<PAGE> 1
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SCHEDULE 14A
(RULE 14A)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
<TABLE>
<S> <C>
/ / Preliminary Proxy Statement / / CONFIDENTIAL, FOR USE OF THE COMMISSION
ONLY (AS PERMITTED BY RULE 14A-6(E)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
</TABLE>
CHEMPOWER, INC.
(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/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how
it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 2
[CHEMPOWER LOGO]
807 East Turkeyfoot Lake Road
Akron, Ohio 44319
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Our Shareholders:
Notice is hereby given that the Annual Meeting of Shareholders of
Chempower, Inc. (the "Company") will be held at the Holiday Inn, I-77 and
Arlington Road, Akron, Ohio 44312, at 2:00 P.M., local time, on Thursday, May 2,
1996, for the following purposes:
(1) To elect five (5) directors of the Company;
(2) To approve an amendment to the Company's 1991 Incentive/Non-Qualified
Stock Option Plan to increase the number of shares reserved for
issuance under such plan;
(3) To ratify the appointment of McGladrey & Pullen, LLP as independent
auditors for the Company for the fiscal year ending December 31, 1996;
and
(4) To transact such other business as may properly come before the meeting
or any adjournments thereof.
The Board of Directors has fixed March 22, 1996 as the record date for
determination of the shareholders entitled to receive notice of and to vote at
the Annual Meeting.
Information relating to the matters to be considered at the Annual Meeting
is set out in the accompanying proxy statement ("Proxy Statement").
YOUR VOTE IS IMPORTANT
You are urged to date, sign and promptly return the enclosed proxy so that
your shares may be voted in accordance with your wishes and so that the presence
of a quorum may be assured. The prompt return of your signed proxy, regardless
of the number of shares you hold, will aid the Company in reducing the expense
of additional proxy solicitation. The giving of such proxy does not affect your
right to vote in person in the event you attend the meeting. You are cordially
invited to attend the meeting, and we request that your indicate your plans in
this respect in the space provided on the enclosed form of proxy.
By Order of the Board of Directors,
ERNEST M. ROCHESTER
Secretary
Akron, Ohio
April 5, 1996
<PAGE> 3
[CHEMPOWER LOGO]
807 East Turkeyfoot Lake Road
Akron, Ohio 44319
------------------------------------
PROXY STATEMENT
April 5, 1996
The accompanying proxy is solicited by the Board of Directors of Chempower,
Inc., an Ohio corporation, for use at the Annual Meeting of Shareholders of the
Company (the "Annual Meeting") to be held at the Holiday Inn at I-77 and
Arlington Road, Akron, Ohio 44312, at 2:00 P.M., local time, on Thursday, May 2,
1996. Only holders of record of the Company's common stock, par value $.10 per
share (the "Shares"), on March 22, 1996 will be entitled to notice of and to
vote at the Annual Meeting. At the close of business on that date, the Company
had 7,565,113 Shares outstanding. Each such Share is entitled to one vote on all
matters properly coming before the Annual Meeting. There is no cumulative voting
in accordance with the Company's Articles of Incorporation.
This Proxy Statement and the accompanying form of proxy were first mailed
to shareholders on or about April 5, 1996.
Any person signing a proxy in the form accompanying this Proxy Statement
has the power to revoke such proxy prior to or at the Annual Meeting. A proxy
may be revoked by a writing delivered to the Secretary of the Company prior to
the Annual Meeting stating that the proxy is revoked, by a subsequent proxy, or
by attendance at the Annual Meeting and voting in person.
The expense of soliciting proxies, including the cost of preparing,
assembling and mailing the Notice, Proxy Statement and proxy, will be borne by
the Company. In addition to solicitation of proxies by mail, solicitation may be
made personally, by telephone or telegraph, and the Company may pay persons
holding shares for others their expenses for sending proxy material to their
principals. No solicitation will be made other than by directors, officers and
employees of the Company.
1. ELECTION OF DIRECTORS
The authorized number of directors of the Company is presently fixed at
five. At the Annual Meeting, all five directors are to be elected to serve for
one-year terms and until their successors shall be elected and qualified.
The five nominees for directors are Messrs. Toomas J. Kukk, Ernest M.
Rochester, Edward G. Kemp, Norman E. Jackson and Robert E. Rohr. All nominees
are presently serving as directors of the Company. Unless a shareholder requests
that voting of the proxy be withheld for any one or more of the nominees for
director, it is intended that shares represented by proxies will be voted for
the election of the five nominees.
