<PAGE>
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF
1934
(AMENDMENT NO. )
Filed by Registrant [_]
Filed by a party other than the Registrant [X]
Check the appropriate box:
[_] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S)240.14a-11(c) or (S)240.14a-12
WELLMAN, INC.
(Name of Registrant as Specified In Its Charter)
Wellman, Inc.
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).
[_] $500 per each party to the controversy pursuant to Exchange Act Rule 14a-
6(i)(3).
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
---------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
---------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:/1/
---------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
---------------------------------------------------------------
/1/ Set forth the amount on which the filing fee is calculated and state how it
was determined
[_] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-------------------------------------
(2) Form, Schedule or Registration Statement No.:
-------------------------------------
(3) Filing Party:
-------------------------------------
(4) Dated Filed:
April 18, 1994
-------------------------------------
<PAGE>
WELLMAN, INC.
1040 BROAD STREET, SUITE 302
SHREWSBURY, NEW JERSEY 07702
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
MAY 17, 1994
To the Stockholders of Wellman, Inc.
Notice is hereby given that the Annual Meeting of the Stockholders of
Wellman, Inc. (the "Corporation") will be held at the Oyster Point Hotel, 146
Bodman Place, Red Bank, New Jersey, on Tuesday, May 17, 1994 at 10:00 A.M.,
Eastern Daylight Time, for the following purposes:
(1) To elect directors of the Corporation for the ensuing year, and until
their successors are elected and qualified.
(2) To approve certain amendments to the Corporation's 1985 Incentive
Stock Option Plan, including the increase by 1,500,000 of the number of
shares of Common Stock that may be issued pursuant to the Plan.
(3) To ratify the selection by the Board of Directors of Ernst & Young as
independent auditors to audit the Corporation's books and accounts for the
fiscal year ending December 31, 1994.
(4) To transact such other business as may properly come before the
meeting or any adjournment thereof, including consideration of the
stockholder proposal set forth in the accompanying proxy statement, if such
proposal is presented at the meeting.
By Order of the Board of Directors,
DAVID K. DUFFELL
Secretary
April 18, 1994
Mailed at New York, New York
PLEASE COMPLETE, SIGN AND DATE THE ENCLOSED PROXY AND MAIL IT AS PROMPTLY AS
POSSIBLE. IF YOU ATTEND THE MEETING AND VOTE IN PERSON, THE PROXY WILL NOT BE
USED.
<PAGE>
WELLMAN, INC.
1040 BROAD STREET, SUITE 302
SHREWSBURY, NEW JERSEY 07702
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
MAY 17, 1994
INTRODUCTION
This Proxy Statement is furnished in connection with the solicitation of
proxies to be used at the Annual Meeting of Stockholders of Wellman, Inc. (the
"Corporation") to be held on May 17, 1994 and at any adjournment thereof, for
the purposes set forth in the accompanying notice of such meeting. All
stockholders of record of the Corporation's Common Stock at the close of
business on March 31, 1994 will be entitled to vote. The stock transfer books
will not be closed.
Proxies in the form enclosed are solicited on behalf of the Board of
Directors. Any stockholder giving a proxy in such form has the power to revoke
it at any time before it is exercised by filing a later proxy with the
Corporation, by attending the meeting and voting in person, or by notifying the
Corporation of the revocation in writing to its President at 1040 Broad Street,
Suite 302, Shrewsbury, New Jersey 07702. Any such proxy, if received in time
for the voting and not revoked, will be voted at the Annual Meeting in
accordance with the directions of the stockholder. Any proxy which fails to
specify a choice with respect to any matter to be acted upon will be voted for
the election of each nominee for director, in favor of Proposals 2 and 3, and
against the Stockholder Proposal referred to herein.
As of March 31, 1994, the Corporation had outstanding and entitled to vote
32,883,942 shares of Common Stock. Each share of such stock entitles the holder
thereof to one vote on the matters to be voted upon at the Annual Meeting with
all holders of Common Stock voting as one class. With regard to the election of
directors, votes that are withheld will be excluded entirely from the vote and
will have no effect. Abstentions may be specified on all proposals other than
the election of directors and will be counted as present for purposes of the
item on which the abstention is noted. Abstentions on the ratification of
accountants, the amendment of the option plan and the stockholder proposal will
have the same legal effect as a vote against such matter. Under the rules of
the New York Stock Exchange, brokers holding shares in street name have the
authority to vote on certain matters when they have not received instructions
from the beneficial owners. Brokers that do not receive instructions are
entitled to vote on the election of directors and the ratification of
accountants. Broker non-votes will have no effect on the outcome of the
election of directors, the ratification of accountants and the amendment of the
option plan. Broker non-votes will have the same legal effect as a vote against
the stockholder proposal.
The holders of a majority of the issued and outstanding shares of Common
Stock entitled to vote, present in person or represented by proxy, shall
constitute a quorum for the transaction of business. Abstentions and broker
non-votes will be counted in determining if a quorum is present. In the absence
of a quorum, the Annual Meeting may be postponed from time to time until
stockholders holding the requisite amount are present or represented by proxy.
<PAGE>
As of March 31, 1994, insofar as is known to the management of the
Corporation, the following persons owned beneficially more than 5% of the
outstanding Common Stock of the Corporation, the only capital stock of the
Corporation currently outstanding. Except as otherwise stated in the footnotes
below, the named persons have sole voting and investment power with regard to
the shares shown as owned by such persons.
<TABLE>
<CAPTION>
NAME AND ADDRESS NUMBER OF SHARES PERCENT
---------------- ---------------- -------
<S> <C> <C>
Merrill Lynch & Co., Inc. ............................. 2,367,997(1) 7.2%
World Financial Center, North Tower
250 Vessey Street
New York, NY 10281
Merrill Lynch Group, Inc. ............................. 2,365,797(1) 7.2%
World Financial Center, North Tower
250 Vessey Street
New York, NY 10281
Princeton Services, Inc. .............................. 2,350,636(1) 7.1%
800 Scudders Mill Road
Plainsboro, NJ 08536
Merrill Lynch Asset Management, L.P. .................. 2,350,636(1) 7.1%
800 Scudders Mill Road
Plainsboro, NJ 08536
Merrill Lynch Capital Fund, Inc. ...................... 2,000,000(1) 6.1%
800 Scudders Mill Road
Plainsboro, NJ 08536
American Express Company............................... 1,694,086(2) 5.2%
American Express Tower
World Financial Center
New York, NY 10285
IDS Financial Corporation.............................. 1,679,430(2) 5.1%
IDS Tower 10
Minneapolis, MN 55440
Brinson Partners, Inc. ................................ 1,635,000 5.0%
209 South LaSalle
Chicago, IL 60604-1295
Brinson Trust Company.................................. 402,000 1.2%
209 South LaSalle
Chicago, IL 60604-1295
</TABLE>
- --------
(1) According to the joint Schedule 13G of Merrill Lynch & Co., Inc., Merrill
Lynch Group, Inc., Princeton Services, Inc., Merrill Lynch Asset
Management, L.P. and Merrill Lynch Capital Fund, Inc. on file with the
Securities and Exchange Commission ("SEC"), each of these entities has
shared voting and dispositive power with respect to these shares and
disclaims beneficial ownership thereof.
(2) According to their joint Schedule 13G on file with the SEC, American
Express Company and IDS Financial Corporation have shared voting power with
respect to 434,300 and 434,300 shares, respectively, and shared dispositive
power with respect to 1,694,086 and 1,679,430 shares, respectively.
American Express Company disclaims beneficial ownership of these shares and
IDS Financial Corporation disclaims beneficial ownership of 14,656 of these
shares.
The approximate date on which the Proxy Statement and accompanying proxy card
will first be mailed to the stockholders of the Corporation is April 18, 1994.
2
<PAGE>
ELECTION OF DIRECTORS
The persons named below have been nominated for election at the Annual
Meeting as directors of the Corporation. The directors who are elected shall
hold office until their respective successors shall have been duly elected and
qualified. In accordance with Delaware General Corporation Law, directors are
elected by a plurality of the votes of the shares present in person or
represented by proxy at the Annual Meeting.
All nominees are members of the present Board. Each of the nominees for
director has consented to being named a nominee in this Proxy Statement and has
agreed to serve as a director, if elected at the Annual Meeting. It is the
intention of the persons named in the proxy to vote for the following nominees.
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION DURING DIRECTOR
NAME AND AGE THE PAST FIVE YEARS SINCE
------------ --------------------------- --------
<S> <C> <C>
Thomas M. Duff, 46....... President, Chief Executive Officer and August, 1985
director of the Corporation since its
inception in 1985.
C. William Beckwith, 62.. Vice President of the Corporation November, 1988
since its acquisition of Wellman
International Limited ("WIL") in
March, 1987. From 1972 until present,
Chief Executive Officer of WIL.
Peter H. Conze, 73....... Retired. From 1956 until retirement in March, 1988
1983, various positions with Celanese
Corp. (a chemicals and synthetic
fibers company), including consultant
from 1979 until 1983 and Vice Chairman
and director from 1970 until 1978.
Allan R. Dragone, 68..... Retired. From January, 1988 until August, 1990
November, 1989, Chairman of the Board
of Fiber Industries, Inc. From 1986
until 1990, President and Chief
Executive Officer of Akzo America,
Inc., the U.S. subsidiary of the Dutch
conglomerate Akzo N.V. Also a director
of Arcadian Chemical Corporation,
American Cyanamid, Purina Mills Inc.
and General Waterworks Corporation.
Richard F. Heitmiller,
65...................... Consultant since 1982. From 1971 until November, 1988
1982, various executive positions with
Arthur D. Little, Inc. (management
consultants) and Vice President of its
Decision Resources subsidiary.
