (the predecessors of Arch Coal), Ashland
adopted the philosophy that each of these businesses would be self-funding
and deliver value to their shareholders, of which Ashland was the largest.
Both companies grew appreciably after initial capital infusions from Ashland
of about $18 million. Over the years, Ashland has invested an additional
$143 million in its coal business, but has received far greater cash
distributions of $238 million (through the end of fiscal 1998). In addition,
at November 30, 1998, the common stock held by Ashland was valued at
$417 million. The coal industry has been a solid investment for the
shareholders of Ashland.
. There are tax issues related to a distribution of Arch Coal shares. Ashland's
Management has, independent of and prior to receiving this shareholder
proposal, analyzed the possibility of distributing Arch Coal stock owned by
Ashland to Ashland's shareholders. Tax advisors indicate that a distribution
of Arch Coal shares would be treated as a sale of this stock and the
resulting gain would be taxable to Ashland. A distribution of Arch Coal
shares would also be a taxable event for Ashland's shareholders. Thus, for
Federal tax purposes, the full value of the Arch Coal shares received by each
Ashland shareholder would be considered a dividend and taxed a second time.
This double taxation would destroy, not create, value for Ashland's
shareholders.
. Ashland's Board and Management have demonstrated aggressiveness and
flexibility in dealing with Ashland's coal investments. Ashland's Management
and its Board have a long-established practice of being very open and
flexible toward Ashland's investment in the coal industry. Through public
sales, private sales, private purchases and creative financial structures,
value has been extracted for Ashland's shareholders. The June 1997 merger of
Arch Mineral and Ashland Coal to form Arch Coal, Inc. is an example.
Ashland's Management was the primary catalyst for that combination, which
created a premier coal operation with important low-sulfur production in both
eastern and western mining areas.
The shareholder proposal will be adopted if votes cast in its favor exceed
votes cast against it. Abstentions and broker non-votes will not be counted as
votes cast either for or against the proposal. Counsel has advised Ashland's
Board that, under Kentucky law, ultimate responsibility to manage the business
and affairs of the corporation rests with the Board. Therefore, the adoption of
this proposal would not require Ashland to distribute the Arch Coal shares to
Ashland's shareholders, but would simply amount to a request that the Board
consider such a proposal.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE AGAINST THIS
SHAREHOLDER PROPOSAL.
6
<PAGE>
ASHLAND INC.'S BOARD OF DIRECTORS
NOMINEES FOR ELECTION AT THE 1999 ANNUAL MEETING
CLASS I DIRECTORS NOMINATED FOR ELECTION
(Term expiring in 2002)
FRANK C. CARLUCCI Director since 1989
[PHOTO Mr. Carlucci, 68, is Chairman of The Carlyle Group in
APPEARS Washington, D.C. He was Secretary of Defense of the United
HERE] States from 1987 to 1989. He is a Director of Kaman
Corporation; IRI International; Neurogen Corporation; Northern
Telecom Ltd.; Pharmacia & Upjohn Inc.; Quaker Oats Company;
SunResorts, Ltd.; and Texas Biotechnology Corporation.
JAMES B. FARLEY Director since 1984
[PHOTO Mr. Farley, 68, is the former Chairman of Booz.Allen &
APPEARS Hamilton, Inc. and the retired Chairman of Mutual of New York.
HERE] He is presently a Director of The MONY Group Inc. (formerly
The Mutual Life Insurance Company of New York) and a Director
of Harrah's Entertainment Inc. He is also a Trustee of The
Forster Trust.
BERNADINE P. HEALY, M.D. Director since 1998
[PHOTO Dr. Healy, 54, is the Dean of the College of Medicine and
APPEARS Public Health, and Professor of Medicine, The Ohio State
HERE] University. From July 1993 to May 1995, she was a physician
and Science Policy Advisor to The Cleveland Clinic Foundation.
She is the immediate past Director of the National Institutes
of Health (from 1991 to 1993). She is a Director of Invacare,
Inc.; Medtronic, Inc.; and National City Corporation. She is
also a Trustee of Battelle Memorial Institute.
W. L. ROUSE, JR. Director since 1987
[PHOTO Mr. Rouse, 66, is an investor in Naples, Florida, and the
APPEARS retired Chairman, President and Chief Executive Officer of
HERE] First Security Corporation. He is a Director of Kentucky
American Water Company and Louisville Gas & Electric Co.
7
<PAGE>
CLASS III DIRECTOR NOMINATED FOR ELECTION
(Term expiring in 2001)
ERNEST H. DREW Director since 1998
[PHOTO Dr. Drew, 61, was formerly Chief Executive Officer of the
APPEARS Westinghouse Industries & Technology Group. From 1988 to 1994,
HERE] he was President and Chief Executive Officer of Hoechst
Celanese Corporation. From 1995 to mid-1997, he served as a
member of the Board of Management of Hoechst AG. At various
times he had Board responsibility for the Chemical,
Specialties and Engineering Plastics Business Groups;
Strategic Planning; and the Americas and Greater China
regions. He is a Director of Johns Manville Corp.; Public
Service Enterprise Group; and Thomas & Betts Corporation.
CONTINUING DIRECTORS NOT UP FOR ELECTION AT THE
1999 ANNUAL MEETING
CLASS II DIRECTORS
(Term expiring in 2000)
PAUL W. CHELLGREN Director since 1992
[PHOTO Mr. Chellgren, 55, is Chairman of the Board (since 1997) and
APPEARS Chief Executive Officer (since 1996) of Ashland. He was Chief
HERE] Operating Officer of Ashland from 1992 to 1996. He is a
Director of Arch Coal, Inc.; Medtronic, Inc.; and PNC Bank
Corp.
