CHASE CORPORATION
50 Braintree Hill Park
Braintree, Massachusetts 02184
Telephone (617) 848-2810
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
Notice is hereby given that the annual meeting of shareholders of
Chase Corporation will be held at 9:30 a.m., Tuesday, January 16, 1996 at
the Sheraton Tara Hotel, 37 Forbes Road, Braintree, Massachusetts 02184 for
the following purposes:
(1) To elect the members of the Board of Directors of the corporation;
(2) To act upon the Chase Corporation 1995 Stock Option Plan; and
(3) To transact such other business as may properly come before the
meeting.
Only shareholders of record on the books of the corporation at the
close of business on December 1, 1995 are entitled to notice of and to vote
at the meeting.
The Board of Directors hopes that all shareholders who can
conveniently do so will personally attend the meeting.
By order of the Board of Directors,
GEORGE M. HUGHES
Clerk
December 20, 1995
SHAREHOLDERS ARE REQUESTED TO DATE AND SIGN THE ACCOMPANYING
PROXY CARD AND RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE.
CHASE CORPORATION
50 Braintree Hill Park
Braintree, Massachusetts 02184
Telephone (617) 848-2810
PROXY STATEMENT
December 20, 1995
The enclosed proxy is solicited by and on behalf of the Board of
Directors of Chase Corporation (the "Company") for the annual meeting of
the Company's shareholders to be held on January 16, l996. The cost of
solicitation will be borne by the Company. In addition to solicitation by
mail, directors, officers and regular employees of the Company may solicit
proxies personally or by telephone.
The authority granted by an executed proxy may be revoked at any time
before its exercise by filing with the Clerk of the Company a written
revocation or a duly executed proxy bearing a later date or by voting in
person at the meeting. Unless the proxy is revoked, the shares represented
thereby will be voted as directed. If no specifications are made, proxies
will be voted to elect the directors nominated by the Board of Directors.
On December 1, l995, the Company had outstanding 3,572,155 shares of
Common Stock, $0.10 par value (the "Common Stock"), which is its only class
of voting stock. Shareholders of record at the close of business on
December 1, 1995 are entitled to vote at the meeting. With respect to all
matters that will come before the meeting, each shareholder may cast one
vote for each share registered in his or her name on the record date. A
majority in interest of the Company's Common Stock outstanding and entitled
to vote represented at the meeting in person or by proxy constitutes a
quorum for the transaction of business.
The approximate date on which this proxy statement and form of proxy
will be first sent or given to shareholders is December 20, l995. The
Company's annual report for fiscal l995 will be sent to shareholders on the
same date.
Principal Holders of Voting Securities
The following table sets forth certain information regarding ownership
of the Company's Common Stock as of December 1, l995, by (i) all persons
known to the Company to be beneficial owners of more than 5% of the
Company's outstanding Common Stock and (ii) all officers and directors of
the Company as a group.
Number of Shares Percent of
Beneficial Owner(a) Beneficially Owned(b) Class
__________________ ____________________ _______
Edward L. Chase 1,546,772(c) 40.5%
39 Nichols Rd.
Cohasset, MA 02025
Wilen Management Corp. 218,900 5.7%
2360 West Joppa Rd.
Lutherville, MD 21093
All current officers and
directors as a group 1,919,537(c) 50.2%
(7 persons)
_____________
(a) Information regarding ownership of the Company's Common Stock by
the directors of the Company is set forth on pages 2 and 3 under the
heading "Election of Directors."
(b) Includes shares subject to stock options exercisable within the
60-day period following December 1, 1995. See "Election of Directors."
(c) Includes 1,614 shares owned of record by Mr. Chase's spouse. Mr.
Chase has shared power to direct voting or disposition, or both, of such
shares. As to balance of the shares, Mr. Chase has sole voting and
investment power.
Arrangements Regarding the Election of Directors
The Company's by-laws provide that for so long as 10% of the Company's
outstanding voting stock is owned by Edward L. Chase or his spouse, issue,
or estate, or a trust for the benefit of his spouse and/or issue, then the
Nominating Committee will recommend to the Board of Directors that such
person or a lineal descendant of such person be elected to the Board of
Directors.
Election of Directors
Six directors are to be elected at the annual meeting. The Board of
Directors recommends that the six nominees named below be elected as
directors. The directors elected at the meeting will hold office until the
next annual meeting and until their successors are elected and qualified.
It is intended that proxies in the accompanying forms be voted in favor of
electing as directors the persons named in the table below. If any nominee
should become unavailable for election, the persons voting the accompanying
proxy may in their discretion vote for a substitute. The Board of Directors
is not presently aware of any reason that would prevent any nominee from
serving as a director if elected.
The affirmative vote by the holders of a majority of the securities
present, or represented, and entitled to vote at the meeting is necessary
to elect the nominees for election as directors. Abstentions will be
counted as present and entitled to vote and, accordingly, will have the
effect of negative votes. Broker non-votes will not be counted as present
or represented for this purpose. A "broker non-vote" occurs when a
registered broker holding a customer's shares in the name of the broker has
not received voting instructions on a matter from the customer, is barred
by applicable rules from exercising discretionary authority to vote on the
matter and so indicates on the proxy.