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION DURING DIRECTOR
NAME AND AGE THE PAST FIVE YEARS SINCE
------------ --------------------------- --------
<S> <C> <C>
Jonathan M. Nelson, 37.. Co-Chairman of Providence Ventures August, 1985
Inc. (investment advisor) since its
inception in 1990. Managing Director
of Narragansett Capital, Inc.
(investment advisor) since its
inception in 1986. Also a general
partner of the general partner of
Providence Media Partners L.P.
(venture capital fund). Also a general
partner of the general partner of
Narragansett Capital Partners-A and -
B, L.P. (venture capital funds)
("NCPAB").
James E. Rogers, 48..... Managing Director of SCI Investors September, 1993
Inc. (investment company) since April,
1993 and Chairman of Custom Papers
Group Inc. (a paper manufacturer)
since November, 1993. From 1991 until
1993, President and Chief Executive
Officer of Specialty Coatings
International (a manufacturer). From
1971 until 1991, various positions
with James River Corporation and its
subsidiaries (a paper manufacturer),
including Senior Vice President from
1982 until 1991. Mr. Rogers is also a
director of Owens & Minor, Inc. (a
medical and surgical supplies
distributor) and Caraustar Industries,
Inc. (a paper recycler).
Raymond C. Tower, 69.... Retired. From 1977 until retirement in August, 1990
1990, President and Chief Operating
Officer of FMC Corp. (a manufacturer
of machinery and chemicals). Also a
director of Morton International Inc.,
Inland Steel Industries, Inc. and
Household International, Inc.
Roger A. Vandenberg, 46. President of Cariad Capital, Inc. August, 1985
(investment adviser) since its
inception in 1992. Managing Director
of Narragansett Capital, Inc.
(investment advisor) since its
inception in 1986. Also a general
partner of the general partner of
NCPAB and a general partner of the
general partner of Narragansett First
Fund (a venture capital fund). Mr.
Vandenberg is also a director of
Monaco Coach Corporation (a
manufacturer of motor homes).
</TABLE>
Although the management does not expect that any of the persons named above
will be unable to serve as a director, should any of them be unable to accept
election, it is intended that the proxies will be voted for the election of a
substitute nominee selected by the persons named in the proxy.
4
<PAGE>
The number of shares of the Corporation's Common Stock owned beneficially,
directly or indirectly, as of March 31, 1994 by the nominees, by the executive
officers named in the Summary Compensation Table below, and by all executive
officers and directors as a group is as follows:
<TABLE>
<CAPTION>
AMOUNT
BENEFICIALLY PERCENTAGE OF
NAME OWNED COMMON STOCK(1)(2)
- ---- ------------ ------------------
<S> <C> <C>
Thomas M. Duff............................. 604,000(1) 1.8%
C. William Beckwith........................ 116,000(1) (3)
Peter H. Conze............................. 3,867(2) (3)
Allan R. Dragone........................... 5,000(2) (3)
Richard F. Heitmiller...................... 5,000(2) (3)
Jonathan M. Nelson......................... 7,000(2) (3)
James E. Rogers............................ 4,000(2) (3)
Raymond C. Tower........................... 6,000(2) (3)
Roger A. Vandenberg........................ 9,000(2)(4) (3)
Clifford J. Christenson.................... 117,800(1) (3)
James P. Casey............................. 138,170(1) (3)
Paul D. Apostol............................ 70,000(1) (3)
All Directors and Executive Officers as a
Group (16 persons)........................ 1,277,322(1)(2) 3.8%
</TABLE>
- --------
(1) Includes the following shares of Common Stock reserved for issuance upon
exercise of stock options outstanding pursuant to the Wellman, Inc. 1985
Incentive Stock Option Plan: Mr. Duff, 225,000 shares; Mr. Beckwith,
115,000 shares; Mr. Christenson, 115,000 shares; Mr. Casey, 75,000 shares;
Mr. Apostol, 70,000 shares; and all directors and executive officers as a
group, 695,464 shares.
(2) Includes the following shares of Common Stock reserved for issuance upon
exercise of stock options outstanding pursuant to the Wellman, Inc.
Directors Stock Option Plan: Mr. Conze, 3,000 shares; Mr. Dragone, 3,000
shares; Mr. Heitmiller, 3,000 shares; Mr. Nelson, 3,000 shares; Mr. Rogers,
1,000 shares; Mr. Vandenberg, 3,000 shares; and all directors and executive
officers as a group, 19,000 shares.
(3) Less than 1%.
(4) Includes 4,000 shares owned of record by Mr. Vandenberg, 1,000 shares held
by a trust for the benefit of his two children and 1,000 shares owned of
record by his wife as custodian for their two children.
COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors has a Compensation Committee, currently comprised of
Messrs. Dragone, Heitmiller and Nelson, which is responsible for reviewing
certain of the Corporation's compensation programs and making recommendations
to the Board of Directors with respect to compensation. The Compensation
Committee met twice during the Corporation's last fiscal year.
The Board of Directors has a Finance and Audit Committee, currently comprised
of Messrs. Conze, Tower and Vandenberg, which is responsible for reviewing the
Corporation's internal auditing procedures and accounting controls and
considering the selection and independence of the Corporation's outside
auditors. The Finance and Audit Committee met twice during the Corporation's
last fiscal year.
The Board of Directors has a Nominating Committee, currently comprised of
Messrs. Dragone, Heitmiller and Tower, which is responsible for considering the
qualifications and recommending to the stockholders the election of directors
of the Corporation. Stockholders may recommend nominees for election as
directors by writing to the President of the Corporation. The Nominating
Committee met once during the Corporation's last fiscal year.
5
<PAGE>
The Corporation's Board of Directors held a total of eight meetings during
1993. Each member of the Board of Directors attended at least 75% of the
aggregate number of meetings of the Board and all committees on which he
served.
COMPENSATION OF DIRECTORS AND OFFICERS
DIRECTORS COMPENSATION
Each director of the Corporation who is not an employee receives fees of
$21,000 per year, plus $1,500 for each Board or committee meeting attended in
person and $750 for each telephonic meeting attended. Directors who are
employees receive no additional compensation for serving as directors or
attending Board or Committee meetings.
The Corporation maintains a Restricted Stock Plan pursuant to which each non-
employee director of the Corporation is eligible to receive a total of 2,000
shares of the Corporation's Common Stock which vest over a period of three
years commencing on the date he was first elected to the Board, provided he has
continuously served as a director for the preceding twelve months.
The Corporation also maintains a Directors Stock Option Plan pursuant to
which each non-employee director of the Corporation is eligible to receive
annually options to acquire 1,000 shares of the Corporation's Common Stock.
In addition, upon voluntary retirement from the Board of Directors on or
after age 65, non-employee directors who have served as directors for three or
more years are entitled to receive retirement payments in an amount equal to
the annual directors fee in effect at the date of retirement for a number of
years equal to the total number of years served as a director of the
Corporation.
EXECUTIVE COMPENSATION
The following table summarizes the compensation for the years ended December
31, 1991, 1992 and 1993 of the Corporation's chief executive officer and the
four other most highly compensated executive officers whose salary and bonus
exceeded $100,000.
6
<PAGE>
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
--------------------------- ------------
OTHER SECURITIES
ANNUAL UNDERLYING ALL OTHER
NAME AND PRINCIPAL COMPEN- OPTIONS/ COMPEN-
POSITION YEAR SALARY BONUS SATION(1) SARS(2) SATION(3)
------------------ ---- -------- -------- --------- ------------ ---------
<S> <C> <C> <C> <C> <C> <C>
Thomas M. Duff.......... 1993 $560,000 $203,218 $47,960 30,000 $128,260
President, CEO 1992 $500,000 $357,500 $43,819 30,000 $ 30,000
1991 $500,000 $ 7,241 $36,813 50,000 $ 30,000
C.W. Beckwith........... 1993 $259,857 $ 92,159 $15,911 15,000 --
Vice President; 1992 $249,392 $150,000 $18,621 20,000 --
CEO of WIL 1991 $494,749 $ 21,381 -- 20,000 $ 81,050
Clifford J. Christenson. 1993 $265,000 $ 96,166 $31,911(4) 25,000 $ 59,307
Executive Vice Presi- 1992 $240,000 $171,600 $13,973 20,000 $ 30,000
dent 1991 $200,000 $ 50,000 $ 7,493 20,000 $ 23,975
James P. Casey.......... 1993 $215,004 $109,839 $21,482 20,000 $ 47,621
Vice President; 1992 $207,500 $154,960 $20,710 15,000 $ 30,000
President of Fibers 1991 $191,250 $ 50,000 $18,140 10,000 $ 5,000
Division
Paul D. Apostol......... 1993 $196,875 $ 88,644 $24,627 15,000 $ 42,434
Vice President, 1992 $184,375 $ 99,130 $15,322 15,000 $ 30,000
Manufactured 1991 $168,750 $ 85,597 $13,416 10,000 $ 5,000
Products Group
</TABLE>
- --------
(1) Includes the Corporation's contributions to life insurance premiums or
payments in lieu thereof (Mr. Duff, $47,960; Mr. Beckwith, $15,911; Mr.
Christenson, $21,111; Mr. Casey, $21,482; and Mr. Apostol, $24,627 in
1993).
(2) None of the options granted were options with tandem SARs and no free-
standing SARs were granted.
(3) Consists of the Corporation's contributions to employee retirement (Mr.
Duff, $30,000; Mr. Beckwith, $-0-; Mr. Christenson, $27,642; Mr. Casey,
$27,642; and Mr. Apostol, $30,000 in 1993), supplemental retirement (Mr.
