SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant [ X ]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-69e)(2))
[ X ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Exchange Act Rule 14a-11 or Rule 14a-12
Quaker Chemical Corporation
- ---------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- ---------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement
if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[ X ] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
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2) Aggregate number of securities to which transaction applies:
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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):
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[ ] 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:
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<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 Wednesday, May 6, 1998, at 10:30
A.M., local time, for the following purposes:
1. To elect four (4) Class III Directors, each to serve for three years
and until his/her 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
1998; 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 13, 1998
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,
/s/ Karl H. Spaeth
Karl H. Spaeth
Secretary
Dated: March 30, 1998
<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 Wednesday, May 6, 1998, 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 30, 1998. 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 four (4) of the nominees named therein and for ratification of
the appointment of Price Waterhouse LLP as the Company's independent
accountants for the year 1998.
As of March 13, 1998, the outstanding voting securities of the Company
consisted of 8,775,344 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 13, 1998, held shares of the
Company's Common Stock beneficially owned since March 1, 1995 are entitled to
cast 10 votes for each such share. Holders of shares the beneficial ownership
of which was acquired after March 1, 1995 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 13, 1998, the holders of
2,943,844 shares of Common Stock will be entitled to cast 10 votes with
respect to each such share, and the holders of 5,831,500 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, 1995 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
35,269,940 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 87,753,440. 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 13, 1998
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 13, 1998, 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, The State Teachers Retirement Fund of Ohio,
and The TCW Group, Inc. have sole voting and dispositive power over the
outstanding Common Stock listed opposite their names. Mellon Bank Corporation
has sole voting power over 392,572 shares, has sole dispositive power over
403,372 shares, and shared dispositive power over 80,500 shares opposite
its name.
Number
of Shares Percent Number
Name and Address Owned(1) of Class(2) of Votes
------------------------ ---------- ----------- --------
Peter A. Benoliel 535,020(3) 6.1 4,949,930
130 Cornwall Lane
St. Davids, PA 19087
Mellon Bank Corporation 494,872(4) 5.6 494,872(4)
One Mellon Bank Center
Pittsburgh, PA 15218
The State Teachers Retire- 432,500(4) 5.0 432,500(4)
ment System of Ohio
275 East Broad Street
Columbus, OH 43215-3771
The TCW Group, Inc. 485,400(4) 5.6 485,400(4)
865 South Figueroa Street
Los Angeles, CA 90017
- ---------------
(1) Based upon information contained in filings made by the named person with
the Securities and Exchange Commission.
(2) Based upon 8,775,344 shares outstanding.
(3) Includes 40,000 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.
2
<PAGE>
Directors and Officers
The following table sets forth information, as of March 13, 1998, 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. 5,000(2) -- 5,900
Patricia C. Barron 10,609(3) -- 12,049
William L. Batchelor 181,082 2.1 1,810,820
Peter A. Benoliel 535,020(4)(5) 6.1 4,949,930
Lennox K. Black 8,574 -- 33,324
Donald R. Caldwell 4,824 -- 4,824
Robert E. Chappell 1,824 -- 1,824
Edwin J. Delattre 1,434(2) -- 3,693
Robert P. Hauptfuhrer 7,200 -- 72,000
Ronald J. Naples 382,186(5)(6) 4.4 138,536
Robert H. Rock 1,824 -- 1,824
Jose Luiz Bregolato 40,263(5) -- 263
Daniel S. Ma 20,797(5) -- 2,111
Marcus C. J. Meijer 77,450(5) -- 16,950
Joseph F. Virdone 6,800(5) -- 3,000
All directors and executive 1,284,887(5)(6) 14.6 7,057,048(7)
officers as a group (17 persons)
- -------------
(1) Based upon 8,775,344 shares outstanding. The percentage is less than 1%,
except as otherwise indicated.
(2) Includes 500 shares in the case of Mr. Anderson and 610 shares in the
case of Dr. Delattre held jointly with a spouse.
(3) Includes 10 shares held in an indirect trust account for child.
(4) Does not include 5,500 shares held of record by Mr. Benoliel's wife.
(5) Includes 40,000 shares in the case of Mr. Benoliel; 40,000 shares in the
case of Mr. Bregolato; 20,000 shares in the case of Mr. Ma; 74,450 shares
in the case of Mr. Meijer; 245,000 shares in the case of Mr. Naples;
6,500 shares in the case of Mr. Virdone; and 425,950 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.
