SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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
/_/ Definitive Additional Materials
/_/ Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
Quaker Chemical Corporation
(Name of Registrant as Specified In Its Charter)
________________________________________________________________________________
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rule 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:*
_____________________________________________________________________________
4) Proposed maximum aggregate value of transaction:
_____________________________________________________________________________
/_/ 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: _________________________________________________
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___________
*Set forth the amount on which the filing fee is calculated and state how it was
determined.
<PAGE>
QUAKER CHEMICAL CORPORATION
Elm and Lee Streets
Conshohocken, Pennsylvania 19428
----------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
----------
To the Shareholders of Quaker Chemical Corporation:
Notice is hereby given that the Annual Meeting of Shareholders of Quaker
Chemical Corporation (the "Company") will be held in Salon A and B, Philadelphia
Marriott West, Matson Ford at Front Street, 111 Crawford Avenue, West
Conshohocken, Pennsylvania 19428, on Thursday, May 9, 1996, at 10:30 A.M., local
time, for the following purposes:
1. To elect three (3) Class I Directors, each to serve for three years
and until his respective successor is elected and qualified;
2. To consider and act upon ratifying the appointment of Price Waterhouse
LLP as the Company's independent accountants for the year 1996; and
3. To transact such other business as may properly come before the
Meeting or any adjournments thereof.
Only shareholders of record at the close of business on March 15, 1996 are
entitled to notice of and to vote at the Meeting.
IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THE MEETING. YOU ARE
CORDIALLY INVITED TO ATTEND THE MEETING IN PERSON. WHETHER OR NOT YOU EXPECT TO
ATTEND IN PERSON, YOU ARE URGED TO COMPLETE, SIGN, DATE, AND RETURN THE ENCLOSED
PROXY IN THE SELF-ADDRESSED ENVELOPE ENCLOSED FOR YOUR CONVENIENCE; NO POSTAGE
IS REQUIRED IF MAILED IN THE UNITED STATES.
By Order of the Board of Directors,
KARL H. SPAETH
Karl H. Spaeth
Secretary
Dated: March 29, 1996
<PAGE>
QUAKER CHEMICAL CORPORATION
----------
PROXY STATEMENT
----------
The solicitation of the accompanying proxy is made by and on behalf of the
Board of Directors of Quaker Chemical Corporation, a Pennsylvania corporation
(the "Company"), whose principal executive offices are located at Elm and Lee
Streets, Conshohocken, Pennsylvania 19428, for use at the Annual Meeting of
Shareholders to be held on Thursday, May 9, 1996, and at any adjournments
thereof. The Meeting will be held in Salon A and B, Philadelphia Marriott West,
Matson Ford at Front Street, 111 Crawford Avenue, West Conshohocken,
Pennsylvania 19428 at 10:30 A.M., local time. The approximate date on which this
Proxy Statement and the accompanying form of proxy will first be sent or given
to shareholders is March 29, 1996. Any shareholder executing and delivering the
accompanying proxy has the power to revoke it at any time prior to its use by
giving notice of its revocation to the Secretary of the Company.
The Company will bear the cost of the solicitation of proxies. Proxies will
be solicited by mail, telephone, facsimile, and personal contact by certain
officers and regular employees of the Company. The Company will, upon the
request of record holders, pay reasonable expenses incurred by record holders
who are brokers, dealers, banks or voting trustees, or their nominees, for
mailing proxy material and the Company's Annual Report to Shareholders to any
beneficial holder of the Common Stock they hold of record.
Proxies in the accompanying form which are properly executed, returned to
the Company, and not revoked will be voted in accordance with the instructions
thereon, or, in the absence of specific instruction, will be voted for the
election of all three (3) of the nominees named therein and for ratification of
the appointment of Price Waterhouse LLP as the Company's independent accountants
for the year 1996.
As of March 15, 1996, the outstanding voting securities of the Company
consisted of 8,669,320 shares of Common Stock, $1.00 par value ("Common Stock").
As more specifically provided in Article 5 of the Company's Articles of
Incorporation, shareholders who, as of March 15, 1996, held shares of the
Company's Common Stock beneficially owned since March 1, 1993 are entitled to
cast 10 votes for each such share. Holders of shares the beneficial ownership of
which was acquired after March 1, 1993 are entitled to cast 1 vote per share,
subject to certain exceptions described in Exhibit A hereto. Based on the
information available to the Company on March 15, 1996, the holders of 3,135,733
shares of Common Stock will be entitled to cast 10 votes with respect to each
such share, and the holders of 5,533,587 shares of Common Stock, including but
not limited to those shares held in "street" or "nominee" name or by a broker,
clearing agency, voting trustee, bank, trust company, or other nominee which
have been presumed to have been acquired by the beneficial owner subsequent to
March 1, 1993 in accordance with the terms and conditions of Article 5 of the
Company's Articles of Incorporation, will be entitled to cast one vote with
respect to each such share, representing an aggregate of 36,890,917 votes. The
aforementioned presumption that a share is entitled to 1 vote rather than 10 is
rebuttable upon presentation to the Company of written evidence to the contrary
in accordance with the procedures established by the Company and described in
Exhibit A hereto. The effect of rebutting the foregoing presumption will be to
increase the number of votes that may be cast at the Meeting. Depending on the
number of shares with respect to which the aforementioned presumption is
rebutted, the total number of votes that may be cast at the Meeting could be
increased to as many as 86,693,200. The presence, in person or by proxy, of
shareholders entitled to cast at least a majority of the votes that all
shareholders are entitled to cast on a particular matter will constitute a
quorum for the purpose of considering such matter. Abstentions, and any shares
as to which a broker or nominee has indicated that it does not have
discretionary authority to vote, will be counted only for purposes of
determining whether a quorum is present at the Meeting and, thus, will have the
effect of a vote to "Withhold Authority" in the election of directors or as an
"Against" vote on all other matters included in the proxy.
Only shareholders of record at the close of business on March 15, 1996 are
entitled to notice of and to vote at the Meeting or any adjournments thereof.
1
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT
Certain Beneficial Owners
The following table sets forth information, as of March 15, 1996, with
respect to persons known to the Company to be the beneficial owners of more than
five percent of its Common Stock (its only class of outstanding equity
securities). Peter A. Benoliel, Quest Advisory Corp., and Quest Management
Company have sole voting and dispositive power over the outstanding Common Stock
listed opposite their names. Invista Capital Management, Inc. has shared power
to vote and sole dispositive power over the Common Stock listed opposite its
name.
Number
of Shares Percent Number
Name and Address Owned(1) of Class(2) of Votes
- --------------------------------------------------------------------------------
Peter A. Benoliel 624,172(3) 7.2 5,644,713
130 Cornwall Lane
St. Davids, PA 19087
Invista Capital Management, Inc. 534,600(4) 6.2 534,600(4)
1500 Hub Tower
699 Walnut
Des Moines, IA 50309
Quest Advisory Corp. and 533,414(4) 6.2 533,414(4)
Quest Management Company
1414 Avenue of the Americas
New York, NY 10019
- ----------
(1) Based upon information contained in filings made by the named person with
the Securities and Exchange Commission.
(2) Based upon 8,669,320 shares outstanding.
(3) Includes 54,631 shares subject to options that are currently exercisable or
will become exercisable within sixty (60) days of the record date.