<TABLE>
<CAPTION>
No. of Common
Shares Owned
Business Experience Has Been Beneficially on Percent
During Past Five Years a Director December 1, of
Name Age and other Directorships Since 1995 (a) Class
____ ____ __________________________ _________ _____________ _____
<S> <C> <S> <C> <C> <C>
Edward L. Chase(b) 74 President Emeritus of the 1971 1,546,772 40.5
Company since 1988;
President,Chief Operating
Officer, and Chief
Financial Officer of
the Company from 1971 to
September 1988; Treasurer
of the Company from 1984
to September 1988; from
1947 to September 1988,
Director and Treasurer
of Chase & Sons, Inc.
Peter R. Chase(b) 47 Chief Executive Officer 1993 263,765(f) 6.9
of the Company since
September 1993 and
President of the Comp-
any since April 1992;
Chief Operating Officer of
the Company since September 1988.
William H. Dykstra 67 Director of Reed and 1988 16,500(c) 0.4
Barton Corporation
since 1977; Senior
Vice President of
Finance from 1977
to January 1993.
Since 1993 is retired
but serves as an active
member on several boards.
George M. Hughes(d) 56 Partner, law firm of 1984 60,500(e) 1.6
Palmer & Dodge since 1974.
Ronald Levy 57 Vice President of Arthur 1994 4,500 0.1
D. Little, Inc., a
management and technology
consulting company, since
1987 and a Director of its
North America Management
Consulting Practice since 1989.
Ernest Siegfriedt,Jr. 64 Independent business 1990 None -
consultant since 1988;
Vice President and
General Manager of the
Fasteners Division of
T.R.W., Inc., a
manufacturing company,
from 1976 to 1988.
</TABLE>
(a) The beneficial owners of these shares have sole voting power and
sole investment power over such shares, except as otherwise indicated. On
December 1, 1995, the officers and directors of the Company as a group
owned beneficially 1,919,537 shares (50.2%) of the Company's outstanding
Common Stock.
(b) Peter R. Chase, President and Chief Executive Officer of the
Company, is the son of Edward L. Chase.
(c) Includes 16,500 shares that may be acquired within 60 days of
December 1, l995 pursuant to the exercise of stock options.
(d) Mr. Hughes is a partner in the law firm of Palmer & Dodge, which
is general counsel to the Company.
(e) Includes 60,500 shares that may be acquired within 60 days of
December 1, 1995 pursuant to the exercise of stock options.
(f) Includes 90,000 shares that may be acquired within 60 days of
December 1, l995 pursuant to the exercise of stock options.
Meetings of the Board of Directors
The Company's Board of Directors held six meetings during the fiscal
year ended August 31, 1995 and each director attended at least 75% of the
aggregate of all meetings of the Board of Directors and all meetings held
by committees of the Board on which he served.
Committees of the Board of Directors
The Board has standing audit, compensation and nominating committees.
All members of the committees serve at the pleasure of the Board of
Directors. The functions and current membership of each committee are as
follows:
Audit Committee. The Audit Committee recommends to the Board of
Directors the engagement of the Company's independent accountants, reviews
the scope and extent of their audit of the Company's financial statements,
and reviews the annual financial statements with the independent
accountants and with management, and makes recommendations to the Board of
Directors regarding the Company's policies and procedures as to internal
accounting and financial controls. The members of the Audit Committee are
Messrs. Dykstra, Siegfriedt and Edward L. Chase. The Audit Committee held
two meetings during the fiscal year ended August 31, 1995.
Compensation Committee. The Compensation Committee advises the Board
of Directors on matters of management, organization, and succession,
recommends persons for appointments to key employee positions, and makes
recommendations to the Board of Directors regarding compensation for
officers and key employees. The members of the Compensation Committee are
Messrs. Levy, Siegfriedt and Hughes. The Compensation Committee held five
meetings during the fiscal year ended August 31, 1995.
Nominating Committee. The Nominating Committee recommends persons for
election as directors of the Company, and makes recommendations to the
Board of Directors regarding the structure and membership of the various
committees of the Board of Directors, including the Nominating Committee
itself. The Nominating Committee will consider nominees recommended by
shareholders if such recommendations are made in writing to the Nominating
Committee. The members of the Nominating Committee are Messrs. Hughes, Levy
and Dykstra. The Nominating Committee held one meeting during the fiscal
year ended August 31, 1995.
Executive Compensation
<TABLE>
Summary Compensation Table
<CAPTION>
Annual Compensation(l) Long Term Compensation
______________________________ ______________________________
(a) (b) (c) (d) (e) (f) (g)
Restricted Securities
Stock Underlying LTIP All
Fiscal Award(s) Warrants/ Payout Other
Name & Principal Position Year Salary Bonus ($) Options (#) ($) Comp(2)
________________________ ______ ______ ______ ______ ___________ ______ ______
<S> <C> <C> <C> <S> <C> <S> <C>
Peter R. Chase 1995 $235,280 175,700 - 400,000(3) - $7,031
President and 1994 $225,260 154,770 - - - $6,758
Chief Executive Officer 1993 $176,600 63,870 - - - $5,298
Everett Chadwick, Jr. 1995 $110,070 82,240 - 50,000(3) - $3,289
Treasurer and 1994 $105,100 72,200 - - - $3,154
Chief Financial Officer 1993 $ 90,100 32,540 - - - $2,703
_____________
</TABLE>
(1) Annual compensation includes amounts earned in each fiscal year,
whether or not deferred. Compensation is deferred pursuant to the
provisions of the Chase Corporation Retirement Savings Plan. Aggregate
perquisite values do not exceed the lesser of $50,000 or 10% of the
reported base salary and bonus for each year. The Company did not provide
its employees with any form of restricted stock awards and does not have a
Long Term Incentive Plan (LTIP).
