<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
FILED BY THE REGISTRANT [X] FILED BY A PARTY OTHER THAN THE REGISTRANT [ ]
- --------------------------------------------------------------------------------
Check the appropriate box:
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[X] Definitive Additional Materials
[ ] Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
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] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act
Rule 0-11 (Set forth the amount on which the filing fee is calculated and
state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
- --------------------------------------------------------------------------------
<PAGE> 2
WELLMAN, INC.
1040 BROAD STREET, SUITE 302
SHREWSBURY, NEW JERSEY 07702
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
MAY 20, 1997
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 20, 1997 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 duly elected and qualified.
(2) To ratify the adoption of the Wellman, Inc. 1997 Stock Option
Plan.
(3) To ratify the selection by the Board of Directors of Ernst & Young
LLP as independent auditors to audit the Corporation's books and accounts
for the fiscal year ending December 31, 1997.
(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 15, 1997
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> 3
WELLMAN, INC.
1040 BROAD STREET, SUITE 302
SHREWSBURY, NEW JERSEY 07702
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
MAY 20, 1997
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 20, 1997 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, 1997 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, 1997, the Corporation had outstanding and entitled to vote
31,113,143 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 adoption of the stock
option plan, ratification of accountants 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, the adoption of the stock option plan and the
ratification of accountants. As a result, broker non-votes will have no effect
on the outcome of the election of directors, the adoption of the stock option
plan and the ratification of accountants. 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> 4
As of March 31, 1997, 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>
Pioneering Management Corporation.............................. 2,018,700(1) 6.5%
60 State Street
Boston, MA 02109
</TABLE>
- ---------------
(1) According to its Schedule 13G on file with the Securities and Exchange
Commission ("SEC"), Pioneering Management Corporation has sole voting power
with respect to 2,018,700 shares, sole dispositive power with respect to
50,700 shares and shared dispositive power with respect to 1,968,000 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 15,
1997.
2
<PAGE> 5
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, 49................. President, Chief Executive Officer and August, 1985
director of the Corporation since its
inception in 1985.
James B. Baker, 51................. Partner of River Associates, LLC August, 1994
(private equity investment fund) since
1993. Prior to 1993, President and
Chief Operating Officer (1991-1992) and
Senior Vice President (1987-1991) of
CONSTAR International, Inc. (plastic
container manufacturer). Also a
director and chairman of the
Compensation Committee of U.S. Xpress
Enterprises, Inc.
C. William Beckwith, 65............ Vice President of the Corporation. November, 1988
Since 1972, Chief Executive Officer of
Wellman International Limited ("WIL").
Clifford J. Christenson, 47........ Executive Vice President of the November, 1995
Corporation since 1993 and Chief
Operating Officer since 1995. Prior to
1993, Chief Financial Officer and
Treasurer since 1985.
Peter H. Conze, 76................. 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, 71............... Retired. From 1988 until 1989, Chairman August, 1990
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 Corporation,
Purina Mills Inc. and Sterling
Chemicals, Inc.
</TABLE>
3
<PAGE> 6
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION DURING DIRECTOR
NAME AND AGE THE PAST FIVE YEARS SINCE
- ----------------------------------- --------------------------------------- ---------------
<S> <C> <C>
Richard F. Heitmiller, 68.......... President of Richard F. Heitmiller, November, 1988
Inc. (consulting firm) since 1982. From
1971 until 1982, various executive
positions with Arthur D. Little, Inc.
(management consultants) and Vice
President of its Decision Resources
subsidiary.
Jonathan M. Nelson, 40............. Co-Chairman of Providence Ventures Inc. August, 1985
(investment advisor) since its
inception in 1990. Managing Director of
Narragansett Capital, Inc. (investment
advisor) since its inception in 1986.
Also a managing general partner of
Providence Ventures LP which is the
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").
Mr. Nelson is also a director and
member of the Executive and
Compensation Committees and the Board
of Governance of Brooks Fiber
Properties, Inc. (provider of
telecommunications services) and a
director and member of the Compensation
Committee of Western Wireless
Corporation.
James E. Rogers, 51................ Partner of SCI Investors Inc. September, 1993
(investment company) since April, 1993
and Chairman of Custom Papers Group
Inc. (a paper manufacturer) since
November, 1993. From 1991 until 1992,
President and Chief Executive Officer
of Specialty Coatings International
Inc. (a manufacturer). Prior to 1991,
Senior Vice President and Group
Executive of James River Corporation (a
paper manufacturer). Mr. Rogers is also
a director and member of the
Compensation and Executive Committees
of Owens & Minor, Inc. (a medical and
surgical supplies distributor) and a
director and member of the Compensation
and Audit Committees of Caraustar
Industries, Inc. (a paper
manufacturer).
