CHASE CORPORATION
50 Braintree Hill Park
Braintree, Massachusetts 02184
Telephone (781) 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 20, 1998 in the second
floor conference room at 50 Braintree Hill Office Park, Braintree,
Massachusetts 02184 for the following purposes:
(1) To elect the members of the Board of Directors of the corporation; and
(2) 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, 1997 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 15, 1997
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 (781) 848-2810
PROXY STATEMENT
December 15, 1997
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 20, l998. 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, l997, the Company had outstanding 3,843,168 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,
l997 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 15, l997. The Company's
annual report for fiscal l997 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, l997, 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............... 1,546,272(c) 38.5%
39 Nichols Rd.
Cohasset, MA 02025
Peter R. Chase................ 399,965 10.0%
305 Grange Park
Bridgewater, MA 02324
All current officers and
directors as a group...... 2,087,366 51.9%
(8 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, l997. 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
Seven directors are to be elected at the annual meeting. The Board of
Directors recommends that the seven 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>
<S> <C> <S> <C> <C> <C> <S><C>
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 1997 (a) Class
Edward L. Chase(c) 76 President Emeritus of the 1971 1,546,272(b) 38.5
Company since 1988; President,
Chief Operating Officer, and
Chief Financial Officer of
the Company from 1971 to
September1988; Treasurer of
the Company from 1984 to
September 1988; from 1947
to September 1988, Director
and Treasurer of Chase
& Sons, Inc.
</TABLE>
<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 1997 (a) Class
<S> <C> <S> <C> <C> <C>
Peter R.Chase(c) 49 Chief Executive of the 1993 399,965(g) 10.0
Company since September
1993 and President of the
Company since April 1992;
Chief Operating Officer of
the Company since September
1988.
Sarah Chase(c) 39 Partner, Ley & Young, P.C. 1997 6,870(d) 0.2
since 1993; Associate
Attorney, Ley & Young,
P.C. 1990 - 1993.
William H. Dykstra 69 Director of Reed and Barton 1988 23,128(b) 0.6
Corporation since 1977;
Senior Vice President of
Finance from 1977 to
January 1993. Serves as
An active member on several
boards.
George M. Hughes(e) 58 Through April 1996, Partner 1984 64,523(f) 1.6
of Palmer & Dodge. As of
May 1996, Founder and
Principle of Hughes &
Associates.
Ronald Levy 59 Vice President of Arthur D. 1994 12,000(b) 0.3
Little, Inc., a management
and technology consulting
company, since 1987 and
a Director of its Technology
and Product Innovation
Practice since 1996.
Ernest E.Siegfriedt,Jr. 66 Independent business 1990 9,500(b) 0.2
consultant since 1988;
Vice President and
General Manager of the
Fasteners Division of T.R.W.,
Inc., a manufacturing
company, from 1976 to 1988.
(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, l997, the officers and directors of the Company as a group owned
beneficially 2,087,366 shares (51.9%) of the Company's outstanding Common
Stock.
(b) Includes 7,500 shares that may be acquired within 60 days of December
1, l997 pursuant to the exercise of stock options.
(c) Peter R. Chase, President and Chief Executive Officer of the Company,
is the son and Sarah Chase is the daughter of Edward L. Chase.
(d) Includes 5,000 shares that may be acquired within 60 days of December
1, l997 pursuant to the exercise of stock options.
(e) Mr. Hughes is general counsel to the Company.
(f) Includes 47,000 shares that may be acquired within 60 days of December
1, l997 pursuant to the exercise of stock options.
(g) Includes 90,500 shares that may be acquired within 60 days of December
1, l997 pursuant to the exercise of stock options.
Meetings of the Board of Directors
The Company's Board of Directors held five meetings during the fiscal year
ended August 31, 1997 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 they 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 Ms. Sarah Chase. The Audit Committee held two meetings during the fiscal
year ended August 31, 1997.
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, Edward L. Chase and Hughes. The Compensation Committee
held two meetings during the fiscal year ended August 31, 1997.
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, 1997.
</TABLE>
<TABLE>
<CAPTION>
Executive Compensation
Summary Compensation Table
Annual Compensation(1) 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 ($) (2) Options (#) ($) Comp(3)
<S> <C> <C> <C> <C> <S> <C> <C>
Peter R. Chase 1997 $255,120 $236,800 $337,500 --- --- $7,654
President and 1996 245,200 184,500 506,250 --- --- 7,240
Chief Executive Officer 1995 235,280 175,700 --- 400,000(4) --- 7,031
Everett Chadwick, Jr 1997 119,580 110,000 --- --- --- 3,587
Treasurer and 1996 114,600 86,250 --- --- --- 3,399
Chief Financial Officer 1995 110,070 82,240 --- 50,000(4) --- 3,289
</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 does not have a Long Term Incentive Plan (LTIP) or
have a program to grant Stock Appreciation Rights.
(2) As of August 31, 1997, Peter R. Chase, the Company's Chief Executive
Officer, held 250,000 shares of restricted stock having a value as of that
date of $2,969,000. The shares vest on the earlier to occur of September 6,
2004 or the occurrence of a change in control as defined in the agreement
between the Company and Mr. Chase with respect to the shares. Dividends are
payable upon the shares when and as declared.
(3) The amounts represent the contribution by the Company on behalf of the
employees to the Chase Corporation Retirement Savings Plan.
(4) During fiscal 1995, the Company granted Peter R. Chase and Everett
Chadwick options for 400,000 and 50,000 shares, respectively, exercisable at
fair market value as of the date of the grant and vesting ratably over
periods of up to 10 years.