During fiscal 1995, the Company granted Peter R. Chase and Everett
Chadwick options for 400,000 and 50,000 shares respectively exercisable at
fair market value as of the date of the grant and vesting ratably over 10
years. The Company does not have a program to grant Stock Appreciation
Rights.
(2) The amounts represent the contribution by the Company on behalf of
the employees to the Chase Corporation Retirement Savings Plan.
(3) Represents stock options.
Stock Options Granted During Fiscal 1995
The following table sets forth each grant of stock options during
fiscal 1995 to the Chief Executive Officer and each other executive officer
named in the Summary Compensation Table. No stock appreciation rights
("SARs") have been granted.
<TABLE>
<CAPTION>
Potential
Realizable Value
at Assumed
Annual Rates of
Stock Price
Appreciation for
Individual Grants Option Term(3)
______________________________________________________ ________________
(a) (b) (c) (d) (e) (f) (g)
Number of
Securities % of Total
Underlying Options/SARs
Options Granted to Exercise or
Granted Employees in Base Price Expiration
Name (#)(1) Fiscal Year(2) ($/Sh) Date 5%($) 10%($)
______ __________ _____________ _____________ __________ ________ __________
<S> <C> <C> <C> <C> <C> <C>
Peter R. Chase 400,000 88.89% $3.375/400,000 2005 $850,000 $2,150,000
Everett Chadwick 50,000 11.11% $3.375/ 50,000 2005 $106,250 $ 268,750
</TABLE>
(1) All options were granted pursant to the 1995 Stock Option Plan and
are subject to shareholder approval of the 1995 Incentive Plan.
(2) Percentages are based on a total of 450,000 shares of Common Stock
underlying all options granted to employees of the Company in fiscal 1995
pursuant to the 1995 Stock Option Plan.
(3) Represents the value of the options granted at the end of the
option terms if the price of the Company's Common Stock were to appreciate
annually by 5% and 10% respectively. There is no assurance that the stock
price will appreciate at the rates shown in the table. If the stock price
appreciates, the value of stock held by all shareholders will increase.
(4) The options vest and become exercisable ratably over ten years
beginning 12 months from the date of grant
in 1995.
Aggregated Option Exercise in Last Fiscal Year and Fiscal Year End Option
Values
<TABLE>
<CAPTION>
Number of Value of
Unexercised Options Unexercised Options
@ fiscal year end @ fiscal year end
Shares Acquired Value Exercisable/ Exercisable/
Name on Exercise (#) Realized($) Unexercisable Unexercisable (1)
_____ ______________ __________ __________________ _______________
<S> <C> <C> <C> <C>
Peter R. Chase 20,000 $42,300 90,000/400,000 $257,850/$400,000
Everett Chadwick, Jr. - - 27,500/ 50,000 $ 78,790/$50,000
</TABLE>
(1) Market value of securities at August 31, 1995 close minus the
exercise price.
Compensation Committee Report on Executive Compensation
Decisions on compensation for the Company's executive officers are
made by the Compensation Committee of the Board of Directors (the
"Committee"). The Committee is composed entirely of independent
non-employee directors who have no interlocking directorships as defined by
the Securities and Exchange Commission. Committee decisions are reviewed
and approved by the full Board of Directors.
The Company's executive compensation program is designed to accomplish
the following objectives:
- - Reward key executives at levels which are competitive with those of
similar comparative companies.
- - Provide incentives which are directly linked to the achievement of
Company strategies, profits and enhanced shareholder values.
- - Assure that the objectives for corporate and business unit performance
are established and measured.
- - Attract and retain executives who have the capabilities needed to assure
proper growth and profitability.
For the fiscal year ended August 31, 1995, the Company, acting through
the Committee, employed three programs to compensate its senior management.
These included an annual base salary program, a stock option plan and a
contingent compensation program based on selected financial performance
measures. Following is a description of the manner in which each program
was administered during the year. It includes an explanation of the
rationale for the compensation paid to the Chief Executive Officer.
Annual Base Salary Program
Salary ranges are established for executive positions, including the
named executive officers, with range mid-points equal to the median salary
determined from appropriate comparative survey data provided by an
independent consultant prior to the beginning of each fiscal year. The
actual salary of each individual holding an executive position is
determined using the Company's salary administration program as a basis and
by taking into consideration the individual's qualifications, sustained
performance and level of responsibility, as evaluated by the Committee.
Annual adjustments in base salary are made after an analysis of the
foregoing factors and aforementioned survey data showing compensation
trends externally.
The base salary for Peter R. Chase was set by the Committee using the
same policies and criteria used for other executive officers of the
Company. His base salary for the fiscal year ended 1995 was set at the
median salary reflected in the aforementioned comparative survey data and
adjusted based on the Committee's evaluation of the criteria discussed
above. Corporate performance measures are used in determining bonuses
rather than base salary and accordingly were not considered by the
Committee in determining Mr. Chase's base salary.