</TABLE>
4
<PAGE> 7
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION DURING DIRECTOR
NAME AND AGE THE PAST FIVE YEARS SINCE
- ----------------------------------- --------------------------------------- ---------------
<S> <C> <C>
Raymond C. Tower, 72............... 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 Household International,
Inc.
Roger A. Vandenberg, 49............ President of Cariad Capital, Inc. August, 1985
(investment advisor) 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 and
member of the Compensation Committee 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.
The number of shares of the Corporation's Common Stock owned beneficially,
directly or indirectly, as of March 31, 1997 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 PERCENTAGE
BENEFICIALLY OF
NAME OWNED COMMON STOCK
- --------------------------------------------------------------- ------------ ------------
<S> <C> <C>
Thomas M. Duff................................................. 652,937(1) 2.0%
James B. Baker................................................. 6,300(2)(3) (4)
C. William Beckwith............................................ 161,000(1) (4)
Clifford J. Christenson........................................ 196,252(1) (4)
Peter H. Conze................................................. 6,867(2) (4)
Allan R. Dragone............................................... 8,000(2) (4)
Richard F. Heitmiller.......................................... 8,000(2) (4)
Jonathan M. Nelson............................................. 10,000(2) (4)
James E. Rogers................................................ 7,000(2) (4)
Raymond C. Tower............................................... 9,000(2) (4)
Roger A. Vandenberg............................................ 10,000(2) (4)
James P. Casey................................................. 180,745(1) (4)
Paul D. Apostol(5)............................................. 105,931(1) (4)
All Directors and Executive Officers as a Group
(18 persons)................................................. 1,779,271(1)(2)(3) 5.5%
</TABLE>
- ------------
(1) Includes the following shares of Common Stock reserved for issuance upon
exercise of stock options outstanding pursuant to the Wellman, Inc. Amended
and Restated 1985 Incentive Stock Option Plan (the "Option Plan"): Mr. Duff,
273,000 shares; Mr. Beckwith, 160,000 shares; Mr. Christenson, 193,000
5
<PAGE> 8
shares; Mr. Casey, 134,000 shares; Mr. Apostol, 105,000 shares; and all
directors and executive officers as a group, 1,244,812 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. Baker, 3,000 shares; Mr. Conze, 6,000
shares; Mr. Dragone, 6,000 shares; Mr. Heitmiller, 6,000 shares; Mr. Nelson,
6,000 shares; Mr. Rogers, 4,000 shares; Mr. Tower, 6,000 shares, Mr.
Vandenberg, 6,000 shares; and all directors and executive officers as a
group, 43,000 shares.
(3) Includes 200 shares owned by Mr. Baker's wife.
(4) Less than 1%.
(5) Mr. Apostol's employment with the Corporation terminated January 31, 1997.
COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors has a Compensation Committee, currently comprised of
Messrs. Dragone, Nelson and Rogers (Chairperson), 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 three times during the Corporation's last fiscal
year.
The Board of Directors has a Finance and Audit Committee, currently
comprised of Messrs. Baker, Conze, Heitmiller and Vandenberg (Chairperson),
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 three times during the Corporation's last fiscal year.
The Board of Directors has a Nominating Committee, currently comprised of
Messrs. Heitmiller, Rogers and Tower (Chairperson), 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 did not meet during the Corporation's last fiscal year.
The Corporation's Board of Directors held a total of six meetings during
1996. 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
$24,000 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.
6
<PAGE> 9
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.
On an annual basis, each non-employee director is eligible to participate
in the Directors' Deferred Compensation Plan which allows the deferral of all or
a portion of directors compensation (excluding expense reimbursement) payable
from time to time. Directors participating in this Plan may elect to have the
deferred compensation invested in an interest-bearing account, a share
equivalent account representing the Corporation's Common Stock, or a combination
of the two. The interest-bearing account accrues interest at the rate equal to
the total return earned by the Lehman Aggregate Bond Index. Deferred
compensation in the share equivalent account is treated as though it were
invested in Common Stock. If a participant makes a share election, dividend
equivalents accrue to a participant's account quarterly and each account is
adjusted to reflect share ownership changes resulting from events such as a
stock split. Participants have no voting rights with respect to the share
equivalent account. All distributions from accounts are made in cash. Messrs.