All nominees have consented to being named in this Proxy Statement and to
serve as a director if elected. Should any nominee subsequently be unable or
unwilling to serve as a director, an event which the Board of Directors does not
expect, then the proxies may be voted for such substitute nominee as may be
named by the Board of Directors.
1
<PAGE> 4
NOMINEES TO BE ELECTED AS DIRECTORS
The following information concerning each nominee is based in part on
information received from the respective nominees and in part on the Company's
records:
<TABLE>
<CAPTION>
NAME AND YEAR INFORMATION
ELECTED ABOUT THE
A DIRECTOR NOMINEES
- -------------------------------- -------------------------------------------------------
<S> <C>
Toomas J. Kukk 1985 Mr. Kukk, age 55, has been Chairman, President and
(c) Chief Executive Officer of the Company since its
organization in August, 1985.
Ernest M. Rochester 1988 Mr. Rochester, age 71, has been Secretary and Vice
(a)(d) Chairman of the Company since March, 1989. Mr. Roch-
ester has been a businessman active in private invest-
ments and the sole proprietor of Parklynn Associates,
North Canton, Ohio, a construction consulting firm,
since January, 1984.
Edward G. Kemp 1988 Mr. Kemp, age 54, has been a partner in the law firm of
(a)(b)(c) Roetzel & Andress, Akron, Ohio, since May, 1972.
Norman E. Jackson 1993 Mr. Jackson, age 68, has been the Chairman of Asset
(a)(b)(c)(d) Sales Associates, Inc., Canton, Ohio, an equipment
sales company, since September, 1981. Mr. Jackson was
Chairman of Galt Alloy, Inc. from 1982 to 1992 and
Chairman of Controlled Power Corporation from 1964 to
1989.
Robert E. Rohr 1995 Mr. Rohr, age 40, has been Vice President - Finance and
(b)(d) Treasurer of the Company since January 1989. Mr. Rohr
was Controller of the Company from 1987 to 1989.
</TABLE>
- ---------------
(a) Member of the Compensation Committee
(b) Member of the Audit Committee
(c) Member of the Stock Plan Committee
(d) Member of the Acquisition/Development Committee
2
<PAGE> 5
INFORMATION ON BOARD OF DIRECTORS AND COMMITTEES
The Board of Directors of the Company held four meetings during the fiscal
year ended December 31, 1995. All incumbent Directors attended at least 75% of
the aggregate of the total number of meetings of the Board of Directors, and the
total number of meetings held by committees of the Board on which they served.
The Board of Directors has established four committees to assist in the
discharge of its responsibilities -- the Audit Committee, the Compensation
Committee, the Stock Plan Committee and the Acquisition/Development Committee.
The committees and the memberships of each of the committees are identified in
the foregoing information relating to the election of the Directors. The general
function of each committee and the number of meetings held by each committee
during the last fiscal year are set forth below.
The Audit Committee reviews the scope and results of the annual audit of
the financial statements and the recommendations of the auditors pertaining to
accounting practices, policies and procedures, and the system of internal
controls followed by the Company. The Audit Committee also recommends to the
Board of Directors the firm of independent public accountants to be selected as
auditors of the Company and reviews all related party transactions on an ongoing
basis. The Audit Committee held two meetings during the last fiscal year.
The Compensation Committee reviews and makes recommendations to the Board
of Directors concerning compensation policies, salaries and other forms of
compensation for management and certain other employees of the Company. The
Compensation Committee held one meeting during the last fiscal year.
The Stock Plan Committee reviews and makes recommendations to the Board of
Directors concerning the granting of stock options to certain key employees and
is responsible for administering the Company Employee Stock Ownership Plan. The
Stock Plan Committee held one meeting during the last fiscal year.
The Acquisition/Development Committee reviews and makes recommendations to
the Board of Directors concerning potential acquisitions, the consideration to
be exchanged for acquisitions and any and all other matters relating to the
acquisition of businesses. The Acquisition/Development Committee held one
meeting during the last fiscal year.
Directors who are not employees of the Company received $1,000 for each
Board meeting attended and $500 for each committee meeting attended. All
directors are offered reimbursement for travel expenses, if any, incurred in
connection with Board and committee meetings attended.
TRANSACTIONS AND OTHER ARRANGEMENTS WITH MANAGEMENT
The Company leases certain real estate which is owned by Holiday
Properties, an Ohio general partnership, the partners of which are Toomas J.