RALPH E. GOMORY Director since 1989
[PHOTO Mr. Gomory, 69, is President of the Alfred P. Sloan Foundation
APPEARS in New York, New York. He is a Director of the Bank of New
HERE] York; LEXMARK International, Inc.; Polaroid Corp.; and The
Washington Post Company.
PATRICK F. NOONAN Director since 1991
[PHOTO Mr. Noonan, 56, is Chairman of The Conservation Fund in
APPEARS Arlington, Virginia. He is a Director of the American Gas
HERE] Index Fund; Fund for Governmental Investors; International
Paper Company; and Saul Centers, Inc.; a Trustee of The
National Geographic Society; and serves on the Board of
Advisors of the Duke University School of the Environment.
8
<PAGE>
JANE C. PFEIFFER Director since 1982
[PHOTO Mrs. Pfeiffer, 66, is a management consultant in Vero Beach,
APPEARS Florida. She is a Director of International Paper Company and
HERE] J.C. Penney Company, Inc. and a Director of The MONY Group
Inc. (formerly The Mutual Life Insurance Company of New York).
MICHAEL D. ROSE Director since 1988
[PHOTO Mr. Rose, 56, served as Chairman of the Board of Promus Hotel
APPEARS Corporation from April 1995 until his retirement in December
HERE] 1997. Mr. Rose served as Chief Executive Officer of Promus
from 1990 to 1994. He also served as Chairman of the Board of
Harrah's Entertainment Inc. from 1995 to December 1996. He is
a Director of Darden Restaurants, Inc.; Felcor Suites Hotels,
Inc.; General Mills, Inc.; First Tennessee National Corp.;
Promus Hotel Corporation; ResortQuest International, Inc.; and
Stein Mart, Inc.
CLASS III DIRECTORS
(Term expiring in 2001)
SAMUEL C. BUTLER Director since 1970
[PHOTO Mr. Butler, 68, is a Partner of Cravath, Swaine & Moore,
APPEARS Attorneys, in New York, New York. He is a Director of
HERE] Millipore Corporation and United States Trust Corporation.
MANNIE L. JACKSON Director since 1994
[PHOTO Mr. Jackson, 59, is the majority owner and Chairman of the
APPEARS Board of the Harlem Globetrotters, International. Mr. Jackson
HERE] retired as a Senior Vice President for Honeywell, Inc., as a
consultant for Honeywell and as an Advisor to its Chairman in
1994. He resigned as a member of Honeywell's Southern Africa
subsidiary's Board of Directors in 1997. He is a Director of
Jostens, Inc.; The Stanley Works; and REEBOK Corporation.
9
<PAGE>
COMMITTEES OF THE BOARD OF DIRECTORS
Ashland's Board has five committees: Audit Committee, Committee on
Directors, Finance Committee, Personnel and Compensation Committee and Public
Policy--Environmental Committee. Membership in those committees is reflected
in the following chart:
<TABLE>
<CAPTION>
PERSONNEL
COMMITTEE AND PUBLIC POLICY--
AUDIT ON FINANCE COMPENSATION ENVIRONMENTAL
COMMITTEE DIRECTORS COMMITTEE COMMITTEE COMMITTEE
--------- --------- --------- ------------ ---------------
<S> <C> <C> <C> <C> <C>
Samuel C. Butler........ X X*
Frank C. Carlucci....... X X*
Ernest H. Drew.......... X X
James B. Farley......... X X* X
Ralph E. Gomory......... X* X
Bernadine P. Healy...... X X
Mannie L. Jackson....... X X
Patrick F. Noonan....... X X*
Jane C. Pfeiffer........ X X X
Michael D. Rose......... X X
W. L. Rouse, Jr......... X X X
</TABLE>
- ---------------------
* Indicates Committee Chairman
THE AUDIT COMMITTEE (i) provides a direct and open avenue of communication
between Ashland's internal auditors, its independent auditors and the Board of
Directors; (ii) recommends the selection of Ashland's independent auditors,
the audit fees and the services provided by the independent auditors;
(iii) reviews the scope and findings of external and internal audits; and
(iv) reviews the adequacy of Ashland's policies, procedures and internal
controls.
THE COMMITTEE ON DIRECTORS recommends (i) nominees for Ashland's Board;
(ii) the desirable size and composition of the Board; and (iii) the elements of
director compensation. It also oversees the Board's annual review of director
performance.
Ashland selects director nominees based on the nominee's skills,
achievements and experience. The Committee on Directors considers candidates
recommended by other directors, employees and shareholders. Written
suggestions for candidates should be sent to the Secretary of Ashland Inc.,
1000 Ashland Drive, Russell, Kentucky 41169 and, after the 1999 Annual Meeting
of Shareholders, to 50 E. RiverCenter Boulevard, P.O. Box 391, Covington,
Kentucky 41012-0391.
In order to nominate a director at an Annual Meeting of Shareholders,
Ashland's By-laws require that a shareholder provide written notice of an
intent to nominate a director not later than 90 days prior to the meeting (if
the meeting is held on the last Thursday in January). For a meeting held
earlier than the last Thursday in January, notice must be given within 10 days
of the first public disclosure of the date of the Annual Meeting. "Public
disclosure" may include a public filing with the Securities and Exchange
Commission (the "SEC").
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;
10
<PAGE>
. Information about each nominee that would be required in a proxy
statement, according to the rules of the SEC, 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 reviews Ashland's financial policies, needs and
structure. It oversees significant financial issues such as dividend action,
offerings of corporate stock or debt securities and major borrowings by
Ashland.
THE PERSONNEL AND COMPENSATION COMMITTEE approves salaries of corporate
officers and participation in, and awards under, Ashland's incentive plans. It
oversees compensation, hiring and performance evaluation policies. The
Committee also oversees various employee compensation, benefit and retirement
plans.