Baker, Nelson and Vandenberg have each elected to defer their compensation and
to invest in the share equivalent account.
In addition, upon voluntary retirement from the Board of Directors,
non-employee directors who have served as directors for three or more years are
entitled to receive total retirement payments equal to the annual directors fee
in effect at the date of retirement multiplied by the number of full years of
continuous service as a director of the Corporation.
7
<PAGE> 10
EXECUTIVE COMPENSATION
The following table summarizes the compensation for the years ended
December 31, 1996, 1995 and 1994 of the Corporation's chief executive officer
and the four other most highly compensated executive officers whose salary and
bonus exceeded $100,000.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
----------------------------- ------------
OTHER SECURITIES ALL
ANNUAL UNDERLYING OTHER
COMPEN- OPTIONS/ COMPEN-
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS SATION(1) SARS(2) SATION(3)
- ------------------------------------- ---- -------- -------- ------- ------------ --------
<S> <C> <C> <C> <C> <C> <C>
Thomas M. Duff....................... 1996 $665,000 $ 61,574 $71,239 70,000 $215,023
President, CEO 1995 $620,000 $534,705 $62,954 40,000 $218,200
1994 $605,000 $462,449 $54,453 30,000 $159,634
Clifford J. Christenson.............. 1996 $360,000 $ 49,896 $35,275 50,000 $109,611
Executive Vice President, COO 1995 $296,250 $255,494 $28,955 30,000 $101,295
1994 $280,000 $214,026 $27,270 25,000 $ 72,661
C.W. Beckwith........................ 1996 $321,500 $ 24,750 $12,765 10,000 --
Vice President 1995 $290,160 $185,066 $17,910 20,000 --
1994 $274,075 $166,170 $17,750 15,000 --
James P. Casey....................... 1996 $270,000 $ 24,300 $25,761 35,000 $ 85,358
Vice President; 1995 $252,500 $217,763 $23,956 20,000 $ 74,128
President, Fibers Group 1994 $237,501 $119,682 $24,607 20,000 $ 66,902
Paul D. Apostol...................... 1996 $240,000 $ 21,600 $24,840 -0- $ 77,222
Vice President, 1995 $222,500 $191,890 $23,225 20,000 $ 75,460
Packaging Products Group 1994 $211,250 $187,825 $22,225 15,000 $ 57,306
</TABLE>
- ------------
(1) Includes the Corporation's contributions to life insurance premiums or
payments in lieu thereof (Mr. Duff, $71,239; Mr. Christenson, $35,275; Mr.
Beckwith, $12,765; Mr. Casey, $25,761; and Mr. Apostol, $24,840 in 1996).
(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, $20,410; Mr. Christenson, $20,410; Mr. Beckwith, $-0-; Mr. Casey,
$20,410; and Mr. Apostol, $20,410 in 1996), supplemental retirement (Mr.
Duff, $190,113; Mr. Christenson, $84,701; Mr. Beckwith, $-0-; Mr. Casey,
$60,448; and Mr. Apostol, $52,312 in 1996), and savings plans (Mr. Duff,
$4,500; Mr. Christenson, $4,500; Mr. Beckwith, $-0-; Mr. Casey, $4,500; and
Mr. Apostol, $4,500 in 1996).
8
<PAGE> 11
The following table sets forth certain information relating to option
grants pursuant to the Option Plan in the year ended December 31, 1996 to the
individuals named in the Summary Compensation Table above.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
-------------------------------------------------
% OF
NUMBER OF TOTAL
SECURITIES OPTIONS/SARS EXERCISE
UNDERLYING GRANTED TO OR
OPTIONS/ EMPLOYEES BASE EXPIRA- GRANT
SARS IN FISCAL PRICE TION DATE
NAME GRANTED(1)(2) YEAR ($/SH) DATE VALUE(3)
- ---------------------------------- ------------- ------------ ------ --------- --------
<S> <C> <C> <C> <C> <C>
Thomas M. Duff.................... 70,000 11.0% $17.00 12/18/07 $603,400
Clifford J. Christenson........... 50,000 7.9% $17.00 12/18/07 $431,000
C.W. Beckwith..................... 10,000 1.6% $17.00 12/18/07 $ 86,200
James P. Casey.................... 35,000 5.5% $17.00 12/18/07 $301,700
Paul D. Apostol................... -0- 0% -- -- --
</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
18, 1996 pursuant to the Option Plan. The options become exercisable in 20%
increments on December 18, 1997, 1998, 1999, 2000 and 2001, 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..................................................... $17.00
Exercise price.................................................. $17.00
Expected option term............................................ 7 years
Stock price volatility.......................................... .4330
Dividend yield.................................................. .84%
Risk-free interest rate......................................... 6.33%
</TABLE>
9
<PAGE> 12
The following table sets forth certain information with respect to
unexercised options to purchase the Corporation's Common Stock granted under the
Option Plan to the individuals named in the Summary Compensation Table above. No
options were exercised in 1996 by such individuals.