Contingent Compensation Program
Each executive officer, including the named executive officers, was
eligible to earn additional contingent compensation under the Company's
management incentive plan equal to a designated percentage of annual base
salary. In the 1995 fiscal year, the target percentage was 30% of annual
base salary for each executive officer for achieving targeted operating
profit set with reference to the three prior years. Potential incentive
earnings could range from 0% to 100% of annual base salary, depending upon
the Company's actual performance during the year. The Company exceeded the
operating profit threshold established for payment of the targeted
incentive compensation in fiscal year 1995; therefore, in accordance with
the plan, incentive earnings for executive officers averaged 75% of annual
base salary in the last fiscal year. The incentive earnings for Peter R.
Chase is also determined pursuant to the Company's management incentive
plan. Pursuant to the formulas set forth in the plan, Mr. Chase's incentive
compensation for fiscal year 1995 equaled 75% of his annual base salary.
The Committee, in carrying out its responsibilities, met several times
in the fiscal year and reviewed performance progress during the year as
well as information provided by independent compensation consultants.
1995 Stock Option Plan
The 1995 Stock Option Plan is designed in part to retain and provide
incentives to the Company's Chief Executive and Chief Financial Officers.
The Committee believes that these executives are in a position to make the
most significant contribution to the Company's future success. The program
is designed to recognize significant contributions and provide longer-term
incentives to increase shareholder value. Under the 1995 Stock Option Plan
options for 400,000 shares were granted to Peter R. Chase and 50,000 shares
to Everett Chadwick. The size and structure of the awards were determined
by the Committee in conjunction with advice from William H. Mercer,
Incorporated acting as consultants to the Committee and advising it as to
industry norms and the accomplishment of the objectives of the Company's
compensation program's goals. To ensure that high levels of performance
occur over the long term, the options granted vest over a period of 10
years. All of the options have been granted with an exercise price equal to
100% of the fair market value of the Company's common stock on the grant
date. Any value received from a stock option grant depends entirely on
increases in the price of the Company's common stock.
By the Chase Corporation Compensation Committee,
Ronald Levy (Chairman)
George M. Hughes
Ernest E. Siegfriedt, Jr.
401(k) Plan. The Company has a deferred compensation plan adopted
pursuant to Section 401(k) of the Internal Revenue Code of 1986, as amended
(the "Code"). Any qualified employee who has attained age 21 and has been
employed by the Company for at least six months may contribute a portion of
their salary to the plan and the Company will match, at the rate of 50% on
the dollar, such contribution up to an amount equal to three percent of
such employee's yearly salary. Amounts contributed to the plan are invested
and income taxes on the amounts contributed and on the investment yield are
deferred until such amounts are paid to the employee upon their departure
from the Company. Both the 401(k) plan and the pension plan described below
were amended, effective January 1, 1989, to comply with pertinent
legislation.
Deferred Compensation; Termination of Employment Arrangements and
Amendment to Certain Arrangements.
The Company has a deferred compensation agreement with a former
officer, Edward L. Chase, who owns approximately 40% of the Company's
outstanding Common Stock. The agreement provides for various
post-retirement health and life insurance benefits and annual payments of
$200,000 through August 31, 1998.
In addition, the Company entered into an agreement with Peter R. Chase
pursuant to which the Company will continue to pay Mr. Chase the equivalent
of his annual compensation for two years following the termination of his
employment if such termination arises in connection with a change in
control of the Company. Any payments made to Mr. Chase after the first year
following his termination will be offset to the extent that he receives any
other compensation, through new employment or otherwise.
Pension Plan. The Company has a defined benefit Pension Plan that
covers substantially all of its employees who have attained the age of 21
and have completed six months of service. Benefits are determined based on
final average base earnings (excluding bonuses, overtime, and other
extraordinary amounts), covered compensation, and total years of service
with the Company (up to a maximum of forty years). Compensation covered by
the plan is annual compensation, less payments on account of overtime,
bonuses, or commissions, to a maximum of $150,000. Benefits are payable
upon the retirement of a participant at age 65, or upon the fifth
anniversary of employment, if later, or earlier if the participant is at
least 55 years old and has completed at least five years of service. The
plan offers the option for a participant to receive a lump sum distribution
upon attainment of age 65 and five years of employment even if the employee
elects to remain actively employed. Benefits may be paid in a variety of
forms, including a lump sum, at the election of the participant. The
following table shows estimates of annual benefits payable under the plan
upon retirement at age 65 or upon the fifth anniversary of employment, if
later, of participants in the specified compensation and years-of-service
classifications before an offset of 0.6% of covered compensation at the
time of retirement times the number of years of service (up to a maximum of
35 years). The compensation covered by the plan for the named executive
officers in the Summary Compensation Table is the salary in that table.
