<PAGE>
<PAGE> 1
Five Radnor Corporate Center
100 Matsonford Road, Suite 550
Radnor, Pennsylvania 19087
July 1, 1996
TO OUR STOCKHOLDERS:
You are cordially invited to attend the Annual Meeting of Stockholders to
be held on Monday, August 5, 1996, at 8:30 a.m., Eastern Daylight Time, in the
Ballroom of the Four Seasons Hotel, 18th Street and Benjamin Franklin Parkway,
Philadelphia, Pennsylvania.
The accompanying Notice of Meeting and Proxy Statement describe the
matters to be acted upon during the Annual Meeting. You are welcome to
present your views on these items and other subjects related to the Company's
operations. Your participation in the activities of the Company is important,
regardless of the number of shares you hold.
To ensure that your shares are represented at the Annual Meeting, whether
or not you are able to attend, please complete the enclosed proxy and return
it to us in the postage-paid envelope.
I hope you will attend the Annual Meeting.
Sincerely,
/s/ Peter McCausland
____________________________________
Peter McCausland
Chairman and Chief Executive Officer<PAGE>
<PAGE> 2
AIRGAS, INC.
___________________________
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
AUGUST 5, 1996
___________________________
TO THE STOCKHOLDERS:
The Annual Meeting of the Stockholders of Airgas, Inc. (the "Company"), a
Delaware corporation, will be held on Monday, August 5, 1996, at 8:30 a.m.,
Eastern Daylight Time, in the Ballroom of the Four Seasons Hotel, 18th Street
and Benjamin Franklin Parkway, Philadelphia, Pennsylvania, for the following
purposes:
1. To elect three Directors of the Company.
2. To vote upon a proposal to ratify the selection of KPMG Peat Marwick
LLP as the Company's independent accountants for the fiscal year
ending March 31, 1997.
3. To transact such other business as may properly come before the
Annual Meeting or any adjournments thereof.
Stockholders of record at the close of business on June 10, 1996, are
entitled to notice of, and to vote at, the Annual Meeting and any adjournments
thereof.
All stockholders are cordially invited to attend the Annual Meeting in
person, but whether or not you plan to attend, please promptly sign, date and
mail the enclosed proxy in the return envelope. Returning your proxy does not
deprive you of the right to attend the Annual Meeting and vote your shares
in person.
By Order of the Board of Directors,
/s/ Todd R. Craun
__________________________________
Todd R. Craun, Esq.
Secretary
Radnor, Pennsylvania
July 1, 1996
The Company's Annual Report for the year ended March 31, 1996,
accompanies this notice, but is not incorporated as part of the proxy
statement and is not to be regarded as part of the proxy solicitation
material.
<PAGE>
<PAGE> 3 AIRGAS, INC.
PROXY STATEMENT
This Proxy Statement is furnished in connection with the solicitation of
proxies at the direction of the Board of Directors of Airgas, Inc. (the
"Company") for use at the Annual Meeting of Stockholders to be held on August
5, 1996.
Stockholders of record at the close of business on June 10, 1996, will be
entitled to vote at the Annual Meeting. At the close of business on June 10,
1996, 64,265,320 shares of the Company's $0.01 par value common stock ("Common
Stock") were outstanding. A stockholder is entitled to one vote for each
share of Common Stock held by such stockholder. This Proxy Statement and the
enclosed form of proxy are being mailed to the Company's stockholders on or
about July 1, 1996.
Shares represented by a proxy in the accompanying form, unless previously
revoked, will be voted at the Meeting if the proxy is returned to the Company
properly executed and in sufficient time to permit the necessary examination
and tabulation before a vote is taken. A proxy may be revoked at any time
prior to its exercise by giving written notice to the Secretary of the
Company, by giving a later dated proxy, or by voting in person at the meeting.
Mere attendance at the Annual Meeting will not revoke the proxy. Any specific
instructions indicated on your proxy will be followed. Unless contrary
instructions are given, your proxy will be voted FOR each of the proposals
described in this Proxy Statement and in the discretion of the proxy holders
on such other business as may properly come before the Annual Meeting.
Abstentions are counted as shares present for purposes of determining the
presence or absence of a quorum for the transaction of business. Brokers
holding shares for beneficial owners must vote their shares according to the
specific instructions they receive from the owners. If specific instructions
are not received, brokers may vote these shares in their discretion, except if
they are precluded from exercising their voting discretion on certain
proposals pursuant to the rules of the New York Stock Exchange. In such a
case, the broker may not vote on the proposal absent specific voting
instructions. This results in what is known as a "broker non-vote." A broker
non-vote has the effect of a negative vote when a majority of the shares
issued and outstanding is required for approval of the proposal. A broker
non-vote has the effect of reducing the number of required affirmative votes
when a majority of the shares present and entitled to vote or a majority of
the votes cast is required for approval of the proposal. The election of each
nominee for director (Proposal 1) requires a plurality of votes cast. Brokers
have discretionary authority to vote on this proposal. The ratification of
the selection of the auditors (Proposal 2) requires the approval of a majority
of the outstanding shares of Common Stock represented and entitled to vote at
the meeting. For purposes of Proposal 2, abstentions will have the same
effect as a vote against the proposal. Broker non-votes will have no effect
on the approval of Proposal 2. The New York Stock Exchange determines whether
brokers have discretionary authority to vote on a given proposal.
The cost of proxy solicitation, including the cost of reimbursing banks
and brokers for forwarding proxies and proxy statements to beneficial owners
of the Common Stock, will be paid by the Company. Proxies will be solicited
without extra compensation by certain officers and regular employees of the
Company by mail and, if found to be necessary, by telephone and personal
interviews. All shares represented by valid proxies will be voted.
