<PAGE> 1
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF
THE SECURITIES EXCHANGE ACT OF 1934
Filed by the registrant [X]
Filed by a party other than the registrant [ ]
Check the appropriate box:
[ ] Preliminary proxy statement
[ ] Confidential, for use of the Commission only (as permitted by Rule
14a-6(e)(2))
[X] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Section 240.14a-11(c) or Section 240.14a-12
A. SCHULMAN, INC.
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
A. SCHULMAN, INC.
(NAME OF PERSON(S) FILING PROXY STATEMENT IF OTHER THAN THE REGISTRANT)
Payment of filing fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies: Common
--------
Stock, $1.00 par value
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(2) Aggregate number of securities to which transaction applies: 37,806,131
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
-------------
(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:
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(2) Form, schedule or registration statement no.:
--------------------------
(3) Filing party:
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(4) Date filed:
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<PAGE> 2
[A. SCHULMAN INC. LOGO]
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
Notice is hereby given that the Annual Meeting of Stockholders of A.
Schulman, Inc. will be held at the Fairlawn Country Club, 200 North Wheaton
Road, Akron, Ohio, on Thursday, December 5, 1996 at 10:00 A.M., local time, for
the purpose of considering and acting upon:
1. The election of five (5) Directors for a three-year term expiring in
1999;
2. The ratification of the selection by the Board of Directors of Price
Waterhouse LLP as independent accountants for the fiscal year ending
August 31, 1997; and
3. The transaction of any other business which properly may come before the
meeting and any adjournments thereof.
Stockholders of A. Schulman, Inc. of record at the close of business on
October 22, 1996 are entitled to vote at the Annual Meeting and any adjournments
thereof.
By order of the Board of Directors
JAMES H. BERICK
Secretary
Akron, Ohio
November 12, 1996
- --------------------------------------------------------------------------------
YOUR VOTE IS IMPORTANT. STOCKHOLDERS ARE REQUESTED TO COMPLETE, DATE, SIGN AND
RETURN THE ENCLOSED PROXY IN THE ENVELOPE PROVIDED WHICH REQUIRES NO POSTAGE IF
MAILED IN THE UNITED STATES.
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<PAGE> 3
[A. SCHULMAN INC. LOGO]
3550 West Market Street
Akron, Ohio 44333
PROXY STATEMENT
November 12, 1996
The accompanying proxy is solicited by the Board of Directors of the
Corporation for use at the Annual Meeting of Stockholders to be held on December
5, 1996, and any adjournments thereof.
Stockholders of record at the close of business on October 22, 1996 (the
record date) will be entitled to vote at the Annual Meeting. At that date the
Corporation had issued and outstanding 37,806,131 shares of Common Stock, $1.00
par value. Each such share is entitled to one vote on all matters properly
coming before the Annual Meeting. At least 18,903,066 shares of Common Stock of
the Corporation must be represented at the meeting in person or by proxy in
order to constitute a quorum for the transaction of business.
This Proxy Statement and the accompanying form of proxy were first mailed
to stockholders on November 12, 1996.
ELECTION OF DIRECTORS
The Board of Directors of the Corporation presently is comprised of
fourteen Directors. The Directors of the Corporation are divided into three
classes; Classes I and III each consist of five Directors and Class II consists
of four Directors. At the Annual Meeting, five Directors of Class I are to be
elected to serve for three-year terms expiring in 1999 and until their
respective successors are duly elected and qualified. Unless a stockholder
requests that voting of the proxy be withheld for any one or more of the
nominees for Director in accordance with the instructions set forth on the
proxy, it presently is intended that shares represented by proxies will be voted
for the election as Directors of the five Class I nominees named in the table
below.
All nominees have consented to being named in this Proxy Statement and to
serve if elected. Should any nominee subsequently decline or be unable to accept
such nomination to serve as a Director, an event which the Board of Directors
does not now expect, the persons voting the
<PAGE> 4
shares represented by proxies solicited hereby either may vote such shares for a
slate of five persons which includes a substitute nominee or for a reduced
number of nominees, as they may deem advisable. For election as a Director, a
nominee must receive the affirmative vote of the holders of a majority of shares
of Common Stock represented at the meeting in person or by proxy.