(6) Includes 32,500 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" and
"Compensation/Management Development Committee Report on Executive
Compensation" below.
(7) Represents 20% of all votes entitled to be cast at the Meeting, based on
information available on March 13, 1998.
Section 16(a) Beneficial Ownership Reporting Compliance
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 directors and officers, 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, 1997 were
filed on a timely basis, except for one filing on Form 4 covering one
transaction for Patricia C. Barron.
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. Four (4) Class III Directors are to be
elected at the Meeting with each member to serve a three (3) year term
expiring in 2001 or until his/her successor is duly elected and qualified. The
four nominees receiving a majority of the 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 III 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 III nominees, Joseph B. Anderson, Jr., Patricia C. Barron,
Edwin J. Delattre, and Ronald J. Naples, each of whom is presently serving as
a director of the Company, having been so elected by the shareholders at the
Annual Meeting held on May 3, 1995. 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:
First Became Principal Occupation for
Name and (Age) a Director the Past Five Years
-------------- ------------ ------------------------
Class III --Directors nominated for election in 1998 to serve until the Annual
Meeting in 2001:
Joseph B. Anderson, Jr. (55) 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. Member of the
Board of Directors of Meritor
Automotive, Inc.
Patricia C. Barron (55) 1989 Corporate Vice President, Business
Operations Support, Xerox
Corporation. Previous positions
with Xerox Corporation include
President, Xerox Engineering
Systems Division; President,
Office Document Products; and Vice
President, Corporate Information
Management. Member of the Board of
Directors of Frontier Corporation,
Reynolds Metals Company, Teleflex
Incorporated, and ARAMARK
Corporation.
Edwin J. Delattre (56) 1984 Dean and Professor of Education
and Philosophy, Boston University.
Ronald J. Naples (52) 1988 Chairman of the Board of the
Company since May 1997; Chief
Executive Officer of the Company
since October 1995; and President
of the Company from October 1995
until March 1998. 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.
4
<PAGE>
First Became Principal Occupation for
Name and (Age) a Director the Past Five Years
-------------- ------------ ------------------------
Class I -- Directors elected in 1996 to serve until the Annual Meeting in 1999:
William L. Batchelor (80) 1952 Retired Senior Vice President of
the Company.
Peter A. Benoliel (66) 1961 Former Chairman of the Board and
Chief Executive Officer of the
Company.
Robert H. Rock (47) 1996 President, MLR Holdings, LLC, 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, The Penn Mutual Life
Insurance Company, and R. P.
Scherer Corporation.
Class II --Directors elected in 1997 to serve until the Annual Meeting in 2000:
Lennox K. Black (68) 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 of 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 Pep Boys.
Donald R. Caldwell (51) 1997 President and Chief Operating
Officer, Safeguard Scientifics,
Inc., a company engaged in a broad
spectrum of activities directed to
information technology and its
Executive Vice President from
November 1993 until February 1996.
Member of the Board of Directors
of Safeguard Scientifics, Inc.,
Integrated Systems Consulting
Group, Inc., CompuCom Systems,
Inc., and Diamond Technology
Partners, Inc.
Robert E. Chappell (53) 1997 Chairman and Chief Executive
Officer, The Penn Mutual Life
Insurance Company, being Chairman
since January 1997, Chief
Executive Officer since April
1995, President from 1994 until
1996, and Chief Operating Officer
from 1994 until 1995. Member of
the Board of Directors of P. H.
Glatfelter Company.
Robert P. Hauptfuhrer (66) 1977 Former Chairman of the Board and
Chief Executive Officer, Oryx
Energy Company, an energy company.
Trustee, 1838 Investment Advisors
Fund.
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; to make recommendations to the Board
concerning programs of external corporate development; and to establish
guidelines as to capital structure and deployment of capital resources. The
current members of the Committee, which took action by unanimous consent once
in 1997, 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 four times in 1997, are R. P. Hauptfuhrer (Chairman), J. B. Anderson,
Jr., P. C. Barron, and D. R. Caldwell.
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 twice in 1997, are L. K. Black (Chairman), R. E. Chappell, E. J. Delattre,
and R. H. Rock.