<PAGE> 4
ELECTION OF DIRECTORS
The By-Laws of the Company presently provide that the Board of Directors
shall designate the number of directors constituting the Board of Directors,
which shall be no less than seven and no more than thirteen members.
Currently, that number has been fixed by the Board of Directors at nine. The
Board of Directors consists of three classes, with directors of one class to
be elected each year, for terms extending to the annual meeting of
stockholders held in the third year following the year of their election.
The three directors whose terms expire at the 1996 Annual Meeting have been
nominated to serve for a term expiring at the 1999 Annual Meeting.
The names and biographical summaries of the three persons who have been
nominated to stand for election at the 1996 Annual Meeting and the remaining
directors whose terms are continuing until the 1997 or 1998 Annual Meetings
appear below. John A. H. Shober and Merril L. Stott were elected by the
stockholders at the 1993 Annual Meeting, and Argeris N. Karabelas has been
nominated to serve as a director. Of the continuing directors, Erroll C.
Sult, Robert E. Naylor, Jr. and Robert L. Yohe were elected by the
stockholders at the 1994 Annual Meeting and W. Thacher Brown, Frank B. Foster,
III and Peter McCausland were elected at the 1995 Annual Meeting. James M.
Hoak, Jr., a director since 1987, is not standing for re-election.
All nominees have indicated that they are willing and able to serve as
directors if elected. In the event that any nominee should become
unavailable, the proxy will be voted for the election of any substitute
nominee designated by the Board of Directors or its Nominating and
Compensation Committee.
The Board of Directors recommends that you vote FOR the election of
Messrs. Shober, Stott and Karabelas.
Set forth below is certain information regarding the three nominees for
election at the Annual Meeting and the remaining six directors whose terms are
continuing until the 1997 and 1998 Annual Meetings.
Nominees for Election for Terms Expiring at the 1999 Annual Meeting:
John A.H. Shober Mr. Shober, age 63, has been the Vice Chairman of Penn
Virginia Corporation, a natural resources company,
since 1992, Chief Executive Officer since 1989 and was
President for more than ten years prior to 1989. He
has been an officer of Penn Virginia Corporation since
1971, and served as a director since 1978. Mr. Shober
is a director of Betz Laboratories, Inc., Ensign
Bickford Industries, Inc., First Reserve Corporation
and MIBRAG mbH, as well as a Member of the Board of
Managers of Pennsylvania Hospital, a Member of the
Board of Trustees of Eisenhower Exchange Fellowships,
Inc. and director of the YMCA of Philadelphia and
vicinity. Mr. Shober has served as a director of the
Company since 1990.
Merril L. Stott Mr. Stott, age 67, has been providing management
consulting services to the Company since April 1,
1994. Prior to that, he was the Director of
Management Development for the Company from April 1,
1993 to March 31, 1994, was President from April 1,
1991 to March 31, 1993, and was Vice President -
<PAGE> 5
Operations from August 1988 to March 31, 1991. Mr.
Stott has served as a director of the Company since
1993.
Argeris N. Karabelas, Dr. Karabelas, age 43, has been the President of
Ph.D. SmithKline Beecham Pharmaceuticals' North American
division since 1993. Prior to 1993, he held a variety
of marketing and sales positions at SmithKline
Beecham, a healthcare company, including Senior Vice
President of Marketing from 1990 to 1993. From 1989
to 1990, Dr. Karabelas was CEO of Cytotherapeutics, a
biotechnology company. Prior to that, he was an
Assistant Professor of Industrial Pharmacy and
Pharmacokinetics at the Massachusetts College of
Pharmacy.
Directors Serving for Terms Expiring at the 1997 Annual Meeting:
Erroll C. Sult Mr. Sult, age 69, has been the President of National
Welders Supply Co., Inc., a major independent producer
and distributor of industrial gases, welding supplies
and related equipment in North Carolina, South
Carolina, Georgia and Virginia, since 1987, and was
Executive Vice President for more than five years
prior thereto. Mr. Sult has served as a director of
the Company since 1988.
Robert E. Naylor, Jr. Mr. Naylor, age 63, retired from the Rohm & Haas
Company, a specialty chemical manufacturer, in
December 1995. For ten years prior to his retirement,
he had been Group Vice President and a director of
Rohm & Haas Company. Mr. Naylor has served as a
director of the Company since 1992.
Robert L. Yohe Mr. Yohe, age 60, is an independent investor,
corporate director and advisor. He was Vice Chairman
of Olin Corporation and a member of its Board of
Directors until 1994. Mr. Yohe is a Director of Betz
Laboratories, Inc., Calgon Carbon Corporation and The
Middleby Corporation. He also is a trustee of
Lafayette College. Mr. Yohe has served as a director
of the Company since 1994.
Directors Serving for Terms Expiring at the 1998 Annual Meeting:
W. Thacher Brown Mr. Brown, age 48, has been the Chairman, President
and a director of 1838 Investment Advisors, Inc., an
investment management company, and President of 1838
Investment Advisors, L.P., since July 1988, and
has been President of 1838 Investment Advisors Funds
since 1995. He is a director of the 1838 Bond
Debenture Trading Fund Inc., the 1838 Investment
Advisors Funds and The Harleysville Mutual Insurance
Company, and was a Senior Vice President and a
director of Drexel Burnham Lambert Incorporated for
more than four years prior to 1988. Mr. Brown has
been a director of the Company since 1989.
<PAGE> 6
Frank B. Foster, III Mr. Foster, age 62, has been Chairman of DBH
Associates, a venture capital/consulting firm, since
1989. He was President and CEO of Diamond-Bathurst
Inc., a publicly-held manufacturer of glass
containers, from 1975 until he founded DBH. He also
serves as a director of Contour Packaging, U.S.