The following information concerning each nominee and each Director
continuing in office is based in part on information received from the
respective nominees and Directors and in part on the Corporation's records:
<TABLE>
<CAPTION>
PRINCIPAL
OCCUPATION DURING
PAST FIVE YEARS FIRST
NAME OF AND AGE AS OF BECAME
NOMINEE OR DIRECTOR OCTOBER 22, 1996 DIRECTOR
------------------- ------------------ --------
<S> <C> <C>
NOMINEES TO SERVE UNTIL 1999 ANNUAL MEETING OF STOCKHOLDERS (CLASS I)
Larry A. Kushkin* Executive Vice President -- International 1989
Automotive Operations of the Corporation since
1989; Age 56
Franz A. Loehr Retired; formerly Associate General Manager of 1984
the Corporation's European subsidiaries and
Managing Director, A. Schulman GmbH; Age 67
Alan L. Ockene degree dagger Chairman, Akron Regional Development Board, since 1992
double-dagger January, 1995; formerly, President and Chief
Executive Officer of General Tire, Inc.
1991-1994; and Vice President of Goodyear Tire
& Rubber Company -- International, 1985-1991;
Age 65
Robert G. Wallace dagger Retired; formerly Executive Vice President, 1988
double-dagger Phillips Petroleum Company and
President of Phillips 66 Company; Age 70
Willard R. Holland double-dagger Chairman of the Board of Ohio Edison Company 1995
(electric utility) since November 1, 1996;
President and Chief Executive Officer, Ohio
Edison Company since 1993; Chairman of the
Board and Chief Executive Officer of Ohio
Edison Company's subsidiary, Pennsylvania Power
Company, since 1993; formerly, Chief Operating
Officer, Ohio Edison Company, 1991-1993; prior
thereto Senior Vice President, Detroit Edison
Company (electric utility), 1988-1991; Age 60
</TABLE>
2
<PAGE> 5
<TABLE>
<CAPTION>
PRINCIPAL
OCCUPATION DURING
PAST FIVE YEARS FIRST
NAME OF AND AGE AS OF BECAME
NOMINEE OR DIRECTOR OCTOBER 22, 1996 DIRECTOR
------------------- ----------------- --------
<S> <C> <C>
CONTINUING DIRECTORS SERVING UNTIL 1997 ANNUAL MEETING OF STOCKHOLDERS (CLASS II)
Gordon E. Heffern degree dagger Consultant to KeyCorp (formerly Society 1983
double-dagger Corporation) since 1990; formerly, Professor,
Kent State University, fall 1992 and prior
thereto 1988-1990; formerly, President and
Chief Executive Officer, Akron Community
Foundation, 1990-1992; also formerly Chairman
and Chief Executive Officer, Society
Corporation and Chairman, Society National
Bank, 1983-1987; Age 72
Robert A. Stefanko* Chairman of the Board of the Corporation since 1980
1991; Executive Vice President -- Finance and
Administration of the Corporation since 1989;
Age 53
Dr. Peggy Gordon Elliott degree Senior Fellow, National Center for Higher 1994
Education since August 1996; formerly,
President, The University of Akron 1992-1996,
and Chancellor and Chief Executive Officer,
Indiana University Northwest, 1984-1992; Age 59
James S. Marlen degree Chairman of the Board of Ameron International 1995
Corporation (construction and industrial
manufacturing) since January, 1995; President
and Chief Executive Officer of Ameron
International Corporation since June, 1993;
formerly, Vice President, GenCorp., Inc.