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 twice during 1997,
are E. J. Delattre (Chairman), P. A. Benoliel, R. P. Hauptfuhrer, R. J. Naples,
and R. H. Rock. The Committee will consider candidates recommended by
shareholders when submitted in writing not later than November 27, 1998 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, 1997, five regular meetings of the
Board of Directors were held. During 1997, each of the directors was in
attendance in person or by teleconference 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, 1995, 1996, and 1997 as to Mr. Naples and each of the
Company's other four most highly compensated officers who served as executive
officers at December 31, 1997 (hereinafter referred to as the named executive
officers).
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
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/ LTIP Compensation
Position Year Salary($) Bonus($) ($)(1) ($) SARs(#)(2) Payouts($) ($)
-------- ---- --------- -------- ----------- ---------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Ronald J. Naples, 1997 635,938(3) 331,406(4) 0 590,625(5) 0 0 950,763(6)
Chairman of the 1996 578,750(3) 126,892 0 0 111,000 0 0
Board and Chief 1995 170,620(3) 0 0 1,282,500(5) 200,000 0 0
Executive Officer
Jose Luiz Bregolato, 1997 142,242(7) 103,827 23,619(8) 0 0 0 0
Vice President- 1996 145,000(7) 40,391 28,270(8) 0 14,000 0 0
South America 1995 115,707(7) 10,841 0 0 20,000 0 0
Daniel S. Ma, 1997 170,280(7) 70,020 90,086(8) 0 0 0 0
Vice President- 1996 145,959(7) 67,778 89,890(8) 0 14,000 0 0
Asia/Pacific 1995 131,000(7) 86,174 88,182(8) 0 20,000 0 0
Marcus C. J. Meijer, 1997 202,302(7) 90,021 0 0 0 0 0
Vice President- 1996 217,207(7) 76,721 0 0 20,000 0 0
Europe 1995 224,200(7) 51,700 0 0 30,000 0 0
Joseph F. Virdone, 1997 146,006 57,847 0 0 0 0 3,533(9)
Vice President-US 1996 126,979 40,546 0 0 21,000 0 4,669(9)
Commercial 1995 116,372 11,326 0 0 0 0 0
Operations
<FN>
- -------------
(1) During the year ended December 31, 1997, certain of the individuals named
in column (a) received personal benefits not reflected in the amounts set
forth for such individual in column (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) Includes compensation earned by Mr. Naples pursuant to the 1995 Naples
Restricted Stock Plan and Agreement (i) for 1997, the fair market value
of 15,000 shares of Common Stock delivered to Mr. Naples on October 2,
1997, which shares have a fair market value of $285,937.50 (based on the
last reported sale price for the Common Stock on the New York Stock
Exchange on October 2, 1997 of $19.0625 per share); (ii) for 1996, the
fair market value of 15,000 shares of Common Stock delivered to Mr.
Naples on October 2, 1996, which shares have a fair market value of
$228,750 (based on the last reported sale price for the Common Stock on
the New York Stock Exchange on October 2, 1996 of $15.25 per share); and
(iii) for 1995, the fair market value of 5,000 shares of Common Stock
awarded to Mr. Naples on October 2, 1995, 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).
(4) Includes the fair market value (based on the last reported sale price for
the Common Stock on the New York Stock Exchange on December 31, 1997 of
$18.9375 per share) of 17,500 shares of restricted Common Stock
($331,406.25) to be awarded to Mr. Naples in lieu of an annual cash
incentive bonus based on 1997 operating results (see Note 5 and the
Compensation/Management Development Committee Report below).
(5) Includes (i) for 1997, the fair market value (based on the last reported
sale price for the Common Stock on the New York Stock Exchange on May 7,
1997 of $16.875 per share) of 35,000 shares of restricted Common Stock
which Mr. Naples is eligible to receive in 1997 and 1998 in lieu of an
annual cash bonus if pre-established financial criteria applicable to all
incentive-based employees are met, of which (see Note 4 above) 17,500
shares were earned in 1997 and (ii) for 1995, 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 $13.50 per share) of
45,000 shares of restricted Common Stock which Mr. Naples is eligible to
receive in installments of 15,000 shares each on October 2, 1996, 1997,
and 1998 (of which 30,000 shares have been delivered -- see Note 3 above)
if Mr. Naples is employed by the Company on such dates and 50,000 shares
of restricted Common Stock which Mr. Naples is entitled to receive at the
rate of 1,000 shares for each $.01 increase in the Company's net income
per share of Common Stock in excess of $1.10 per share (all of which were
delivered to Mr. Naples in 1998 as a result of the Company's performance
in 1997). All shares of restricted Common Stock are registered in Mr.