(4) These shares, which are held in street name, are presumed under Article 5
of the Company's Articles of Incorporation to be entitled to one (1) vote
per share. Each such share for which the aforementioned presumption is
rebutted in accordance with applicable procedures shall be entitled to ten
(10) votes per share or up to an aggregate of 5,346,000 votes in the case
of Invista Capital Management, Inc. and up to an aggregate of 5,334,140 in
the case of Quest Advisory Corp. and Quest Management Company.
2
<PAGE>
Directors and Officers
The following table sets forth information, as of March 15, 1996, with
respect to beneficial ownership of the Company's Common Stock by each director,
each nominee for director, each executive officer named in the Summary
Compensation Table, and all directors and executive officers of the Company as a
group. Each director, nominee, and executive officer has sole voting and
dispositive power over the Common Stock listed opposite his/her name unless
otherwise noted.
Number
of Shares Percent Number of
Name Owned of Class(1) Votes
---- ----- ----------- -----
Joseph B. Anderson, Jr 900(2) -- 1,800
Patricia C. Barron 4,160(3) -- 5,600
William L. Batchelor 201,602 2.3 2,016,020
Peter A. Benoliel 624,172(4)(5) 7.2 5,644,713
Lennox K. Black 7,750 -- 14,500
Edwin J. Delattre 448 -- 1,573
Francis J. Dunleavy 3,000 -- 30,000
Robert P. Hauptfuhrer 7,200 -- 72,000
Frederick Heldring 7,800(2) -- 78,000
Ronald J. Naples 51,000(6) -- 52,350
Robert H. Rock 0 -- 0
Alex Satinsky 2,000 -- 15,500
Jose Luiz Bregolato 34,631(5) -- 0
John E. Burrows, Jr 651(7) -- 6,474
Sigismundus W. W. Lubsen 42,326(8) -- 59,588
Daniel S. Ma 15,036(5) -- 405
Marcus C. J. Meijer 70,631(5) -- 1,550
Clifford E. Montgomery 35,765(5) -- 134
All directors and executive
officers as a group (19 persons) 1,154,695(2)(5)(6) 12.9 8,151,247(9)
- ----------
(1) Based upon 8,669,320 shares outstanding. The percentage is less than 1%,
except as otherwise indicated.
(2) Includes 100 shares in the case of Mr. Anderson and 6,600 shares in the
case of Mr. Heldring held jointly with a spouse.
(3) Includes 10 shares held in an indirect trust account for child.
(4) Does not include 3,000 shares held of record by Mr. Benoliel's wife.
(5) Includes 54,631 shares in the case of Mr. Benoliel; 34,631 shares in the
case of Mr. Bregolato; 14,631 shares in the case of Mr. Ma; 69,081 shares
in the case of Mr. Meijer; 35,631 shares in the case of Mr. Montgomery; and
238,503 shares in the case of all directors and officers as a group subject
to options that are currently exercisable or will become exercisable within
sixty (60) days of the record date. Also includes 5,881 shares held in
trust accounts for children of directors and officers.
(6) Includes 45,000 shares of restricted Common Stock awarded to Mr. Naples
which are registered in his name and for which he has sole voting power but
for which he has no dispositive power since the shares are held by the
Company and are subject to forfeiture. For additional information, see
"Employment Agreements with Executive Officers" below.
(7) Includes 53 shares held in a trust account for a child.
(8) Includes 5,818 shares held in a trust account for children.
(9) Represents 22.1% of all votes entitled to be cast at the Meeting, based on
information available on March 15, 1996.
Based solely (i) on the Company's review of certain reports filed with the
Securities and Exchange Commission ("SEC") pursuant to Section 16(a) of the
Securities Exchange Act of 1934 (the "Act"), as amended, and (ii) written
representations of the Company's officers and directors, the Company believes
that all reports required to be filed pursuant to the 1934 Act with respect to
transactions in the Company's Common Stock through December 31, 1995 were filed
on a timely basis, except for one filing on Form 4 covering one transaction each
for Patricia C. Barron, Lennox K. Black, and Edwin J. Delattre.
3
<PAGE>
ELECTION OF DIRECTORS
The Articles of Incorporation, as amended, provide that the Company shall
have a Board of Directors that is divided into three classes, each class to
consist, as nearly as may be possible, of one-third of the total number of
directors. One class shall be elected each year to serve as directors for a term
of three (3) years. Directors elected to fill vacancies and newly created
directorships will be elected to serve for the balance of the term of the class
to which they are elected. At the present time, there are eleven (11) directors
including three (3) Class I Directors, four (4) Class II Directors, and four (4)
Class III Directors. Mr. Sigismundus W. W. Lubsen, formerly a Class I Director,
resigned as President and Chief Executive Officer and as a director of the
Company effective July 31, 1995, and the Board of Directors, on June 28, 1995,
voted to decrease the number of directors of the Company from twelve (12) to
eleven (11), effective July 31, 1995. Mr. Francis J. Dunleavy, a Class I
Director, is not eligible to stand for reelection having reached retirement age.
To fill the vacancy created by Mr. Dunleavy's retirement, Mr. Robert H. Rock has
been nominated as a Class I Director. Therefore, three (3) Class I Directors are
to be elected at the Meeting with each member to serve a three (3) year term
expiring in 1999 or until his successor is duly elected and qualified. The three
nominees receiving the greatest number of votes cast by the holders of the
Company's Common Stock present, in person or by proxy, at the Meeting will be
elected Class I Directors of the Company.
The proxies will be voted in accordance with the instructions set forth
therein, and proxies for which no contrary instructions are given will be voted
for the Class I nominees, William L. Batchelor, Peter A. Benoliel, and Robert H.
Rock. Mr. Benoliel and Mr. Batchelor are each presently serving as a director of
the Company, having been so elected by the shareholders at the Annual Meeting
held on May 5, 1993. If any nominee withdraws or otherwise becomes unable to
serve, which is not anticipated, the proxies will be voted for a substitute
nominee who will be designated by the Board of Directors. The following table
sets forth information concerning the nominees and the Company's directors who
will continue to serve in that capacity following the Meeting:
<TABLE>
<CAPTION>
First Became Principal Occupation for
Name and (Age) a Director the Past Five Years
-------------- ---------- -------------------
<S> <C> <C>
Class I--Directors nominated for election in 1996 to serve until the Annual Meeting in 1999:
William L. Batchelor (78) 1952 Retired Senior Vice President of the Company.
Peter A. Benoliel (64) 1961 Chairman of the Board and former Chief Executive Officer of the Company.
Robert H. Rock (45) President, MLR Holdings, an investment company with holdings in the
publishing and information businesses. Formerly Chairman and majority
owner of IDD Enterprises, a publisher of magazines, newsletters, and a
provider of on-line data for financial executives. Member of the Board
of Directors of Alberto-Culver Company, Hunt Manufacturing Company,
and R.D. Scherer Corporation.
Class II--Directors elected in 1994 to serve until the Annual Meeting in 1997:
Lennox K. Black (66) 1985 Chairman of the Board and former Chief Executive Officer, Teleflex
Incorporated, a diversified Fortune 1000 manufacturer of products and
services for the automotive, marine, industrial, aerospace, and medical
markets worldwide; and Chairman of the Board and Chief Executive
Officer, Penn Virginia Corporation, an energy company engaged primarily
in leasing of mineral rights, collection of royalties, and development
and production of oil and natural gas. Member of the Board of Directors
of Westmoreland Coal Company and Pep Boys.
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
First Became Principal Occupation for
Name and (Age) a Director the Past Five Years
-------------- ---------- -------------------
<S> <C> <C>
Robert P. Hauptfuhrer (64) 1977 Former Chairman of the Board and Chief Executive Officer, Oryx Energy
Company, an energy company. Trustee, 1838 Investment Advisors Funds.