Precision Glass, Fragrance Impressions, Ltd.,
Carr-Lowrey Glass Company and 1838 Investment
Advisors Funds. Mr. Foster has been a director of
the Company since 1986.
Peter McCausland Mr. McCausland, age 46, has been the Chairman of the
Board and the Chief Executive Officer of the Company
since 1987, was the President from 1993 to 1995 and
from 1986 to 1988. Mr. McCausland has been a director
of the Company since 1986.
Board of Directors and Committees
The Board of Directors held six meetings during the year ended March 31,
1996. The average attendance by directors at these meetings was 93 percent,
and all incumbent directors attended at least 93 percent of the Board and
Committee meetings they were scheduled to attend.
The standing committees of the Board of Directors are an Executive
Committee, a Nominating and Compensation Committee and an Audit Committee.
These committees held, respectively, two meetings, three meetings and three
meetings during the year ended March 31, 1996.
The members of the Executive Committee are Messrs. Foster, McCausland and
Sult. As authorized by Delaware law and the Company's By-Laws, the Executive
Committee may exercise all of the powers of the Board of Directors when the
Board is not in session, except that it may not elect directors or appoint
officers, amend the By-Laws, declare dividends, appoint members of the
Executive Committee, approve the acquisition of substantially all the assets
or capital stock of a corporation or business entity which has annual sales in
excess of 20% of the annual sales of the Company or take any other action
which may only be taken by the Board.
The members of the Nominating and Compensation Committee are Messrs.
Brown, Hoak and Shober. Its responsibilities include the review of
compensation practices and corporate benefit plans of the Company, and the
review and recommendation of prospective officers and Board members. The
Committee does not consider nominations for Board membership made by the
Company's stockholders.
The members of the Audit Committee are Messrs. Brown, Naylor and Yohe.
Its duties include the selection of independent accountants subject to the
approval of the stockholders, review of the scope and results of the audit and
review of the organization and scope of the Company's internal auditing and
financial controls.
Compensation of Directors
Directors (other than those who are employees of the Company) are paid an
annual retainer of $9,000 plus a fee of $1,000 for each Board or Committee
meeting attended, and are entitled to participate in the 1989 Non-Qualified
Stock Option Plan for Directors (Non-Employees) (the "Directors' Plan").
<PAGE> 7
Under the Directors' Plan, on the date of each annual meeting of stockholders,
continuing directors are granted options to purchase 8,000 shares of the
Company's Common Stock at an exercise price equal to the fair market value on
the date of grant. The options are exercisable immediately and have terms of
10 years. Messrs. Brown, Foster, Hoak, Naylor, Shober, Sult, Stott and Yohe
each received options to acquire 5,000 shares adjusted to reflect the 2-for-1
stock split in April 1996 (after they each waived their right to options to
acquire 3,000 shares) in fiscal 1996. The Chairman of the Audit Committee and
the Nominating and Compensation Committees also receive an additional $3,000
annual retainer. Directors are also reimbursed for their travel expenses for
attendance at Board and Committee meetings.
From April 1, 1995, through March 31, 1996, Mr. Stott was paid $10,000
for consulting services he rendered to the Company.
Filings Under Section 16(a)
Section 16(a) of the Securities and Exchange Act of 1934 requires the
Company's officers and directors, and persons who own more than ten percent of
a registered class of the Company's equity securities, to file reports of
ownership and changes in ownership of the securities with the Securities and
Exchange Commission and the New York Stock Exchange. Such persons are also
required to furnish the Company with copies of all Section 16(a) forms they
file. The Company knows of no greater than ten percent stockholders, other
than one person who is an officer and director.
Based solely on its review of the copies of the forms received by it with
respect to the 1996 fiscal year, or written representations from certain
reporting persons that no Forms 5 were required, the Company believes that all
of its officers and directors complied with all filing requirements applicable
to them, except with respect to one late filing of a Form 4 to report the sale
of 353 shares of the Company's Common Stock by E. Pat Baker in August 1995,
which Form 4 was filed in September 1996, two weeks late. Additionally, 215
shares of the Company's Common Stock acquired by Mr. Baker on March 31, 1995,
pursuant to the Company's 1994 Stock Purchase Plan was inadvertently omitted
from Mr. Baker's Form 3. The acquisition of shares was made one day before
the date on which Mr. Baker became an executive officer for purposes of
Section 16(a). Upon discovery of the error, an amendment was promptly filed.
<PAGE>
<PAGE> 8
EXECUTIVE COMPENSATION
The following table sets forth certain information concerning the
compensation paid during the fiscal years ended March 31, 1996, 1995 and 1994
to the Company's Chief Executive Officer and each of the Company's four
other most highly compensated executive officers based on salary and bonus
earned during the 1996 fiscal year.