Naples' name, and he is entitled to receive the dividends paid thereon,
but the shares are held by the Company subject to future delivery. At
December 31, 1997, the fair market value of the 32,500 shares of
restricted Common Stock representing the balance to be delivered to him
under the foregoing arrangements had a fair market value of $615,469
(based on the last reported sale price for the Common Stock on the New
York Stock Exchange on December 31, 1997 of $18.9375 per share).
(6) Includes (i) the fair market value (based on the last reported sale price
for the Common Stock on the New York Stock Exchange on December 31, 1997
of $18.9375 per share) of (i) 50,000 shares of restricted Common Stock
($946,875) earned by Mr. Naples in 1997 under the 1995 Naples Restricted
Stock Plan and Agreement at the rate of 1,000 shares for each $.01
increase in the Company's net income per share of Common Stock in excess
of $1.10 (after elimination of the effects of foreign currency
fluctuations) as discussed in Note 5 above and in "Employment Agreements
of Executive Officers" below and (ii) $3,888 earned under the Company's
Profit Sharing Plan.
(7) Mr. Ma's, Mr. Meijer's, and Mr. Bregolato's compensation was paid in Hong
Kong dollars, Dutch guilders, and Brazilian reales, respectively. For
purposes of this presentation, Mr. Ma's, Mr. Meijer's, and Mr.
Bregolato's salary and bonus for each year have been translated into U.S.
dollars using the applicable exchange rates for the conversion of
currencies into U.S. dollars on December 31 of such year.
(8) Represents housing benefits paid to Mr. Ma and Mr. Bregolato in
connection with their assignment for the Company in Hong Kong and Sao
Paulo, respectively.
(9) Represents amounts earned under the Company's Profit Sharing Plan.
</TABLE>
Options/SAR Grants in the Last Fiscal Year
During 1997, no stock options were granted to any of the five most highly
compensated officers.
Aggregate Option/SAR Exercises in Last Fiscal Year and FY-End
Option/SAR Values
The following table provides information related to options to purchase
the Company's Common Stock held by the named executive officers during the
year ended December 31, 1997 and the number and value of such options held as
of the end of such year. The Company does not have any outstanding stock
appreciation rights.
<TABLE>
<CAPTION>
AGGREGATE OPTION/SAR EXERCISES IN LAST YEAR
AND YEAR-END OPTION/SAR VALUES
(a) (b) (c) (d) (e)
Number of Securities Value of Unexercised
Value Underlying Unexercised In-the-Money Options
Shares Acquired Realized Options at Year End(#) at Year End($)
Name on Exercise(#) ($) Exercisable Unexercisable Exercisable/Unexercisable(1)
---- --------------- -------- ----------- ------------- ----------------------------
<S> <C> <C> <C> <C> <C>
Ronald J. Naples 0 0 245,000 66,000 543,349/149,964
Jose Luiz Bregolato 0 0 40,000 14,000 6,250/55,125
Daniel S. Ma 0 0 20,000 14,000 6,250/55,125
Marcus C. J. Meijer 0 0 74,450 20,000 26,534/78,750
Joseph F. Virdone 0 0 6,000 15,000 38,250/60,562
<FN>
- ------------
(1) Based on the last sale price on December 31, 1997 on the New York Stock
Exchange of $18.9375 per share.
</TABLE>
Long-Term Performance Incentive Plan Awards in Last Fiscal Year
During 1997, no performance incentive units pursuant to the Company's
Long-Term Performance Incentive Plan were granted.
Employment Agreements with Executive Officers
Chief Executive Officer
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 Annual
Incentive Compensation Plan pursuant to which cash bonuses may be paid to
participants but, as a result of an amendment to the Employment Agreement
dated as of January 1, 1997, was removed from the program for the years 1997
and 1998 and, instead, received an award of 35,000 shares of the Company's
Common Stock which will vest over two years based upon the Company achieving
previously approved targets of financial performance, of which 17,500 shares
were vested and will be delivered to Mr. Naples in 1998.