(aerospace, automotive, chemical and plastics)
and President, GenCorp. Polymer Products, a
subsidiary of GenCorp., Inc., 1988-1993; Age 55
CONTINUING DIRECTORS SERVING UNTIL 1998 ANNUAL MEETING OF STOCKHOLDERS (CLASS III)
James H. Berick degree dagger Chairman, Berick, Pearlman & Mills Co., L.P.A., 1973
double-dagger Cleveland, Ohio (attorneys) and Secretary of
the Corporation; President and Treasurer,
Realty ReFund Trust since 1990; Age 63
Terry L. Haines* President and Chief Executive Officer of the 1990
Corporation since 1991; formerly, Chief
Operating Officer, 1990-1991; Age 50
</TABLE>
3
<PAGE> 6
<TABLE>
<CAPTION>
PRINCIPAL
OCCUPATION DURING
PAST FIVE YEARS FIRST
NAME OF AND AGE AS OF BECAME
NOMINEE OR DIRECTOR OCTOBER 22, 1996 DIRECTOR
------------------- ------------------ --------
<S> <C> <C>
Dr. Paul Craig Roberts degree Distinguished Fellow, Cato Institute since 1993; 1992
Chairman of Institute for Political Economy
since 1985; Columnist for Business Week since
1983 and The Washington Times since 1988;
nationally syndicated Columnist for Scripps
Howard News Service since 1989; formerly,
William E. Simon Chair in Political Economy at
Center for Strategic and International Studies,
1982-1993, and Assistant Secretary of Treasury
for Economic Policy, 1981-1982; Age 57
Rene C. Rombouts General Manager of the Corporation's European 1992
subsidiaries since 1993 and Director of
European Marketing -- Manufactured Products of
the Corporation since 1983; Age 58
James A. Karman degree President and Chief Operating Officer, RPM, Inc. 1995
(coatings, sealants and specialty chemicals)
since 1978; formerly, Chief Financial Officer,
RPM, Inc. 1982-1993; Age 59
<FN>
- ---------------
* Member of Executive Committee
degree Member of Audit Committee
dagger Member of Nominating Committee
double-dagger Member of Compensation Committee
</TABLE>
Mr. Haines is a Director of FirstMerit Corporation. Mr. Berick is a
Director of MBNA Corporation, Realty ReFund Trust, The Tranzonic Companies and
The Town and Country Trust. Mr. Heffern is a Director of Pioneer Standard
Electronics, Inc. Dr. Roberts is a Director of 12 of the Value Line Mutual
Funds. Mr. Wallace is a Director of Valmont Industries, Inc. Dr. Elliott is a
Director of The Lubrizol Corporation. Mr. Marlen is a Director of Ameron
International Corporation. Mr. Karman is a Director of RPM, Inc., McDonald & Co.
Investments, Inc., Shiloh Industries, Inc. and Sudbury, Inc. Mr. Holland is a
Director of Ohio Edison Company. Mr. Ockene is a Director of Sudbury, Inc. and
Ameron International Corporation.
The Board of Directors has established the following committees: Executive
Committee, Audit Committee, Compensation Committee and Nominating Committee.
The functions performed by the Audit Committee of the Board of Directors
include: (i) recommending to the Board of Directors the appointment of a firm of
independent accountants to examine the books and accounts of the Corporation and
its subsidiaries; (ii) reviewing with the independent accountants the scope of
their work, prior to their examination; (iii) reviewing with the independent
accountants the scope of their examination after it has been completed, as well
as any recommendations made by the independent accountants; (iv) reviewing with
the independent accountants and approving each non-audit service performed or
proposed to be performed by the independent accountants, as well as the
relationship of audit to non-audit
4
<PAGE> 7
fees; and (v) considering the possible effect of the non-audit services upon the
independence of the accountants. The Audit Committee held two meetings during
the year ended August 31, 1996.
The functions performed by the Compensation Committee of the Board of
Directors include making recommendations to the Board of Directors concerning
compensation policies, salaries, grants of stock options and other forms of
compensation for management and certain other employees of the Corporation. The
Compensation Committee held two meetings during the year ended August 31, 1996.
The functions performed by the Nominating Committee include identifying
potential directors and making recommendations as to the size, functions and
composition of the Board and its committees. The Nominating Committee has no
formal procedures for consideration of nominees recommended by stockholders. The
Nominating Committee did not meet during the year ended August 31, 1996.
The Board of Directors held five meetings during the year ended August 31,
1996. All incumbent Directors attended at least 75% of the meetings of the Board
of Directors and any committees thereof on which they served during the year.