Summary Compensation Table (continued on next page)
Annual Compensation
Long Term Compensation
_______________________
Other Annual
Name and Principal Fiscal Compensation
Position Year Salary ($) Bonus ($) ($)(1)
_________________ ______ __________ _________ ____________
Peter McCausland 1996 $ 500,000 $ 497,500 (1)
Chairman and Chief 1995 325,000 580,280
Executive Officer 1994 325,000 575,000
Hermann Knieling 1996 163,333 71,000 (1)
President and Chief 1995 120,000 64,733
Operating Officer 1994 115,000 50,700
Britton H. Murdoch 1996 159,500 72,500 (1)
Vice President- 1995 153,000 85,000
Finance 1994 147,500 68,300
Kenneth A. Keeley 1996 150,556 55,000 (1)
Division President- 1995 152,062 64,733
Central 1994 145,000 49,500
Gordon L. Keen, Jr. 1996 127,700 76,000 (1)
Vice President- 1995 123,600 60,800
Corporate Development 1995 123,000 50,200
<PAGE>
<PAGE> 9
Summary Compensation Table (continued from previous page)
Long Term Compensation
______________________
Securities All Other
Name and Principal Restricted Underlying LTIP Compensation
Position Stock Awards Options (#) Payouts ($)(1)
_________________ ____________ ___________ ________ ____________
Peter McCausland None 144,000 None $ 6,066(2)
Chairman and Chief None 216,000 None 5,766
Executive Officer None 272,000 None 4,558
Hermann Knieling None 34,000 None 8,513(3)
President and Chief None 40,400 None 6,900
Operating Officer None 51,200 None 5,600
Britton H. Murdoch None 32,000 None 7,727(4)
Vice President - None 40,400 None 7,692
Finance None 51,200 None 6,082
Kenneth A. Keeley None 32,000 None 8,316(5)
Division President - None 40,400 None 8,125
Central None 51,200 None 6,488
Gordon L. Keen, Jr. None 20,000 None 6,641(6)
Vice President - None 24,400 None 6,062
Corporate Development None 32,000 None 5,048
(1) Amount does not exceed the lesser of $50,000 or 10% of total salary and
bonus.
(2) Consists of $5,718 of employer matching contributions and additional
discretionary contributions based on the profitability of the Company
under the Company's 401(k) Plan, and the value of life insurance
premiums of $348 paid for the benefit of Mr. McCausland.
(3) Consists of $7,109 of employer matching contributions and discretionary
contributions based on the profitability of the Company under the
Company's 401(k) Plan and the value of life insurance premiums of
$1,404 paid for the benefit of Mr. Knieling.
(4) Consists of $7,595 of employer matching contributions and additional
discretionary contributions based on the profitability of the Company
under the Company's 401(k) Plan, and the value of life insurance
premiums of $132 paid for the benefit of Mr. Murdoch.
(5) Consists of $7,416 of employer matching contributions and additional
discretionary contributions based on the profitability of the Company
under the Company's 401(k) Plan and the value of life insurance
premiums of $900 paid for the benefit of Mr. Keeley.
(6) Consists of $6,065 of employer matching contributions and additional
discretionary contributions based on the profitability of the Company
under the Company's 401(k) Plan and the value of life insurance
premiums of $576 paid for the benefit of Mr. Keen.<PAGE>
<PAGE> 10
Option Grants During 1996 Fiscal Year (continued on next page)
The following table provides information related to options granted to
the named executive officers during fiscal 1996. The Company does not have
any outstanding stock appreciation rights.
Individual Grants
______________________________________________________________________________
No. of
Securities % of Total
Underlying Options
Options Granted to
Granted Employees in Exercise Expiration
Name (#)(2) Fiscal Year Price ($/Sh) Date
____ _________ ____________ ____________ ___________
Peter McCausland 72,000 7.4% $13.32 May 22, 2005
72,000 7.4 17.31 May 22, 2005
Hermann Knieling 16,000 1.6 13.32 May 22, 2005
16,000 1.6 17.31 May 22, 2005
2,000 .2 13.32 May 22, 2005
Britton H. Murdoch 16,000 1.6 13.32 May 22, 2005
16,000 1.6 17.31 May 22, 2005
Kenneth A. Keeley 16,000 1.6 13.32 May 22, 2005
16,000 1.6 17.31 May 22, 2005
Gordon L. Keen, Jr. 10,000 1.0 13.32 May 22, 2005
10,000 1.0 17.31 May 22, 2005
<PAGE> 11
Options Granted During 1995 Fiscal Year (continued from previous page)
Potential Realization Value at
Assumed Annual Rates of Stock
Price Appreciation for Option
Term (1)
_______________________________
Name 0%($)(3) 5%($)(3) 10%($)(3)
____ ________ ________ _________
Peter McCausland $ 0 $603,135 $1,528,463
0 315,855 1,241,183
Hermann Knieling 0 134,030 339,658
0 70,190 275,818
0 16,754 42,457
Britton H. Murdoch 0 134,030 339,658
0 70,190 275,818
Kenneth A. Keeley 0 134,030 339,658
0 70,190 275,818
Gordon L. Keen, Jr. 0 83,769 212,287
0 43,868 172,387
(1) These amounts, based on assumed appreciation rates of 0%, 5% and 10%
prescribed by the Securities and Exchange Commission rules, are not
intended to forecast possible future appreciation, if any, of the
Company's stock price.
(2) Options to acquire shares of Common Stock, which become exercisable in
four equal annual installments beginning May 22, 1996.
(3) No gain to the optionees is possible without an increase in stock
price, which will benefit all stockholders. If the named executive
officers realize the appreciated values based on the 5% and 10%
appreciation rates set forth in the table, total stockholder value will
have appreciated by approximately $584 million and $1.481 billion,
respectively, and the value of the named executive officers'
appreciation will be approximately 0.3% of the total stockholders'
appreciation. Potential stock price appreciation to all stockholders
is calculated based on a total of 64,265,320 shares of Common Stock
outstanding on June 10, 1996, and a price of $14.46 per share, the
weighted average exercise price of options granted in fiscal 1996
referred to in the table above.<PAGE>
<PAGE> 12
Aggregated Option Exercises During 1996 Fiscal Year
and Fiscal Year-End Option Values
The following table provides information related to employee options and
warrants exercised by the named executive officers during fiscal 1996 and the
number and value of such options held at fiscal year-end.