8
<PAGE>
Pursuant to the Employment Agreement, 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 to be 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 of which 30,000 shares have
been delivered to Mr. Naples, and 50,000 shares are to be delivered to him
beginning in 1997 at the rate of 1,000 shares for each $.01 increase in the
Company's net income per share of Common Stock (before extraordinary and non-
recurring gains and losses) in excess of $1.10 per share. On January 31, 1998,
by reason of the extraordinary amount of the effect of foreign currency
transactions ($.21 per share) on the Company's 1997 earnings, the Agreement
was amended to exclude such transactions in calculating earnings per share.
The $1.10 per share target was not achieved in 1996. The $1.10 per share
target was exceeded by $.52 per share in 1997, and 50,000 shares were
delivered to him in 1998. The Company may make loans to Mr. Naples to cover
withholding and additional taxes on the stock bonuses, and a loan in the
principal amount of $186,244 has been extended. The loan has a ten-year term
ending November 2005 and bears interest at a rate of 6.4% per annum.
The Employment Agreement also provides for and 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. In 1996, Mr. Naples was awarded options to purchase 75,000 shares of
the Company's Common Stock at $13.50 per share, which are first exercisable on
May 9, 1998, and also options to purchase 36,000 shares at $15.00 per share,
which are first exercisable on October 31, 1998. 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. Except in the case of Mr. Meijer, 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. Mr. Meijer's employment agreement of
April 10, 1990 provides for continued employment until either party gives the
other party six (6) months' notice of termination. Mr. Meijer's agreement
provides for a payment equal to two (2) years salary, bonus, and vacation if
he elects to resign from his position within twelve months (12) of a change in
control. Also, if the Company terminates Mr. Meijer's employment for other
than cause, it shall pay to Mr. Meijer an amount equal to two (2) months
income (as defined in Mr. Meijer's employment agreement) for each year of
service up to a maximum of twenty-four (24) months. In the case of Messrs.
Bregolato and Virdone, each is entitled to eighteen (18) months salary if they
are terminated (other than for cause) within three (3) years of a change in
control, and in all other cases, Messrs. Bregolato and Virdone are entitled to
severance equal respectively to ten (10) months and twelve (12) months of
salary if terminated by the Company (other than for cause).
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
9
<PAGE>
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, 1997 an estimate of benefits that will be
accrued from December 1, 1997 to age 65 (except for Mr. Bregolato, for whom
the appropriate age is 60) based upon W-2 or other information.
Years
Credited
Estimated Annual Service as of
Name Pension Benefit 12/31/97
---- ---------------- ------------
Ronald J. Naples $32,042 2
Jose Luiz Bregolato 35,940(1) 4
Daniel S. Ma 28,613 4
Marcus C. J. Meijer 84,760(2) 6
Joseph F. Virdone 33,715 2
- --------------
(1) The pension benefit for Mr. Bregolato is provided under a defined benefit
program established in accordance with Brazilian law to which the Company
contributed $27,774 in 1997.
(2) 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, 1997 in the aggregate amount of $242,000.
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.
Estimated Payment
Name Under the Program
---- -----------------
Ronald J. Naples $181,404
Jose Luiz Bregolato 0(1)
Daniel S. Ma 45,983
Marcus C. J. Meijer 0(1)
Joseph F. Virdone 27,536
- ------------
(1) Mr. Meijer and Mr. Bregolato do not participate in the Pension Plan and,
therefore, are not eligible for payments under the Program.
10
<PAGE>
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 the period January 1, 1997-June 1, 1997, 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.
Effective June 1, 1997, directors who are not employees of the Company
are paid an annual retainer of $18,000. Directors who are not current or
former employees of the Company are paid a fee of $1,000 for each Board and
each Committee meeting attended. Committee Chairmen are paid an annual
retainer as follows: Audit Committee $2,000; Nominating Committee and
Compensation/Management Development Committee $1,500; Executive Committee
$48,000.
Each member of the Board is required to hold at least 5,000 shares of the
Company's Common Stock, and 75% of the Annual Retainer is paid in the form of
shares until 5,000 shares are accumulated.
Alex Satinsky, a director of the Company until May 7, 1997, is a member
of the law firm Fox, Rothschild, O'Brien & Frankel, LLP, which was retained by
the Company as General Counsel during the year 1997 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 purpose of the Company's executive remuneration program is to
compensate on the basis of performance. Accordingly, a considerable portion of
an executive officer's total compensation is incentive-based and tied directly
to the achievement of pre-established business goals. By relating executive
compensation to the results achieved, compensation is linked to the interests
of all shareholders. The 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").