COMPENSATION OF DIRECTORS
Each Director of the Corporation who is not an employee of the Corporation
receives an annual Director's fee of $21,000 plus $1,000 for each Board or
committee meeting attended. In addition, on the first business day of February
of each year, each non-employee Director of the Corporation receives a grant of
an option to purchase 875 shares of the Common Stock of the Corporation, at an
option price equal to the fair market value of such shares on the first business
day immediately preceding the date of grant. Mr. Loehr has Consulting Agreements
with the Corporation, one providing for annual compensation of $75,000 for each
of the years ended August 31, 1995 and 1996 and one providing for compensation
of $50,000 for the year ended August 31, 1997.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
James H. Berick, Secretary, Director, and a member of the Corporation's
Compensation Committee is the Chairman of Berick, Pearlman & Mills Co., L.P.A.,
which is retained by the Corporation as legal counsel.
5
<PAGE> 8
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
This report describes the Corporation's executive compensation programs and
the basis on which fiscal year 1996 compensation determinations were made by the
Corporation's Compensation Committee in respect of the executive officers of the
Corporation, including the Chief Executive Officer and the other executive
officers named in the compensation tables in this proxy statement.
To ensure that the compensation program is administered in an objective
manner, the Compensation Committee is comprised entirely of independent
Directors. The duties of the Compensation Committee include recommending to the
Board of Directors the base salary level and bonus for the Chief Executive
Officer, setting the base salaries and bonuses for all other executive officers,
and approving the design and awards of all other elements of the executive pay
program. The Compensation Committee further evaluates executive performance and
addresses other matters related to executive compensation.
COMPENSATION POLICY AND OVERALL OBJECTIVES
In determining the amount and composition of executive compensation, the
Compensation Committee's goal is to provide a compensation package that will
enable the Corporation to attract and retain talented executives, reward
outstanding performance and link the interests of the Corporation's executives
to the interests of the Corporation's shareholders. In determining actual
compensation levels, the Compensation Committee considers all elements of the
program in total, rather than any one element in isolation.
The Compensation Committee members believe that each element of the
compensation program should target compensation levels at rates that are
reflective of current market practices. Offering market-comparable pay
opportunities allows the Corporation to maintain a stable, successful management
team.
Competitive market data is provided by an independent compensation
consultant. The data provided compares the Corporation's compensation practices
to those of a group of comparison companies. The Corporation's market data for
compensation comparison purposes is comprised of a group of diversified
manufacturing companies that have national and international business
operations. The Compensation Committee reviews and approves the selection of
companies used for compensation comparison purposes.
In establishing a comparison group for compensation purposes, the
Compensation Committee neither bases its decisions on quantitative relative
weights of various factors, nor follows mathematical formulae. Rather, the
Compensation Committee exercises its discretion and makes its judgment after
considering the factors it deems relevant.
The key elements of the Corporation's executive compensation are base
salary, annual bonuses and long-term incentives. These key elements are
addressed separately below. In determining compensation, the Compensation
Committee considers all elements of an executive's total compensation package.
6
<PAGE> 9
BASE SALARIES
The Compensation Committee regularly reviews each executive's base salary.
Base salaries for executives initially are determined by evaluating executives'
levels of responsibility, prior experience, breadth of knowledge, internal
equity issues and external pay practices. Increases to base salaries are driven
primarily by individual performance. Individual performance is evaluated based
on sustained levels of individual contribution to the Corporation.
In determining Mr. Haines' base salary in 1996, the Compensation Committee
considered the Corporation's financial performance for the prior year, Mr.
Haines' individual performance and his long-term contributions to the success of
the Corporation. The Compensation Committee also compares Mr. Haines' base
salary to the base salaries of other chief executive officers.
ANNUAL BONUSES
The Corporation's bonus program promotes the Corporation's
pay-for-performance philosophy by providing executives with direct financial
incentives in the form of annual cash bonuses based on individual performance.
Annual bonus opportunities allow the Corporation to communicate specific goals
that are of primary importance during the coming year and motivate executives to
achieve these goals.
Although target bonus opportunities are not established at the beginning of
the year, the payouts are intended to represent a significant portion of each
executive's total compensation. This practice reinforces the Corporation's
pay-for-performance philosophy. The sizes of the payouts are determined at the
discretion of the Compensation Committee, based upon each executive's
performance during the prior fiscal year and on Corporation performance. Mr.