Duff, $98,260; Mr. Beckwith, $-0-; Mr. Christenson, $29,307; Mr. Casey,
$17,621; and Mr. Apostol, $12,434 in 1993), and savings plans (Mr. Duff, $-
0-; Mr. Beckwith, $-0-; Mr. Christenson, $2,358; Mr. Casey, $2,358; and Mr.
Apostol, $-0- in 1993).
(4) Includes $10,800 payment made to Mr. Christenson upon exercise of options
converted into non-qualified options as compensation for taxes payable. See
"Proposed Amendments to 1985 Incentive Stock Option Plan--Description of
the Option Plan--Terms of Options".
7
<PAGE>
The following table sets forth certain information relating to option grants
pursuant to the Corporation's 1985 Incentive Stock Option Plan (the "Option
Plan") in the year ended December 31, 1993 to the individuals named in the
Summary Compensation Table above.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
--------------------------------------------
% OF
NUMBER OF TOTAL
SECURITIES OPTIONS/SARS
UNDERLYING GRANTED TO EXERCISE
OPTIONS/ EMPLOYEES OR BASE EXPIRA- GRANT
SARS IN FISCAL PRICE TION DATE
NAME GRANTED(1)(2) YEAR ($/SH) DATE VALUE (3)
---- ------------- ------------ -------- -------- ---------
<S> <C> <C> <C> <C> <C>
Thomas M. Duff.......... 30,000 8.5 $17.375 12/15/04 $283,039
C.W. Beckwith........... 15,000 4.2 $17.375 12/15/04 $141,519
Clifford J. Christenson. 25,000 7.1 $17.375 12/15/04 $235,866
James P. Casey.......... 20,000 5.7 $17.375 12/15/04 $188,693
Paul D. Apostol......... 15,000 4.2 $17.375 12/15/04 $141,519
</TABLE>
- --------
(1) None of the options granted were options with tandem SARs and no free-
standing SARs were granted.
(2) All options granted to the named executive officers were granted on
December 15, 1993 pursuant to the Option Plan. The options become
exercisable in 20% increments on December 15, 1994, 1995, 1996, 1997 and
1998, respectively. If a Change of Control (as defined in the Option Plan)
occurs, these options would become immediately exercisable.
(3) Based on the Black-Scholes option pricing model. The Corporation's use of
this model should not be construed as an endorsement of its accuracy at
valuing options. The actual value, if any, an executive may realize will
depend on the excess of the stock price over the exercise price on the date
the option is exercised, so that there is no assurance the value realized
by an executive will be at or near the value estimated by the Black-Scholes
model. The estimated values under that model are based on the following
assumptions:
<TABLE>
<S> <C>
Stock price...................................................... $17.375
Exercise price................................................... $17.375
Expected option term............................................. 10 years
Stock price volatility........................................... .3591
Dividend yield................................................... .64%
Risk-free interest rate.......................................... 6.1%
</TABLE>
8
<PAGE>
The following table sets forth certain information with respect to option
exercises in 1993 and unexercised options to purchase the Corporation's Common
Stock granted under the Option Plan to the individuals named in the Summary
Compensation Table above.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION/SAR
VALUES
<TABLE>
<CAPTION>
NUMBER OF VALUE OF
SECURITIES UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS/SARS AT OPTIONS/SARS AT
FY-END FY-END (1)
------------------------- -------------------------
SHARES ACQUIRED VALUE
NAME ON EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- --------------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Thomas M. Duff.......... -0- -0- 112,000 113,000 $ 48,375 $62,250
C.W. Beckwith........... -0- -0- 59,000 56,000 $155,625 $29,375
Clifford J. Christenson. 22,160 $307,420 49,000 66,000 $ 18,750 $43,125
James P. Casey.......... -0- -0- 28,000 47,000 $ 7,875 $32,750
Paul D. Apostol......... -0- -0- 28,000 42,000 $ 7,875 $25,875
</TABLE>
- --------
(1) Based on the closing price on the New York Stock Exchange of the
Corporation's Common Stock on December 31, 1993 ($18.75).
Pension Plan. The Corporation's subsidiary, Fiber Industries, Inc. ("FII"),
maintains the Fiber Industries, Inc. Retirement Income Plan (the "Pension
Plan"), a tax-qualified defined benefit pension plan for eligible employees of
FII, which included Messrs. Casey and Apostol. Effective July 1, 1991, no
additional employees became Participants in the Pension Plan.
Participants are entitled to a monthly retirement benefit if they retire (i)
at or after age 65 (normal retirement age) or (ii) at or after age 55 with
either five or ten years of vesting service depending on whether they retire
directly from employment with FII or are transferred Celanese employees.
Participants whose employment with FII terminates after five years of vesting
service will also be eligible for a monthly retirement benefit. If benefits are
paid prior to normal retirement age they may be reduced, depending on the date
benefits begin and the Participant's age and service.
A Participant's normal retirement benefit is calculated under a formula which
takes into consideration final average compensation, years of service up to 35,
and benefits to be derived through Social Security and certain employee benefit
plans. Final average compensation covered by the Pension Plan is based on the
combined amounts set forth under the headings "Salary" and "Bonus" of the
Summary Compensation Table for Messrs. Casey and Apostol.
Benefits, computed on the basis of a straight life annuity, are payable upon
early, normal and late retirement, and upon death of a Participant with at
least five years of service. If benefits are paid in a form other than a
straight life annuity to the Participant, they are adjusted actuarially to
reflect the features of such other form.
9
<PAGE>
The following table illustrates the estimated annual normal retirement
benefits payable under the Pension Plan. These benefit levels assume an
employee's retirement at age 65 during 1993 and payment in the form of a single
life annuity.
<TABLE>
<CAPTION>
YEARS OF SERVICE
AVERAGE -----------------------------------------------------------------------------------------
EARNINGS 15 20 25 30 35
- -------- ------ ------ ------ ------ -------
<S> <C> <C> <C> <C> <C>
$125,000 23,580 33,018 42,455 51,893 61,330
$150,000 28,305 39,680 51,055 62,431 73,806
$175,000 33,030 46,343 59,656 72,968 86,281
$200,000 37,756 53,006 68,256 83,506 98,756
$225,000 42,344 59,470 76,596 93,722 110,848
$250,000 43,363 60,858 78,354 95,849 113,345
$275,000 43,363 60,858 78,354 95,849 113,345
$300,000 43,363 60,858 78,354 95,849 113,345
$400,000 43,363 60,858 78,354 95,849 113,345
$450,000 43,363 60,858 78,354 95,849 113,345
$500,000 43,363 60,858 78,354 95,849 113,345
$600,000 43,363 60,858 78,354 95,849 113,345
$700,000 43,363 60,858 78,354 95,849 113,345
</TABLE>
Notwithstanding the above table, benefits under the Pension Plan may not
exceed certain limits imposed by the Internal Revenue Code (the "Code"). The
maximum benefit payable in 1993 is $115,641. The table incorporates the Code
limitations on compensation allowable under a qualified pension plan. The limit
on compensation allowable in 1993 is $234,840; effective January 1, 1994 this
limit has been lowered to $150,000, which has not been reflected in the table.
In addition, the above estimated benefits are subject to limitations for
employees who also participate in the Wellman, Inc. Retirement Plan and the
Wellman, Inc. Employee Stock Ownership Plan. The estimated credited years of
service under the Pension Plan for Messrs. Casey and Apostol are 25 and 23
years, respectively.
REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS ON EXECUTIVE
COMPENSATION
The Compensation Committee of the Board of Directors of the Corporation (the
"Committee"), which is composed entirely of non-employee directors, met twice
during fiscal 1993. The Committee has responsibility for administering the
Corporation's annual Management Incentive Compensation and 1985 Incentive Stock
Option Plans. The Committee is also responsible for making compensation
recommendations to the Board with respect to the five executive officers whose
fiscal 1993 compensation is disclosed on the Summary Compensation Table on page
7 of this proxy statement. In this capacity, the Committee determines the
salary, management incentive plan awards and stock option grants for those
executive officers, following administrative policies and practices which it
establishes from time to time in accordance with the terms and provisions of
the plans. This Committee Report describes the Corporation's officer
compensation program strategy, the components of the compensation program, and
the manner in which 1993 compensation determinations were made by the Committee
with respect to the President and Chief Executive Officer, Mr. Thomas M. Duff.
Similar determinations were made by the Committee with respect to the other
four executive officers, based on recommendations submitted by Mr. Duff.
Compensation Strategy. The Committee endeavors to maintain an officer
compensation program which is competitive with the practices of public
corporations of similar revenue size. The Committee retained the
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services of a compensation consultant to audit the competitiveness of executive
officer salary levels, annual bonus opportunities and payments, and stock
option grants relative to the practices of corporations of comparable revenue
size. The survey companies used by the consultant include some, but by no means
all, of the companies included in the peer groups shown on the Stock
Performance Graph. The Committee believes a substantial component of executive
officer total compensation should be based on the Corporation's profitability
and on the increase in market value of its stockholders' investment. The
Management Incentive Plan compensates executive officers commensurate with the
Corporation's annual growth and profitability, and annual stock option grants
ensure that their longer-term incentive compensation is directly related to
increases in the market value of the Corporation's stock.
The remainder of this Committee Report describes the components of the
Corporation's officer compensation program and the manner in which these were
administered in fiscal 1993.
Base Salary. Base salary forms the competitive foundation of the officer
compensation program. Executive officer salaries are administered by the
Committee so as to ensure they remain competitive with practices of companies
of comparable revenue size. The Committee periodically audits market practices
to ensure executive officer salaries remain competitive in a manner which
properly reflects the performance of the incumbent officers. Messrs. Duff,
Christenson, Casey and Apostol currently have employment agreements which
provide that their "annual base salary shall be reviewed for consideration of
possible increases based on the executive's performance and other relevant
circumstances in such a manner as shall be substantially consistent with
increases in base salary awarded in the ordinary course of business to other
peer executives of the company and its affiliated companies."