Frederick Heldring (71) 1970 Chairman, Global Interdependence Center. Formerly Vice Chairman of the
Board of CoreStates Financial Corporation, a bank holding company; and
Chairman and President of The Philadelphia National Bank, a commercial
bank.
Alex Satinsky (83) 1952 Partner, Fox, Rothschild, O'Brien & Frankel, General Counsel to the
Company.
Class III--Directors elected in 1995 to serve until the Annual Meeting in 1998:
Joseph B. Anderson, Jr. (53) 1992 Chairman and Chief Executive Officer, Chivas Products Limited, an interior
trim automotive supplier and manufacturer. Formerly President and Chief
Executive Officer, Composite Energy Management Systems Inc., a
manufacturer of bumpers for the automotive industry. Previously served
as Director, Body Hardware Business Unit, Inland Fisher Guide Division,
General Motors Corporation.
Patricia C. Barron (53) 1989 President, Xerox Engineering Systems Division, Xerox Corporation. Previous
positions with Xerox Corporation include President, Office Document
Products, and Vice President, Corporate Information Management. Member
of the Board of Directors of Frontier Corporation and Reynolds Metals
Company.
Edwin J. Delattre (54) 1984 Dean and Professor of Education and Philosophy, Boston University.
Ronald J. Naples (50) 1988 President and Chief Executive Officer of the Company since October 2,
1995. Formerly Chairman of the Board and Chief Executive Officer, Hunt
Manufacturing Company, a producer and distributor of office products,
office furniture, and art/craft products. Member of the Board of
Directors of Advanta Corp.
</TABLE>
There are no family relationships between any directors, executive
officers, or nominees for election as directors of the Company.
5
<PAGE>
Committees of the Board of Directors
The Company has an Executive Committee whose principal functions are to act
for the Board of Directors in situations requiring prompt action when a meeting
of the full Board is not feasible and to implement specific action for the Board
when directed to do so. The current members of the Committee, which met once in
1995, are P. A. Benoliel (Chairman), L. K. Black, R. P. Hauptfuhrer, and R. J.
Naples.
The Company has an Audit Committee whose principal functions are to
recommend the selection of independent accountants; approve the scope of audit
and specification of non-audit services provided by such accountants and the
fees for such services; and review audit results, internal accounting
procedures, and programs to comply with applicable laws and regulations relating
to financial accountability. The current members of the Committee, which met
three times in 1995, are F. J. Dunleavy (Chairman), J. B. Anderson, Jr., P. C.
Barron, and R. P. Hauptfuhrer.
The Company has a Compensation/Management Development Committee whose
principal functions are to review and recommend officers' compensation; review
the performance of officers and management development and succession; review
compensation levels throughout the Company; and administer the Company's
Long-Term Performance Incentive Plan. The current members of the Committee,
which met three times in 1995, are F. Heldring (Chairman), P. C. Barron, L. K.
Black, and E. J. Delattre.
The Company has a Finance Committee whose principal functions are to
establish guidelines for the investment of Company funds and advise on matters
relating to the Company's financial condition, dividend policy, and shareholder
financial interests. The current members of the Committee, which did not meet in
1995 as a Committee but did act by written consent, are L. K. Black (Chairman),
J. B. Anderson, Jr., F. Heldring, and A. Satinsky.
The Company has a Nominating Committee whose principal role is to ensure
that the Board of Directors has the depth and range of relevant experience to
provide optimal governance of the Company and growth in shareholder value. To
accomplish this, the Committee has responsibility to review Board membership,
provide leadership in the nomination of directors, and review shareholder
proposals. The current members of the Committee, which met once during 1995, are
R. P. Hauptfuhrer (Chairman), E. J. Delattre, F. J. Dunleavy, and R. J. Naples.
The Committee will consider candidates recommended by shareholders when
submitted in writing not later than November 29, 1996 with a statement of the
candidate's business experience, business affiliations, and confirmation of the
candidate's willingness to serve as a nominee. Nominations should be submitted
to the Secretary of the Company.
During the year ended December 31, 1995, six regular meetings and one
special meeting of the Board of Directors were held. During 1995, each of the
directors was in attendance at no less than 75% of the aggregate number of
meetings of the Board of Directors and Committees of the Board on which he or
she then served.
EXECUTIVE COMPENSATION
Summary of Cash and Certain Other Compensation
The following table sets forth certain summary information concerning
compensation paid or accrued by the Company and its subsidiaries for the years
ended December 31, 1993, 1994, and 1995 as to Mr. Lubsen, Mr. Benoliel, and Mr.
Naples, who each served as the Company's Chief Executive Officer in 1995, each
of the Company's other four most highly compensated officers who served as
executive officers at December 31, 1995, and one additional executive officer
who would have been included as one of the four most highly compensated officers
had he still been employed by the Company on December 31, 1995 (hereinafter
referred to as the named executive officers).
6
<PAGE>
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long-Term Compensation
----------------------------------------
Annual Compensation Awards Payouts
-------------------------------------- ------------------------ ---------
(a) (b) (c) (d) (e) (f) (g) (h) (i)
Restricted Securities
Name and Other Annual Stock Underlying All Other
Principal Compensation Award(s) Options/ LTPI Compensation
Position Year Salary($) Bonus($) ($)(1) ($) SARs(#)(2) Payouts($) ($)(3)
-------- ---- --------- -------- ------ --- ---------- ---------- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Peter A. Benoliel, 1995 200,000 0 0 0 30,000 0 0
Chairman of the 1994 200,000 0 0 0 0 0 5,000
Board and from 1993 215,000 0 0 0 30,000 51,000 0
July 31, 1995 to
October 2, 1995
Acting Chief
Executive Officer
Sigismundus 1995 151,666 0 0 0 50,000(5) 0 0
W. W. Lubsen, 1994 400,000(4) 0 0 0 0 0 5,000
President and 1993 359,000(4) 0 0 0 40,000 45,540 0
Chief Executive
Officer,
January 1, 1995
to July 31, 1995
Ronald J. Naples, 1995 170,620(6) 0 0 1,282,500(7) 200,000 0 0
President and
Chief Executive
Officer,
October 2, 1995 to
December 31, 1995
Jose Luiz 1995 115,707(8) 10,841 0 0 20,000 0 0
Bregolato, 1994 107,600(8) 10,300 0 0 0 0 0
Vice President- 1993 52,500(8) 20,000 0 0 20,000 0 0
South America
John E 1995 164,885(9) 0 0 0 30,000(10) 0 0
Burrows, Jr., 1994 157,000 24,000 0 0 0 0 5,000
Vice President- 1993 149,000 17,000 0 0 25,000 0 0
North America
Daniel S. Ma, 1995 131,000(8) 86,174 88,182(11) 0 20,000 0 0
Vice President- 1994 125,500(8) 7,900 84,843(11) 0 0 0 0
Asia/Pacific 1993 60,500(8) 15,000 37,878(11) 0 0 0 0
Marcus C. J 1995 224,200(8) 51,700 0 0 30,000 0 0
Meijer, Vice 1994 194,000(8) 49,000 0 0 0 0 0
President- 1993 170,000(8) 38,000 0 0 30,000 26,000 0
Europe
Clifford E 1995 122,500 10,453 0 0 15,000 0 0
Montgomery, 1994 118,000 10,000 0 0 0 0 4,000
Vice President- 1993 115,000 17,000 0 0 12,000 10,000 0
Human Resources
</TABLE>
- ----------------
(1) During the year ended December 31, 1995, certain of the individuals named
in column (a) received personal benefits not reflected in the amounts set
forth for such individual in columns (c), (d), and (e), the dollar value of
which did not exceed the lesser of $50,000 or 10% of the total of annual
salary and bonus reported for such individual in columns (c) and (d).