Kukk and Ernest M. Rochester. Such leased real estate includes 807 East
Turkeyfoot Lake Road in Akron, Ohio, the Company's principal office; 3600
Cardiff Avenue in Cincinnati, Ohio, an office, warehouse and storage facility;
and 6050 West Virginia State Route 34 in Winfield, West Virginia, an office,
warehouse and storage facility. The Company made aggregate annual payments under
these leases of $321,000, in 1995. The Company believes that the terms of these
leases are no less favorable than those which could have been negotiated in
arms-length transactions and all rental payments made by the Company are equal
to market rates.
3
<PAGE> 6
COMMON STOCK OWNERSHIP OF PRINCIPAL HOLDERS AND MANAGEMENT
The following table sets forth the beneficial ownership of the Company's
shares of common stock as of March 22, 1996 by: (i) each person or group known
by the Company to own beneficially more than 5% of its outstanding shares of
common stock, (ii) each director and nominee for election as a director of the
Company, (iii) each executive officer named in the following Summary
Compensation Table and (iv) all directors and executive officers as a group. All
information with respect to beneficial ownership has been furnished by the
respective director, officer or shareholder, as the case may be.
<TABLE>
<CAPTION>
NAME AND ADDRESS AMOUNT AND NATURE PERCENT
OF BENEFICIAL OWNER OF BENEFICIAL OWNERSHIP(1) OF CLASS
- --------------------------------------- -------------------------- --------
<S> <C> <C>
Directors (Other Than Executive Officers):
Norman E. Jackson 70,000 *
Edward G. Kemp -- --
Executive Officers (+ also serves as director):
Toomas J. Kukk+(2) 1,766,213(3) 23.1%
807 E. Turkeyfoot Lake Road
Akron, Ohio 44319
Ernest M. Rochester+(4) 67,000(3) *
Robert E. Rohr+ 107,000(3) 1.4%
Dale C. Crumley 165,691(3) 2.2%
Scott R. Lowrie 42,000(3) *
Patrick F. Byrne 42,000(3) *
Directors and Executive Officers as a 2,259,904(5) 28.7%
Group (8 Persons)
Other Principal Beneficial Owners:
Mark L. Rochester(6) 2,066,064 27.3%
3511 Greensburg Road
North Canton, Ohio 44720
FMR Corp. (7) 677,700 9.0%
82 Devonshire Street
Boston, Massachusetts 02109
Linder Fund, Inc. (7) 650,000 8.6%
7711 Carondelet Avenue
St. Louis, Missouri 63105
</TABLE>
- ---------------
* Less than 1%.
(1) All shares are held with sole voting and sole investment power.
(2) Excludes 366,850 shares held by Mr. Kukk's immediate family, as to which he
disclaims beneficial ownership.
(3) Ownership totals for Messrs. Kukk, Rochester, Rohr, Crumley, Lowrie and
Byrne include 67,000, 67,000, 52,000, 37,000, 42,000 and 42,000 exercisable
options, respectively.
(4) Excludes 10,000 shares held by Mr. Rochester's spouse, and 2,066,064 held by
his son, Mark Rochester, as to which he disclaims beneficial ownership.
(5) Includes 307,000 shares as to which six executive officers hold currently
exercisable options.
(6) Mr. Rochester is the son of Ernest M. Rochester, a director and executive
officer of the Company.
(7) This information was obtained by the Company from Schedules 13G as filed
with the Commission in January 1996 and February 1996.