Haines' 1996 bonus award was determined using the same criteria as the other
executive officers and is reported in the Summary Compensation Table, below.
LONG-TERM INCENTIVES
Long-term incentives are provided pursuant to the Corporation's 1991 Stock
Incentive Plan (the "1991 Plan").
In keeping with the Corporation's commitment to provide a total
compensation package which includes at-risk components of pay, the Compensation
Committee makes annual decisions regarding appropriate stock-based grants for
each executive. When determining these awards, the Compensation Committee
considers the Corporation's financial performance in the prior year, executives'
levels of responsibility, prior experience, historical award data, and
compensation practices at the comparison companies.
Stock options were granted in 1996 at an option price equal to the fair
market value of the Corporation's common stock on the date of grant.
Accordingly, stock options granted in 1996 have value only if the stock price
appreciates following the date the options are granted. This design focuses
executives on the creation of shareholder value over the long term and
encourages equity ownership of the Corporation. These stock options become
exercisable at the rate of 25% per year commencing on the first anniversary of
the date of grant of the option, so long as the holder remains employed by the
Corporation or a subsidiary.
7
<PAGE> 10
In 1996, Mr. Haines received options to purchase 30,000 shares at the fair
market value ($23.00) of such shares on the date of grant. These grants were
established after comparison to the averages of long-term incentive grants at
the comparison companies. The Compensation Committee believes that this equity
interest provides a strong link to the interests of shareholders.
RESTRICTED STOCK
Shares of restricted stock were awarded to certain executives in 1996.
Restricted stock awarded to executives vests five years after the date awarded.
Because of its vesting requirements, restricted stock enhances the Corporation's
ability to maintain a stable executive team, focused on the Corporation's
long-term success. Restricted stock provides executives with an immediate link
to shareholder interests. Dividends are accrued until the lapse of restrictions
on the restricted stock and are paid out thereafter. In 1996, Mr. Haines
received an award of 8,000 shares of restricted stock.
The Compensation Committee:
Gordon E. Heffern, Chairman
James H. Berick
Robert G. Wallace
Alan L. Ockene
Willard R. Holland
8
<PAGE> 11
COMPENSATION OF EXECUTIVE OFFICERS
The following table sets forth the compensation paid or to be paid by the
Corporation and its subsidiaries in respect of services rendered during the
Corporation's last three fiscal years to the Corporation's Chief Executive
Officer and each of the four most highly compensated executive officers (as
measured by salary and bonus) whose aggregate salary and bonus during the fiscal
year ended August 31, 1996, exceeded $100,000:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
---------------------
ANNUAL COMPENSATION (1) AWARDS
------------------------------------ ---------------------
OTHER RESTRICTED
ANNUAL STOCK ALL OTHER
FISCAL COMPENSA- AWARD(S) OPTIONS COMPEN-
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS TION(2) (3) (#) SATION(4)
- --------------------------------- ------ -------- -------- ---------- ---------- ------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Terry L. Haines 1996 $360,000(5) $145,000 $ 29,491 $184,000 30,000 $ 137,049(6)
President & Chief 1995 $325,000 $180,000 $ 21,910 $0 27,500 $ 130,819
Executive Officer 1994 $270,833 $180,000 $ 12,075 $157,500 25,000 $ 117,309
Robert A. Stefanko 1996 $300,000(5) $145,000 $ 7,976 $149,500 25,000 $ 92,904(6)
Chairman of the Board 1995 $270,833 $180,000 $118,335 $0 23,000 $ 122,274
of Directors, Chief 1994 $226,667 $180,000 $0 $131,250 20,000 $ 116,474
Financial Officer and
Executive Vice President--
Finance and Administration
Larry A. Kushkin 1996 $215,000(5) $130,000 $ 29,206 $ 75,900 18,000 $ 41,942(6)
Executive Vice President-- 1995 $200,000 $160,000 $139,899 $0 14,000 $ 69,278
International Automotive 1994 $185,000 $155,000 $0 $ 78,750 12,000 $ 76,585
Operations
Leonard E. Emge 1996 $150,000(5) $ 50,000 $ 3,399 $ 41,400 7,000 $ 16,110(6)
Vice President-- 1995 $135,000 $ 60,000 $ 11,646 $0 7,000 $ 14,610
Manufacturing 1994 $117,833 $ 40,000 $ 7,121 $ 39,375 5,000 $ 13,570
Alain C. Adam 1996 $122,000(5) $ 45,000 $ 45,052 $ 27,600 3,500 $ 13,310(6)
Vice President-- 1995 $116,000 $ 55,000 $0 $0 3,500 $ 12,710
Automotive Marketing 1994 $110,000 $ 53,000 $ 2,165 $ 31,500 3,500 $ 12,787
- ---------------
(1) Includes amounts earned in fiscal year, whether or not deferred.