<TABLE>
<CAPTION>
Average Remuneration Years of Service at Age 65
______________________
<S> <C> <C> <C> <C>
5 highest consecutive years 10 20 30 40
_______________________ __ __ __ __
$ 50,000.00 $ 7,500.00 $15,000.00 $22,500.00 $28,250.00
$100,000.00 $15,000.00 $30,000.00 $45,000.00 $56,500.00
$150,000.00 $22,500.00 $45,000.00 $67,500.00 $84,750.00
</TABLE>
Compensation of Directors. Directors who are not employees of the Company
are paid an annual retainer of $5,000 plus a fee of $750 for each Board
meeting they attend ($1,250 if they attend a committee meeting on the same
day). Non-employee directors who are committee members receive a fee of
$750 per committee meeting they attend that is not held on the same day as
a directors meeting. Non-employee directors also are eligible to receive
stock options.
Performance Graph
The following line graph compares the yearly percentage change in the
Corporation's cumulative total shareholder return on the Common Stock for
the last five fiscal years with the cumulative total return on the Standard
& Poor's 500 Stock Index ("the S&P 500 Index"), and a composite peer index,
weighted by market equity capitalization on companies with the Chase
Corporation Standard Industrial Classification (S.I.C.) code (the "Peer
Group Index"). The companies included in the Peer Group Index are American
Biltrite, Inc., Lamson & Sessions Co., Plymouth Rubber Company Inc.,
MacDermid Inc., Bairnco Corp., and Flamemaster Corp. Cumulative total
returns are calculated assuming that $100 was invested 8/31/90 in each of
the Common Stock, the S&P 500 and the Peer Group Index, and that all
dividends were reinvested.
Chase Corporation
Comparison of 1990-1995 Cumulative Total Return Performance (a)
<TABLE>
<CAPTION>
1990 1991 1992 1993 1994 1995
<S> <C> <C> <C> <C> <C> <C>
Chase 100.0 111.7 110.8 114.3 214.8 333.2
S&P 500 100.0 126.4 136.2 156.7 165.0 199.6
Peer Group 100.0 117.2 130.0 157.1 237.3 241.8
</TABLE>
(a) Cumulative total returns are calculated assuming dividend reinvestment
at August 31.
PROPOSAL NUMBER 2
APPROVAL OF THE 1995 STOCK OPTION PLAN
Proposal
In connection with the completion of the Compensation Committee's
review of the Company's compensation policies, the Board of Directors has
approved a 1995 Stock Option Plan, subject to approval by the Company's
shareholders.
The 1995 Stock Option Plan is administered by the Compensation
Committee of the Board of Directors (the "Committee"). Under the plan,
awards have been made to senior management and to non-employee members of
the Board of Directors. These awards are described in greater detail below.
Subject to adjustment for stock splits, stock dividends and similar
events, the total number of shares of Common Stock issued under the 1995
Stock Option Plan is 512,500 shares.
The Board of Directors believes that stock options and other
stock-based incentive awards can play an important role in the success of
the Company by encouraging and enabling senior management and non-employee
directors of the Company upon whose judgment, initiative and efforts the
Company largely depends for the successful conduct of its business to
acquire a proprietary interest in the Company. Providing such persons with
a direct stake in the Company is intended to assure a closer identification
of the interests of participants in the 1995 Stock Option Plan with those
of the Company, thereby stimulating their efforts on the Company's behalf
and strengthening their desire to remain with the Company.
The proposed 1995 Stock Option Plan is intended to help the Company
achieve its goals by keeping the Company's incentive compensation program
dynamic and competitive with those of other companies.
The Board of Directors recommends that the 1995 Stock Option Plan be
approved, and therefore recommends a vote FOR this proposal.
Summary of the Chase Corporation 1995 Stock Option Plan
The following description of certain features of the 1995 Stock Option
Plan is intended to be a summary only. The summary is qualified in its
entirety by the full text of the 1995 Stock Option Plan which is attached
hereto as Exhibit A.
The 1995 Stock Option Plan is administered by the Committee. All
members of the Committee are "outside directors" as defined in Section 162
of the Code and the regulations promulgated thereunder.
The 1995 Stock Option Plan permits the granting of options to purchase
Common Stock. The option exercise price of each option is not to be less
than 100% of the fair market value of the Common Stock on the date of grant
in the case of incentive stock options and Non-Qualified Options.
Under the 1995 Stock Option Plan option to purchase up to 450,000
shares of Common Stock were granted to senior management as described more
fully below and 62,500 shares have been reserved for issuance to
non-employee directors. Options are intended to qualify as incentive stock
options ("Incentive Options") under Section 422 of the Code and to the
extent they do not meet all of the requirements of the Code, such options
will be options that are Non-Qualified Options.
The term of each option will be fixed by the Committee and may not
exceed ten years from date of grant or seven years in the case of options
granted to directors.
Upon exercise of options, the option exercise price must be paid in
full either in cash or by certified or bank check or other instrument
acceptable to the Committee or, if the Committee so permits, by delivery of
shares of Common Stock of the Company owned by the optionee. The exercise
price may also be delivered to the Company by a broker pursuant to
irrevocable instructions to the broker from the optionee.
To qualify as Incentive Options, options must meet additional Federal
tax requirements, including limits on the value of shares subject to
Incentive Options which first become exercisable in any one calendar year,
and a shorter term and higher minimum exercise price in the case of certain
large shareholders.
The 1995 Stock Option Plan provides for the grant of options to
non-employee Directors. Each non-employee Director has been granted an
option to acquire 12,500 shares of Common Stock on a one time basis. The
exercise price of each such option is the fair market value of the Common
Stock on the date of grant. Options granted to non-employee Directors vest
1/5 on the date of the annual meeting in 1996 and 1/5 on each annual
meeting date thereafter.