Mr. Duff's salary was last adjusted by the Committee in November 1993. In
determining the size of Mr. Duff's salary increase, the Committee took into
account his existing salary in relation to competitive salary data furnished by
its compensation consultant and its subjective evaluation of Mr. Duff's
performance. The Committee considered similar information in approving salary
increase recommendations submitted by Mr. Duff with respect to the other
executive officers. Mr. Duff's 1993 annual salary approximates the 75th
percentile of competitive practice for corporations with revenues of comparable
size. The average 1993 salaries of the other executive officers were somewhat
above the 50th percentile of competitive levels for their peers in corporations
with revenues of comparable size.
Management Incentive Plan. The Management Incentive Plan ("MIP") was first
implemented in 1992. Annual bonuses earned by the executive officers, and other
plan participants, are directly related to, and based upon, corporate (and for
operating executives, their operating unit's) profit growth. Under the terms of
the MIP, profit is defined as operating profit less a capital charge based on
the net assets employed to generate these profits. The plan pays awards based
on growth in annual profits. Unless profits exceed a base level established at
the start of the year, no MIP awards are paid. The base level established for
1993 was exceeded. The base profit level increases each year reflecting the
profit growth of the business to ensure that bonuses are directly related to
incremental profit growth--i.e., the added value created for the Corporation's
stockholders. The maximum MIP award which may be paid is 1.5x target levels.
Payment of any awards earned in excess of this amount is deferred.
Mr. Duff's target MIP award is 50% of base salary; the target awards for the
other executive officers range from 20% to 50%. Of the executive officers named
in the Summary Compensation Table, only Mr. Casey achieved his targeted MIP
award.
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For fiscal 1993, the Committee recommended the payment of an annual bonus of
$203,218 for Mr. Duff, which was consistent with the Corporation's
profitability and the terms of the MIP.
Stock Options. Annual stock option grants represent the third component of
the Corporation's officer compensation program. Stock option grants permit
optionees to share in the future growth in market value of the Corporation's
common stock by allowing them to purchase shares of stock for a period up to
ten years following date of grant at a price equal to the price of a share of
common stock on the date the options were granted. To ensure stock options
provide a longer-term stockholder value-based incentive, 20% of the options
granted in a year become exercisable (i.e., the optionee can purchase the
option shares) on the first through fifth anniversaries of the grant date,
provided the optionee remains an employee of the Corporation.
The Chief Executive Officer of the Corporation submits proposed stock option
grants for the executive officers (other than himself) to the Committee for
approval. In making the final determination of option grants, the Committee
considers the individual executive's scope of responsibility, individual
performance, the levels of profits and return on assets of the Corporation and
of its operating divisions (with no specific target levels being established),
competitive levels of option grants, and the aggregate number of options
awarded to the executive to date. The Committee, in its discretion, assigns
relative weights to these factors as it deems appropriate.
The Option Grants Table on page 8 of this proxy statement shows the terms and
size of 1993 stock option grants made to the executive officers named in the
Summary Compensation Table. The Committee and the Board approved the grant of
these options effective December 15, 1993. These grants were below the 50th
percentile of competitive levels for Mr. Duff, and the average grants for the
other executive officers fell approximately midway between the 50th and 75th
percentiles of competitive practice for corporations of comparable revenue size
based on data provided by the Committee's compensation consultant.
The values shown under the "Potential Realized Value" column of this table
represent an estimate of the potential value of these grants. These projections
should not be construed as a forecast of future stock price or the compensation
that will be realized from the actual exercise of these option share grants.
Unless the future price of the Corporation's stock is higher than $17.375 per
share, the price at the time the 1993 options were granted, these options will
have no value.
The table on page 9 of this proxy statement entitled "Aggregated Option/SAR
Exercises in Last Fiscal Year and FY-End Option/SAR Values" shows the total
number of exercisable and unexercisable options which each executive officer
was granted as of December 31, 1993 and the appreciated value of these grants
based on the market price of the Corporation's common stock on that date. The
Committee believes it is important for the executive officers to have a
significant incentive based on increases in the market value of the
Corporation. The option grants shown on the table reflect actions taken by the
Committee and the Board of Directors, which are fully consistent with this
intention and the compensation strategy previously described in this Committee
Report.
Certain amendments to the Option Plan designed to conform the plan to the new
IRS definitions of performance-based compensation are being presented to the
stockholders for their approval in order to help assure full deductibility of
future awards. The Committee will continue to monitor future developments in
this area, and to propose any further changes required to keep the
Corporation's compensation programs in conformity with IRS guidelines.
This report has been provided by the Compensation Committee.
Jonathan M. Nelson (Chairman)
Allan R. Dragone
Richard F. Heitmiller
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FIVE-YEAR PERFORMANCE COMPARISON
The following graph compares the five-year cumulative total return for the
Corporation's stock with the Standard & Poor's ("S&P") 500 Stock Index and the
S&P Midcap 400 Index. Due to the unique nature of its operations, the
Corporation believes there exists no appropriate or comparable line of business
or industry index, nor could one be constructed, which would render a
meaningful or accurate performance comparison. The Corporation has derived an
average of approximately 80% of its total sales over the last three years from
the sale of man-made fibers, primarily polyester. The Corporation believes that
the polyester fiber manufacturing operations of its publicly-owned competitors,
if such operations could be analyzed separately, would not represent as
significant a proportion of their sales or operations. Further, the
Corporation, which is the largest plastics recycler in the nation, believes it
is the only major polyester fiber producer to utilize a significant amount of
recycled waste raw materials in its fiber manufacturing operations.
[GRAPH APPEARS HERE]
<TABLE>
COMPARISON OF FIVE YEAR CUMULATIVE RETURN
AMONG WELLMAN, INC., S&P 500, AND S&P MID-CAP 400
<CAPTION>
Measurement period WELLMAN, S&P S&P MID-
(Fiscal year Covered) INC. 500 CAP 400
- --------------------- -------- -------- --------
<S> <C> <C> <C>
Measurement PT -
12/31/88 $100.00 $100.00 $100.00
FYE 12/31/89 $188.06 $131.59 $135.46
FYE 12/31/90 $ 96.23 $127.49 $128.46
FYE 12/31/91 $121.74 $166.17 $192.67
FYE 12/31/92 $116.23 $178.81 $215.57
FYE 12/31/93 $102.89 $196.75 $245.53
</TABLE>
The above graph assumes $100 invested on December 31, 1988 in the
Corporation's stock and $100 invested at that time in each of the two indices.
The comparison assumes that all dividends are reinvested.
EMPLOYMENT CONTRACTS
The Corporation has entered into change of control employment agreements with
Messrs. Duff and Christenson. These agreements are intended to encourage such
executives to remain in the employ of the
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Corporation by providing them with greater security and to reinforce and
encourage continued attention and dedication to their duties without
distraction in the face of the potentially disturbing circumstances arising
from the possibility of a change in control. A change of control is defined to
include the acquisition by any person or group of 20% or more of the
Corporation's then outstanding stock, a change in the majority of the
Corporation's Board of Directors or approval of a reorganization, merger or
consolidation by the Corporation's stockholders.
The employment agreements (which include provisions for renewal and for
automatic extension upon a change of control) provide for employment as
officers of the Corporation at base salaries of $620,000 (effective April 1,
1994 and increasing to $680,000 in 1995) and $240,000, respectively, subject to
increase in the discretion of the Board of Directors, plus participation in the
Corporation's executive bonus plan. The Board increased Mr. Christenson's
salary effective April 1, 1994 to $285,000.
In addition, the executives are eligible to participate in all incentive,
savings, retirement and welfare benefit plans applicable to other Corporation
executives and shall receive reimbursement for expenses and automobiles. The
agreements provide that if the executive is terminated prior to a change of
control other than for cause or disability, he is entitled to his annual salary
times a fraction, the numerator of which is the number of months remaining in
the three year contract (plus renewals), and the denominator of which is 12,
and his highest annual bonus times a fraction, the numerator of which is the
number of days in the current fiscal year through the date of termination, and
the denominator of which is 365, plus all previously deferred compensation not
yet paid. The executives are also entitled to receive all benefits through the
remaining three years (plus renewals). The agreements further provide that, if
the executive is terminated after a change of control, other than for cause or
disability, or if the executive terminates for good reason (as defined in the
agreement), the executive is entitled to receive his salary and bonus through
the date of termination and a lump sum severance payment equal to three times
the sum of his base salary and annual bonus (and certain other benefits).
Further, an additional payment is required in an amount such that after the
payment of all taxes, income and excise, the executive will be in the same
after-tax position as if no excise tax under Section 4999 of the Code had been
imposed.
The Corporation has also entered into employment agreements with Messrs.
Casey and Apostol which expire in 1994. The agreements provide for employment
as officers of the Corporation at base salaries of $200,000, subject to
increase in the discretion of the Board of Directors, plus in each case
participation in the Corporation's executive bonus plan. The Board increased
the salaries of Messrs. Casey and Apostol effective April 1, 1994 to $230,000
and $215,000, respectively. In addition, the executives are eligible to
participate in all incentive, savings, retirement and welfare benefit plans
applicable to other Corporation executives and shall receive reimbursement for
expenses and automobiles. The agreements further contain a non-competition
clause restricting the executives from competing with the Corporation or any of
its subsidiaries or affiliates during the term of the agreements and for a
period of 12 months thereafter, except under certain circumstances.