(columns continued on next page)
Shares Value
Acquired on Realized
Name Exercise (#) ($)(1)
____ ___________ ________
Peter McCausland ---- ----
Hermann Knieling 14,600 155,908
Britton H. Murdoch 48,000 550,080
Kenneth A. Keeley 360,000 4,219,120
Gordon L. Keen, Jr. ---- ----
<PAGE> 13
(columns continued from previous page)
Number of Securities
Underlying Value of Unexercised
Unexercised Options In-the-Money Options
Name at Fiscal Year-End (#) at Fiscal Year-End($)(2)
____ ____________________________ __________________________
Exercisable Unexercisable Exercisable Unexercisable
___________ _____________ ___________ _____________
Peter McCausland 802,000 526,000 12,892,390 5,007,730
Hermann Knieling 71,500 95,900 1,003,837 770,496
Britton H. Murdoch 157,700 97,900 2,533,427 823,696
Kenneth A. Keeley 212,900 93,900 3,503,867 757,376
Gordon L. Keen, Jr. 272,100 60,300 3,268,090 517,330
(1) Represents the difference between the option exercise price and the
market value on the date of exercise.
(2) Value based on the closing price of $19.88 per share on March 31,
1996, less the option exercise price.
Termination of Employment and Change in Control Arrangement
The Company has agreed that upon Mr. McCausland's termination of
employment or change in control of the Company, he is entitled to a payment
equal to two times annual salary, the continuation of health insurance and
other employee benefits for a three-year period and automatic vesting of all
previously granted stock options.
NOMINATING AND COMPENSATION COMMITTEE REPORT ON
EXECUTIVE COMPENSATION
The Nominating and Compensation Committee of the Board of Directors has
furnished the following report on executive compensation. Under the
supervision of the Nominating and Compensation Committee, the Company has
developed and implemented compensation policies, plans and programs.
The Committee is composed of three independent, nonemployee directors.
Following review and approval by the Nominating and Compensation Committee,
all issues pertaining to executive compensation (other than the granting of
stock options under the Company's Amended and Restated 1984 Stock Option Plan)
are submitted to the full Board of Directors for approval.
Since its inception, the Company has maintained the philosophy that
compensation of its entire management team, including executive officer level
positions through operating management positions at the Company's operating
subsidiaries, should be directly and materially linked to operating
performance. To achieve this linkage, compensation is heavily weighted
towards bonuses paid on the basis of performance and to the award of stock
options to a relatively broad level of operating management.
<PAGE> 14
Compensation Principles
The foundation of the management compensation program is based on beliefs
and guiding principles designed to align compensation with business strategy,
Company values and management initiatives. The program:
- - Rewards executives for long-term strategic management and the enhancement
of shareholder value through the award of stock options as a significant
percentage of total compensation.
- - Integrates compensation programs with both the Company's annual and
longer-term strategic planning and measurement processes.
- - Provides flexibility in order to maximize local autonomy, which the
Company views as an important element of its success.
Executive Compensation Program
The total compensation program consists of both cash and equity based
compensation. The annual compensation consists of a base salary and an annual
bonus under the Company's Management Incentive Plan. Incentive compensation
is closely tied to corporate and individual performance in a manner that
encourages a continuing focus on building profitability and shareholder value.
Once each year, the Committee determines the salary ranges for executive
officers upon review of salary ranges in companies comparable in size in terms
of annual sales and capitalization. The comparison group includes companies
in the specialty chemicals industry plus distribution companies and fast
growth companies outside of the Company's industrial classification. The
Committee included companies outside of the Company's industry in the
comparison group because it believes that the Company is similar in certain
respects to such companies. Actual salary changes are based upon individual
and Company-wide performance and generally are fixed at levels slightly below
salary levels paid at companies in the comparison group. The individual's
performance is measured against specific management objectives, such as
pre-tax profits, operating cash flow, debt repayment, safety targets, programs
for training and development of personnel and sales and marketing programs.
Offsetting the Company's lower base salary levels, however, is the
opportunity to earn significantly higher total compensation through incentive
bonus and stock option programs. The bonus and stock option components are
"at risk," meaning that the ultimate value of the compensation depends on such
factors as company financial performance, individual performance and stock
price. This at risk portion of the Company's executive compensation ranges
from approximately 60% to 70% of total compensation, which represents a higher
portion of total compensation than for most of the companies in the comparison
group. The Committee approves the participation of key executives in the
Management Incentive Plan. Awards for executive officers vary with a
combination of the Company's achievement of cash flow and earnings goals and
are then adjusted up or down for the executive's achievement of specified
objectives and individual job performance. The Company's objectives that the
Committee considers are the same as those used to determine salary. The
Committee relies on these quantitative and qualitative measures and it uses
subjective judgment and discretion in light of these measures and the
Company's compensation principles described above to determine base salaries
and bonuses.
<PAGE> 15
Long-term incentives are provided through the grant of stock options.
The Committee reviews and approves the participation of executive officers of
the Company and its subsidiaries under the Company's stock option plan. The
Committee has the authority to determine the individuals to whom stock options
are awarded, the terms of the options and the number of shares subject to each
option. The size of option grants are based upon position level. The
Committee determines the percentage of total compensation which is to consist
of the value of stock options for each position level and divides that value
by the estimated value of the options, using the Black-Scholes method. During
fiscal 1996, the value of options granted was generally between 45% and 55% of
an executive officer's total compensation. Through grants of stock options,
the objective of aligning executive officers' long-range interests with those
of the stockholders are met by providing the executive officers with the
opportunity to build a meaningful stake in the Company. The Company does not
have a formal policy regarding stock ownership objectives for executives and,
therefore, the Committee does not consider stock option grants previously
made. As with the determination of base salaries and bonuses, the Committee
relies on quantitative and qualitative measures and exercises subjective
judgment and discretion in view of these measures and the Company's general
policies. Executive officers may also participate in the Company's 401(k)
Plan, which includes Company matching contributions and discretionary
contributions based on the Company's profitability, and the Company's Employee
Stock Purchase Plan, which permits eligible employees to purchase shares of
the Company's Common Stock at varying discounts from the market price,
depending on the employee's compensation level.