The Board of Directors may at any time amend the 1995 Stock Option
Plan and the Committee may at any time amend outstanding awards for the
purpose of satisfying changes in the law or for any other lawful purpose.
However, no such action may be taken which adversely affects any rights
under outstanding awards without the holder's consent.
The 1995 Stock Option Plan provides that in the event of a "Change of
Control" (as defined in the 1995 Incentive Plan) of the Company, all stock
options shall automatically become fully exercisable. In addition, at any
time prior to or after a Change of Control, the Committee may accelerate
awards and waive conditions and restrictions on any awards to the extent it
may determine appropriate.
Tax Aspects Under the U.S. Internal Revenue Code
The following is a summary of the principal Federal income tax
consequences of option grants under the 1995 Stock Option Plan. It does not
describe all Federal tax consequences under the 1995 Stock Option Plan, nor
does it describe state or local tax consequences.
Incentive Options
Under the Code, an employee will not realize taxable income by reason
of the grant or the exercise of an Incentive Option. If an employee
exercises an Incentive Option and does not dispose of the shares until the
later of (a) two years from the date the option was granted or (b) one year
from the date the shares were transferred to the employee, the entire gain,
if any, realized upon disposition of such shares will be taxable to the
employee as long term capital gain, and the Company will not be entitled to
any deduction. If an employee disposes of the shares within such one year
or two year period in a manner so as to violate the holding period
requirements (a "disqualifying disposition"), the employee generally will
realize ordinary income in the year of disposition, and, provided the
Company complies with applicable withholding requirements, the Company will
receive a corresponding deduction, in an amount equal to the excess of (l)
the lesser of (x) the amount, if any, realized on the disposition and (y)
the fair market value of the shares on the date the option was exercised
over (2) the option price. Any additional gain realized on the disposition
will be long term or short term capital gain and any loss will be long term
or short term capital loss. The employee will be considered to have
disposed of his shares if he sells, exchanges, makes a gift of or transfers
legal title to the shares (except by pledge or by transfer on death). If
the disposition of shares is by gift and violates the holding period
requirements, the amount of the employee's ordinary income (and the
Company's deduction) is equal to the fair market value of the shares on the
date of exercise less the option price. If the disposition is by sale or
exchange, the employee's tax basis will equal the amount paid for the
shares plus any ordinary income realized as a result of the disqualifying
distribution. The exercise of an Incentive Option may subject the employee
to the alternative minimum tax.
Special rules apply if an employee surrenders shares of Common Stock
in payment of the exercies price of an Incentive Option.
An Incentive Option that is exercised by an employee more than three
months after an employee's employment terminates will be treated as a
Non-Qualified Option for Federal income tax purposes. In the case of an
employee who is disabled, the three-month period is extended to one year
and in the case of an employee who dies, the three-month employment rule
does not apply.
Non-Qualified Options
There are no Federal income tax consequences to either the optionee or
the Company on the grant of a Non-Qualified Option. On the exercise of a
Non-Qualified Option, the optionee (except as described below) has taxable
ordinary income equal to the excess of the fair market value of the Common
Stock received on the exercise date over the option price of the shares.
The optionee's tax basis for the shares acquired upon exercise of a
Non-Qualified Option is increased by the amount of such taxable income.
The Company will be entitled to a Federal income tax deduction in an amount
equal to such excess, provided the Company complies with applicable
withholding rules. Upon the sale of the shares acquired by exercise of a
Non-Qualified Option, the optionee will realize long-term or short-term
capital gain or loss depending upon his or her holding period for such
shares.
Section 83 of the Code and the regulations thereunder provide that the
date for recognition of ordinary income (and the Company's equivalent
deduction) upon exercise of a Non-Qualified Option and for the commencement
of the holding period of the shares thereby acquired by a person who is
subject to Section 16 of the 1934 Act will be delayed until the date that
is the earlier of (i) six months after the date of the exercise and (ii)
such time as the shares received upon exercise could be sold at a gain
without the person being subject to such potential liability.
Special rules apply if an optionee surrenders shares of Common Stock
in payment of the exercise price of a Non-Qualified Option.
Parachute Payments
The exercise of any portion of any option that is accelerated due to
the occurrence of a change of control may cause a portion of the payments
with respect to such accelerated options to be treated as "parachute
payments" as defined in the Code. Any such parachute payments may be
non-deductible to the Company, in whole or in part and may subject the
recipient to a non-deductible 20% federal excise tax on all or portion of
such payment (in addition to other taxes ordinarily payable).
Limitation on Company's Deductions
As a result of Section 162(m) of the Code, the Company's deduction for
certain awards under the 1995 Incentive Plan may be limited to the extent
that any executive officer whose compensation is required to be reported in
the summary compensation table receives compensation (other than
performance-based compensation) in excess of $1 million a year.
Auditors
The Board of Directors has selected the firm of Livingston & Haynes,
P.C., which served as auditors for the Company during the most recently
completed fiscal year of the Company, to serve as auditors for the Company
for the fiscal year ending August 31, 1996. Representatives of Livingston &
Haynes, P.C. are expected to be present at the meeting of shareholders with
an opportunity to make a statement if they desire to do so. Such
representatives will be available to respond to appropriate questions.