THE PUBLIC POLICY--ENVIRONMENTAL COMMITTEE monitors public issues that have
an impact on Ashland and oversees Ashland's environmental, health and safety
compliance practices.
MEETINGS OF THE BOARD OF DIRECTORS AND COMMITTEES
During fiscal 1998, seven meetings of the Board of Directors were held. The
Audit Committee met four times, the Committee on Directors met two times, the
Finance Committee met three times, the Personnel and Compensation Committee
met four times and the Public Policy--Environmental Committee met two times.
Each current director attended at least 75% of the total meetings of the Board
and the Committees on which he or she served, with the exception of Ralph E.
Gomory, who attended 69% of such meetings. Overall attendance at Board and
Committee meetings (excluding Dr. Healy, who was elected at the September 1998
Board of Directors' meeting) was 91.4%.
COMPENSATION OF DIRECTORS
ANNUAL RETAINER AND MEETING FEES. Non-employee directors receive an annual
retainer of $56,000, which must, pursuant to the Ashland Inc. Deferred
Compensation Plan for Non-Employee Directors (the "Directors' Deferral Plan")
either be (i) deferred into the Ashland Common Stock Fund or (ii) taken in
Ashland Common Stock.
In addition to the annual retainer, non-employee directors receive $1,500
for each Board meeting attended and $1,000 for each Committee meeting
attended. Meeting fees may be paid in cash, shares of Ashland Common Stock or
deferred into any investment alternative available in the Directors' Deferral
Plan.
The payout of the deferred annual retainer and deferred meeting fees occurs
upon termination of service by a director. However, upon a "change in control"
of Ashland (as defined in the Directors' Deferral Plan), amounts in the
directors' deferral accounts would be automatically distributed to the
director.
In addition to an annual retainer and meeting fees, a non-employee director
may receive compensation at the rate of $1,000 per day for services on special
assignments as directed by the Chairman of the Board. This special assignment
compensation cannot be deferred. Directors who are employees of Ashland are
not additionally compensated for service on the Board or its Committees.
11
<PAGE>
RESTRICTED SHARES--INITIAL GRANT. Upon election to Ashland's Board, a new
director receives 1,000 restricted shares of Ashland Common Stock. The director
pays Ashland an amount equal to the par value of the restricted shares. The
restricted shares may not be sold, assigned, transferred, or otherwise
encumbered until the earliest to occur of: (i) normal retirement from the Board
at age 70; (ii) death or disability of the director; (iii) a 50% change in the
beneficial ownership of Ashland; or (iv) voluntary early retirement to enter
governmental service. Under certain circumstances, the Committee has discretion
to avoid a director's forfeiture of these shares if he or she leaves Ashland's
Board for reasons other than those listed above.
RESTRICTED SHARES--SUBSEQUENT GRANTS; STOCK OPTIONS. At its January 1998
meeting, Ashland's Board voted to terminate any further grants of restricted
stock to non-employee directors, other than the initial grant discussed above.
At that meeting, the Board also voted to terminate any further stock option
grants to non-employee directors. Directors kept any restricted stock and stock
options granted prior to that termination.
OTHER COMPENSATION. In January 1997, the Board prospectively terminated the
Directors' Charitable Awards Program. All current non-employee directors, other
than Drs. Drew and Healy, remain eligible for the Charitable Awards. Under that
program, $1 million is donated upon a director's death to one or more
educational organizations recommended by that director.
Ashland's Board considers stock ownership of Ashland by directors and
management to be of utmost importance. The Board believes that such ownership
enhances directors' and management's commitment to Ashland's future and further
aligns management's interests with those of Ashland's shareholders.
Accordingly, in fiscal 1993, the Board established minimum stock ownership
guidelines for directors and certain executive officers of Ashland. 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,
other than Drs. Drew and Healy, have attained the minimum stock ownership
levels established by the Board. Each newly elected director, such as Drs. Drew
and Healy, 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.
12
<PAGE>
STOCK OWNERSHIP OF DIRECTORS AND CERTAIN
OFFICERS OF ASHLAND
The following table shows the stock ownership of members of Ashland's Board,
stock ownership of the executive officers of Ashland named in the Summary
Compensation Table on page 18 and stock ownership of the directors and
executive officers of Ashland as a group.
<TABLE>
<CAPTION>
STOCK OWNERSHIP
--------------------------
AGGREGATE NUMBER OF SHARES
NAME BENEFICIALLY OWNED
---- --------------------------
<S> <C>
Paul W. Chellgren.............................. 426,187(1)(2)(3)(4)(8)
John A. Brothers............................... 201,035(1)(2)(3)(5)
James R. Boyd.................................. 189,346(1)(2)(3)
J. Marvin Quin................................. 108,873(1)(2)(3)
David J. D'Antoni.............................. 148,226(1)(2)(3)(6)
Samuel C. Butler............................... 64,705(2)(3)(7)(8)
Frank C. Carlucci.............................. 28,198(2)(3)(8)
Ernest H. Drew................................. 3,798(2)(3)
James B. Farley................................ 18,950(2)(3)
Ralph E. Gomory................................ 24,690(2)(3)
Bernadine P. Healy............................. 3,546(2)(3)
Mannie L. Jackson.............................. 14,693(2)(3)
Patrick F. Noonan.............................. 14,699(2)(3)
Jane C. Pfeiffer............................... 16,715(2)(3)
Michael D. Rose................................ 25,463(2)(3)
W.L. Rouse, Jr. ............................... 29,145(2)(3)
All directors and executive officers as a group
(26 persons).................................. 2,019,532(3)
</TABLE>
- ---------------------
None of the listed individuals owned more than 1% of Ashland's outstanding
Common Stock as of November 23, 1998. All directors and executive officers as a
group owned 2,019,532 shares of Ashland Stock, which equalled 2.7% of the stock
outstanding on November 23, 1998.