Wellman International Investments Limited ("WIIL"), a subsidiary of the
Corporation, is a party to a multi-year employment contract with Mr. Beckwith
which expires on December 31, 1996. Under the agreement, Mr. Beckwith's annual
base salary is (Pounds)110,000, which is subject to increase from time to time
as agreed upon by the parties. The parties increased Mr. Beckwith's salary to
(Pounds)168,000 (approximately $251,000) in 1993 and (Pounds)174,000
(approximately $260,000) in 1994. WIIL may terminate the agreement at any time
for cause or in the event of Mr. Beckwith's incapacity for a continuous period
of 364 days or a total of 364 days (including Saturdays and holidays) in any 24
month period. The agreement contains a covenant not to compete restricting Mr.
Beckwith from competing with the Corporation or any of its subsidiaries in the
United Kingdom or Ireland for a period of six months.
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OTHER INFORMATION
Section 16(a) of the Securities Exchange Act of 1934 requires the
Corporation's officers and directors, and persons who own more than 10% of a
registered class of the Corporation's equity securities ("insiders"), to file
reports of ownership and changes in ownership with the Securities and Exchange
Commission ("SEC"). Insiders are required by SEC regulation to furnish the
Corporation with copies of all Section 16(a) forms they file. Based solely on
review of the copies of such forms furnished to the Corporation, the
Corporation believes that during 1993 all Section 16(a) filing requirements
applicable to its insiders were complied with except that a trust for which Mr.
Apostol serves as trustee inadvertently failed to timely file an initial report
of its holdings as required by Section 16.
Mr. Vandenberg is the President and a director of Glasstech Industries, Inc.
("Glasstech"), a portfolio company of NCPAB, and a director and vice chairman
of Glasstech's operating company subsidiary. Glasstech filed for protection
under federal bankruptcy laws in 1993.
PROPOSED AMENDMENTS TO 1985 INCENTIVE STOCK OPTION PLAN
The Corporation presently maintains the Wellman, Inc. 1985 Incentive Stock
Option Plan, as amended (the "Option Plan"), which was adopted by the
Corporation's stockholders on May 17, 1988. On February 24, 1994, the Board
adopted amendments to the Option Plan (i) to increase the number of shares of
Common Stock issuable under the Option Plan by 1,500,000; (ii) to extend the
term of the Option Plan from December 15, 1995 to December 15, 1997; (iii) to
lengthen the period when an option may be exercised after termination of
employment in the event of death, disability or retirement to three years after
such termination; (iv) to provide for the forfeiture of all future options
granted under the Option Plan upon termination of employment to compete with
the Corporation; and (v) to permit the transfer of options to members of the
immediate family of an Option Plan participant if the stock option agreement
provides for such transferability and no consideration is received by the
participant for such transfer. The number of shares heretofore made available
for the Option Plan's purposes has been completely depleted. As of December 31,
1993, 450,148 shares of Common Stock had been issued pursuant to the Option
Plan. The lengthening of the option term in the event of death, disability or
retirement is intended to enable retiring participants to better plan their tax
situation and for participants in unfortunate circumstances beyond their
control to have flexibility in the timing of their option exercises. The
transferability of options is proposed to permit participants to minimize their
estate taxes.
In addition, the Board has adopted, and proposes that the stockholders
approve, an amendment to the Option Plan which provides that during the
remaining term of the Option Plan no one individual may, in the aggregate,
receive more than 20% of the total shares granted in any one year under the
Option Plan. This amendment is intended to bring future grants of options under
the Option Plan into full conformity with the performance-based compensation
requirements recently adopted by Congress. Beginning in 1994, this new
legislation provides that the Corporation will not be able to deduct
compensation paid to its five executive officers named in the Summary
Compensation Table in excess of $1,000,000 unless the compensation meets the
definition of "performance-based compensation" set forth in the legislation.
Non-deductibility would result in additional tax costs to the Corporation and
its stockholders. The stockholder approval requested by this proposal will
assist in enabling awards made under the Option Plan to meet the requirements
to qualify as "performance-based compensation", thereby enabling the
Corporation to achieve maximum tax deductibility of such compensation costs.
If the amendments to the Option Plan are not adopted, the Option Plan as in
effect prior to such amendments would remain in effect.
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BOARD RECOMMENDATION
The Board recommends a vote FOR the ratification of the amendments to the
Option Plan. Approval of the amendments will require the favorable vote of a
majority of the shares entitled to vote thereon present in person or
represented by proxy at the Annual Meeting when a quorum is present.
DESCRIPTION OF THE OPTION PLAN
The principal features of the Option Plan are summarized below, but such
summary is qualified in its entirety by reference to the terms of the Option
Plan. Copies of the Option Plan are available upon request from the
Corporation.
Participation. Key executive and managerial employees (including officers,
whether or not they are directors) of the Corporation are eligible to receive
options under the Option Plan. A director of the Corporation who is not a full-
time employee of the Corporation shall not be eligible to receive options.
Approximately 226 employees have been granted options under the Option Plan as
of December 31, 1993. As now amended, the Option Plan also provides that no one
individual may receive more than 20% of the total shares granted in any one
year under the Option Plan.
Administration. The Option Plan is administered by the Compensation Committee
of the Board, which determines the employees eligible for options, the number
of shares subject to each option, and interprets and construes the terms of the
Option Plan.
Terms of Options. The options granted pursuant to the Option Plan on or
before December 21, 1987 were originally incentive stock options ("ISOs") as
defined in Section 422A of the Code and those granted after December 21, 1987
are not ISOs. On March 4, 1988, the Board determined that on or before January
15, 1989 optionholders could, at their election, convert their unexercised ISOs
into non-qualified stock options. All of the outstanding options were so
converted. To compensate the optionee for the taxes which would be payable when
the converted option is exercised, the optionee receives a bonus payment equal
to 45% of the difference between the exercise price and the lesser of the
market price at the date of exercise or $12.50 per share. The Corporation is
entitled to an income tax deduction in an amount equal to the fair market value
of the shares as to which the option is exercised.
Options granted under the Option Plan are vested and exercisable to the
extent of 20% of the total number of shares to which it pertains beginning one
year after the date it is granted and as to an additional 20% beginning on each
of the second, third, fourth and fifth anniversaries of the date it is granted;
provided that (i) if the optionee's employment by the Corporation is terminated
for cause (as defined in the Option Plan), the option shall not be vested or
exercisable to any extent, (ii) if the optionee's employment is terminated by
reason of death or disability, any options granted shall be deemed vested and
exercisable to the extent of 30% of the total number of shares to which it
pertains one year after the date of grant, an additional 10% on the second
anniversary of the date of grant, and an additional 20% beginning on each of
the third, fourth and fifth anniversaries of the date of grant, and (iii) in
the event of a change of control of the Corporation (as defined in the Option
Plan), all outstanding options become immediately exercisable.
The exercisable portion of the options may be exercised for a period of 10
years and 1 day, in the case of options granted on or before December 21, 1987,
or 11 years, in the case of options granted after December 21, 1987, from the
date of grant of the option, provided that such period shall not exceed 5
years, in the case
16
<PAGE>
of options granted on or before December 21, 1987, or 6 years, in the case of
options granted after December 21, 1987, from the date of grant in the case of
options granted to an individual possessing more than 10% of the combined
voting power of all classes of stock of the Corporation or any parent or
subsidiary corporation of the Corporation (a "10% Holder").
The option price shall not be less than the fair market value of the Common
Stock on the date of the grant, except that the option price for options
granted to a 10% Holder shall not be less than 110% of such fair market value.
Termination of Options. Options terminate three months after termination of
employment by the Corporation except (i) if optionee's employment is terminated
by reason of death or disability or upon retirement at or after age 65, then
the period during which the vested and exercisable portion of the option may be
exercised by the executor or administrator of the estate of the optionee, or by
the person or persons to whom the option shall have been validly transferred
pursuant to will or the laws of descent and distribution, or by the optionee
shall not exceed three years after such death, disability or retirement (but
not subsequent to the expiration of the option), or (ii) if the optionee's
employment is terminated for cause (as defined in the Option Plan) or if the
optionee's employment is voluntarily terminated and the optionee subsequently
competes with the Corporation, then the option shall not be exercisable at any
time. Options are not transferable except by will or the laws of descent and
distribution or, if so provided in the option agreement, to members of the
optionee's immediate family if no consideration is paid to the optionee for
such transfer.
Stock Dividends or Splits. Appropriate adjustments will be made in the number
of shares covered by each option and to the option price in the event of any
change in the voting stock of the Corporation by reason of any
recapitalization, merger, consolidation, split-up, combination or exchange of
voting stock at a price substantially below market value or of any similar
change affecting the Corporation's voting stock.
Duration and Amendment of Plan. The Option Plan shall remain in effect until
all shares subject or which may become subject to the Option Plan shall have
been purchased pursuant to options; provided that no grant shall be made under
the Option Plan after December 15, 1997, and the Board may terminate the Option
Plan prior to that date. Amendments may be made by the Board of Directors,
provided, however, that no action of the Board may (i) increase the maximum
number of shares covered by the Option Plan, other than adjustments in the case
of stock dividends or splits as discussed above, (ii) change the manner of
determining minimum option prices, or (iii) change the period when options may
be granted or exercised. No termination or amendment may adversely affect the
rights of existing optionees without their consent.
Federal Income Tax Consequences. Options issued under the Option Plan are
intended to be treated as non-qualified stock options ("non-qualified
options"). The grant of a non-qualified option does not result in recognition
of income to the optionee. Except as described in the following paragraph, upon
the exercise of a non-qualified option, the amount by which the fair market
value of the Common Stock on the date of exercise exceeds the option price is
taxed to the optionee as ordinary income. The Corporation is entitled to a
deduction in the amount of the ordinary income realized by the optionee. At
such time as the optionee sells shares issued to him upon exercise of his non-
qualified option, he will realize gain or loss in an amount equal to the
difference between the fair market value of the shares on the date of exercise
and the selling price.