Proposals of Security Holders for 1997 Annual Meeting
Proposals of security holders intended to be present at the 1997
annual meeting of the Company s shareholders must be received by the
Company for inclusion in its proxy statement and form of proxy relating to
that meeting not later than August 16, 1996.
Retirement of Founder
In 1995 Francis M. Chase, one of the founders of the Company, retired
as a director. The Company expresses its thanks and appreciation to Mr.
Chase for his many years of dedicated service on behalf of the Company and
his contributions to its growth.
Miscellaneous
The management does not know of any business that will come before the
meeting except the matters described in the notice. If other business is
properly presented for consideration at the meeting, it is intended that
the proxies will be voted by the persons named therein in accordance with
their judgment on such matters.
In the event that a quorum is not present when the meeting is
convened, it is intended to vote the proxies in favor of adjourning from
time to time until a quorum is obtained.
By order of the Board of Directors,
George M. Hughes
Clerk
EXHIBIT A
CHASE CORPORATION
1995 Stock Option Plan
This 1995 Stock Option Plan (the "Plan") provides for ownership of
Common Stock, $.10 par value (the "Stock") of Chase Corporation (the
"Company") by officers, employees and directors so as to provide additional
incentives to promote the success of the Company through the grant of
Incentive Stock Options and Non-statutory Stock Options (as such terms are
defined in Section 3(a) below (collectively, "Options").
1. Administration of the Plan.
The administration of the Plan shall be under the general supervision
of the Compensation Committee of the Board of Directors of the Company (the
"Compensation Committee"). Within the limits of the Plan, the Directors or
Compensation Committee shall determine the individuals to whom, and the
times at which, Options shall be granted, the type of Option to be granted,
the duration of each Option, the price and method of payment for each
Option, and the time or times within which (during its term) all or
portions of each Option may be exercised. The Compensation Committee may
establish such rules as it deems necessary for the proper administration of
the Plan,make such determinations and interpretations with respect to the
Plan and Options granted under it as may be necessary or desirable and
include such further provisions or conditions in Options granted under the
Plan as it deems advisable.
2. Shares Subject to the Plan.
(a) Number and Type of Shares. The aggregate number of shares of Stock
of the Company which may be optioned under the Plan is 512,500 shares. In
the event that the Compensation Committee in its discretion determines that
any stock dividend, split-up, combination or reclassification of shares,
recapitalization or other similar capital change affects the Stock such
that adjustment is required in order to preserve the benefits or potential
benefits of the Plan or any Option granted under the Plan, the maximum
aggregate number and kind of shares or securities of the Company as to
which Options may be granted under the Plan and as to which Options then
outstanding shall be exercisable, and the option price of such Options,
shall be appropriately adjusted by the Compensation Committee (whose
determination shall be conclusive) so that the proportionate number of
shares or other securities as to which Options may be granted and the
proportionate interest of holders of outstanding Options shall be
maintained as before the occurrence of such event.
(b) Effect of Certain Transactions. In the event of a consolidation or
merger of the Company with another corporation, or the sale or exchange of
all or substantially all of the assets of the Company, or a reorganization
or liquidation of the Company, each holder of an outstanding Option shall
be entitled to receive upon exercise and payment in accordance with the
terms of the Option the same shares, securities or property as he would
have been entitled to receive upon the occurrence of such event if he had
been, immediately prior to such event, the holder of the number of shares
of Stock purchasable under his Option; provided, however, that in lieu of
the foregoing the Board of Directors of the Company (the "Board") may upon
written notice to each holder of an outstanding Option provide that such
Option shall terminate on a date not less than 20 days after the date of
such notice unless theretofore exercised. In connection with such notice,
the Board may in its discretion accelerate or waive any deferred exercise
period.
(c) Reservation of Shares. The Company shall at all times while the
plan is in force reserve such number of shares of Stock as will be
sufficient to satisfy the requirements of the Plan. Shares issued under the
Plan may consist in whole or in part of authorized but unissued shares or
treasury shares.
3. Grant of Options: Eligible Persons.
(a) Types of Options. Options shall be granted under the Plan either
as incentive stock options ("Incentive Stock Options"), as defined in
Section 422 of the Internal Revenue Code of 1986, as amended (the "Code")
or as Options which do not meet the requirements of Section 422
("Non-statutory Stock Options"). Options may be granted by the Directors,
within the limits set forth in Sections 1 and 2 of the Plan, to all
employees of the Company or any parent corporation or subsidiary
corporation of the Company (as defined in Sections 424(e) and (f),
respectively, of the Code).
(b) Date of Grant. The date of grant for each Option shall be the date
on which it is approved, or such later date as the Directors may specify.
No Options shall be granted hereunder after ten years from the date on
which the Plan was approved by the Board.
4. Form of Options.
Options granted hereunder shall be evidenced by a writing delivered to
the optionee specifying the terms and conditions thereof and containing
such other terms and conditions not inconsistent with the provisions of the
Plan as the Compensation Committee considers necessary or advisable to
achieve the purposes of the Plan or comply with applicable tax and
regulatory laws and accounting principles. The form of such Options may
vary among optionees.