(1) Includes shares of Ashland Common Stock held under Ashland's Employee
Savings Plan and/or LESOP. Participants can vote the Employee Savings Plan
and LESOP shares, and can invest in twenty-four investment options
available under the Employee Savings Plan (other than "matching shares"
contributed to a participant's account by Ashland, which must remain in the
Ashland Common Stock Fund of the Employee Savings Plan.)
(2) Includes Stock Units (share equivalents) held by executive officers or
directors under the Deferred Compensation Plan for Employees (the
"Employees' Deferral Plan") or the Directors' Deferral Plan, respectively.
When an officer terminates employment with Ashland, or a director
terminates service on the Board, he or she may elect to take the payout of
Stock Units in cash or Ashland Common Stock.
(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 September 30, 1998, through the exercise of stock
options: as to Mr. Chellgren, 292,500 shares (excluding 15,000 stock
options transferred to his children); Mr. Brothers, 143,750 shares; Mr.
Boyd, 139,250 shares; Mr. Quin, 71,250 shares (excluding 10,000 stock
options transferred to his children); and Mr. D'Antoni, 113,250 shares.
Each non-employee director has the right to acquire beneficial ownership of
4,000 shares within 60 calendar days after September 30, 1998 through the
exercise of stock options with the exception of Mr. Jackson, who has the
right to acquire 3,000 shares and Drs. Drew and Healy, who do not have the
right to acquire any such shares. All directors and executive officers as a
group have the right to acquire beneficial ownership of 1,328,081 shares
within 60 calendar days after September 30, 1998.
(4) Includes 60,000 shares of Restricted Common Stock of Ashland for which Mr.
Chellgren has voting power.
(5) Includes 20,000 shares of Restricted Common Stock of Ashland for which Mr.
Brothers has voting power.
(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) Includes 3,880 shares of Ashland Common Stock owned in trust for the
benefit of Mr. Butler and 750 shares of Ashland Common Stock owned by Mr.
Butler's wife for which he disclaims beneficial ownership.
(8) Includes shares of Ashland Common Stock held under the DRIP, which provides
participants with voting power with respect to such shares.
13
<PAGE>
EXECUTIVE COMPENSATION
PERSONNEL AND COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
DESCRIPTION OF THE PERSONNEL AND COMPENSATION COMMITTEE (THE "COMMITTEE") OF
ASHLAND'S BOARD OF DIRECTORS (THE "BOARD"):
. Comprised entirely of non-employee members;
. Key Executive Compensation responsibilities include the review,
recommendation and approval of changes to Ashland's executive
compensation policies and programs and the review and approval of 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;
. 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 being "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 18 companies of similar size and
diversity to Ashland (the "Compensation Peer Group"). (This Compensation
Peer Group contains different companies than the peer group of companies
selected for comparison in the Five-Year Cumulative Total Return
Performance Graph on page 23); 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
typically 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 business unit performance.
Increases in base salaries typically occur annually following review by the
Committee.
. ANNUAL INCENTIVE BONUS: Incentive compensation is awarded annually, with 20%
based upon the participant's individual performance for the last fiscal year
and 80% based upon Ashland's operating performance. Within 90 days after the
beginning of each fiscal year, performance Hurdle and Target objectives are
established for the upcoming year. For 1998 the objectives were corporate
economic profit and business unit economic profit. For the Chairman of the
Board and Chief Executive Officer, as well as certain other executive
officers, in addition to the economic profit objectives, there was a net
income objective.
14
<PAGE>
Hurdles are the minimum objectives that must be reached in order to trigger a
bonus payout. If the applicable Target(s) is/are achieved, maximum incentive
payments may be earned. The Committee may adjust incentive awards downward
based on such factors as the Committee deems appropriate.
A participant's maximum potential payout is generally a fixed percentage of
the midpoint of the annual salary range for the participant's position and is
dependent upon the participant's level of participation in Ashland's Incentive
Compensation Plan.
Awards for the Chief Executive Officer, the Executive Vice President and
senior vice presidents are based upon overall corporate performance. Awards to
other corporate employees are based equally upon general overall corporate
performance and business unit performance. Awards for business unit employees
are based entirely on business unit performance. Business unit presidents
receive awards based either solely on business unit performance or on a
combination of overall corporate performance and business unit 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.
Ashland's Board also approved grants of stock options to certain employees of
Marathon Ashland Petroleum LLC ("MAP"), Ashland's joint venture with USX-
Marathon, under terms similar to those for Ashland employees. The Board
believes that it is in Ashland's shareholders best interests to encourage MAP
employees to hold Ashland shares. USX-Marathon is granting the same MAP
employees stock options in USX-Marathon Group stock.
Performance Shares/Units
The performance share/unit program for certain key executives is a long-term
incentive plan 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 for the 1995-1998 and 1997-2000 performance periods 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: (i) a minimum four-year average corporate return on
equity (the "corporate objective") (50%); (ii) 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 (iii) 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%).
15
<PAGE>
. BUSINESS UNIT EMPLOYEES: (i) a minimum four-year average return on investment
for the applicable business unit (50%); (ii) the corporate objective (25%);
(iii) the peer TRS objective (12.5%); and (iv) the S&P TRS objective (12.5%).
Awards to the Chief Executive Officer, the Executive Vice President and the
Senior Vice Presidents 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, business unit
presidents and administrative vice presidents--three times base salary;
and
. designated key managers--one times base salary.