4
<PAGE> 7
EXECUTIVE COMPENSATION
SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION
The following table shows the annual and long-term compensation earned for
the fiscal years ended December 31, 1995, 1994 and 1993 of the Company's chief
executive officer ("CEO") and its next four most highly compensated executives
who were officers of the Company at the end of 1995.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
------------
ANNUAL COMPENSATION SECURITIES
----------------------------------------------------- UNDERLYING
NAME AND PRINCIPAL OTHER ANNUAL OPTIONS(#) ALL OTHER
POSITION YEAR SALARY(1) BONUS COMPENSATION(1) (2) COMPENSATION
- ------------------- ----- --------- -------- ---------------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Toomas J. Kukk, 1995 $ 173,174 $ 55,000 -- 40,000 $ 1,700(3)
Chairman, 1994 135,256 -- -- -- --
President and 1993 133,000 20,000 -- 32,000 --
CEO
Robert E. Rohr 1995 $ 93,796 $ 35,000 -- 10,000 1,000(3)
Vice President- 1994 83,220 -- -- -- 1,400
Finance and 1993 80,000 20,000 -- 10,000 2,000
Treasurer
Dale C. Crumley 1995 $ 93,856 $ 35,000 -- 10,000 1,000(3)
Vice President- 1994 84,787 -- -- -- 1,700
Estimating/ 1993 81,000 20,000 -- 10,000 2,000
Engineering
Scott R. Lowrie 1995 $ 99,256 $ 35,000 -- 10,000 1,000(3)
General Counsel 1994 99,256 -- -- -- 1,500
1993 86,000 20,000 -- 10,000 2,000
Patrick F. Byrne 1995 $ 82,765 $ 35,000 -- 10,000 11,303(4)
Vice President- 1994 73,722 15,000 -- -- 10,769
Operations
</TABLE>
- ---------------
(1) No named executive officer received personal benefits or perquisites in
excess of the lesser of $50,000 or 10% of his aggregate salary and bonus.
(2) Pursuant to the Company's 1991 Stock Option Plan, options awarded in 1993
and 1995, are exercisable on March 1, 1996 and April 1, 1997, respectively.
(3) The amount represents the total contributions by the Company to the 401(k)
Savings Plan for the named officer.
(4) The amount represents the total contribution by the Company to Mr. Byrne's
union-sponsored pension plan.
5
<PAGE> 8
OPTION GRANTS
Shown below is information on grants of stock options pursuant to the
Company's 1991 Stock Option Plan during the fiscal year ended December 31, 1995,
to the executive officers who are named in the Summary Compensation Table.
OPTION GRANTS IN 1995
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL REALIZABLE
- ---------------------------------------------------------------------------- VALUE AT ASSUMED
NUMBER OF PERCENTAGE OF ANNUAL RATES OF STOCK
SECURITIES TOTAL OPTIONS PRICE APPRECIATION FOR
UNDERLYING GRANTED TO EXERCISE OPTION TERMS(3)
OPTIONS EMPLOYEES IN PRICE PER EXPIRATION ----------------------
NAME GRANTED(1) 1995 SHARE(2) DATE 5% 10%
- -------------------- ---------- ------------- --------- ---------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Toomas J. Kukk 40,000 24.5% $3.00 3-31-2005 $ 75,467 $ 191,249
Robert E. Rohr 10,000 6.1 3.00 3-31-2005 18,867 47,812
Dale C. Crumley 10,000 6.1 3.00 3-31-2005 18,867 47,812
Scott R. Lowrie 10,000 6.1 3.00 3-31-2005 18,867 47,812
Patrick F. Byrne 10,000 6.1 3.00 3-31-2005 18,867 47,812
</TABLE>
- ---------------
(1) These options were granted on March 31, 1995, pursuant to the 1991 Stock
Option Plan and become exercisable on April 1, 1997.
(2) The common stock closing market price on the date of grant, March 31, 1995,
was $3.00. In general, an optionee's rights under an exercisable option
shall cease upon termination of employment.
(3) Calculated on option terms of ten years beginning March 31, 1995, through
March 31, 2005. The dollar amounts under these columns are the result of
calculations at the five percent and ten percent assumed speculative
appreciation rates set by the Securities and Exchange Commission and,
therefore, are not intended to forecast possible future appreciation of the
Company's Shares.
6
<PAGE> 9
OPTION EXERCISES AND FISCAL YEAR-END VALUES
Shown below is information with respect to the exercise of stock options
during the fiscal year ended December 31, 1995 and the unexercised stock options
held at December 31, 1995 to purchase the Company's Shares by the executive
officers who are named in the Summary Compensation Table.
AGGREGATED OPTION EXERCISES IN 1995
AND DECEMBER 31, 1995 OPTION VALUE
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES UNDERLYING VALUE OF UNEXERCISED
SHARES UNEXERCISED OPTIONS AT DECEMBER IN-THE-MONEY OPTIONS
ACQUIRED 31, 1995 AT DECEMBER 31, 1995(1)
ON VALUE ------------------------------- -------------------------------
NAME EXERCISE REALIZED EXERCISABLE UNEXERCISABLE(2) EXERCISABLE UNEXERCISABLE(2)
- ------------------- ---------- --------- ---------- ---------------- ---------- ----------------
<S> <C> <C> <C> <C> <C> <C>
Toomas J. Kukk -- $ -- 35,000 72,000 $ 30,625 $ 42,000
Robert E. Rohr 105,000 140,625 42,000 20,000 10,500 11,250
Dale C. Crumley 25,000 18,750 27,000 20,000 6,125 11,250
Scott R. Lowrie 22,800 20,400 32,000 20,000 10,500 11,250
Patrick F. Byrne 33,000 45,000 32,000 20,000 10,500 11,250
</TABLE>
- ---------------
(1) Calculated on a per share basis as the amount, by which the fair market
value of the underlying Share represented by an option exceeds, as of
December 29, 1995, (last day of trading for the fiscal year ended December
31, 1995) the per share exercise price of the option.