Competitive Reward Systems
In order to attract, motivate, and retain executives, 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, using a database (which may include companies that are part of the S&P
Chemicals (Specialty) Index) available through HayGroup, a compensation
consulting company. With respect to executive officers in other countries, the
base pay is determined based upon the regions in which they are located. While
average base pay is in the lower half of the companies surveyed according to
recent data, attainment of the maximum incentive portion would place total pay
in the top quarter of the survey group.
Compensation Components
Base salary is reviewed annually, and increases are based primarily on
performance against pre-established goals with major emphasis on the
attainment of financial objectives and the extent of the individual's
penetration of his/her salary range. Individual increases are recommended by
the Chief Executive Officer ("CEO") and approved by the
Compensation/Management Development Committee (the "Committee"). Increases in
salary in 1997 were determined by considering market data, responsibilities of
the position, job performance, and the Company's overall financial results. In
the case of some foreign-based executive officers, salary increases may be
mandated by the laws in the particular country or region even when similar
increases are not granted to officers residing in the United States. The
overall salary structure is adjusted, as needed, based on HayGroup data
reflecting the median of both the national chemical industry and the local
general industry for those cases where the position is not "national" in
nature.
11
<PAGE>
The incentive compensation component is paid on an annual basis in the
form of a cash bonus. The incentive is designed to be a short-term award for
specific results and performance in a given year and to be competitive within
the industry. In 1997, the major portion of the incentive award was based on
the attainment of a previously established consolidated corporate Profit-
Before-Tax ("PBT") target. In addition, there is also a management
discretionary award which is paid if certain regional, product line, business
development, or business support objectives are attained. The actual incentive
award payout is based on the attainment of either or both financial and
discretionary goals, except in the case of the CEO whose incentive payout is
based on the attainment of financial goals only.
At the beginning of the year, the CEO recommends bonus gates at three
levels of consolidated corporate PBT performance as follows: (1) Threshold --
the PBT level at which an entry bonus is earned; (2) Mid -- the PBT level at
which a mid-level bonus is earned; and (3) Maximum -- the PBT level at which
the maximum bonus is earned. The maximum financial bonus amount is determined
by multiplying the compensation salary grade midpoint of the position by a
previously established incentive award percentage. The greater the weight of
the position and resultant impact on profitability of the Company, the greater
the percentage. In the case of the CEO, the maximum financial award that might
be paid is 80% of his salary grade midpoint. The applicable maximum percentage
for executive officers is lower and can range from 40% to 60% of salary grade
midpoint. Depending upon the performance level achieved, the bonus amount can
be as high as the Maximum, or if performance is below the Threshold level, no
bonus will be paid.
The discretionary bonus award may be paid on the attainment of pre-
established goals and within pre-established boundaries. This amount is
awarded at the discretion of the manager and targeted to recognize individual
performance.
The PBT targets for 1997 were aggressive, and bonuses have been
calculated at the Maximum level.
For the years 1997 and 1998, the CEO will not participate in the annual
bonus program and will not receive cash bonus payments. Mr. Naples has been
awarded a grant of 35,000 shares of restricted Common Stock to vest over the
two years 1997 and 1998 at a maximum of 17,500 shares per year depending on
the level of the Company's pretax profit performance. In 1997, the Company's
pretax profits exceeded the Maximum level set for the annual bonus program,
and, accordingly, Mr. Naples will receive all 17,500 shares of restricted
Common Stock for 1997.
The final component is compensation realized from the Long-Term
Performance Incentive Plan comprising a combination of grants of incentive
stock options, non-qualified options, and performance incentive units issued
under the Plan. Awards under the Plan play an important role in the Company's
executive compensation structure thereby making compensation more dependent
upon the long-term performance of the Company. 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 Company's business that
will affect long-term total return to shareholders. The amounts of the awards
are 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. The
Company's past practice has been to grant stock options combined with
performance incentive units to executive officers every two years for rolling
four-year performance periods. No awards under the Long-Term Performance
Incentive Plan were granted in 1997, except to Mr. James A. Geier, Vice
President-Human Resources, who joined the Company on November 17, 1997 and at
that time received awards in a comparable relationship to other participants
in the 1995-98 Plan.