In addition, incentive compensation payments for the previous five years were
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. Any payment of those performance awards 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 of 1986, as amended from
time to time (the "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 reasonable efforts, 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 participated in these plans
on the same terms as other eligible employees, subject to any legal limits on
the amounts that could be contributed or paid to executives under the plans,
during fiscal 1998. Beginning in January 1999, certain highly compensated
employees no longer can participate in Ashland's Employee Savings Plan, and
will instead receive some of the same benefits available under the Employee
Savings Plan by participating in the Employees' Deferral Plan.
16
<PAGE>
COMPENSATION OF THE CHIEF EXECUTIVE OFFICER
. Fiscal 1998 Performance
<TABLE>
<CAPTION>
YEAR ENDED
SEPTEMBER 30,
-------------------
1998 1997
------- ------
(IN MILLIONS EXCEPT
EARNINGS PER SHARE)
<S> <C> <C>
Reported results
Net income........................................... $203 $279
Earnings per share................................... $2.63 $3.64
Excluding unusual items
Net income........................................... $263 $245
Earnings per share................................... $3.41 $3.21
</TABLE>
Financial results for fiscal 1998 were adversely affected by unusual items.
On a pre-tax basis, these items included:
. a $50 million charge for severance and other costs related to Ashland's
corporate reorganization and headquarters relocation;
. a $43 million charge primarily for retained environmental issues
associated with properties contributed to MAP;
. $15 million charge to adjust the carrying value of MAP's inventories to
market value; and
. a $14 million gain on Ashland's sale of its stock in Melamine Chemical,
Inc.
The combined impact of these items lowered 1998 earnings by $60 million, or
78 cents a share, after taxes. Excluding unusual items in both years, net
income was $263 million, or $3.41 a share, for 1998, up from $245 million, or
$3.21 per share for 1997. Removing unusual items in both years gives a clearer
picture of 1998 results. On an adjusted basis, net income grew 7 percent, while
earnings per share increased 6 percent. Operating income excluding unusual
items totaled $541 million, up 11 percent from 1997. Debt as a percent of total
capitalization was 43 percent at September 30, 1998, despite 20 acquisitions
for a total consideration of $255 million. The acquisitions were in keeping
with Ashland's strategy to grow earnings from wholly owned businesses.
. Fiscal 1998 CEO Compensation
Considering Ashland's positive financial performance over the past two fiscal
years, Mr. Chellgren received a base salary increase of $50,000. This was his
first salary increase since becoming Chief Executive Officer on October 1,
1996. Mr. Chellgren received an annual bonus for fiscal 1998 of $1,108,458, as
Ashland's performance for fiscal 1998 exceeded the established incentive
compensation Hurdle. Mr. Chellgren received a stock payout of the fiscal 1995-
1998 performance share award in the amount of 8,495 shares. During the fiscal
1995-1998 performance cycle, Ashland achieved a four-year average 10.9% ROE and
9.8% TRS.
SUMMARY
The Committee believes that the compensation provided to Ashland's executive
officers will create a strong linkage and alignment with the long-term best
interests of Ashland and its shareholders.
PERSONNEL AND COMPENSATION
COMMITTEE
Frank C. Carlucci, Chairman
James B. Farley
Mannie L. Jackson
Patrick F. Noonan
W. L. Rouse, Jr.
17
<PAGE>
SUMMARY COMPENSATION TABLE
The following table is a summary of compensation information for each of the
last three fiscal years ended September 30, 1998, 1997 and 1996 for the Chief
Executive Officer of Ashland and each of the other most highly compensated
executive officers as of September 30, 1998.
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG-TERM COMPENSATION
----------------------------- ----------------------------------
AWARDS PAYOUTS
OTHER --------------------- ------------
ANNUAL RESTRICTED ALL OTHER
COMPEN- STOCK OPTIONS LTIP COMPEN-
PRINCIPAL POSITION YEAR SALARY BONUS(1) SATION(2) AWARDS ($) (#) PAYOUTS(3) SATION(4)
- ------------------ ---- -------- ---------- --------- ---------- ------- ------------ ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Paul W. Chellgren 1998 $810,677 $1,108,458 $17,570 40,000 8,495 shares $32,761
Chairman of the Board 1997 745,996 978,566 13,222 $2,769,375(5) 40,000 0 32,832
and Chief Executive 1996 580,699 514,782 14,041 50,000 $347,760 32,871
Officer
John A. Brothers 1998 507,105 473,046 14,361 15,000 6,178 shares 20,493
Executive Vice
President 1997 451,143 397,759 13,009 988,750(6) 30,000 0 19,998
1996 411,664 344,513 19,674 25,000 $266,616 22,446
James R. Boyd 1998 426,037 411,667 6,214 20,000 5,252 shares 17,217
Senior Vice President 1997 383,299 405,943 9,079 20,000 0 17,149
and Group Operating 1996 355,127 371,673 9,957 25,000 $213,293 26,483
Officer
J. Marvin Quin 1998 381,191 370,403 5,223 15,000 4,711 shares 15,406
Senior Vice President 1997 345,161 362,472 3,525 20,000 0 15,547
and Chief Financial 1996 320,246 259,093 3,587 25,000 $193,200 16,164
Officer
David J. D'Antoni 1998 410,513 300,566 3,076 20,000 8,011 shares 16,590
Senior Vice President
and President of 1997 368,351 354,043 5,635 20,000 0 16,521
Ashland Chemical 1996 340,178 333,160 3,834 15,000 $269,906 36,035
Company
</TABLE>
- ---------------------
(1) Amounts received under Ashland's Incentive Compensation Plan for each of
the fiscal years ended September 30, 1998, 1997 and 1996.
(2) This column reflects reimbursement of taxes for each of the named
executives. 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.