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)
---------------------------- ----------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ------------------------------------ ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Thomas M. Duff...................... 135,000 138,000 0 $ 8,750
Clifford J. Christenson............. 90,000 103,000 0 6,250
C.W. Beckwith....................... 115,000 45,000 $ 110,000 1,250
James P. Casey...................... 60,000 74,000 0 4,375
Paul D. Apostol..................... 71,000 34,000 0 0
</TABLE>
- ---------------
(1) Based on the closing price on the New York Stock Exchange of the
Corporation's Common Stock on December 31, 1996 ($17.125).
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.
10
<PAGE> 13
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 1996 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 16,166 25,551 34,935 44,319 53,703
$150,000 18,658 29,752 40,846 51,940 63,033
$175,000 19,835 30,604 41,741 52,879 64,016
$200,000 22,731 34,969 47,733 60,497 73,261
$225,000 25,627 39,334 53,725 68,116 82,507
$250,000 28,522 43,699 59,716 75,734 91,752
$275,000 31,418 47,423 64,799 82,175 99,550
$300,000 32,189 48,284 65,326 82,822 100,317
$400,000 32,189 48,284 65,326 82,822 100,317
$450,000 32,189 48,284 65,326 82,822 100,317
$500,000 32,189 48,284 65,326 82,822 100,317
$600,000 32,189 48,284 65,326 82,822 100,317
$700,000 32,189 48,284 65,326 82,822 100,317
</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 1996 is $120,000. The table incorporates the Code
limitations on compensation allowable under a qualified pension plan. The limit
on compensation allowable in 1996 is $150,000. 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 28 and 26 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
three times during fiscal 1996. 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 1996 compensation is disclosed on the Summary Compensation
Table on page 8 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 1996 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 believes a substantial
component of executive officer total compensation should be based on the
Corporation's financial performance. The Management Incentive Plan compensates
executive officers commensurate with the Corporation's financial performance and
other strategic goals, and annual stock option grants ensure that their
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<PAGE> 14
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 1996.
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 has periodically engaged compensation
consultants to survey market practices to ensure executive officer salaries
remain competitive in a manner which properly reflects the performance of the
incumbent officers. Such surveys have included the practices of some, but by no
means all, of the companies included in the peer groups shown on the Stock
Performance Graph.
Mr. Duff's salary was last adjusted by the Committee as of April 1, 1996.
In determining Mr. Duff's salary, the Committee took into account his salary in
relation to competitive salary data and its subjective evaluation of Mr. Duff's
performance. The Committee considered similar information in approving salary
recommendations submitted by Mr. Duff with respect to the other executive
officers. Mr. Duff's 1996 annual salary falls within the fourth quartile (above
the 75th percentile) of competitive practice for corporations with revenues of
comparable size. The average 1996 salaries of the other executive officers fall
within the fourth quartile of competitive practice 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 and achieving individual
strategic objectives established early in the year. 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 Committee establishes for each
participant in the MIP a maximum targeted award based on a percentage of base
salary and the portion of that target award which is to be based upon achieving
strategic goals.
Mr. Duff's target MIP award is 60% of base salary; 20% of the target award
is based upon achieving strategic objectives. The target awards for the other
executive officers range from 40% to 60% of base salary; in general 30% of the
target award is based upon achieving strategic objectives. None of the executive
officers named in the Summary Compensation Table were eligible to receive the
portion of the MIP award related to financial performance.
For fiscal 1996, the Committee recommended the payment of an annual bonus
of $61,574 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 of eleven
years following the 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.
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<PAGE> 15
The Option Grants Table on page 9 of this proxy statement shows the terms
and size of 1996 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 18, 1996. The grant falls within the second
quartile of competitive practice for Mr. Duff, and the average grants for the
other executive officers who received options in 1996 fell within the third
quartile of competitive practice for corporations of comparable revenue size.
The values shown under the "Grant Date 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 $17.00 per
share, the price at the time the 1996 options were granted, these options will
have no value.