Chief Executive Officer Compensation
The Nominating and Compensation Committee reviewed the Chief Executive
Officer's compensation for fiscal year 1996 and determined that his base
salary would increase to $500,000 in fiscal 1996 from $325,000 in fiscal 1995.
This higher base salary approximates the median level of chief executive
officers of the comparison group of companies and is consistent with the
Company's objective of paying a higher level of compensation through its at
risk bonus and stock option programs. The fiscal 1996 bonus award was based
upon the achievement of objective, pre-determined pre-tax profits, operating
cash flow and debt repayment (exclusive of acquisition related debt) targets,
as set forth in the Management Incentive Plan, and the Chief Executive
Officer's performance in meeting specific strategic and operating objectives,
such as the successful integration of a large number of acquisitions and
increases in same-store sales. In determining the number of shares to be
awarded as stock options, the Committee relied upon grant levels specifically
determined and recommended by an independent outside consultant in 1990 for
growth-oriented companies initiating stock option plans, as part of a
five-year, front-end loaded stock option grant plan for the Chief Executive
Officer, and upon the Chief Executive Officer's performance.
Deductibility
The Company intends, to the extent practicable, to preserve deductibility
under the Internal Revenue Code (the "Code") of compensation paid to its
executive officers while maintaining compensation programs to attract and
retain highly qualified executives in a competitive environment.
John A.H. Shober, Chairman
W. Thacher Brown
James M. Hoak, Jr.
<PAGE> 16
STOCKHOLDER RETURN PERFORMANCE PRESENTATION
Set forth below is a line graph comparing the yearly change in the
cumulative total stockholder return on the Company's Common Stock against the
cumulative total return of the S&P Composite - 500 Stock Index and the S&P
Chemicals Composite Index for the period of five years commencing April 1,
1991 and ended March 31, 1996.
<PAGE>
<PAGE> 17
CERTAIN TRANSACTIONS
McClain Corporation ("McClain"), Woodstock, Illinois, which is the
beneficial owner of more than five percent of the Company's Common Stock, is
the exclusive sales agent of a subsidiary of the Company for the sale and
marketing of certain products, including electrically calcined anthracite and
electrode paste, under a sales agency agreement which was renewed by the
parties in October 1993 for a ten-year term (the "Sales Agency Agreement").
The Sales Agency Agreement provides for the payment of commissions to McClain
equal to 5% of the sales for all Company products sold under the Sales
Agency Agreement by McClain. During the fiscal year ended March 31, 1996,
Midwest Carbide, a wholly-owned subsidiary of the Company, paid McClain
$685,000 pursuant to the Sales Agency Agreement. The Company believes the
amounts paid to McClain are not inconsistent with industry practices.
The Company leases two properties from Mr. Knieling under two leases that
expire in fiscal 1997. During fiscal 1996, the Company made rental payments
to Mr. Knieling in the aggregate amount of $64,800. The leases were executed
in connection with the purchase by the Company of Mr. Knieling's business
prior to his employment by the Company. The Company believes that the terms
of the leases are no less favorable than could have been obtained in
arms-length transactions with unaffiliated third parties.
Since April 1, 1995, National Welders Supply Co., Inc., of which Mr. Sult
is the President, paid $495,000 to the Company for the purchase of nitrous
oxide, $109,000 to the Company for the purchase of specialty gases and
$987,000 to a joint venture of the Company for the purchase of calcium
carbide. The Company believes that the terms of the transactions are no less
favorable than could have been obtained in arms-length transactions with
unaffiliated third parties.
The Company leases cylinders from William A. Rice, Jr., Division
President - Industrial Distribution and Purchasing, of the Company, under a
capital lease continuing through December 1997. The lease was executed in
connection with the purchase by the Company of Mr. Rice's business prior
to his employment by the Company. During its 1996 fiscal year, the Company
made principal and interest payments totaling $174,000 under the cylinder
lease. The Company believes that the terms of the lease are no less favorable
than could have been obtained in arms-length transactions with unaffiliated
third parties.
In April 1995, the Company made a $110,000 loan to William E. Sanford,
Vice President - Sales and Marketing, to assist in the payment of taxes
incurred as a result of Mr. Sanford's exchange of an interest in a subsidiary
for the Company's Common Stock. The loan had an annual interest rate of 9%,
and principal and interest were due and payable on demand. Mr. Sanford repaid
the principal amount in full plus interest of $7,975 in December 1995.
<PAGE>
<PAGE> 18
SECURITY OWNERSHIP
The following table sets forth certain information, according to
information supplied to the Company regarding the number and percentage of
shares of the Company's Common Stock beneficially owned on March 31, 1996 (i)
by each person who is the beneficial owner of more than 5% of the Common
Stock; (ii) by each nominee for director and director (who is a nominee or
continuing director); (iii) by each executive officer named in the Summary
Compensation Table; and (iv) by all directors and executive officers of the
Company as a group. Unless otherwise indicated, the stockholders listed
possess sole voting and investment power with respect to the shares listed.