(3) Amounts received under Ashland's Performance Unit Plan for the fiscal 1993-
1996 and 1995-1998 performance periods.
(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 1998, these payments were $6,720
(for Employee Savings Plan) and $0 (for LESOP) for each named executive
officer and $26,041, $13,773, $10,497, $8,686 and $9,870 (for ERISA
forfeitures) for Messrs. Chellgren, Brothers, Boyd, Quin and D'Antoni,
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
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 $1.00 per share purchase price.
18
<PAGE>
STOCK OPTION GRANTS
The following table sets forth certain information on stock option grants in
fiscal 1998 to the Chief Executive Officer of Ashland and each of the other
most highly compensated executive officers as of September 30, 1998.
OPTION GRANTS IN FISCAL 1998
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL REALIZABLE
- --------------------------------------------------------------- VALUE AT ASSUMED
% OF TOTAL ANNUAL RATES OF
OPTIONS STOCK PRICE
GRANTED TO EXERCISE APPRECIATION FOR
OPTIONS EMPLOYEES OR BASE OPTION TERM*
GRANTED IN FISCAL PRICE EXPIRATION ---------------------
NAME (#) YEAR ($/SH) DATE 5% 10%
- ---- ------- ---------- -------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Paul W. Chellgren....... 40,000 6.9% $48.000 10/17/08 $1,220,219 $3,099,697
John A. Brothers........ 15,000 2.6% $48.000 10/17/08 457,582 1,162,386
James R. Boyd........... 20,000 3.5% $48.000 10/17/08 610,110 1,549,848
J. Marvin Quin.......... 15,000 2.6% $48.000 10/17/08 457,582 1,162,386
David J. D'Antoni....... 20,000 3.5% $48.000 10/17/08 610,110 1,549,848
</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 17, 2008 (the expiration date of the $48.000
options) would be $78.51 and $125.49, respectively, and the potential
realizable value for all Ashland shareholders if all 75,634,909 shares
outstanding on September 17, 1998 (the grant date of the $48.00 options) were
held until October 17, 2008 would be $5,937,755,242 and $9,491,607,440,
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 table below sets forth the following information with respect to stock
option exercises during fiscal 1998 by each of the named executive officers
and the status of their options as of September 30, 1998:
. The number of shares of Ashland Common Stock acquired upon exercise of
stock options during fiscal 1998;
. The aggregate dollar value realized upon the exercise of such options;
. The total number of exercisable and unexercisable stock options held at
September 30, 1998; and
. The aggregate dollar value of in-the-money unexercised options at
September 30, 1998.
19
<PAGE>
AGGREGATED OPTION EXERCISES IN FISCAL 1998
AND FISCAL YEAR END OPTION VALUES(1)
<TABLE>
<CAPTION>
NUMBER OF
UNEXERCISED
OPTIONS VALUE OF UNEXERCISED
SHARES VALUE AT FY-END IN-THE-MONEY
ACQUIRED ON REALIZED EXERCISABLE/ OPTIONS AT FY-END(1)
NAME EXERCISE (#) (2) UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
- ---- ------------ -------- -------------- -------------------------
<S> <C> <C> <C> <C>
Paul W. Chellgren....... 0 $282,706 307,500/72,500 $3,831,250/$90,625
John A. Brothers........ 0 0 143,750/36,250 1,749,687/ 45,312
James R. Boyd........... 0 0 139,250/36,250 1,567,749/ 45,312
J. Marvin Quin.......... 0 0 81,250/31,250 717,812/ 45,312
David J. D'Antoni....... 0 0 113,250/33,750 1,293,812/ 27,187
</TABLE>
- ---------------------
(1) Based on the closing price of Ashland Common Stock as reported on the New
York Stock Exchange Composite Tape on September 30, 1998 of $46.25 per
share.
(2) Mr. Chellgren exercised 17,500 stock options in a series of "cashless
exercises" in fiscal 1998 resulting in the indicated Value Realized.
RETIREMENT PLANS
Pension Plans
Ashland maintains qualified pension 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), these plans will terminate and
the funds in the plans, as well as any excess assets, will be distributed to
the participants.
If benefits payable under the qualified plans exceed limits imposed by the
Code, they can be paid out (with the approval of the Personnel and Compensation
Committee of the Board) under a nonqualified excess benefit pension plan. The
nonqualified plan provides for the payment of benefits in excess of ERISA
limits or of limits imposed by the Code. The nonqualified plan provides that
participants may, at the discretion of the Personnel and Compensation
Committee, receive their retirement benefits in a lump-sum distribution. Those
approved to receive a lump-sum payment may defer payment of all or part of it
through the Employees' Deferral Plan.
20
<PAGE>
The following table shows the total combined estimated annual benefits
payable under the qualified and nonqualified plans to eligible salaried
employees for years of service, assuming retirement at age 65. Benefits are
determined on a straight-life annuity basis. There is no offset in benefits
under either plan for Social Security benefits. Those amounts are, however,
reduced by the actuarial value of 50% of the value of a participant's LESOP
account and the actuarial value of 50% of any shares forfeited under the LESOP
because of limitations imposed 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, 1998, Messrs. Chellgren, Brothers, Boyd, Quin and D'Antoni
had credited service in the combined plans of 23, 28, 16, 25 and 24 years,
respectively.
Supplemental Early Retirement Plan
The Supplemental Early Retirement Plan (the "SERP") allows eligible key
executives to retire prior to age 65. The maximum annual benefit payable under
the SERP is an amount equal to 50% of the final average annual compensation the
employee received during the highest 36 months of his or her final 60 months of
employment. Annual compensation includes salary plus incentive compensation
awards. The amount paid under the SERP is reduced by any other payments made
under Ashland's qualified and nonqualified pension plans.