(2) Represents the net value (market value less exercise price) realized in
respect of Common Shares purchased from the Corporation pursuant to exercise
of stock options.
(3) The total number of restricted shares and the aggregate market value at
August 31, 1996: Mr. Haines held 19,000 shares valued at $413,250; Mr.
Stefanko held 15,250 shares valued at $331,688; Mr. Kushkin held 8,800
shares valued at $191,400; Mr. Adam held 3,525 shares valued at $76,669; and
Mr. Emge held 4,175 shares valued at $90,806. Dividends accrue but are not
paid on the restricted shares until the restrictions thereon lapse. The
aggregate market value is based on the fair market value at August 31, 1996
of $21.75.
(4) Represents the following compensation: Corporation contributions to Profit
Sharing Plan; amounts accrued by the Corporation for the fiscal year under
non-qualified profit sharing plan; Corporation payments of term life
insurance premiums; amounts accrued by the Corporation for the fiscal year
under deferred compensation agreements; and Director's fees received from
the Corporation's Belgian subsidiary.
9
<PAGE> 12
(5) There has been no increase in the named executive officers' salaries since
the following dates: Messrs. Haines and Stefanko, April 1, 1995, and Messrs.
Kushkin, Emge and Adam, September 1, 1995.
(6) Amounts shown include the following: Corporation contributions to Profit
Sharing Plan -- $15,000 for each of Messrs. Haines, Stefanko, Kushkin and
Emge, and $12,200 for Mr. Adam; amounts accrued by the Corporation for the
fiscal year ended August 31, 1996 under non-qualified profit sharing plan --
$22,984 for Mr. Haines, $16,370 for Mr. Stefanko, and $7,067 for Mr.
Kushkin; Corporation payments of term life insurance premiums -- $1,110 for
each named executive officer; amounts accrued by the Corporation under
deferred compensation agreements for the fiscal year ended August 31, 1996
-- $75,062 for Mr. Haines ($37,531 of which was not vested), $37,531 for Mr.
Stefanko ($18,766 of which was not vested), and $18,765 for Mr. Kushkin
($13,136 of which was not vested); and Director's fees received from the
Corporation's Belgian subsidiary -- $22,893 for each of Messrs. Haines and
Stefanko.
</TABLE>
STOCK OPTIONS
The following table contains information concerning the grant of stock
options during fiscal year 1996 to the named executive officers. The amounts
shown for each of the named executive officers as potential realizable values
are based on arbitrarily assumed annualized rates of stock appreciation of five
percent and ten percent over the full five-year term of the options, which would
result in stock prices of approximately $27.96 and $33.67, respectively. No gain
to the optionees is possible without an increase in stock price which will
benefit all stockholders proportionately. Actual gains, if any, on an option
exercise are dependent upon future performance of the Corporation's Common Stock
and overall market conditions. There can be no assurance that the potential
realizable values shown in this table will be achieved.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS IN 1996 POTENTIAL REALIZABLE
% OF TOTAL VALUE AT ASSUMED
OPTIONS ANNUAL RATES OF STOCK
GRANTED TO EXERCISE PRICE APPRECIATION FOR
EMPLOYEES IN OR BASE 5-YEAR OPTION TERM
OPTIONS FISCAL PRICE(3) EXPIRATION 5% ($) 10% ($)
NAME (#)GRANTED(1) YEAR(2) ($/SH) DATE (4) (4)
- ---------------------- ------------- ------------ -------- ----------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Terry L. Haines 30,000 15.29% $23.00 07/10/01 $148,800 $320,100
Robert A. Stefanko 25,000 12.75% $23.00 07/10/01 $124,000 $266,750
Larry A. Kushkin 18,000 9.18% $23.00 07/10/01 $ 89,280 $192,060
Leonard E. Emge 7,000 3.57% $23.00 07/10/01 $ 34,720 $ 74,690
Alain C. Adam 3,500 1.78% $23.00 07/10/01 $ 17,360 $ 37,345
<FN>
- ---------------
(1) All options for common shares were granted pursuant to the 1991 Plan. Such
options become exercisable at the rate of 25% per year commencing on the
first anniversary of the date of grant of the option, so long as the
optionee remains employed by the Corporation.