(2) In general, an optionee's rights under an unexercisable option shall cease
upon termination of employment.
7
<PAGE> 10
REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS ON EXECUTIVE
COMPENSATION
The following report of the Compensation Committee describes the
philosophy, objectives and components of the Company's executive compensation
programs for 1995 and discusses the determinations concerning the compensation
for the President and Chief Executive Officer of the Company for 1995.
The Company has established an executive compensation program which
properly recognizes each executive's contributions to operating performance
based upon the accomplishment of planned objectives and underscored by
profitability. The compensation of executive officers, including the Chief
Executive Officer ("CEO"), is a mix of base salary and awards, if any, under the
Company's Incentive Compensation Program and Stock Option Plan. Base salaries
for the Company's executive officers are lower than a level deemed by the
Committee to be competitive compared to compensation paid to executives of
similar companies. This is in recognition of the potential for additional
compensation through the award programs.
The Incentive Compensation Program is designed to enhance financial
performance, customer service and corporate efficiency through a
performance-based cash incentive award. Each year, the Committee evaluates the
overall performance of the Company and determines the maximum potential
incentive award for executives. Executives are evaluated on the basis of
performance against a combination of corporate and individual goals. With
respect to the CEO's incentive compensation, the Committee meets in the absence
of the CEO to evaluate his performance. The Committee may grant an income award
to the CEO when the Company meets targeted level of net income and for other
factors which result in the long-term strengthening of the Company.
Specifically, this performance was considered by the Committee and reflected in
the incentive compensation of the CEO. The Committee reports on all executive
evaluations to the other outside members of the Board.
The stock option grants are proposed by the CEO for the Company's key
employees (other than himself) and are subject to approval by the Committee. The
Committee establishes a stock option grant for the CEO. The purpose of the stock
option plan is to attract and retain capable executive officers and other key
employees and to provide an inducement for them to promote the best, long term
interests of the Company and its shareholders. Stock options are granted at the
prevailing market value and will only have value if the Company's stock price
increases. The number of options granted to each participant is determined by
his or her performance and opportunity for contribution to the overall
profitability of the Company.
In conclusion, the Committee believes that the compensation policies and
practices of the Company herein described are fair and equitable and are in
keeping with the best interests of the Company, its employees and shareholders.
Submitted March 6, 1996 and signed by the members of the Compensation
Committee:
Ernest M. Rochester, Chairman
Edward G. Kemp
Norman E. Jackson
8
<PAGE> 11
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee of the Board of Directors consists of Ernest M.
Rochester, Edward G. Kemp and Norman E. Jackson. Mr. Rochester is Secretary and
Vice Chairman of the Board of the Company. Mr. Kemp and Mr. Jackson are
independent directors of the Company, and are neither officers of the Company
nor affiliated with any principal shareholder of the Company. In addition, see
"Transactions And Other Arrangements With Management".
None of the executive officers of the Company has served on the Board of
Directors or on the compensation committee of any other entity, any of whose
officers served either on the Board of Directors or on the Compensation
Committee of the Company.
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors and executive officers, and any persons who own more than ten percent
of the Company's Common Stock, to file with the Securities and Exchange
Commission and NASDAQ reports of ownership and changes in ownership of Common
Stock. Such persons are required by SEC regulations to furnish the Company with
copies of all Section 16(a) forms they file.
To the Company's knowledge, based solely on review of the copies of such
reports furnished to the Company or written representations that no other
reports were required, during the year ended December 31, 1995, all such Section
16(a) filing requirements were complied with.