5. Option Price.
In the case of Incentive Stock Options, the price at which shares may
from time to time be optioned shall be determined by the Compensation
Committee, provided that such price shall not be less than the fair market
value of the Stock on the date of granting as determined in good faith by
the Compensation Committee; and provided further that no Incentive Stock
Option shall be granted to any individual who is ineligible to be granted
an Incentive Stock Option because his ownership of stock of the Company or
its parent or subsidiary corporations exceeds the limitations set forth in
Section 422(b)(6) of the Code unless such option price is at least 110% of
the fair market value of the Stock on the date of grant.
In the case of Non-statutory Stock Options, the price at which shares
may from time to time be optioned shall be determined by the Compensation
Committee.
The Compensation Committee may in its discretion permit the option
price to be paid in whole or in part by a note or in installments or with
shares of Stock of the Company or such other lawful consideration as the
Compensation Committee may determine.
6. Term of Option and Dates of Exercise.
(a) Exercisability. The Compensation Committee shall determine the
term of all Options, the time or times that Options are exercisable and
whether they are exercisable in installments; provided, however, that the
term of each non-statutory stock option granted under the Plan shall not
exceed a period of eleven years from the date of its grant and the term of
each Incentive Stock Option granted under the Plan shall not exceed a
period of ten years from the date of its grant, provided that no Incentive
Stock Option shall be granted to any individual who is ineligible to be
granted such Option because his ownership of stock of the Company or its
parent or subsidiary corporations exceeds the limitations set forth in
Section 422(b)(6) of the Code unless the term of his Incentive Stock Option
does not exceed a period of five years from the date of its grant. In the
absence of such determination, the Options shall be exercisable at any time
or from time to time, in whole or in part, during a period of ten years
from the date of its grant or, in the case of an Incentive Stock Option,
the maximum term of such Option.
(b) Effect of Disability, Death or Termination of Employment. The
Compensation Committee shall determine the effect on an Option of the
disability, death, retirement or other termination of employment of an
optionee and the extent to which, and during the period which, the
optionee's estate, legal representative, guardian, or beneficiary on death
may exercise rights thereunder. Any beneficiary on death shall be
designated by the optionee, in the manner determined by the Compensation
Committee, to exercise rights of the optionee in the case of the optionee's
death.
(c) Other Conditions. The Compensation Committee may impose such
conditions with respect to the exercise of Options, including conditions
relating to applicable federal or state securities laws, as it considers
necessary or advisable.
(d) Withholding. The optionee shall pay to the Company, or make
provision satisfactory to the Compensation Committee for payment of, any
taxes required by law to be withheld in respect of any Options under the
Plan no later than the date of the event creating the tax liability. In the
Compensation Committee's discretion, such tax obligations may be paid in
whole or in part in shares of Stock, including shares retained from the
exercise of the Option creating the tax obligation, valued at the fair
market value of the Stock on the date of delivery to the Company as
determined in good faith by the Compensation Committee. The Company and any
parent corporation or subsidiary corporation of the Company (as defined in
Sections 424(e) and (f), respectively, of the Code) may, to the extent
permitted by law, deduct any such tax obligations from any payment of any
kind otherwise due to
the optionee.
(e) Amendment of Options. The Compensation Committee may amend, modify
or terminate any outstanding Option, including substituting therefor
another Option of the same or different type, changing the date of exercise
or realization and converting an Incentive Stock Option to a Non-statutory
Stock Option, provided that the optionee's consent to such action shall be
required unless the Compensation Committee determines that the action,
taking into account any related action, would not materially and adversely
affect the optionee.
7. Non-transferability.
Options granted under the Plan shall not be transferable by the holder
thereof otherwise than by will or the laws of descent and distribution, and
shall be exercisable, during the holder's lifetime, only by him or her.
8. No Right to Employment.
No persons shall have any claim or right to be granted an Option and
the grant of an Option shall not be construed as giving an optionee the
right to continued employment. The Company expressly reserves the right at
any time to dismiss an optionee free from any liability or claim under the
Plan, except as specifically provided in the applicable Option.
9. No Rights as a Shareholder.
Subject to the provisions of the applicable Option, no optionee or any
person claiming through an optionee shall have any rights as a shareholder
with respect to any shares of Stock to be distributed under the Plan until
he or she becomes the holder thereof.
10. Amendment or Termination.
The Board may amend or terminate the Plan at any time, provided that
no amendment shall be made without shareholder approval if such approval is
necessary to comply with any applicable tax or regulatory requirement,
including any requirement for exemptive relief under Section 16(b) of the
Securities Exchange Act of 1934, or any successor provision.
11. Shareholder Approval.
The Plan is subject to approval by the shareholders of the Company by
the affirmative vote of the holders of a majority of the shares of capital
stock of the Company entitled to vote thereon and present or represented at
a meeting duly held in accordance with the laws of the Commonwealth of
Massachusetts, or by any other action that would be given the same effect
under the laws of such jurisdiction, which action in either case shall be
taken within twelve (12) months from the date the Plan was adopted by the
Board. In the event such approval is not obtained, all Options granted
under the Plan shall be void and without effect.
12. Governing Law.
The provisions of the Plan shall be governed by and interpreted in
accordance with the laws of the Commonwealth of Massachusetts.
As adopted by the Board of Directors on July 18 and December 5, 1995.