The table on page 10 of this proxy statement entitled "FY-End Option/SAR
Values" shows the total number of exercisable and unexercisable options which
each executive officer was granted as of December 31, 1996 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.
Based upon the performance-based provisions of the MIP, the Committee
believes that the Corporation's compensation programs are in conformity with the
IRS definitions of performance-based compensation to assure full deductibility
of the executive's compensation.
This report has been provided by the Compensation Committee.
Allan R. Dragone
Jonathan M. Nelson
James E. Rogers (Chairperson)
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<PAGE> 16
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 74% 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 major 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 world's largest plastics recycler, believes it is the
only major polyester fiber producer to utilize a significant amount of recycled
raw materials in its manufacturing operations.
<TABLE>
<CAPTION>
MEASUREMENT PERIOD
(FISCAL YEAR COVERED) WELLMAN, INC. S&P 500 S&P MID-CAP 400
<S> <C> <C> <C>
1991 100.00 100.00 100.00
1992 95.48 107.62 111.91
1993 84.52 118.46 127.53
1994 129.62 120.03 122.96
1995 104.56 165.13 161.00
1996 79.93 203.05 191.91
</TABLE>
The above graph assumes $100 invested on December 31, 1991 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 six key executives, including Messrs. Duff, Christenson, Casey and Apostol.
These agreements are intended to encourage such executives to remain in the
employ of the 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
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<PAGE> 17
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 determined by the Board of Directors, plus
participation in the Corporation's executive bonus plan. Provided there has been
no change in control, the employment agreements of the executives other than Mr.
Duff provide the executive's employment may be terminated upon 30 days notice.
Mr. Duff's agreement provides that, provided there has been no change in
control, his employment may be terminated at any time but that he will be
entitled to one year's compensation in the event of termination other than for
cause or disability.
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 after a change of
control, other than for cause, death or disability, or if the executive
terminates for good reason (as defined in the agreements), 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.
Wellman International Investments Limited ("WIIL"), a subsidiary of the
Corporation, was a party to a multi-year employment contract with Mr. Beckwith
which expired on December 31, 1996. Under the agreement, Mr. Beckwith's annual
base salary is L110,000, which is subject to increase from time to time as
agreed upon by the parties. The parties increased Mr. Beckwith's salary to
L186,390 (approximately $314,812) in 1996. The agreement contained 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.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE AND 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 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 1996 all
Section 16(a) filing requirements applicable to its insiders were complied with.
Mr. Vandenberg was formerly 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 and emerged from bankruptcy in
January 1995.
ADOPTION OF 1997 STOCK OPTION PLAN
The Wellman, Inc. 1997 Stock Option Plan (the "Option Plan") is intended to
provide an increased incentive for employees to contribute to the Corporation's
future success and proprietary, thus enhancing the value of the Corporation's
stock for the benefit of the stockholders, and increase the Corporation's
ability to attract and retain qualified individuals.
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<PAGE> 18
Pursuant to the terms of the Option Plan, 2,000,000 shares of the
Corporation's Common Stock are reserved for grant to eligible employees. The
Option Plan was adopted by the Board of Directors on November 19, 1996.
BOARD RECOMMENDATION
The Board recommends a vote FOR the ratification of the Option Plan.
Approval of the Option Plan 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
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.
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. 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) or if the
optionee voluntarily resigns and subsequently competes with the Corporation, 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 as if the termination date were the next
succeeding anniversary 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 11
years.
The option price equals the average of the highest and lowest sales prices
of the Common Stock on the New York Stock Exchange on each of the 20 days that
sales have been made prior to the grant of the option.
Termination of Options. Options terminate one year after termination of
employment by the Corporation except (i) if optionee's employment is terminated
by reason of death or disability or upon retirement, 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
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.
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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 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 the options prices set forth above, or (iii) permit the granting
of options expiring beyond the period set forth above. No termination or
amendment may adversely affect the rights of existing options 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.
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 or 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 LLP as independent
auditors to audit the books and accounts of the Corporation for the fiscal year
ending December 31, 1997 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
LLP 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 LLP 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 LLP during the year
ended December 31, 1996 were furnished at customary rates.
The Board recommends a vote FOR ratification of Ernst & Young LLP as
independent auditors for the fiscal year ending December 31, 1997.
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<PAGE> 20
STOCKHOLDER PROPOSAL
STOCKHOLDER PROPOSAL
Local 2398, Amalgamated Clothing and 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 "Union Proposal") at the Corporation's 1997 Annual
Meeting for the reasons given:
RESOLVED: The shareholders of Wellman, Inc. ("Company") hereby request the
Board of Directors to redeem the shareholder rights issued August
6, 1991, unless said issuance is approved by the affirmative vote
of a majority of outstanding shares at a meeting of shareholders
as soon as practical.