9
<PAGE> 12
PERFORMANCE GRAPH
Set forth below is a line graph comparing the yearly percentage change in
the cumulative total shareholder return for the Company's common stock with the
similar returns for The Nasdaq Stock Market (U.S. Companies) ("Nasdaq-U.S.") and
a peer group consisting of Kimmins Environmental Service Corp., NSC Corp. and
PDG Environmental Inc. ("Peer Group") selected by the Company for the period
from December 31, 1990 to December 31, 1995. The Nasdaq Stock Market-U.S. has
been selected as the required broad equity market index. The graph assumes that
the value of the investment in the Company's common stock and each index was
$100 on December 31, 1990 and that all dividends, if any, were reinvested when
paid. The Company has not paid any dividends on its Common Stock during this
period.
COMPARISON OF CUMULATIVE TOTAL RETURN
AMONG CHEMPOWER, INC., NASDAQ-U.S. AND PEER GROUP
(DECEMBER 31, 1990 TO DECEMBER 31, 1995)
<TABLE>
<CAPTION>
MEASUREMENT PERIOD CHEMPOWER,
(FISCAL YEAR COVERED) INC. NASDAQ-U.S. PEER GROUP
<S> <C> <C> <C>
12-31-90 100 100 100
12-31-91 135 161 107
12-31-92 117 187 83
12-31-93 117 215 69
12-31-94 135 210 49
12-31-95 130 296 58
</TABLE>
The preceding sections entitled "Report of the Compensation Committee of
the Board of Directors on Executive Compensation" and "Performance Graph" do not
constitute soliciting material for purposes of Rule 14a-9 of the Securities and
Exchange Commission, will not be deemed to have been filed with the Commission
for purposes of Section 18 of the Securities Exchange Act of 1934, and are not
to be incorporated by reference into any other filing made by the Company with
the Commission.
10
<PAGE> 13
2. APPOINTMENT OF INDEPENDENT AUDITORS
Upon the recommendation of its Audit Committee, the Board of Directors of
the Company has selected McGladrey & Pullen, LLP as independent auditors,
subject to shareholder approval, to examine and audit the financial statements
of the Company for the fiscal year ending December 31, 1996. McGladrey & Pullen,
LLP were the independent auditors of the Company for the fiscal year ended
December 31, 1995. A representative of McGladrey & Pullen, LLP will be present
at the Annual Meeting to make a statement if they so desire and to respond to
appropriate questions.
3. PROPOSED AMENDMENT TO THE 1991 INCENTIVE/NON-QUALIFIED STOCK OPTION PLAN
The Board of Directors has adopted, subject to shareholder approval, an
amendment to the 1991 Incentive/Non-Qualified Stock Option Plan of Chempower,
Inc. (the "1991 Plan") to increase the number of Shares of common stock reserved
for use upon the exercise of awards to be granted from time to time under the
1991 Plan to an aggregate of 1,300,000 shares. The current number of Shares
reserved in connection with the 1991 Plan is 600,000.
The amendment increasing the number of Shares reserved is proposed and was
adopted by the Board of Directors in the belief that the 1991 Plan is
accomplishing its goal of providing additional incentive to persons who can
contribute significantly to the success of the business of the Company and that
the Company should be in a position to continue to make grants. The 1991 Plan
presently provides for the issuance of 600,000 shares. As of March 1, 1996, the
Company had granted 596,000 options to purchase Shares to executive officers and
key employees under the 1991 Plan.
In addition, the Company has granted stock options pursuant to the 1991
Plan, subject to shareholder approval of the amendment, as follows: Mr. Kukk,
options to purchase 75,000 shares; Mr. Rochester, options to purchase 75,000
shares; Mr. Rohr, options to purchase 10,000 shares; Mr. Crumley, options to
purchase 10,000 shares; Mr. Byrne, options to purchase 10,000 shares; Mr.
Lowrie, options to purchase 10,000 shares; all current executive officers as a
group, options to purchase 190,000 shares; and all employees who are not
executive officers, as a group, options to purchase 109,000 shares. The Company
anticipates making additional stock option grants in the future, thus making it
necessary to amend the 1991 Plan by increasing the number of shares available
under the 1991 Plan. The options granted under the 1991 Plan subject to
shareholder approval have not vested. The Board believes that it is in the best
interests of the Company and its shareholders to approve the proposed amendment.
Description of the 1991 Plan
On January 25, 1991, the Board of Directors of the Company adopted the 1991
Plan subject to approval by the Company's shareholders. The shareholders of the
Company approved the 1991 Plan on May 2, 1991.
The 1991 Plan provides for the issuance of stock options to purchase
Shares, $.10 par value, of the Company, subject to adjustment in the event of
share dividends, share splits, or other changes in the Company's capitalization.