(2) Options to purchase shares of the Company's Common Stock.
(3) The amounts listed as "All Other Compensation" represent compensation
earned by each of the named executive officers pursuant to the terms of the
Company's Profit Sharing Plan.
(4) Includes for each of the years ended December 31, 1993 and 1994 the fair
market value of 6,000 shares of Common Stock which were issued during such
year and an additional cash payment made during such year pursuant to a
Restricted Stock and Cash Bonus Plan Agreement between the Company and Mr.
Lubsen (the "Lubsen Agreement"). The aggregate values of the shares issued
to Mr. Lubsen pursuant to the Lubsen Agreement during 1993 and 1994 (based,
with respect to each issuance, on the last reported sale price for the
Common Stock on the Nasdaq National Market System on the last trading day
of each such year) were $95,250 and $112,500, respectively.
7
<PAGE>
(5) Pursuant to the terms of the Company's Long-Term Performance Incentive
Plan, these options expired on October 31, 1995 without being exercised,
which date is three months following Mr. Lubsen's last date of employment.
(6) Includes the fair market value of 5,000 shares of Common Stock awarded to
Mr. Naples on October 2, 1995 pursuant to the 1995 Naples Restricted Stock
Plan and Agreement, which shares have a fair market value of $82,500, based
on the last reported sale price for the Common Stock on the Nasdaq National
Market System on the date of issuance of $16.50 per share.
(7) Includes the fair market value, based on the last reported sale price for
the Common Stock on the Nasdaq National Market System on December 29, 1995,
of (i) 45,000 shares of restricted Common Stock awarded to Mr. Naples on
October 2, 1995, which shares are registered in his name and on which he is
entitled to dividends but which are held by the Company and will be
delivered to Mr. Naples in installments of 15,000 shares each on October 2,
1996, 1997, and 1998 if Mr. Naples is still employed by the Company on such
dates; and (ii) 50,000 shares of restricted Common Stock which may be
earned by Mr. Naples at the rate of 1,000 shares for each $.01 increase in
the Company's net income per share of Common Stock as reported to
shareholders in excess of $1.10 per share, all pursuant to the 1995 Naples
Restricted Stock Plan and Agreement.
(8) Mr. Bregolato's, Mr. Ma's, and Mr. Meijer's compensation was paid in
Brazilian reals, Hong Kong dollars and Dutch guilders, respectively. For
purposes of this presentation, Mr. Bregolato's, Mr. Ma's and Mr. Meijer's
salary and bonus for each year have been translated into U.S. dollars using
the applicable exchange rates for the conversion of currencies into U.S.
dollars on December 31 of such year.
(9) Mr. Burrows resigned from the Company effective November 6, 1995.
(10) Pursuant to the terms of the Company's Long-Term Performance Incentive
Plan, these options expired on February 6, 1996 without being exercised,
which date is three months following Mr. Burrows' last date of employment.
(11) Represents housing benefits paid to Mr. Ma in connection with his
assignment for the Company in Hong Kong.
Options/SAR Grants in the Last Fiscal Year
During 1995, the Company granted stock options (without any stock apprecia-
tion rights) to the named executive officers as follows:
STOCK OPTION GRANTS LAST YEAR
<TABLE>
<CAPTION>
Potential
Realizable Value
at Assumed
Annual Rates of
Stock Price
Appreciation for
Individual Grants Option Term
-------------------------------------------------------- --------------------
(a) (b) (c) (d) (e) (f) (g)
Number of
Securities
Underlying % of Total Exercise
Options Options Granted or Base
Granted to Employees Price Expiration
Name (#)(1) in 1995 ($/sh)(2) Date 5%($) 10%($)
---- ------ ------- --------- ---- ----- ------
<S> <C> <C> <C> <C> <C> <C>
Peter A. Benoliel 30,000 6.5 20.490 1/3/00 98,000 341,000
Sigismundus W. W. Lubsen(3) 50,000 10.9 18.625 10/31/95 -- --
Ronald J. Naples 100,000 21.8 17.500 10/1/05 1,101,000 2,789,000
50,000 10.9 19.250 10/1/05 605,000 1,534,000
50,000 10.9 22.500 10/1/05 707,500 1,793,000
Jose Luiz Bregolato 20,000 4.4 18.625 1/3/05 234,000 594,000
John E. Burrows, Jr. (4) 30,000 6.5 18.625 2/6/96 -- --
Daniel S. Ma 20,000 4.4 18.625 1/3/05 234,000 594,000
Marcus C. J. Meijer 30,000 6.5 18.625 1/3/05 351,000 891,000
Clifford E. Montgomery 15,000 3.3 18.625 1/3/05 176,000 445,000
</TABLE>
(1) Of the options listed, 17,142 of Mr. Naples' options and 10,738 options of
each of the other named executives are incentive stock options, which
qualify for favorable tax treatment under Section 422 of the Internal
Revenue Code. In the case of Mr. Naples, his incentive stock options first
become exercisable in three equal installments of 5,714 options on each of
October 2, 1996, 1997 and 1998, and in the case of the other named
executives, half were first exercisable on January 4, 1996 and the other
half will be exercisable on January 4, 1997. Further, with respect to Mr.
Naples' options (which option amounts include the incentive stock
8
<PAGE>
options), 135,000 options (100,000 at an exercise price of $17.50 and
35,000 at an exercise price of $19.25) are first exercisable on October 2,
1996; 35,000 options (15,000 at an exercise price of $19.25 and 20,000 at
an exercise price of $22.50) are first exercisable on October 2, 1997; and
30,000 options (at an exercise price of $22.50) are first exercisable on
October 2, 1998. Except as otherwise discussed above, all other options
granted are exercisable on the first anniversary of the option grant.
(2) The purchase price of a share of Common Stock is the fair market value of a
share of Common Stock on the date of grant and, in the case of Mr.
Benoliel, is 110% of the fair market value of a share of Common Stock on
the date of grant.
(3) Pursuant to the terms of the Company's Long-Term Performance Incentive
Plan, these options expired on October 31, 1995 without being exercised,
which date is three months following Mr. Lubsen's last date of employment.
(4) Pursuant to the terms of the Company's Long-Term Performance Incentive
Plan, these options expired on February 6, 1996 without being exercised,
which date is three months following Mr. Burrows' last date of employment.
Aggregate Option/SAR Exercises in Last Fiscal Year and FY-End Option/SAR Values
The following table provides information related to options to purchase the
Company's Common Stock exercised by the named executive officers during the year
ended December 31, 1995 and the number and value of such options held as of the
end of such year. The Company does not have any outstanding stock appreciation
rights.