Amount and Nature of Percentage of
Name of Beneficial Owner Beneficial Ownership(1) Shares Outstanding
________________________ _______________________ __________________
Peter McCausland
612 East Gravers Lane
Wyndmoor, PA . . . . . . 9,596,704 (2)(3)(4) 14.8
James M. Hoak, Jr. . . . 50,800 (2) *
Erroll C. Sult . . . . . 81,600 (2) *
W. Thacher Brown . . . . 106,000 (2)(5) *
Frank B. Foster, III . . 55,600 (2) *
John A. H. Shober. . . . 56,000 (2) *
Merril L. Stott. . . . . 202,984 (2)(6) *
Robert E. Naylor, Jr.. . 28,000 (2) *
Robert L. Yohe . . . . . 15,000 (2) *
Britton H. Murdoch . . . 231,798 (2) *
Kenneth A. Keeley. . . . 527,142 (2)(4)(7) *
Gordon L. Keen, Jr.. . . 380,174 (2)(4) *
Hermann Knieling . . . . 213,414 (2)(4) *
Thomas W. Smith
323 Railroad Avenue
Greenwich, CT 06830. . . 3,695,600 (8) 5.78
Edward J. McAree
323 Railroad Avenue
Greenwish, CT 06830. . . 3,698,000 (8) 5.78
Thomas N. Tryforos
323 Railroad Avenue
Greenwich, CT 06380. . . 3,696,392 (8) 5.78
<PAGE> 19
Firstar Investment Research and
Management Company
777 E. Wisconsin Avenue
Milwaukee, Wisconsin 53202. . . 3,435,750 (9) 5.37
Firstar Corporation
777 E. Wisconsin Avenue
Milwaukee, Wisconsin 53202. . . 3,435,750 (9) 5.37
Putnam Investments, Inc.
One Post Office Square
Boston, Massachusetts 02109 . . 4,827,786 (10) 7.54
All directors and executive
officers as a group
(23 persons) 12,822,437 (1)(2)(3)(4)(5)(6)(7) 19.2
* Less than 1% of the outstanding Common Stock
(1) Includes all options, warrants and other rights to acquire shares
exercisable on or within 60 days of March 31, 1996. Each of the
amounts beneficially owned have been adjusted to reflect a 2-for-1
stock split of the Company's Common Stock effective on April 15, 1996.
(2) Includes the following number of shares of Common Stock which may be
acquired by certain directors and executive officers through the
exercise of options and warrants which were exercisable as of
March 31, 1996 or became exercisable within 60 days of that date: Mr.
McCausland, 1,044,000 shares; Mr. Hoak, 42,000 shares; Mr. Sult, 58,000
shares; Mr. Brown, 50,000 shares; Mr. Foster, 42,000 shares; Mr.
Shober, 42,000 shares; Mr. Stott, 18,000 shares; Mr. Naylor, 26,000
shares; Mr. Murdoch, 198,600 shares; Mr. Keeley, 249,800 shares; Mr.
Keen, 332,400 shares; Mr. Knieling, 108,900 shares; Mr. Yohe, 10,000
shares; and all directors and executive officers as a group, 3,099,890
shares.
(3) Investment and/or voting power with respect to 2,279,880 of such shares
are shared with, or under the control of, members of Mr. McCausland's
immediate family, and 90,558 shares are held by a charitable foundation
of which Mr. McCausland is an officer and director.
(4) Includes the following shares of Common Stock held under the Company's
401(k) Plan as of December 31, 1995: Mr. McCausland, 31,664 shares;
Mr. Keeley, 17,448 shares; Mr. Keen, 644 shares; Mr. Knieling, 9,458
shares; and all executive officers as a group, 127,318 shares.
(5) Includes 8,000 shares owned by members of Mr. Brown's immediate family.
(6) Includes 180,800 shares owned in a living trust of which Mr. Stott and
his spouse are co-trustees and their children are the beneficiaries.
(7) Includes 253,084 shares owned in a living trust, of which Mr. Keeley is
both trustee and beneficiary and 2,200 shares held in a partnership,
the partners of which are Mr. Keeley and his two sons.
<PAGE> 20
(8) Messrs. Smith, McAree and Tryforos jointly reported on a Schedule 13D,
dated February 11, 1994, (upon which the Company has relied in making
this disclosure) that in their capacities as investment managers for
certain managed accounts consisting of three private investment limited
partnerships (of which each is a general partner) and an employee
profit sharing plan of a corporation of which Mr. Smith is the sole
stockholder (and for which each of them is a trustee) they had the
following voting and investment power for shares of the Common Stock:
Messrs. Smith, McAree and Tryforos each have shared voting and
dispositive power for 3,695,600 shares; Mr. McAree has sole voting and
dispositive power for 2,400 shares; and Mr. Tryforos has sole voting
and dispositive power for 792 shares.
(9) Firstar Investment Research and Management Company ("FIRMC") reported
on Schedule 13G, dated February 13, 1996 (upon which the Company has
relied in making this disclosure) that it had sole voting power for
1,252,400 shares, shared voting power for 2,014,050 shares, sole
dispositive power for 1,416,000 shares and shared dispositive power for
2,019,750 shares. FIRMC is a subsidiary of Firstar Corporation, as
reported in a Schedule 13G filed by Firstar Corporation, dated
February 13, 1996, upon which the Company has relied in making this
disclosure. Firstar Corporation reported that it had sole voting power
for 2,882,200 shares, shared voting power for 389,950 shares, sole
dispositive power for 3,045,800 shares and shared dispositive power for
389,950 shares.