Options granted under the 1991 Plan will be either
11
<PAGE> 14
non-qualified or "incentive stock options" within the meaning of the Internal
Revenue Code of 1986, as amended. The exercise price of incentive stock options
issued under the 1991 Plan shall in no event be less than the fair market value
of the Company's Shares at the time of grant of such option. The 1991 Plan is
administered by the Stock Plan Committee (the "Committee") of the Board of
Directors.
Agreements evidencing options may contain such terms and conditions,
consistent with the terms of the 1991 Plan, as the Committee may determine. The
1991 Plan also provides that the Committee may, under such terms and conditions
as the Committee deems appropriate, accept the surrender of an optionee's right
to exercise an option, or portion thereof, issued under the 1991 Plan and
authorize a payment of an amount equal to the difference between the aggregate
exercise price of the surrendered option, or portion thereof, and the aggregate
fair market value of the Shares underlying the surrendered option on the date of
surrender. Such payment may be made in cash, in Shares, or partly in cash and
partly in Shares, as the Committee may determine. The 1991 Plan also permits
participants to exercise stock options granted under the 1991 Plan by delivering
already-owned Shares of the Company, in addition to or in lieu of cash, in
payment thereof; however, pyramiding is not permitted under the terms of the
1991 Plan.
Non-qualified stock options will not result in any taxable income to the
optionee or deduction to the Company at the time they are granted. In general,
the holder of non-qualified stock options will realize taxable ordinary
compensation income at the time of the exercise of the option in an amount
measured by the excess of the then fair market value of the Shares over the
option price. The tax basis to the optionee for non-qualified option Shares
acquired would be the option price plus such taxable ordinary compensation
income and, when the optionee disposes of the shares, capital gain or loss will
be recognized, either long or short term, depending on the holding period of the
Shares. The amount included in the income of the optionee of non-qualified
options as ordinary taxable income will measure the amount of deduction to which
the Company is entitled.
Incentive stock options will not result in taxable income to the optionee
or a deduction to the Company at the time granted or at the time exercised if
holding period requirements are observed. The optionee must hold the stock more
than two years from the date of grant and one year from date of exercise. If
these holding requirements are met, the optionee will receive capital gain
treatment and the Company no deduction. If these holding requirements are not
met, in general, the optionee has ordinary taxable income and the Company a
deduction measured by the excess of the fair market value of the Shares at the
time of exercise or disqualifying sale over the option price, whichever produces
a lesser gain. The tax basis to the optionee for Shares acquired on exercise of
the incentive stock option would be the option price. The difference between the
fair market value at the date of exercise and the option price of the incentive
stock option will generally be an item of tax preference. Thus, it will have to
be included when making the alternative minimum tax calculation for the year in
which the incentive stock option was exercised.
Upon an optionee's receipt of cash or Shares in exchange for surrender of
the optionee's right to exercise an option, or portion thereof, the amount of
any cash received and the fair market value of any Shares received will be
taxable to the optionee as ordinary income and, in general, will measure the
amount of the deduction to which the Company is entitled.
12
<PAGE> 15
New Plan Benefits
The table below sets forth, for each of the executive officers named in the
Summary Compensation Table and the groups identified below, information
regarding the benefits granted by the Board of Directors subject to approval by
the shareholders.
THE 1991 PLAN
<TABLE>
<CAPTION>
NAME AND POSITION DOLLAR VALUE($) NUMBER OF UNITS
- ----------------------------------------------------- ---------------- ---------------
<S> <C> <C>
Toomas J. Kukk
Chairman of the Board of Directors, Chief Executive
Officer and President.............................. (a) 75,000
Ernest M. Rochester
Vice Chairman and Secretary........................ (a) 75,000
Robert E. Rohr
Vice President-Finance, Chief Financial Officer and
Treasurer.......................................... (a) 10,000
Dale C. Crumley
Vice President-Estimating/Engineering.............. (a) 10,000
Patrick F. Byrne
Vice President of Operations....................... (a) 10,000
Scott R. Lowrie
General Counsel.................................... (a) 10,000
Executive Officer Group.............................. (a) 190,000
Non-Executive Director Group......................... -- --
Non-Executive Officer Employee Group................. (a) 109,000
</TABLE>
- ---------------
(a) All options granted under the 1991 Plan, and subject to shareholder
approval, have been granted at the exercise price of $3.75 per share (the
fair market value of a share of Common Stock on the date of grant). The
actual value, if any, that a person may realize will depend on the excess of
the stock price over the exercise price on the date the option is exercised.