At the discretion of the Personnel and Compensation Committee of the Board an
individual may receive a SERP retirement benefit in a lump-sum distribution. An
executive approved under the SERP may defer payment of all or a part of the
lump sum, through the Employees' Deferral Plan. The retirement benefit received
as a lump sum is equal to the actuarial present value of all expected future
payments if the executive received monthly payments discounted at the average
of the monthly published Pension Benefit Guaranty Corporation (the "PBGC")
rates used to value annuities in effect during the six months ending the
January 1 or July 1 immediately preceding the calculation date. Prior to
October 1, 1998, the Personnel and Compensation Committee used the PBGC
interest rate to calculate lump sum conversions. Effective October 1, 1998,
lump sum distributions will be calculated under assumptions prescribed by the
Personnel and Compensation Committee, which may or may not be the PBGC rate.
In addition, the amounts paid out under the SERP are reduced by the actuarial
value of 50% of the value of a participant's LESOP account and the actuarial
value of 50% of any shares forfeited under the LESOP because of limitations
imposed by the Code.
21
<PAGE>
Messrs. Chellgren and Brothers are currently eligible to participate in the
SERP. The estimated lump-sum value of the retirement benefit under the SERP to
Mr. Chellgren, assuming retirement at age 62, is $5,449,274 and to Mr.
Brothers, again assuming retirement at age 62, is $2,259,557.
Upon a "change in control" of Ashland (as defined in the SERP), eligible key
executive employees may, at their election, retire at an earlier age pursuant
to the SERP. Ashland normally enters into consulting agreements with its
retiring key executive employees who participate in the SERP. Under these
agreements, a retiring executive receives payment of a mutually agreed per diem
compensation for services rendered to Ashland.
EXECUTIVE EMPLOYMENT AGREEMENTS AND OTHER ARRANGEMENTS
The executive officers listed in this Proxy Statement, as well as certain
other executive officers, have employment agreements with Ashland which provide
for the continuation of their then-current salaries for two years after
termination of their employment with Ashland without "Cause". If they are
terminated without "Cause", or if they resign for "Good Reason", within two
years after a "change in control" of Ashland, they would receive a payment
equal to three times their annual compensation, including incentive
compensation payments, based on the average of the preceding five years. In
addition, the Executive Employment Agreements provide for continuation of
certain benefits for one year. The terms "Cause", "Good Reason" and "change in
control" are defined in the agreements. The total payment to an individual
executive would never exceed an amount that would be deemed an "excess
parachute payment" under Section 280G of the Code.
22
<PAGE>
FIVE YEAR TOTAL RETURN PERFORMANCE GRAPH
The following graph compares Ashland's five-year cumulative total shareholder
return with the cumulative total return of the Standard & Poor's 500 index, the
peer group used by Ashland in its 1997 Proxy Statement (the "Old Peer Group")
and a newly constructed peer group (the "New Peer Group"). The cumulative total
shareholder return for each of these groups assumes the reinvestment of
dividends.
[GRAPH APPEARS HERE]
The Old Peer Group was originally developed in 1993 to closely resemble
Ashland's business structure at the time. The Old Peer Group consists of the
following companies: Diamond Shamrock (now Ultramar Diamond Shamrock); FINA,
Inc. (now wholly-owned by PetroFina S.A.); Pennzoil Company; Sun Company, Inc.;
Total Petroleum N.A. (now wholly-owned by Ultramar Diamond Shamrock); Union
Carbide Corporation and USX-Marathon Group. The annual returns for each of
these seven companies are weighted by beginning-of-the-year market
capitalization.
Due to recent changes within Ashland's operating structure, a New Peer Group
has been constructed that includes representative companies from the four
industries in which Ashland primarily competes: petroleum refining and
marketing, specialty chemical production and distribution, motor oil and car
care products, and highway construction. The annual returns for the companies
in each of the following portfolios have been weighted by their respective
beginning-of-year market capitalization:
23
<PAGE>
. Petroleum Refining and Marketing Portfolio: Holly Corporation; Sun
Company, Inc.; Tesoro Petroleum Corporation; Tosco Corporation; Ultramar
Diamond Shamrock; and Valero Energy Corporation.
. Specialty Chemical Production and Distribution Portfolio: Air Products &
Chemicals, Inc.; Dow Chemical; E.I. DuPont de Nemours & Co., Inc.;
Eastman Chemical Company; Praxair, Inc.; Rohm & Haas Company; and Union
Carbide Corporation.
. Motor Oil and Car Care Products Portfolio: Quaker State Corporation.
. Highway Construction Portfolio: Florida Rock Industries and Granite
Construction, Inc.
Each portfolio is then weighted to reflect Ashland's annual invested capital
in each of these lines of business with the annual return for the New Peer
Group represented by the sum of these weighted portfolios.
MISCELLANEOUS
PERSONNEL AND COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION.
The members of the Personnel and Compensation Committee of the Board of
Directors for fiscal 1998 were Frank C. Carlucci (Chairman), James B. Farley,
Mannie L. Jackson, Patrick F. Noonan and W. L. Rouse, Jr. There were no
impermissible interlocks or inside directors on the Personnel & Compensation
Committee.
BUSINESS RELATIONSHIPS. During fiscal 1998, 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. Ashland believes
that during fiscal 1998 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.
PROXY SOLICITATION COSTS. The proxies being solicited by this Proxy Statement
are being solicited by Ashland. All costs of soliciting proxies, including the
cost of preparing and mailing this Proxy Statement and the accompanying
material, will be borne by Ashland. Expenses associated with this solicitation
may also include charges and expenses of banks, brokerage houses and other
custodians, nominees or fiduciaries for forwarding proxies and proxy materials
to beneficial owners of shares. Solicitations may be made by mail, telephone,
telegraph, telex, facsimile, electronic means and personal interview, and by
officers and employees of Ashland, who will not be additionally compensated for
such activity. Ashland has arranged for the services of Morrow & Co., Inc. to
assist in the solicitation of proxies. Morrow's fees will be paid by Ashland
and are estimated at $35,000, excluding out-of-pocket expenses.