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In the event a non-qualified option is exercised by an executive officer
subject to Section 16(b) of the Securities Exchange Act of 1934, the shares
issued to such officer are treated as being subject to a substantial risk of
forfeiture within the meaning of Section 83(a) of the Code for the 6-month
period during which Section 16(b) applies. Thus, the executive officer will
include in income and the Corporation may deduct, at the end of such six-month
period rather than at the time the option was exercised, the difference between
the fair market value of the shares at the end of the six-month period and the
option price, and the executive officer's holding period will begin at that
time. However, the executive officer may elect, under the provisions of Section
83(b) of the Code, within 30 days after the exercise of the option, to treat
the shares acquired upon such exercise as not being subject to a substantial
risk of forfeiture.
The preceding discussion is based upon federal tax laws and regulations in
effect on the date of this Proxy Statement, which are subject to change, and
does not purport to be a complete description of the federal income tax aspects
of the Option Plan. Optionees may also be subject to state and local taxes in
connection with the grant exercise of non-qualified options granted under the
Option Plan and the sale or other disposition of shares acquired upon exercise
of options.
RATIFICATION OF SELECTION OF AUDITORS
The selection, by a majority of the members of the Board who are not officers
or employees of the Corporation, of Ernst & Young as independent auditors to
audit the books and accounts of the Corporation for the fiscal year ending
December 31, 1994 shall be submitted to the Annual Meeting for ratification.
Such ratification requires the affirmative vote of a majority of the shares
entitled to vote thereon present in person or represented by proxy at the
Annual Meeting when a quorum is present. Representatives of Ernst & Young will
be present at the Annual Meeting and will be given an opportunity to make a
statement if they desire to do so and will respond to appropriate questions of
stockholders.
The firm of Ernst & Young has advised the Corporation that neither it nor any
of its members has any direct financial interest in the Corporation as a
promoter, underwriter, voting trustee, director, officer or employee.
All professional services rendered by Ernst & Young during the year ended
December 31, 1993 were furnished at customary rates.
The ratification of the selection of independent auditors requires the
affirmative vote of a majority of the shares entitled to vote thereon present
in person or represented by proxy at the Annual Meeting when a quorum is
present.
The Board recommends a vote FOR ratification of Ernst & Young as independent
auditors for the fiscal year ending December 31, 1994.
STOCKHOLDER PROPOSAL
Local 2398, Amalgamated Clothing & Textile Workers Union ("ACTWU"), P.O. Box
1073, Johnsonville, South Carolina, the beneficial owner of 200 shares of
Common Stock, has advised the Corporation that it intends to introduce the
following resolution (the "Stockholder Proposal") at the Corporation's 1994
Annual Meeting for the reasons given:
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RESOLVED: That the shareholders of Wellman, Inc. hereby request the Board
of Directors to redeem the shareholder rights issued on August
6th 1991 unless the issue is approved by the affirmative vote of
a majority of the outstanding shares at a meeting of the
shareholders held as soon as possible.
SUPPORTING STATEMENT
At the 1993 annual meeting Wellman shareholders spoke loudly and clearly on
the same proposal when they supported our call for a vote on the Company's
poison pill rights plan. This proposal received 53.1% of all votes cast at last
year's meeting.
Our board took no action in response to this vote, demonstrating its
arrogance toward the will of the true owners of Wellman. This is not a new
phenomena. Wellman's board has repeatedly been unable to garner sufficient
support for other proposals with anti-takeover and/or management entrenchment
effects, including the adoption of a classified board of directors.
We are surprised by the Board's lack of responsiveness to last year's vote
however, given the poor stock performance of our company. As of December 1993
the stock price of Wellman was only 40% of its all-time high, which was reached
over four years ago.
Our company's poison pill rights plan was unilaterally created by the Board
of Directors in August of 1991, when they declared a dividend of one common
stock purchase right for each outstanding share of common stock. We believe
this "flip in" type plan will tend to entrench management and depress our
Company's stock price.
Rights plans like our company's have become increasingly unpopular in recent
years. A majority of shareholders at Allergan, Hartmarx and Bowater asked
management to repeal or redeem poison pills in 1993.
The effects of poison pill rights plans on the trading value of companies'
stock have been the subject of extensive research. A 1986 study by the Office
of the Chief Economist of the U.S. Securities and Exchange Commission on the
economics of poison pill rights plans states that "The stock-returns evidence
suggests that the effect of poison pills to deter prospective hostile takeover
bids outweighs the beneficial effects that come from increased bargaining
leverage of the target management." Another study, by Professor Michael
Ryngaert published in 1988, examined poison pill plans adopted through 1986 and
singled out rights plans such as the one authorized by our company for their
negative effect on shareholder value.
In last year's proxy statement the Company argued that "the real issue is
whether the Corporation's stockholders trust the Board to utilize this
tool. . . ." In our view last year's vote in favor of this proposal indicates
that a majority of the voting shareholders do not trust the Board to make such
a decision.
In light of what can at best be described as the debatable economic benefit
of our common share rights and the undeniably undemocratic way in which they
were assigned, and continue to be maintained, we believe these rights should
either be redeemed or voted on.
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We urge shareholders to vote for this resolution.
BOARD RECOMMENDATION
THE BOARD STRONGLY OPPOSES THE STOCKHOLDER PROPOSAL AND RECOMMENDS A VOTE
AGAINST IT. AT LAST YEAR'S ANNUAL MEETING, ONLY 34% OF THE OUTSTANDING SHARES
WERE VOTED IN FAVOR OF THIS RESOLUTION.
The Corporation's Stockholder Rights Plan (the "Plan") is designed to provide
your Board with the ability to take what the Board believes are the most
effective steps to protect and maximize the value of your investment in the
Corporation. Under Delaware law, the Board has a fiduciary responsibility to
undertake this task and accordingly has a duty to oppose unfair takeover
offers. The Delaware Supreme Court has held that adoption of a rights plan is a
valid exercise of a Board's business judgment when the rights plan is adopted
to help the Board better fulfill its fiduciary duties. Federal and state courts
interpreting Delaware law have repeatedly validated the use of rights plans
during actual takeover contests as a useful and legitimate tool available to
directors in fulfilling their fiduciary duties. Over 1,400 publicly held
companies have adopted stockholder rights plans.
The Board believes that the Plan preserves and protects value for all
stockholders of the Corporation. The Plan enables the Board of Directors to
respond in an orderly and considered manner to an unsolicited bid. It puts the
Board in a better position to defend against unfair offers, such as coercive,
partial or two-tiered bids and stock accumulation programs in which all
stockholders do not share in the premium associated with a change in control.
The Plan positions the Board to negotiate a higher price for the stockholders,
from the original bidder or a third party, when the sale of the Corporation is
considered to be in the best interests of the Corporation and its stockholders.
The Plan also permits the Board to deal more effectively with "greenmail"
transactions where an acquiring person seeks a large short-term profit at the
expense of the Corporation and stockholders.
It is important to note that the Plan is not intended to prevent a bidder
from making a tender offer for the Corporation and it will not do so. The basic
objective of the Plan is to encourage prospective acquirors to negotiate with
the Board of Directors. The Board's ability to negotiate with a potential
acquiror on behalf of all stockholders is significantly greater than that of
the stockholders individually.
The Plan also gives the Board a greater period of time within which it can
properly evaluate the proposed offer. This additional time is important because
hostile bidders frequently rely on the twenty business day offering period to
"stampede" stockholders into accepting their offer at an unfair price. The 1986
study by the Office of the Chief Economist of the U.S. Securities and Exchange
Commission, which is referred to in the ACTWU's Supporting Statement, noted
that of thirteen companies that were acquired, each with a rights plan, all
received bids that were superior to those offered initially.
A March 1988 study by Georgeson & Co., a major proxy solicitor, found that
companies with rights plans received premiums which were on average 69% higher
in takeover contests than the premiums received by companies without such
plans. Even though a bidder may offer a premium over the current market price
of the target company's stock, that premium does not necessarily recognize the
inherent value of the target company. The bidder, of course, can be expected to
act in its own self interest, in other words to try to acquire the target
company as cheaply as possible and to pressure stockholders into selling. The
Plan provides, in the Board's opinion, valuable stockholder protection against
that happening.
20
<PAGE>
ACTWU suggests that the Plan may have a negative effect on the trading value
of the Corporation's stock. However, there is no evidence that the adoption of
the Plan has depressed the Corporation's stock price.
The Board's overriding objective in adopting the Plan was to preserve the
Corporation's long-term value for the benefit of all of its stockholders. The
Board believes there is strong empirical evidence that such plans better
position the Board to negotiate the most attractive and fair price for all
stockholders.
The Board believes that the proper time to consider redemption of the rights
issued under the Plan is when a specific offer is made to acquire the
Corporation's stock. Redemption of the rights prior to that time would be
premature and would remove any incentive for a potential acquiror to negotiate
with the Board so that the stockholders are treated fairly.
The true test of the benefits of the Plan is how it is used in practice. The
question of a stockholder vote on the Plan misses the point. The real issue is
whether the Corporation's stockholders trust the Board to utilize this tool
properly if and when the need arises. This Board will, as fiduciaries, properly
consider the interest of all stockholders if there is ever such an offer.
For the above reasons, the Board recommends that the shareholders vote
AGAINST the adoption of the Stockholder Proposal.