(2) Based on 196,150 options granted to all employees.
(3) Fair market value on the date of grant.
(4) The share price represents the price of the Common Stock if the assumed
annual rates of stock price appreciation are achieved. If the named
executive officers realize these values, the Corporation's shareholders will
realize aggregate appreciation in the price of the 37,806,131 shares of
Common Stock outstanding of $187.5 million or $403.4 million, respectively,
over the five-year term of the options.
</TABLE>
10
<PAGE> 13
The following table contains information concerning stock option exercises
during fiscal year 1996 by the named executive officers and the number of their
unexercised options at August 31, 1996.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
NUMBER OF UNEXERCISED OPTIONS
AT YEAR END(#)
SHARES FISCAL
ACQUIRED ON VALUE -------------------------------
NAME EXERCISE(#) REALIZED(1) EXERCISABLE UNEXERCISABLE
- -------------------------- ----------- --------------- ----------- -------------
<S> <C> <C> <C> <C>
Terry L. Haines 14,643 $ 29,491 66,250 72,500
Robert A. Stefanko 5,268 $ 7,976 54,812 60,063
Larry A. Kushkin 5,067 $ 29,206 31,375 37,625
Leonard E. Emge 2,718 $ 3,399 9,562 15,688
Alain C. Adam 14,375 $ 45,052 9,187 8,813
<FN>
- ---------------
(1) Represents the net value (market value less exercise price).
</TABLE>
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS
The following table sets forth information as of October 22, 1996 in
respect of beneficial ownership of shares of the Corporation's Common Stock by
each person known to the Corporation to own five percent or more of its Common
Stock.
<TABLE>
<CAPTION>
AMOUNT AND NATURE
OF BENEFICIAL PERCENT OF
NAME OWNERSHIP OUTSTANDING
- ------------------------------------------ ----------------- -----------
<S> <C> <C>
FMR Corp.(1) 4,386,962 11.6%
82 Devonshire Street
Boston, Massachusetts 02109
Dietche & Field Advisers, Inc.(2) 2,139,900 5.7%
437 Madison Avenue
New York, New York 10022
<FN>
- ---------------
(1) According to FMR Corp.'s ("FMR") report on Schedule 13G dated January 10,
1996, FMR, a parent holding company, Fidelity Management & Research Company
("Adviser"), a wholly-owned subsidiary of FMR and a registered investment
adviser, Edward C. Johnson 3d, Chairman of the Board and a shareholder of
FMR, and Abigail P. Johnson, a Director and a shareholder of FMR, each
directly or indirectly beneficially owned 4,386,962 shares of the
Corporation's Common Stock. FMR further stated in the Schedule 13G that
Fidelity Magellan Fund, 82 Devonshire Street, Boston, Massachusetts 02109,
an investment company for which Adviser serves as investment adviser, is the
indirect or direct beneficial owner of 2,722,025 shares or 7.2% of the
Corporation's outstanding Common Stock.
(2) Information according to Dietche & Field Advisers, Inc.'s report on Schedule
13G dated October 11, 1996.