(10) Putnam Investments, Inc. ("PI"), a wholly-owned subsidiary of Marsh &
McLennon Companies, Inc., wholly owns Putnam Investment Management,
Inc. and The Putnam Advisory Company, Inc. (collectively, the "Putnam
Group"). The Putnam Group together filed a Schedule 13G dated
January 29, 1996, upon which the Company has relied in making this
disclosure. Each of the members of the Putnam Group are considered
beneficial owners in the aggregate of 4,827,786 shares, or 7.54% of
shares outstanding, of the Company's voting common stock, which shares
were acquired for investment purposes by the Putnam Group for certain
of their advisory clients.
<PAGE>
<PAGE> 21
PROPOSAL TO RATIFY ACCOUNTANTS
The Board of Directors has selected the firm of KPMG Peat Marwick LLP as
independent certified public accountants to audit the books, records and
accounts of the Company for the fiscal year ending March 31, 1997. The Board
of Directors has proposed that the stockholders ratify the selection of KPMG
Peat Marwick LLP. This firm audited the Company's financial statements for
the fiscal year ended March 31, 1996. Representatives of KPMG Peat Marwick
LLP are expected to attend the Annual Meeting, will have the opportunity to
make a statement if they desire to do so, and are expected to be available to
respond to appropriate questions.
The Board of Directors recommends that you vote FOR ratification of KPMG
Peat Marwick LLP as independent accountants.
STOCKHOLDERS PROPOSALS FOR
NEXT ANNUAL MEETING
Any properly submitted proposal which a stockholder intends to present at
the next Annual Meeting of Stockholders must be received by the Company by
March 3, 1997, if it is to be included in the Company's proxy statement and
form of proxy relating to the next Annual Meeting.
<PAGE>
<PAGE> 22
APPENDIX 1
Airgas, Inc.
Comparison of Five Year Cumulative Total Return
900|------------------------------------------------------|
| * |
| |
| |
800|------------------------------------------------------|
| |
| |
| |
700|------------------------------------------------------|
| |
| |
| |
600|------------------------------------------------------|
| * |
| |
| |
D 500|------------------------------------------------------|
| * |
O | |
| |
L 400|------------------------------------------------------|
| |
L | |
| |
A 300|------------------------------------------------------|
| * |
R | & |
| |
S 200|---------------------------------------------------$--|
| & |
| * & $ |
| & &$ $ |
| $ |
100|---*&$------------------------------------------------|
| |
| |
| |
0|----|--------|--------|--------|--------|--------|----|
March 31, 1991 1992 1993 1994 1995 1996
* = Airgas & = Chemicals $ = S&P 500
|-----------|-------|--------|--------|--------|--------|--------|
|March 31, | 1991 | 1992 | 1993 | 1994 | 1995 | 1996 |
|-----------|-------|--------|--------|--------|--------|--------|
|* Airgas | 100 | 133.57 | 279.77 | 478.38 | 593.11 | 889.66 |
|-----------|-------|--------|--------|--------|--------|--------|
|& Chemicals| 100 | 127.41 | 130.31 | 155.74 | 187.69 | 265.61 |
|-----------|-------|--------|--------|--------|--------|--------|
|$ S&P | 100 | 111.04 | 127.95 | 129.84 | 150.05 | 198.22 |
|-----------|-------|--------|--------|--------|--------|--------|
The graph above assumes that $100 was invested on April 1, 1991, in Airgas,
Inc. Common Stock, the S&P Chemicals Composit Index and the S&P 500 Index.
<PAGE> 23
AIRGAS, INC.
PROXY
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF THE COMPANY
FOR THE ANNUAL MEETING OF STOCKHOLDERS, AUGUST 5, 1996
The undersigned holder of Common Stock of Airgas, Inc. hereby appoints
Peter McCausland, Todd R. Craun and Britton H. Murdoch, and each of them,
proxies, with powers of substitution in each, to vote on behalf of the
undersigned at the Annual Meeting of Stockholders to be held at 8:30 a.m. on
Monday, August 5, 1996, in the Ballroom of the Four Seasons Hotel, 18th Street
and Benjamin Franklin Parkway, Philadelphia, Pennsylvania, and at all
adjournments thereof, according to the number of shares which the undersigned
would be entitled to vote if then personally present, and in their discretion
upon such other business as may come before the Meeting.
SHARES WILL BE VOTED AS INSTRUCTED, BUT IF NO INSTRUCTION IS GIVEN, SHARES
WILL BE VOTED FOR ALL THE NOMINEES FOR DIRECTOR NAMED IN THE PROXY
STATEMENT, FOR THE PROPOSALS DESCRIBED IN THE PROXY STATEMENT AND WITH
DISCRETIONARY AUTHORITY ON SUCH OTHER MATTERS AS MAY COME BEFORE THE
MEETING.
(Continued, and to be signed, on the other side)
____________________________________________________
[to be inserted on back of proxy card]
Please mark [] or [] in blue or black ink.
1. Election of Directors.
Nominees: John A.H. Shober, Merril L. Stott, Argeris N. Karabelas
[] FOR all nominees listed above
[] FOR all nominees listed above; except vote withheld from following
nominees (if any): ___________________________________
[] VOTE WITHHELD from all nominees
2. Ratify the selection of KPMG Peat Marwick
LLP as independent auditors.
[] FOR [] AGAINST [] ABSTAIN
<PAGE> 24
3. In their discretion, upon such other matters as
may properly come before the Meeting.
The undersigned acknowledges receipt with this proxy of a copy of the
Notice of Annual Meeting of Stockholders and the Proxy Statement of the
Board of Directors.
NOTE: Please sign exactly as name(s) appears hereon.
Executors, administrators, trustees, etc. should
give full title as such.
Signature______________________________________________
Signature_______________________________________________
Dated____________________________________________, 1996
PLEASE SIGN AND RETURN PROMPTLY IN THE ENCLOSED POSTAGE PAID ENVELOPE.
<PAGE>