The affirmative vote of a majority of the total quorum is necessary to adopt
the Stockholder Proposal. Unless otherwise indicated, the persons named on the
proxy will vote all proxies AGAINST the Stockholder Proposal.
OTHER MATTERS
Management does not know of any matters which will be brought before the
Annual Meeting other than those specified in the notice thereof. However, if
any other matters properly come before the Annual Meeting, it is intended that
the persons named in the form of proxy, or their substitutes acting thereunder,
will vote therein in accordance with their best judgment.
FINANCIAL STATEMENTS
The financial statements of the Corporation are contained in the 1993 Annual
Report to Stockholders, which has been provided to the stockholders
concurrently herewith. Such report and the financial statements contained
therein are not to be considered as a part of this soliciting material.
STOCKHOLDER PROPOSALS FOR 1995 ANNUAL MEETING
Under the regulations of the Securities and Exchange Commission, a record or
beneficial owner of shares of the Corporation's Common Stock may submit
proposals on proper subjects for action at the 1995 Annual Meeting of
Stockholders of the Corporation. All such proposals must be mailed to the
Corporation at 1040 Broad Street, Suite 302, Shrewsbury, New Jersey 07702 and
must be received at that address on or before December 20, 1994, in order to be
included in the Corporation's proxy relating to the 1995 Annual Meeting.
21
<PAGE>
EXPENSE OF SOLICITATION OF PROXIES
All the expenses of preparing, assembling, printing and mailing the material
used in the solicitation of proxies by the Board will be paid by the
Corporation. In addition to the solicitation of proxies by use of the mails,
officers and regular employees of the Corporation may solicit proxies on behalf
of the Board by telephone, telegram or personal interview, the expenses of
which will be borne by the Corporation. Arrangements may also be made with
brokerage houses and other custodians, nominees and fiduciaries to forward
soliciting materials to the beneficial owners of stock held of record by such
persons at the expense of the Corporation. The Corporation has retained
Georgeson & Co. to assist in this solicitation at an estimated cost of $13,000
which will be borne by the Corporation.
By order of the Board of Directors,
DAVID K. DUFFELL
Secretary
New York, New York
April 18, 1994
22
<PAGE>
WELLMAN, INC.
AMENDED AND RESTATED
1985 INCENTIVE STOCK OPTION PLAN
Dated as of May 17, 1994
1. Purpose:
-------
This 1985 Incentive Stock Option Plan, as amended (the
"1985 Incentive Plan") is intended as an incentive and to
encourage stock ownership by certain key executive and
managerial employees of Wellman, Inc. (the "Company") so that
they may acquire a, or increase their, proprietary interest in
the success of the Company, and to encourage them to remain in
the employ of the Company. The options granted before December
22, 1987 pursuant to the 1985 Incentive Plan shall be incentive
stock options ("ISOs") as defined in Section 422A of the
Internal Revenue Code of 1954, as from time to time amended
(the "Code"). The options granted after December 21, 1987
pursuant to the 1985 Incentive Plan shall not be incentive
stock options and the terms of any options issued after
December 21, 1987 shall provide that it will not be treated as
an incentive stock option. The 1985 Incentive Plan shall be
interpreted to conform to the requirements of Section 422A with
respect to options granted before December 22, 1987.
Hereinafter, options granted pursuant to the 1985 Incentive
Plan shall be referred to as "Options".
<PAGE>
2. Administration:
--------------
The 1985 Incentive Plan shall be administered by the
members of the Compensation Committee of the Board of Directors
of the Company (the "Committee"). The Committee shall from
time to time at its discretion determine employees eligible for
Options to be granted under the 1985 Incentive Plan, the number
of shares subject to each Option, and such other matters
specifically delegated to it under this 1985 Incentive Plan.
In determining the grant of ISOs to eligible employees, for
years prior to 1987 the aggregate market value of shares of
Common Stock (the "Shares") underlying ISOs granted in any
calendar year ("grant year") under the 1985 Incentive Plan and
of ISOs granted in such grant year by the Company, its parent,
or any subsidiary, as the terms "parent" and "subsidiary" are
defined in Section 425(h) of the Code, and the predecessors of
any such corporation (collectively, the "Employer Group") under
any other incentive stock option plan to an individual shall
not exceed $100,000 plus the amount of "unused limit carryover"
to such year as determined by Section 422 A(c)(4) of the Code.
The Committee shall have the final authority to interpret
and construe the terms of the 1985 Incentive Plan and of any
Option. No member of the Committee shall be liable for any
action, interpretation or construction made in good faith with
respect to the 1985 Incentive Plan or any Option.
-2-
<PAGE>
3. Eligibility:
-----------
Key executive and managerial employees (including officers,
whether or not they are directors) of the Company shall be
eligible to receive Options. A director of the Company who is
not a full time employee of the Company shall not be eligible
to receive Options. An eligible employee holding stock options
and Options may receive additional Options.
4. Stock:
-----
The stock subject to Options shall be voting Shares of the
Company's authorized but unissued voting Shares or the voting
Shares held by the Company in its treasury. The total amount
of the Shares on which Options may be granted pursuant to this
1985 Incentive Plan may equal but shall not exceed in the
aggregate 3,508,000 voting Shares. * Such number of Shares
shall be adjusted in accordance with the provisions of Article
5(i).
In the event that an Option expires or is terminated the
Shares allocable to the unexercised portion of such Option may
again be subjected to an Option.
5. Terms and Conditions of Options:
-------------------------------
Options shall be evidenced by agreements in such form as
the Committee shall from time to time determine, which
- ------------------
*Originally 504,000, as adjusted for a two-for-one stock split
effective June 15, 1989, and as amended on May 22, 1990 to add
1,000,000 Shares and as further amended on May 17, 1994 to add
1,500,000 Shares.
-3-
<PAGE>
agreements shall comply with and be subject to the following
terms and conditions:
(a) Option Period:
-------------
The vested and exercisable portion of the Option,
as determined in accordance with Article 5(e), may be
exercised for a period of 10 years from the date that
the Option is granted (except that such period shall
be 11 years if the Option is granted after
December 21, 1987), provided, however that: (i) in
the case of an Option granted to an individual who, at
the time of grant, owns stock possessing more than 10
percent of the total combined voting power of all
classes of stock of the Company or any parent or
subsidiary corporation of the Company (a "Ten Percent
Stockholder"), such period shall not exceed five years
from the date of grant (except that such period shall
not exceed six years from the date of grant if such
date is after December 21, 1987); (ii) in the event
that an optionee shall voluntarily resign, provided,
with respect to Options granted on or after May 17,
1994, that such optionee does not subsequently compete
with the Company, or an optionee's employment is
terminated without cause, the period during which the
vested and exercisable portion of the Option may be
exercised shall not exceed three months after such
-4-
<PAGE>
termination (but not subsequent to the expiration of
the Option); (iii) in the event that an optionee's
employment is terminated by reason of death or
disability (as that term is defined in Section
22(e)(3)) or upon voluntary retirement on or after 65
years of age, then the period during which the vested
and exercisable portion of the Option may be exercised
shall not exceed three years after such death,
disability or retirement (but not subsequent to the
expiration of the Option); and (iv) in the event that
an optionee's employment is terminated for cause (as
hereinafter defined in subparagraph (1) of this
paragraph) or, with respect to Options granted on or
after May 17, 1994, if the optionee shall voluntarily
resign and such optionee subsequently competes with
the Company then the Option shall not be exercisable
at any time.
(b) Number of Shares:
Each Option shall state the number of Shares to
which it pertains.
(c) Option Price:
Each Option shall state the option price, which
shall be not less than 100% of the fair market value
per voting Share on the date of the granting of the
Option. In the case of an Option granted to a Ten
-5-
<PAGE>
Percent Stockholder, this option price shall not be
less than 110% of the fair market value per voting
Share on the date of the granting of the Option. The
fair market value on the date of the granting of the
Option shall be determined by the Committee.
(d) Medium and Time of Payment:
The option price shall be payable in United
States dollars upon the exercise of the Option and may
be paid in cash or by personal or certified check,
bank draft or postal or express money order.
(e) Vesting of Option:
Each Option shall be vested and exercisable to
the extent of 20% of the total number of Shares to
which it pertains beginning one year after the date it
is granted and as to an additional 20% beginning on
each of the second, third, fourth and fifth
anniversaries of the date it is granted, provided,
however that: (i) in the event that an employee is
terminated for cause (as hereinafter defined in
subparagraph (1) of this paragraph) or, with respect
to Options granted on or after May 17, 1994, an
employee voluntarily resigns and subsequently competes
with the Company, his Option shall not be deemed
vested or exercisable to any extent; (ii) in the event
that an employee's employment is terminated because of
-6-
<PAGE>
death or disability, any Option granted to him shall
be deemed vested and exercisable to the extent of 30%
of the total number of Shares to which it pertains one
year after the date it is granted, an additional 10%
beginning on the second anniversary of the date it is
granted; and (iii) all Options shall be exercisable in
full upon the occurrence of a Change in Control of the
Company. For purposes of this Article 5(e) and
Article 5(a), termination of employment shall be
considered to occur when an employee is no longer a
full-time employee of the Company or of any parent or
subsidiary corporation of the Company; whether an
authorized leave of absence or absence on military or
government service shall constitute termination of
employment for purposes of the 1985 Incentive Plan
shall be determined by the Committee; and the
Committee shall determine whether a termination is
with or without cause, a voluntary retirement, due to
disability, or whether an optionee subsequent to
termination competes with the Company. For purposes
of this Article 5(e), a "Change in Control" shall be
deemed to have occurred if (a) any "person" or "group"
(as such terms are used in Section 13(d)(3) and
14(d)(2) of the Exchange Act) other than the Company
is or becomes the beneficial owner, directly or
-7-
<PAGE>
indirectly, of securities of the Company representing
25% or more of the combined voting power of the
Company's then outstanding securities; or (b) during
any period of two consecutive years, individuals who
at the beginning of such period constitute the Board
of Directors of the Company cease for any reason to
constitute at least a majority thereof unless the
election, or the nomination for election by the
Company's shareholders, of each new director was
approved by a vote of at least two-thirds of the
directors of the Company then still in office who were
directors of the Company at the beginning of the
period.