Compensation of Chief Executive Officer
The compensation of the CEO, Ronald J. Naples, for the 1997 year was
established in 1995 by the Committee and was incorporated in an Employment
Agreement between the Company and Mr. Naples at the time of his employment by
the Company, as reported in detail elsewhere in this Proxy Statement. The
total compensation package for Mr. Naples was established by the Committee at
levels considered by the Committee to be reasonable after having taken into
account Mr. Naples' prior experience as the chief executive officer of a
successful corporation and his general familiarity with the Company after
having served as a director for over seven years. In 1997, Mr. Naples'
Employment Agreement was amended in two respects. First, to remove him from
participation in the Company's Annual Incentive Compensation Plan for 1997 and
1998 and replace such participation by an award of 35,000 shares of restricted
Common Stock which can be earned at the rate of 17,500 shares per year thereby
increasing Mr. Naples' interests in the Company as a shareholder. Second, by
reason of the extraordinary negative effect of foreign currency translations
on the Company's earnings per share in 1997 (approximately $.21 per share
12
<PAGE>
as opposed to $.08 and a positive effect of $.07 per share in 1996 and 1995,
respectively), the effect of foreign currency translations was treated as an
extraordinary item for the purpose of calculating earnings per share in
determining Mr. Naples' entitlement to the stock bonus provided for in the
Employment Agreement.
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. Although the
reported compensation of the Company's CEO set forth in the Summary
Compensation Table above was in excess of $1,000,000, the $1,000,000 threshold
for Section 162(m) purposes was not exceeded due to a variety of factors.
Accordingly, all of the compensation paid in 1997 to the Company's CEO and the
four most highly compensated executive officers is expected to be fully
deductible for tax purposes by the Company. It is considered unlikely that the
compensation of any of the CEO or the other four most highly compensated
executive officers will exceed the Section 162(m) $1,000,000 threshold in the
near future. Therefore, 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
Lennox K. Black, Chairman
Robert E. Chappell
Edwin J. Delattre
Robert H. Rock
13
<PAGE>
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 SmallCap 600 Stock Index, and the S&P
Chemicals (Specialty) Index for the period of five (5) fiscal years commencing
December 31, 1992 and ending December 31, 1997.
Comparison of Five Year Cumulative Total Return*
Among Quaker Chemical Corporation, The S & P Smallcap 600 Index
and S & P Chemicals (Specialty) Index
[The following table was represented by a line graph in the
printed document.]
Quaker S&P Small Cap S&P Chemicals
Date Chemical Corp. 600 Index (Specialty Index)
- ------------------------------------------------------------------------------
12/92 100 100 100
12/93 79 119 101
12/94 96 113 108
12/95 72 147 125
12/96 91 178 205
12/97 110 224 260
* $100 invested on 12/31/92 in stock or index
including reinvestment of dividends.
Fiscal year ending December 31.
14
<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, 1998 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 1999 Annual Meeting of Shareholders, the
shareholder must present his or her proposal(s) to the Company not later than
November 27, 1998.
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,
/s/ Karl H. Spaeth
Karl H. Spaeth
Secretary
Dated: March 30, 1998
15
<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.
Such evidence can include trade confirmations and account statements
indicating ownership through the required holding period. Nevertheless, the
Company, at its sole discretion, will determine the adequacy of the evidence
presented. 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
notification 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 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.
16
<PAGE>
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.
If a Shareholder has questions concerning the Shareholder Voting
Procedures or would like to present evidence of ownership through the required
36 month holding period, please contact Irene Kisleiko, the Company's
Assistant Secretary, at (610) 832-4119.
17
<PAGE>
P R O X Y
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
Ronald J. Naples, 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 6, 1998, 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>
Joseph B. Anderson, Jr., Patricia C. Barron, Edwin J. Delattre,
and Ronald J. Naples
(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 1998.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
(CONTINUED ON REVERSE SIDE)
(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, 1997.
DATED: ___________________________, 1998
----------------------------------------
(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 Pennsylvania 19428-8909 USA
Telephone: 610-832-4000 Facsimile: 610-832-4495
March 30, 1998
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, 1995 (36 months before the
record date), you are entitled to 10 votes per share. For all shares
purchased by you after March 1, 1995, 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.