AGGREGATE OPTION/SAR EXERCISES IN LAST YEAR
AND YEAR-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
(a) (b) (c) (d) (e)
Number of Securities Value of Unexercised
Value Underlying Unexercised In-the-Money Options
Shares Acquired Realized Options at Year End(#) at Year End($)
Name on Exercise(#) ($) Exercisable Unexercisable Exercisable/Unexercisable(1)
---- -------------- --- ----------- ------------- ----------------------------
<S> <C> <C> <C> <C> <C>
Peter A. Benoliel 0 0 80,998 5,369 0/0
Sigismundus W. W. Lubsen 35,440 445,645 0(2) 0 0/0
Ronald J. Naples 0 0 0 200,000 0/0
Jose Luiz Bregolato 0 0 34,631 5,369 0/0
John E. Burrows, Jr. 0 0 0(3) 0 0/0
Daniel S. Ma 0 0 14,631 5,369 0/0
Marcus C. J. Meijer 0 0 69,081 5,369 0/0
Clifford E. Montgomery 0 0 35,631 5,369 0/0
</TABLE>
- ----------
(1) Based on the last sale price on December 29, 1995 on the Nasdaq National
Market System of $13.50 per share.
(2) Pursuant to the terms of the Company's Long-Term Performance Incentive
Plan, all of Mr. Lubsen's options not exercised by October 31, 1995 (three
months following Mr. Lubsen's last date of employment) expired.
(3) Pursuant to the terms of the Company's Long-Term Performance Incentive
Plan, all of Mr. Burrows' options not exercised by February 6, 1996 (three
months following Mr. Burrows' last date of employment) expired.
9
<PAGE>
Long-Term Performance Incentive Plan Awards in Last Fiscal Year
During 1995, the Company granted performance incentive units pursuant to
the Company's Long-Term Performance Incentive Plan to the named executive
officers as follows:
LONG-TERM PERFORMANCE INCENTIVE PLAN--AWARDS LAST YEAR
<TABLE>
<CAPTION>
Estimated
Future Payouts
Under Non-Stock
Price-Based Plan
----------------------------------------
(a) (b) (c) (d) (e) (f)
Performance
Number of or Other
Shares, Units Period Until
or Other Maturation or Threshold Target Maximum
Name Rights (#)(1) Payout ($ or #)(2) ($ or #)(2) ($ or #)(2)
---- ------------- ------------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Peter A. Benoliel 15,000 1995 through 1998 0.00 279,750 559,500
Sigismundus W. W. Lubsen 25,000(3) 1995 through 1998 0.00 0 0
Ronald J. Naples 25,000 1995 through 1998 0.00 466,250 932,500
Jose Luiz Bregolato 10,000 1995 through 1998 0.00 186,500 373,000
John E. Burrows, Jr. 15,000(3) 1995 through 1998 0.00 0 0
Daniel S. Ma 10,000 1995 through 1998 0.00 186,500 373,000
Marcus C. J. Meijer 15,000 1995 through 1998 0.00 279,750 559,500
Clifford E. Montgomery 7,500 1995 through 1998 0.00 139,875 279,750
</TABLE>
(1) Performance Incentive Units.
(2) The value on maturation of a performance incentive unit is determined by
performance over a time period as plotted on a grid defined by two axes;
one axis sets forth average return on assets and one axis sets forth
average earnings per share for the period 1995-1998. Each performance unit
is issued at the value of the stock price of incentive stock options
($18.65), and the 1995 performance unit grid results in a zero payout for
performance of less than 5% return on assets based on average earnings per
share of $1.22 for the years 1996, 1997, and 1998. A payout of $18.65 per
unit will be made if performance reaches the target, and a payout of $37.30
per unit will be made if performance reaches the maximum of the measurement
scale.
(3) Pursuant to the terms of the Company's Long-Term Performance Incentive
Plan, all performance incentive units awarded to Mr. Lubsen and Mr. Burrows
became null and void on their respective dates of resignation.
Employment Agreements with Executive Officers
Ronald J. Naples assumed the position of President and Chief Executive
Officer of the Company on October 2, 1995. Effective that date, Mr. Naples
entered into an Employment Agreement with the Company for a term ending December
31, 1998 and continuing thereafter for successive terms of one year unless
timely notice to terminate is given by either the Company or Mr. Naples. Mr.
Naples' base salary is at an annual rate of $350,000 which is to be reviewed
annually after January 1, 1999 if the Employment Agreement is then in effect.
Mr. Naples is eligible to participate in the Company's incentive compensation
plan pursuant to which bonuses may be paid to participants.
Mr. Naples was granted a stock bonus of 100,000 shares of the Company's
Common Stock. Of this amount, 5,000 shares were paid to him immediately; 45,000
shares were registered in Mr. Naples' name and are being held by the Company for
delivery to Mr. Naples in installments of 15,000 shares each on October 2, 1996,
1997, and 1998 if Mr. Naples is employed by the Company on those dates; and
50,000 shares are to be delivered to him beginning in 1996 at the rate of 1,000
shares for each $.01 increase in the Company's net income per share of Common
Stock as reported to shareholders in excess of $1.10 per share. The Company may
make loans to Mr. Naples to cover withholding and additional taxes on the stock
bonuses.
10
<PAGE>
Mr. Naples was granted options to purchase 200,000 shares of the Company's
Common Stock, which options become exercisable in installments and at varying
prices as follows--135,000 shares, 35,000 shares, and 30,000 shares,
respectively, after October 2, 1996, 1997, and 1998, prices of $17.50 for the
first 100,000 shares, $19.25 for the next 50,000 shares, and $22.50 for the
remaining shares. Mr. Naples was also granted 25,000 performance incentive units
under the Company's Long-Term Performance Incentive Plan for the 1995 through
1998 performance award period and will be granted not less than 25,000
performance incentive units and options to purchase not less than 50,000 shares
of the Company's Common Stock for the performance award period covering 1997
through 2000. Mr. Naples participates in the Company's Supplemental Retirement
Income Plan with full service being based on 15 years instead of 30 years, as in
the case of other participants.
The Employment Agreement further provides that upon the termination of Mr.
Naples' employment for reasons other than Mr. Naples' death or disability or by
the Company for "cause" or by Mr. Naples for other than "good reason" (each as
defined in the Employment Agreement), the Company will pay Mr. Naples
termination benefits ranging from 250% to 300% of his base salary depending upon
when such termination occurs. In addition, subject to certain conditions, if Mr.
Naples' employment is terminated, his right to exercise the stock options and to
receive his stock bonuses may be accelerated.
All other executive officers of the Company are employed pursuant to
employment agreements, which agreements provide for each officer's salary and
the basis upon which his bonus (if any) is to be calculated. Salary and the
bonuses, if any, are adjusted annually by the Compensation/Management
Development Committee. Each employment agreement is for an initial term of one
(1) year and thereafter is automatically renewed for successive one (1) year
terms unless either party gives written notice of termination at least ninety
(90) days prior to the expiration of the then current term. The agreements also
provide for the payment by the Company of an amount substantially equal to 150%
of the officer's then current annual rate of salary (except in the case of Mr.
Lubsen whose agreement, which has expired due to his resignation, provided for
the payment of the greater of 200% of his then current annual salary or
$400,000) if the officer's employment by the Company is terminated other than
for cause or by reason of death, disability, or normal retirement within three
(3) years after the occurrence of certain specified events that constitute a
change or potential change in control of the Company.
Pension and Death Benefits
Substantially all of the Company's U.S. employees are covered by a
noncontributory qualified defined benefit retirement plan (the "Pension Plan").