Aggregated Option Exercises in Last Fiscal Year and Fiscal Year End Option
Values
<TABLE>
<CAPTION>
Number of Value of
Unexercised Options Unexercised Options
@ fiscal year end @ fiscal year end
Shares Acquired Value Exercisable/ Exercisable/
Name on Exercise (#) Realized($) Unexercisable Unexercisable (1)
<S> <C> <C> <C> <C>
Peter R. Chase 90,000 $505,350 82,500/317,500 $680,000/$2,669,000
Everett Chadwick, Jr. 10,000 $ 86,250 420/ 39,580 $ 3,600/$ 336,000
</TABLE>
(1) Market value of securities at August 31, 1997 close minus the exercise
price.
Compensation Committee Report on Executive Compensation
Recommendations 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 of a majority of
independent nonemployee 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, 1997, 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 midpoints 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 1997 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 1997 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 1997; therefore,
in accordance with the plan, incentive earnings for executive officers
averaged 93% 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 1997
equaled 93% of his annual base salary.
Stock Options
The Company has in effect a Plan which 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 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.
Stock Awards
The Committee considered the amount of stock and options owned by the
Company's Chief Executive Officer and concluded that the ownership of
additional equity in the Company by the Executive would provide a longer
term incentive to add value for the Company's shareholders. The target
amount of additional stock was set at 250,000 shares of restricted stock
of which 150,000 shares were issued on September 7, 1995 and the
remaining 100,000 shares were issued September 30, 1996. The size and
structure of the award were determined in conjunction with advice from
William H. Mercer, Incorporated acting as consultants to the Committee.
The Committee, in carrying out its responsibilities, met several
times in the fiscal year and reviewed
performance progress during the years as well as information provided
by independent compensation consultants.
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 and an
excess 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 $160,000. 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 tables show estimates of annual benefits
payable under the qualified plan and non-qualified excess plan upon
retirement at age 65 or upon the fifth anniversary of employment, if
later.
Table 1 relates to those participants who were employed prior to May
1, 1995 or are covered by a collective bargaining agreement and are in
the specified compensation and years-of-service classifications before
an offset of .6% of covered compensation at the time of retirement times
the number of years-of-service (up to a max. of 35 years).
<TABLE>
<CAPTION>
Table 1:
Average Remuneration Years of Service at Age 65
5 highest consecutive years 10 20 30 40
<C> <C> <C> <C> <C>
$ 50,000 $ 7,500 $ 15,000 $ 22,500 $ 28,250
100,000 15,000 30,000 45,000 56,500
160,000 24,000 48,000 72,000 90,400
200,000 * 30,000 60,000 90,000 113,000
250,000 * 37,500 75,000 112,500 141,250
300,000 * 45,000 90,000 135,000 169,500
350,000 * 52,500 105,000 157,500 197,750
400,000 * 60,000 120,000 180,000 226,000
</TABLE>
<TABLE>
<CAPTION>
Table 2 relates to those participants who became employed on or after May 1,
1995 and are not covered by a collective bargaining agreement and are in the
specified compensation and years-of-service classifications before any offset
of .3% of covered compensation at the time of retirement times the number of
years-of-service (up to a max. of 35 years).
Table 2.
Average Remuneration Years of Service at Age 65
5 highest consecutive years 10 20 30 40
<C> <C> <C> <C> <C>
$ 50,000 $ 3,750 $ 7,500 $ 11,250 $ 14,125
100,000 7,500 15,000 22,500 28,250
160,000 12,000 24,000 36,000 45,200
200,000 * 15,000 30,000 45,000 56,500
250,000 * 18,750 37,500 56,250 70,625
300,000 * 22,500 45,000 67,500 84,750
350,000 * 26,250 52,500 78,750 98,875
400,000 * 30,000 60,000 90,000 113,000
</TABLE>
*As required by Section 415 of the IRC, qualified plan payments may not provide
annual benefits exceeding a maximum amount, currently $125,000. For the
associate who is covered under the excess plans, amounts above this maximum
will be paid under the terms of the excess plans up to the amounts shown in
the table above. Pursuant to Section 401(a)(17) of the IRC, annual
compensation in excess of $160,000 (for 1997) cannot be taken into account in
determining qualified plan benefits.<PAGE>
Mr. Chase and Mr. Chadwick have
approximately 26 and 9 years of service, respectively.
Compensation of Directors. Directors who are not employees of the Company
are paid an annual retainer of $6,000 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, with the Chairman receiving a fee of $1,000.
Non-employee directors also are eligible to receive stock options. As
authorized under the terms and provision of the company's 1995 Stock
Option Plan, each director, exclusive of the Chief Executive Officer has
received an option to purchase 12,500 shares which would be fully vested
by January 15, 2000.
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
8/31/92 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 1992/1997 Cumulative Total Return Performance (a)
1992 1993 1994 1995 1996 1997
Chase 100.0 103.8 196.4 306.1 394.9 867.7
S&P 500 100.0 115.0 121.1 146.5 173.8 243.9
Peer Group 100.0 122.4 189.4 188.3 230.7 747.5
(a) Cumulative total returns are calculated assuming dividend
reinvestment at August 31.
Auditors
The Board of Directors has selected the firm of Livingston & Haynes,
P.C., which served as auditors for the Company for the most recently
completed fiscal year of the Company, to serve as auditors for the
Company for the fiscal year ending August 31, 1998. 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 1999 Annual meeting
Proposals of security holders intended to be present at the 1999
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 14, 1998.
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 therin in
accordance with their judgement 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