SUPPORTING STATEMENT
This resolution received 53.2% of votes cast at the 1995 Annual Meeting of
Shareholders.
In August of 1991, the Company's Board of Directors met and issued a
dividend of one common stock purchase right for each outstanding share of common
stock. These rights are a type of corporate anti-takeover device commonly known
as a poison pill.
We believe the terms of the rights are designed to discourage or thwart an
unwanted takeover of our Company. While management and the Board of Directors
should have appropriate tools to ensure that all shareholders benefit from any
proposal to buy the Company, we do not believe that the future possibility of a
takeover justifies the unilateral implementation of such a poison pill-type
device.
Rights plans like ours have become increasingly unpopular in recent years.
In 1996, a majority of shareholders at Baker Hughes, Consolidated Natural Gas,
Fleming Companies, Rite Aid, Rowan Companies, Supervalu and Weyerhaeuser voted
in favor of proposals asking management to repeal or redeem poison pills.
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 the rights plans states that "The stock-returns evidence suggest
that the effect of poison pills to deter prospective hostile takeover bids
outweighs the beneficial effects that might come from increased bargaining
leverage of the target management." Another, more recent, study by Professor
Michael Ryngaert singled out rights plans such as the one authorized by our
Company for their negative effect on shareholder value. A 1992 study by
Professor John Pound of Harvard University's Corporate Research Project and
Lilli A. Gordon of the Gordon Group found a correlation between high corporate
performance and the absence of poison pills.
A majority of shareholders who cast their votes at the 1993, 1994 and 1995
annual meetings supported our proposal. At the 1989 and 1990 annual meetings
management was unable to garner enough support to enact changes it wanted in the
Company's corporate governance structure. Taken together all of these votes seem
to demonstrate consistent shareholder opposition to anti-takeover initiatives
proposed or enacted by management. We believe this is the reason Wellman
management refuses to agree to a binding vote on the poison pill issue.
In light of what can at best be described as the debatable economic benefit
of our share rights and the undeniably undemocratic way in which they were
assigned to shareholders, we believe these rights should be either redeemed or
voted on.
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We urge shareholders to vote FOR this resolution.
BOARD RECOMMENDATION
THE BOARD STRONGLY OPPOSES THE UNION PROPOSAL AND RECOMMENDS A VOTE AGAINST
IT. AT THE 1996 ANNUAL MEETING, ONLY 45% 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 1,600 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 its 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 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.
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.
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<PAGE> 22
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 Union Proposal.
The affirmative vote of a majority of the total quorum (as such term is
defined in Section 2.11 of the Corporation's by-laws) is necessary to adopt the
Union Proposal. Unless otherwise indicated, the persons named on the proxy will
vote all proxies AGAINST the Union 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 1996
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 1998 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 1998 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 16, 1997, in order to be
included in the Corporation's proxy relating to the 1998 Annual Meeting.
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 Continental Stock
Transfer & Trust Company to assist in this solicitation at an estimated cost of
$3,000 which will be borne by the Corporation.
By order of the Board of Directors,
DAVID K. DUFFELL
Secretary
New York, New York
April 15, 1997
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<PAGE> 23
WELLMAN, INC.
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
OF THE CORPORATION FOR ANNUAL MEETING MAY 20, 1997
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 20, 1997 or at any adjournment thereof.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU INSTRUCT THE PROXIES TO VOTE FOR
PROPOSALS 1, 2 AND 3.
1. Election of Directors:
FOR all nominees (except as
marked to the contrary below) [ ]
JAMES B. BAKER C. WILLIAM BECKWITH CLIFFORD J. CHRISTENSON 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 ratify the adoption of the Wellman, Inc. 1997 Stock Option
Plan.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
3. Proposal to ratify the selection of Ernst & Young LLP as independent
auditors of the Corporation for the fiscal year ending December 31, 1997.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU INSTRUCT THE PROXIES TO VOTE
AGAINST PROPOSAL 4.
4. Stockholder proposal to recommend redemption of shareholder rights issued
August 6, 1991 unless approved by affirmative vote of the majority of
outstanding shares.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
(Continued from other side)
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.
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.
Dated: .............., 1997
...........................
...........................
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.
WITHHOLD AUTHORITY to
vote
for all nominees listed
below [ ]