The method of funding the Pension Plan does not readily permit the calculation
of the required contribution, payment, or accrual applicable to any covered
individual. The formula for determining the annual pension benefit is based upon
two formulas, a past service formula for service through November 30, 1989 and a
future service formula for service beginning December 1, 1989, as follows: (a)
1.1% of the employee's Highest Average Earnings (HAE) (which means the average
of the employee's three highest consecutive years of pay including overtime,
shift differential, bonuses, and commissions) before December 1, 1989 plus .5%
of HAE over the employee's Covered Compensation as defined in the Pension Plan
(which depends on the employee's birth date and is determined from an Internal
Revenue Service table which is updated each year) times the employee's service
up to December 1, 1989; and (b)(i) for the employee's service after December 1,
1989 until past and future service total 35 years, 1.15% of annual pay plus .6%
of annual pay over the employee's Covered Compensation and (ii) for the
employee's service after December 1, 1989 beyond 35 years, 1.3% of annual pay.
Listed below for each of the persons named is the estimated annual pension
benefit payable to them and their credited service under the Pension Plan. The
estimate of the annual pension benefit was made by adding to the accrued
benefits as of November 30, 1995 an estimate of benefits that will be accrued
from December 1, 1995 to age 65 based upon W-2 or other information.
11
<PAGE>
Years
Credited
Estimated Annual Service as of
Name Pension Benefit(1) 12/31/95
---- ------------------ ---------------
Peter A. Benoliel $98,544 39
Sigismundus W. W. Lubsen 25,054(1) 7
Ronald J. Naples 32,537 0
Jose Luiz Bregolato 41,000(2) 2
John E. Burrows, Jr. 12,183(1) 5
Daniel S. Ma 22,805 2
Marcus C. J. Meijer 84,768(3) 4
Clifford E. Montgomery 41,559 4
- ----------
(1) Mr. Lubsen's and Mr. Burrows' employment terminated on July 31, 1995 and on
November 6, 1995, respectively. The amount stated is the actual amount
payable at age 65.
(2) The pension benefit for Mr. Bregolato is provided by the Brazilian pension
program which is a government-defined and funded program supplemented by
the Company.
(3) The pension benefit for Mr. Meijer is provided by a policy funded through
premiums paid to an insurance company. The premiums are currently equal to
16.75% of Mr. Meijer's annual pensionable salary.
The Company also provides supplemental retirement income in accordance with
the provisions of a Supplemental Retirement Income Program (the "Program") which
became effective on November 6, 1984. The Program, which is a "non-qualified
plan" for federal income tax purposes, is intended to provide to officers of the
Company elected to office by the Board of Directors additional retirement income
in certain cases. Generally speaking, an officer who, as of age 65, has
completed at least 30 years of employment with the Company and/or its affiliated
companies will qualify for the maximum benefit under the Program which will
entitle him to receive annually from the date of retirement until death such
payments, if any, as are required to maintain his "net post-retirement income,"
as defined, at a level equal to 80% of his "net pre-retirement income," as
defined. For an officer who otherwise qualifies to participate in the Program
but, as of age 65, has completed less than 30 years of employment (15 years in
the case of Mr. Naples), the maximum benefit is reduced by 2% (2.667% in the
case of Mr. Naples) for each such full year of employment less than 30. Because
the benefits payable under the Program depend on various post-retirement factors
(e.g., defined benefit pension calculation, number of years employed less than
30, social security benefit at age 65, state, local, and federal income taxes on
pension and social security benefits), it is impossible to determine in advance
which officers might be eligible to receive payments under the Program or the
amount payable to any participant. Payments were made pursuant to the Program
during the year ended December 31, 1995 in the aggregate amount of $165,803.
Listed below for each named executive officer is the estimated annual
payment to be made under the Program assuming that (a) the named executive
officer retires at age 65; (b) the officer's compensation (salary plus
incentive) remains at its current level; (c) the estimated pension benefit is as
set forth above; (d) social security benefits remain unchanged and at the
current level; and (e) there is no change to the current federal, state, and
local income tax rates applicable to pension and social security benefits.
12
<PAGE>
Estimated Payment
Name Under the Program
---- -----------------
Peter A. Benoliel $71,668
Sigismundus W. W. Lubsen -0-(1)
Ronald J. Naples 87,031
Jose Luiz Bregolato -0-(2)
John E. Burrows, Jr. -0-(1)
Daniel S. Ma 18,091
Marcus C. J. Meijer -0-(2)
Clifford E. Montgomery 16,141
- ----------
(1) Neither Mr. Lubsen nor Mr. Burrows met the qualification requirements by
their last date of employment by the Company.
(2) Messrs. Bregolato and Meijer do not participate in the Pension Plan and,
therefore, are not eligible for payments under the Program.
Certain of the Company's executive officers are entitled to a death benefit
if employed by the Company at the time of death. The benefit, equal to 1 1/3
times the deceased officer's then current annual salary plus $30,000, is payable
in installments at various times over a 40 month period after death. The
Company's policy is not to provide currently for this contingent future
liability.
Compensation of Directors
Employees of the Company and persons affiliated with the Company's General
Counsel are not paid any fees for services as a director of the Company. During
1995, directors of the Company, who were not employees or affiliated with the
Company's General Counsel, were paid a standard fee of $15,000 each for the year
plus $850 for each meeting attended except that directors who are former
employees received only the standard fee. In addition, they received $850 for
attending each meeting of a Committee on which they serve. Each Committee
Chairman received an additional $150 for each Committee meeting chaired.
Alex Satinsky, a director of the Company, is a member of the law firm Fox,
Rothschild, O'Brien & Frankel, which was retained by the Company as General
Counsel during the year 1995 and which is being retained by the Company in such
capacity during the current year.
COMPENSATION/MANAGEMENT DEVELOPMENT COMMITTEE REPORT
ON EXECUTIVE COMPENSATION
Introduction
The philosophy of the Company's executive officers' remuneration program is
to compensate on the basis of performance. Therefore, a considerable portion of
an executive officer's total compensation is incentive based and tied directly
to the achievement of business goals. The Company's compensation program has
three components: a base salary; an annual incentive cash payment; and
compensation realized from options and/or performance incentive units issued
under the Company's Long-Term Performance Incentive Plan (the "Plan"). Both the
annual incentive payment and compensation earned pursuant to the Plan are based
on achievement of previously set financial criteria targeted for the development
of shareholder value. All components combined are intended to attract, motivate,
and retain executives.
Compensation Structured to Reward Excellence
The Company positions its executive officer base pay levels at the median
of a broad cross section of both chemical and chemical specialty companies in
the United States derived from the database of the compensation consulting
company HayGroup (some companies of which may be included in the companies that
are part of S&P Chemicals (Specialty) Index) and as to foreign-based executive
officers in the regions where such executive officers are located. Total pay,
which includes incentive-based compensation, is sufficiently variable that
outstanding performance may result in total compensation in the top quarter of
the industry comparison group. The most recent survey data places the Company's
average base compensation in the lower half of the companies surveyed.
13
<PAGE>
The target compensation for the position of Chief Executive Officer ("CEO")
is currently at the median of the chemical industry group.
Compensation Components
The base salary component is primarily used as a foundation upon which to
overlay the Company's annual and long-term incentive programs. Base salary
increases are approved by the Committee based on a recommendation by the CEO
following extensive review of each executive officer's performance during the
past year. The Committee's decision is based on achievement, as measured against
previously established goals, which include primary emphasis on attainment of
financial goals and non-financial objectives in such areas as leadership,
vision, and the management of cultural change. On average, base salary range
structural increases are made based on median increases in both the national
chemical industry as well as local general industry. Individual salary increases
are made based on performance in comparison to the individual executive's
penetration into his/her salary range. This salary range is part of Quaker's
overall salary structure which is adjusted as needed based on HayGroup data
reflecting median increases in both the national chemical industry as well as
local general industry more closely reflecting the competitiveness of positions
that are not "national" in nature. In the case of executive officers residing
outside of the United States who fall within the jurisdiction of laws other than
United States law, salary increases that are mandated by such laws will be
granted even if similar increases are not being granted to executive officers
located in the United States.