(f) Serial Exercise:
For grants of ISOs prior to 1987, the Option
Agreement shall provide that an ISO shall not be
exercisable and no put or call shall be allowed
while there is outstanding any incentive stock
option as defined in Section 422A of the Code
previously granted under the 1985 Incentive Plan
or under another incentive stock option plan as
defined in Section 422A of the Code to the
optionee with respect to stock in a member of the
Employer Group. For this purpose, an incentive
stock option shall be considered outstanding
-8-
<PAGE>
until it is exercised in full or expires by
reason of lapse of time. For Options granted
after 1986, the Option Agreement shall not
contain such sequential exercise requirement.
(g) Non-Transferability:
An Option shall be exercisable during the
optionee's lifetime only by him or his Permitted
Transferee (as hereinafter defined) and after his
death only by his personal representative, and
the Option shall not be assignable or
transferable by him, otherwise (i) than by will
or the laws of descent or distribution or (ii) to
a Permitted Transferee if the stock option
agreement provides for such transferability and
no consideration is received by the optionee for
such transfer. For purposes of this Article
5(g), a "Permitted Transferee" shall be a member
of the immediate family (i.e., parent, spouse or
child) of the optionee. Once so transferred, it
shall not be further transferable. Any
transferee shall be required to provide evidence
of transfer satisfactory to the Committee. No
transfer by the optionee by will or the laws of
descent and distribution shall be effective to
bind the Company unless the Company shall have
-9-
<PAGE>
been furnished with written notice thereof and a
copy of the will and/or such other evidence as
the Committee may deem necessary to establish the
validity of the transfer and the acceptance by
the transferee or transferees of the terms and
conditions of the Option.
(h) Investment Representation:
Each Option Agreement may provide that, upon
demand by the Committee for such a
representation, the optionee (or any permissible
transferee of the option under Article 5(g))
shall deliver to the Committee at the time of any
exercise of an Option or portion thereof a
written representation that the Shares to be
acquired upon such exercise are to be acquired
for investment and not for resale or with a view
to the distribution thereof. Upon such demand,
delivery of such representation prior to the
delivery of any Shares issued upon exercise of an
Option and prior to the expiration of the Option
period shall be a condition precedent to the
right of the optionee or such other transferee to
purchase any Shares.
-10-
<PAGE>
(i) Adjustments in Event of Change in Voting
Shares:
In the event of any change in the voting
Shares of the Company by reason of any stock
dividend, recapitalization, reorganization,
merger, consolidation, split-up, combination, or
exchange of voting Shares at a price
substantially below fair market value, or rights
offering to purchase voting Shares, or of any
similar change affecting the voting Shares, the
number and kind of Shares which thereafter may be
optioned and sold under the 1985 Incentive Plan
and the number and kind of Shares subject to
option in outstanding option agreements and the
purchase price per share thereof shall be
appropriately adjusted consistent with such
change in such manner as the Committee may deem
equitable in its discretion to prevent
substantial dilution or enlargement of the rights
granted to, or available for, participants in the
1985 Incentive Plan.
(j) Rights as a Shareholder:
An optionee or a transferee of an Option
shall have no rights as a shareholder with
respect to Shares covered by his Option until the
date as of which a stock certificate is issued to
him for such Shares. No adjustment shall be made
-11-
<PAGE>
for dividends (ordinary or extraordinary, whether
in cash, securities or other property) or
distributions or other rights for which the
record date is prior to the date such stock
certificate is issued.
(k) No Right to Continued Employment:
The Option Agreement shall not confer upon
the optionee any right with respect to
continuance of employment by the Company or a
parent or subsidiary corporation of the Company,
nor shall it interfere in any way with the right
of his employer to terminate his employment at
any time.
(1) Definition of Cause:
The term "cause" in the context of a termination
of employment means only one or more of the
following: (a) the commission in the course of
employment of any dishonest or fraudulent act; (b)
conviction of a felony (from which, through lapse of
time or otherwise, no successful appeal shall have
been made) whether or not committed in the course of
employment; (c) the willful refusal to carry out
reasonable instructions of the Chairman of the Board
of Directors of the Company which has a material
adverse affect upon the Company; and (d) the willful
-12-
<PAGE>
disclosure of any trade secrets or confidential
corporate information to persons not authorized to
know same.
(m) Other Provisions:
The Committee may, as a condition precedent to
the exercise of any Option, require the holder of the
Option (including, in the event of his death, his
legal representatives, legatees or distributees) to
enter into such agreements or to make such
representations as may be required to make lawful
under the laws of the U.S. or any foreign country the
exercise of the Option and the ultimate disposition of
the Shares acquired by such exercise.
The Option Agreements authorized under the 1985
Incentive Plan shall contain such other provisions,
consistent with the 1985 Incentive Plan, as the
Committee shall deem advisable.
6. Term of 1985 Incentive Plan:
---------------------------
Subject to Article 8, the 1985 Incentive Plan shall remain
in effect until all Shares subject or which may become subject
to the 1985 Incentive Plan shall have been purchased pursuant
to Options; provided that no grant shall be made under the 1985
Incentive Plan after December 15, 1997.
-13-
<PAGE>
7. Indemnification of Committee:
----------------------------
To the full extent permitted by law, the Company shall
indemnify each person made or threatened to be made a party to
any civil or criminal action or proceeding by reason of the
fact that he, or his testator or intestate, is or was a member
of the Committee.
8. Amendment of the 1985 Incentive Plan:
------------------------------------
The Board of Directors of the Company may from time to time
amend, suspend or discontinue the 1985 Incentive Plan,
provided, however that, subject to the provisions of Article
5(i), no action of the Board of Directors or of the Committee
may: (i) increase the number of Shares subject to the 1985
Incentive Plan pursuant to Article 4; (ii) permit the granting
of any Option at a price less than that determined in
accordance with Articles 5(c); or (iii) permit the granting of
Options which expire beyond the period provided for in Article
5(a). Without the written consent of an optionee, no amendment
or suspension of the 1985 Incentive Plan shall alter or impair
any Option previously granted to him under the 1985 Incentive
Plan.
9. Application of Funds:
--------------------
The proceeds received by the Company from the sale of
Shares pursuant to Options will be used for general corporate
purposes.
-14-
<PAGE>
10. No Obligation to Exercise Option:
--------------------------------
The granting of an Option shall impose no obligation upon
the optionee to exercise such Option.
-15-
<PAGE>
WELLMAN, INC.
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE CORPORATION FOR
ANNUAL MEETING MAY 17, 1994
The undersigned hereby appoints THOMAS M. DUFF, CLIFFORD J. CHRISTENSON and
DAVID K. DUFFELL, or any one or more of them, attorneys, with full power of
substitution to each for and in the name of the undersigned, with all powers
the undersigned would possess if personally present to vote the Common Stock of
the Undersigned in Wellman, Inc. at the Annual Meeting of its Stockholders to
be held May 17, 1994 or at any adjournment thereof.
1. ELECTION OF DIRECTORS: [_] FOR the nominees listed below (except as
marked to the contrary below), [_] WITHHOLD AUTHORITY to vote for the
nominees listed below.
C. WILLIAM BECKWITH PETER H. CONZE ALLAN R. DRAGONE
THOMAS M. DUFF RICHARD F. HEITMILLER JONATHAN M. NELSON
JAMES E. ROGERS RAYMOND C. TOWER ROGER A. VANDENBERG
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE
WRITE THAT NOMINEE'S NAME IN THE SPACE PROVIDED BELOW.)
---------------------------------------------------------------------------
2. Proposal to approve the amendments of the Wellman, Inc. 1985 Incentive
Stock Option Plan, as amended. [_] FOR [_] AGAINST [_] ABSTAIN
3. Proposal to ratify the selection of Ernst & Young as independent auditors
of the Corporation for the fiscal year ending December 31,
1994. [_] FOR [_] AGAINST [_] ABSTAIN
4. Stockholder proposal to request the Board to redeem the shareholder
rights issued on August 6, 1991 unless the issue is approved by the
majority of stockholders. [_] FOR [_] AGAINST [_] ABSTAIN
5. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting or any adjournment
thereof.
(Continued and to be signed on the other side)
<PAGE>
(Continued from other side)
YOU ARE ENCOURAGED TO SPECIFY YOUR CHOICES BY MARKING THE APPROPRIATE BOXES,
SEE REVERSE SIDE, BUT YOU NEED NOT MARK ANY BOXES IF YOU WISH TO VOTE IN
ACCORDANCE WITH THE BOARD OF DIRECTORS' RECOMMENDATIONS. THE PROXIES CANNOT
VOTE YOUR SHARES UNLESS YOU SIGN AND RETURN THIS CARD.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL
BE VOTED FOR PROPOSALS 1, 2 AND 3 AND AGAINST PROPOSAL 4.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU INSTRUCT THE PROXIES TO VOTE FOR
PROPOSALS 1, 2 AND 3 AND AGAINST PROPOSAL 4.
Dated: .................... , 1994
..................................
..................................
Signature(s)
NOTE: Joint owners should each
sign. When signing as attorney,
executor, administrator, trustee
or guardian, please give full
title as such.
PLEASE SIGN EXACTLY AS NAME APPEARS HEREON.