SHAREHOLDER PROPOSALS FOR THE 2000 ANNUAL MEETING. Shareholders interested in
presenting a proposal for consideration at Ashland's Annual Meeting of
Shareholders in 2000 may do so by following the procedures prescribed in Rule
14a-8 of the Securities Exchange Act of 1934 and Ashland's By-laws. To be
eligible for inclusion in the Proxy Statement for the 2000 Annual Meeting,
shareholder proposals must be received by Ashland's Corporate Secretary no
later than August 13, 1999.
Ashland's By-Laws provide that a shareholder must provide Ashland with
written notice of a matter he or she wishes to bring before an annual meeting
at least 90 days in advance of the meeting, if the meeting is held no earlier
than the last Thursday in January. If the meeting is held earlier, the
shareholder must provide Ashland with written notice within 10 days after the
first public disclosure of the date of the meeting. The first public disclosure
of that date may be a public
24
<PAGE>
filing with the SEC. 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 the 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.
OTHER MATTERS. As of the date of this Proxy Statement, Ashland does not know
of any business to be presented for consideration at the Annual Meeting, other
than the items referred to in this Proxy Statement. In the event that any
additional matter is properly brought before the meeting for shareholder
action, proxies in the enclosed form returned to Ashland will be voted in
accordance with the recommendation of the Board or, in the absence of such
recommendation, in accordance with the judgment of the proxy holder.
Please fill in, sign and date the enclosed form of proxy and return it in the
accompanying prepaid envelope. 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 11, 1998.
25
<PAGE>
[ASHLAND LOGO] ASHLAND 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 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 and 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 held under the terms of said Plan(s), at the Annual Meeting of
Shareholders of ASHLAND INC. to be held at the Metropolitan Club, 50 E.
RiverCenter Boulevard, Covington, Kentucky, at 10:30 a.m. on January 28, 1999,
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 ("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 the
undersigned 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, Attn: Susan Hogan.
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
Trustees.
PLEASE MARK, SIGN DATE AND MAIL THE VOTING INSTRUCTION CARD PROMPTLY, USING THE
ENCLOSED ENVELOPE.
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
(CONTINUED AND TO BE SIGNED ON REVERSE SIDE.)
4298--Ashland Inc. (ESOP) Ivory Stock
<PAGE>
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY [X]
- --------------------------------------------------------------------------------
[ ] TO VOTE FOR ALL FOUR ITEMS AS RECOMMENDED BY THE BOARD OF DIRECTORS, MARK
THIS BOX, SIGN, DATE AND RETURN THE PROXY.
- --------------------------------------------------------------------------------
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR
---
1. ELECTION OF DIRECTORS -
Nominees are: Class I: Frank C. Carlucci, James B. Farley,
Bernadine P. Healy, W.L. Rouse, Jr.
Class II: Ernest H. Drew
FOR ALL (Except
FOR WITHHOLD Nominee(s) written
ALL ALL below)
[ ] [ ] [ ]
- -----------------------------------------------------------------
2. Ratification of Ernst & Young LLP as independent auditors for the 1999
fiscal year.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
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 and 2
and AGAINST proposals 3 and 4.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST
-------
3. Shareholder proposal to spin off Ashland Chemical, APAC and Valvoline as
three separate companies.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
4. Shareholder proposal to distribute Arch Coal, Inc. stock to Ashland's
shareholders.
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 name.
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
[UP ARROW] FOLD AND DETACH HERE [UP ARROW]
YOUR VOTE IS IMPORTANT.
PLEASE MARK, SIGN, DATE AND MAIL THE PROXY CARD PROMPTLY
USING THE ENCLOSED ENVELOPE
4298--ASHLAND INC. (ESOP) IVORY STOCK
<PAGE>
[ASHLAND LOGO] ASHLAND INC.
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 Metropolitan Club, 50 E. RiverCenter Boulevard, Covington, Kentucky,
at 10:30 a.m. on January 28, 1999, 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 and upon any other business that may properly
come before the meeting of 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>
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY [X]
- --------------------------------------------------------------------------------
[ ] TO VOTE FOR ALL FOUR ITEMS AS RECOMMENDED BY THE BOARD OF DIRECTORS, MARK
THIS BOX, SIGN, DATE AND RETURN THE PROXY.
- --------------------------------------------------------------------------------
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR
---
1. ELECTION OF DIRECTORS -
Nominees are: Class I: Frank C. Carlucci, James B. Farley,
Bernadine P. Healy, W.L. Rouse, Jr.
Class II: Ernest H. Drew
FOR ALL (Except
FOR WITHHOLD Nominee(s) written
ALL ALL below)
[ ] [ ] [ ]
- -----------------------------------------------------------------
2. Ratification of Ernst & Young LLP as independent auditors for the 1999
fiscal year.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
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 and 2
and AGAINST proposals 3 and 4.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST
-------
3. Shareholder proposal to spin off Ashland Chemical, APAC and Valvoline as
three separate companies.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
4. Shareholder proposal to distribute Arch Coal, Inc. stock to Ashland's
shareholders.
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 name.
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
[UP ARROW] FOLD AND DETACH HERE [UP ARROW]
YOUR VOTE IS IMPORTANT.
PLEASE MARK, SIGN, DATE AND MAIL THE PROXY CARD PROMPTLY
USING THE ENCLOSED ENVELOPE