The incentive component is paid on an annual basis in the form of a cash
bonus. It is primarily used to motivate executive officers to meet or exceed
previously established targets on a consistent basis. The measure used in 1995
is the attainment of previously established Profit Before Tax ("PBT") targets as
well as the accomplishment of non-financial (personal) goals linked directly to
the achievement of the Company's strategic plan. Payments are made based on
actual performance compared with target. Performance above budget target is
based on a formula which provides that for each additional 5% achievement of
budgeted PBT there will be an additional 20% increase in the percentage of the
financial incentive award. The total incentive award amount is determined by
multiplying the base salary compensation labor grade midpoint of the position,
based on data provided by the HayGroup, by a previously established incentive
award percentage which varies between 20-65%. The greater the weighting of the
position and resultant impact on profitability of the Company, the greater the
percentage.
PBT targets have historically been established at levels which the
Committee believes have been aggressive. In 1995, since Company PBT targets were
not achieved, none of the individuals who served as CEO nor the other executive
officers received incentive payments resulting from achievement of previously
established financial objectives. Incentive payments were made in certain cases
(other than to the CEO) for achievement of non-financial objectives referred to
as personal goals.
The final component is compensation realized from the biannual grants of
incentive stock options, non-qualified options, and performance incentive units
issued under the Plan. Awards under the Plan provide incentives to those
employees largely responsible for the long-term success of the Company. The Plan
is primarily used to retain and motivate executive officers to improve total
return to shareholders. With stock options, executive officers receive gains
only if the stock price improves over the fair market value at the date of the
grant. With performance incentive units, for the 1995-98 Plan, the cash value of
the award is based on average earnings per share growth rate and average return
on assets. The purpose of issuing both stock options and performance incentive
units is to motivate executive officers to make the types of long-term changes
in the business that will affect long-term total return to shareholders. Past
practice has been to grant stock options combined with performance incentive
units to executive officers in alternate years, and, in 1995, both incentive
stock options and performance incentive units were issued to executive officers.
The amounts of the awards were based on the relative position of each executive
officer within the organizational structure of the Company and past practice and
performance factors independent of the terms and amounts of awards previously
granted.
Compensation of Chief Executive Officer
The compensation of Ronald J. Naples, who assumed the position of President
and Chief Executive Officer on October 2, 1995, was fixed by the
Compensation/Management Development Committee without reference to any specific
criteria but at levels which the Committee believed to have been reasonable
after having taken into account Mr. Naples' prior experience as a chief
executive officer of a successful corporation and his general familiarity with
the Company after having served as a director for over seven years.
14
<PAGE>
Policy Regarding Deductibility of Compensation for Tax Purposes
Section 162(m) of the Internal Revenue Code (the "Code"), enacted in 1993,
generally imposes a $1,000,000 limit on the amount of compensation deductible by
the Company in regard to compensation paid to the Company's CEO and the other
four most highly compensated executive officers. Since the amount of
compensation paid in the last year to any of the Company's CEOs and each of the
other four most highly compensated officers was considerably less than
$1,000,000, and it is unlikely that compensation levels will dramatically
increase in the foreseeable future, the Company has not adopted any policy with
respect to qualifying compensation paid to executive officers for deductibility
under Section 162(m) of the Code.
Compensation/Management Development Committee
Frederick Heldring, Chairman
Patricia C. Barron
Lennox K. Black
Edwin J. Delattre
Performance Graph
Set forth below is a line graph comparing the yearly percentage change in
the cumulative total shareholder return on the Company's Common Stock against
the cumulative total return of the S&P Composite 500 Stock Index, the S&P
SmallCap 600 Stock Index, and the S&P Chemicals (Specialty) Index for the period
of five (5) fiscal years commencing December 31, 1990 and ending December 31,
1995.
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN*
AMONG QUAKER CHEMICAL CORPORATION, THE S&P 500 INDEX,
THE S&P SMALLCAP 600 INDEX AND THE S&P CHEMICALS (SPECIALTY) INDEX
[The following table was represented by a line graph in the printed document.]
Date Quaker Chemical Corp. S&P 500 S&P Small Cap S&P Chemicals(spclty)
- ---- --------------------- ------- ------------- ---------------------
12/90 100 100 100 100
12/91 114 130 141 148
12/92 120 140 150 180
12/93 94 155 171 213
12/94 114 157 149 203
12/95 86 215 196 264
*$100 invested on 12/31/90 in stock or index--
including reinvestment of dividends.
Fiscal year ending December 31.
15
<PAGE>
APPOINTMENT OF INDEPENDENT ACCOUNTANTS
The Board of Directors of the Company has appointed Price Waterhouse LLP,
independent accountants, to examine the accounts of the Company for the year
ending December 31, 1996 and to report on the Company's financial statements for
that period. The firm of Price Waterhouse LLP has acted as independent
accountants for the Company since 1968. Representatives of Price Waterhouse LLP
will be present at the Meeting to make a statement if they desire to do so and
to respond to appropriate questions.
There is no requirement that the appointment of Price Waterhouse LLP as the
Company's independent accountants be submitted to the shareholders for their
approval. However, the Board of Directors believes that shareholders should be
provided an opportunity to express their views on the subject. The Board of
Directors will not be bound by a negative vote but will take any negative vote
into consideration in future years.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE IN FAVOR OF THE
RATIFICATION OF THE APPOINTMENT OF PRICE WATERHOUSE LLP.
DEADLINE FOR RECEIPT OF SHAREHOLDER PROPOSALS
TO BE INCLUDED IN MANAGEMENT'S PROXY AND
PROXY STATEMENT FOR THE NEXT ANNUAL MEETING
OF SHAREHOLDERS
In order for a shareholder's proposal(s) to be set forth in the Company's
Proxy Statement and Proxy for the 1997 Annual Meeting of Shareholders, the
shareholder must present his or her proposal(s) to the Company not later than
November 29, 1996.
OTHER MATTERS
The Board of Directors does not know of any matters other than the matters
described herein and procedural matters to be presented at the Meeting. If any
other matters properly come before the Meeting, the persons named in the
accompanying proxy will vote on such matters in accordance with their best
judgment.