As of March 1, 1996, the closing price of a share of Common Stock as
reported on the NASDAQ Exchange was $3.75.
Vote Necessary for Approval
The affirmative vote of the holders of a majority of the votes entitled to
vote and present in person or by proxy at the Annual Meeting of Shareholders is
required for adoption of the amendment to the 1991 Plan. The Board of Directors
recommends a vote for ratification and approval of the amendment to the 1991
Plan.
4. OTHER BUSINESS
The Board of Directors does not intend to bring any other business before
the meeting and knows of no other matters to be brought before the meeting.
However, as to any other business
13
<PAGE> 16
that properly may be brought before the meeting, it is intended that proxies, in
the form enclosed, will be voted in accordance with the judgment of the persons
voting such proxies.
SHAREHOLDER PROPOSALS FOR THE 1997 ANNUAL MEETING
Proposals by shareholders for inclusion in the 1997 Annual Meeting Proxy
Statement must be received by the Company's Secretary at its executive offices,
807 East Turkeyfoot Lake Road, Akron, Ohio 44319, no later than November 30,
1996. All such proposals are subject to the applicable rules and requirements of
the Securities and Exchange Commission.
EXPENSE OF SOLICITATION
The cost of solicitation of proxies in the accompanying form will be paid
by the Company. In addition to solicitation by use of the mails, certain
officers and regular employees of the Company may solicit the return of proxies
by telephone, telegram or personal interview.
You are urged to sign and return your proxy promptly in order to make
certain your shares will be voted at the Annual Meeting. For your convenience, a
return envelope is enclosed requiring no additional postage if mailed in the
United States.
ANNUAL REPORT
A copy of the Company's Annual Report on Form 10-K for the year ended
December 31, 1995, as filed with the Securities and Exchange Commission, will be
provided on written request without charge to any shareholder whose proxy is
being solicited by the Board of Directors. Written requests should be directed
to:
Ms. Beth A. Yake
Investor/Public Relations
Chempower, Inc.
807 East Turkeyfoot Lake Road
Akron, Ohio 44319
(330) 896-4202
By Order of the Board of Directors,
ERNEST M. ROCHESTER
Secretary
14
<PAGE> 17
CHEMPOWER, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS
MAY 2, 1996
The undersigned hereby appoints Mark A. Milhoan and Scott R. Lowrie
and each of them, proxies to represent the undersigned with full power of
substitution, at the Annual Meeting of Shareholders of Chempower, Inc. to
be held on Thursday, May 2, 1996, at 2:00 P.M., local time, at the
Holiday Inn, I-77 and Arlington Road, Akron, Ohio 44312 and at any and
all adjournments thereof:
1. ELECTION OF DIRECTORS
/ / FOR all nominees listed below except (as marked to the contrary
below).
/ / WITHHOLD AUTHORITY to vote for all nominees listed below.
Toomas J. Kukk Ernest M. Rochester Edward G. Kemp Norman E.
Jackson Robert E. Rohr
2. PROPOSAL TO RATIFY THE SELECTION OF McGLADREY & PULLEN, LLP AS THE
COMPANY'S INDEPENDENT AUDITORS FOR THE FISCAL YEAR ENDING DECEMBER 31,
1996.
/ / FOR / / AGAINST / / ABSTAIN
3. PROPOSAL TO APPROVE AN AMENDMENT TO THE 1991 INCENTIVE/NON-QUALIFIED
STOCK OPTION PLAN
/ / FOR / / AGAINST / / ABSTAIN
4. IN THEIR DISCRETION THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH OTHER
BUSINESS THAT MAY PROPERLY COME BEFORE THE MEETING.
(Continued, and to be signed, on the other side)
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED SHAREHOLDER. UNLESS OTHERWISE SPECIFIED, THE
SHARES WILL BE VOTED FOR PROPOSALS 1, 2, AND 3.
Dated: , 1996
--------------------------------
--------------------------------
Signatures of Shareholder(s)
NOTE: Signature should agree
with name on stock certificate
as printed hereon. Executors,
administrators, trustees and
other fiduciaries should so
indicate when signing.
/ / I PLAN TO ATTEND THE MEETING IN AKRON, OHIO AT 2:00 P.M. ON MAY 2,
1996.
PLEASE DATE, SIGN AND RETURN THIS PROXY. THANK YOU.