By Order of the Board of Directors,
KARL H. SPAETH
Karl H. Spaeth
Secretary
Dated: March 29, 1996
16
<PAGE>
EXHIBIT A
---------
SHAREHOLDER VOTING ADMINISTRATIVE PROCEDURES
Voting Rights
At the Annual Meeting of Shareholders held May 6, 1987, shareholders
approved an amendment to the Articles of Incorporation, pursuant to which the
holders of the Company's $1.00 par value Common Stock on May 7, 1987 (the
"Effective Date") became entitled to 10 votes per share of Common Stock with
respect to such shares, and any shares of Common Stock acquired after the
Effective Date, subject to certain exceptions, shall only be entitled to 1 vote
per share until such shares have been owned beneficially for a period of at
least 36 consecutive calendar months, dating from the first day of the first
full calendar month on or after the date the holder acquires beneficial
ownership of such shares (the "Holding Period"). Each change in beneficial
ownership with respect to a particular share will begin a new "1 vote" Holding
Period for such share. A change in beneficial ownership will occur whenever any
change occurs in the person or group of persons having or sharing the voting
and/or investment power with respect to such shares within the meaning of Rule
13d-3 of the General Rules and Regulations under the Securities Exchange Act of
1934. Under the amendment, a share of Common Stock held of record on a record
date shall be presumed to be owned beneficially by the record holder and for the
period shown by the shareholder records of the Company. A share of Common Stock
held of record in "street" or "nominee" name by a broker, clearing agency,
voting trustee, bank, trust company, or other nominee shall be presumed to have
been held for a period of less than the required 36 month Holding Period. The
foregoing presumptions are rebuttable upon presentation to the Company of
satisfactory evidence to the contrary. The amendment also provides that no
change in beneficial ownership will be deemed to have occurred solely as a
result of any of the following:
(1) a transfer by any gift, devise, bequest, or otherwise through the laws
of inheritance or descent;
(2) a transfer by a trustee to a trust beneficiary under the terms of the
trust;
(3) the appointment of a successor trustee, guardian, or custodian with
respect to a share; or
(4) a transfer of record or a transfer of a beneficial interest in a share
where the circumstances surrounding such transfer clearly demonstrate
that no material change in beneficial ownership has occurred.
Maintaining Records
The Company's registrar and transfer agent, American Stock Transfer & Trust
Company, maintains the Company's register of shareholders. A single register is
maintained, but individual holdings are coded to indicate automatically the
number of votes that each shareholder is entitled to cast. Internal mechanisms
automatically convert the voting rights by a 10-to-1 ratio for those
shareholders who have held their shares for the required Holding Period.
Additionally, the register can be adjusted manually, in order to respond to
shareholders whose shares were held in "street" or "nominee" name if shares
acquired were held by the same party for the required Holding Period.
Proxy Administration
As indicated above, record ownership proxy administration is relatively
simple. The transfer agent will mail proxy cards to all shareholders, and each
proxy card will reflect the number of votes that the shareholder is entitled to
cast, not the number of shares held. If shareholders have deposited shares with
brokers, clearing agencies, voting trusts, banks, and other nominees, such
shareholders will normally be entitled to one vote per share. If they can
provide evidence that they have held their shares for the Holding Period, they
can increase the number of votes that may be cast to 10 votes per share by
proper notification to the Company. Equally, if a shareholder believes that he
or she is entitled to 10 votes per share by virtue of falling within one of the
exceptions set forth above, that can be accomplished through proper notifica-
tion to the Company. Acceptable substantiation will in most cases be a letter
from the shareholder explaining the circumstances and stating why he or she
feels that the common shares held by such shareholder are entitled to 10 votes
per share, either because the shares have been held for the required Holding
Period or because the shareholder falls within one of the exceptions set forth
above. The Company reserves the right to change what it deems to be acceptable
substantiation at any time if it
17
<PAGE>
appears from experience that the present definition is inadequate or is being
abused, and further reserves the right at any time to require that a particular
shareholder provide additional evidence that one of the exceptions is
applicable.
Where evidence is presented that is satisfactory, the shareholder records
will be manually adjusted as appropriate. The shareholder submitting the
evidence will be advised as to any action taken or not taken, which will be
posted by ordinary mail to the shareholder's registered address.
Special proxy cards are not used, and no special or unusual procedures are
required in order properly to execute and deliver the proxy card for tabulation
by the transfer agent.
Summary
The procedures set forth above have been reviewed with representatives of
various brokers and banks, as well as counsel to the Company. Those
representatives have made helpful and valuable suggestions, which have been
incorporated in the procedures.
The Company is confident that these procedures are efficient in addressing
the complications of multi-vote casting and tabulating, but the Company is
prepared to revise them if experience dictates the need for revision.
18
<PAGE>
PROXY
QUAKER CHEMICAL CORPORATION
Elm and Lee Streets
Conshohocken, PA 19428
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints William L. Batchelor, Peter A. Benoliel, and
Alex Satinsky, and each of them (or if more than one is present, then a majority
of those present) proxies of the undersigned, to attend the Annual Meeting of
Shareholders of Quaker Chemical Corporation, a Pennsylvania corporation (the
"Company"), to be held at the Philadelphia Marriott West, West Conshohocken,
Pennsylvania, on May 9, 1996, or any adjournment thereof, and with all powers
the undersigned would possess if present, to vote:
<TABLE>
<S> <C> <C>
1. ELECTION OF DIRECTORS FOR all nominees listed below |_| WITHHOLD AUTHORITY |_|
(except as marked to the contrary below) to vote for all nominees listed below
</TABLE>
William L. Batchelor, Peter A. Benoliel, and Robert H. Rock
(Instruction: to withhold authority to vote for any individual nominee write
that nominee's name on the space provided below.)
- --------------------------------------------------------------------------------
2. PROPOSAL TO RATIFY THE APPOINTMENT OF PRICE WATERHOUSE LLP AS THE COMPANY'S
INDEPENDENT ACCOUNTANTS FOR 1996.
FOR |_| AGAINST |_| ABSTAIN |_|
(CONTINUED ON REVERSE SIDE)
<PAGE>
(CONTINUED FROM REVERSE SIDE)
3. IN THEIR DISCRETION UPON SUCH OTHER MATTERS AS MAY COME BEFORE THE MEETING OR
ANY ADJOURNMENT THEREOF.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR PROPOSALS 1 AND 2.
The undersigned hereby also acknowledges receipt of the Notice of Annual
Meeting of Shareholders, the Proxy Statement with respect to said Meeting, and
the Company's Annual Report for the year ended December 31, 1995.
DATED:__________________________, 1996
______________________________________
(Signature)
(Signature should be exactly as name
or names appear on this Proxy)
PLEASE DATE, SIGN, AND RETURN PROMPTLY
<PAGE>
Quaker Chemical
Corporation ELM AND LEE STREETS
CONSHOHOCKEN o PENNSYLVANIA 19428-0809 o USA
TELEPHONE: 610-832-4000 o FACSIMILE: 610-832-4495
March 29, 1996
Dear Quaker Shareholder:
Your enclosed proxy card shows the number of votes you are entitled to cast not
the number of shares that you own.
This reflects the action taken at the Annual Meeting of Shareholders on May 6,
1987 when shareholders approved an amendment to the Articles of Incorporation by
which holders of Common Stock became entitled to 10 votes per share of Common
Stock for shares which were held on that date. The amended Articles also provide
that with respect to shares acquired after May 6, 1987, all shares are entitled
to one vote per share until such shares are held for 36 consecutive months.
After 36 months, each share is entitled to 10 votes.
There are some exceptions to the above and those exceptions are listed in
Exhibit A "Shareholder Voting Administrative Procedures" to the enclosed Proxy
Statement.
Because we have no means of tracking ownership of shares held in "street" or
"nominee" name, such shares are presumed to have been held for a period of less
than 36 consecutive months.
Please review the number of votes which are listed on the proxy card. For all
shares purchased by you before March 1, 1993 (36 months before the record date),
you are entitled to 10 votes per share. For all shares purchased by you after
March 1, 1993, you are entitled to one vote per share.
If you feel that the votes listed do not accurately reflect the number of votes
you are entitled to cast, Exhibit A to the enclosed Proxy Statement outlines
procedures by which you may seek change. If you have any questions, please call
Irene M. Kisleiko, Assistant Corporate Secretary, at 610-832-4119.
To allow sufficient time to research your questions or act on your requests,
please call Ms. Kisleiko at Quaker Chemical as soon as possible.
Thank you.