</TABLE>
11
<PAGE> 14
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth information as of October 22, 1996 in
respect of beneficial ownership of shares of the Corporation's Common Stock by
each Director, by each named executive officer, and by all Directors and
executive officers as a group:
<TABLE>
<CAPTION>
AMOUNT AND NATURE
OF BENEFICIAL PERCENT OF
NAME OWNERSHIP(1)(2)(3) OUTSTANDING
- ------------------------------------------ ----------------- -----------
<S> <C> <C>
Gordon E. Heffern 3,702 *
Robert A. Stefanko 154,774 *
Dr. Peggy Gordon Elliott 1,218 *
James H. Berick 16,311 *
Terry L. Haines 115,250(4) *
Dr. Paul Craig Roberts 3,716(5) *
Rene C. Rombouts 87,079 *
Larry A. Kushkin 319,138(6) *
Franz A. Loehr 142,474 *
Alan L. Ockene 5,011 *
Robert G. Wallace 8,936 *
James S. Marlen 6,000(7) *
Willard R. Holland 1,500 *
James A. Karman 500 *
Alain C. Adam 20,835 *
Leonard E. Emge 33,281 *
All Directors and
Executive Officers as a
group (17 persons) 960,246 2.5%
- ---------------
* Less than 1% of the shares outstanding
(1) Includes the following number of shares which are not owned, but can be
purchased within 60 days upon the exercise of options granted under the
Corporation's 1991 Stock Incentive Plan: 66,250 by Terry L. Haines; 31,375
by Larry A. Kushkin; 54,812 by Robert A. Stefanko; 9,187 by Alain C. Adam;
9,562 by Leonard E. Emge; 36,218 by Rene C. Rombouts; and 212,110 by all
Directors and executive officers as a group.
(2) Includes 1,311 shares which are not owned but can be purchased within 60
days upon the exercise of options granted under the Corporation's 1992
Non-Employee Directors' Stock Option Plan by each of Alan L. Ockene, Robert
G. Wallace, Gordon E. Heffern, James H. Berick, and Dr. Paul Craig Roberts
and 6,555 shares by all Directors and executive officers as a group.
(3) Includes the following number of restricted shares of Common Stock awarded
under the Corporation's 1991 Stock Incentive Plan: 19,000 for Terry L.
Haines, 15,250 for Robert A.
12
<PAGE> 15
Stefanko, 8,800 for Larry A. Kushkin, 9,500 for Rene C. Rombouts, 3,750 for
Franz A. Loehr, 3,525 for Alain C. Adam, 4,175 for Leonard E. Emge, and
66,125 for all Directors and executive officers as a group.
(4) Includes 2,500 shares of the Corporation's Common Stock acquired by Mr.
Haines on October 30, 1996.
(5) Includes 100 shares held by Dr. Roberts as trustee for his son, the
beneficial ownership of which Dr. Roberts disclaims.
(6) Includes 5,815 shares held solely by Mr. Kushkin's wife and 55,820 shares
held in trust for Mr. Kushkin's children, the beneficial ownership of all of
which Mr. Kushkin disclaims.
(7) Includes 2,000 shares held solely by Mr. Marlen's wife, the beneficial
ownership of which Mr. Marlen disclaims.
</TABLE>
13
<PAGE> 16
PERFORMANCE GRAPH
The following graph compares total stockholder returns in respect of the
Corporation's Common Shares over the last five fiscal years (i.e. the cumulative
changes over the past five-year period of $100 invested) to the Standard &
Poor's 500 Stock Index ("S&P 500") and the Standard and Poor's Specialty
Chemical Group ("S&P Specialty Chemicals"). Total return values for the
Corporation's Common Shares, S&P 500 and S&P Specialty Chemicals were calculated
based upon market weighting at the beginning of the period and include
reinvestment of dividends on a quarterly basis. The stockholder returns shown on
the graph below are not necessarily indicative of future performance.
The following graph shall not be deemed incorporated by reference by any
general statement incorporating by reference this proxy statement into any
filing under the Securities Act of 1933 or under the Securities Exchange Act of
1934, except to the extent the Corporation specifically incorporates this
information by reference and otherwise shall not be deemed filed under such
Acts.
<TABLE>
<CAPTION>
Measurement Period A. Schulman, S&P Specialty
(Fiscal Year Covered) Inc. S&P 500 Chemicals
<S> <C> <C> <C>
8/91 100.00 100.00 100.00
8/92 134.27 107.94 106.95
8/93 118.46 124.27 125.81
8/94 135.67 131.02 121.66
8/95 137.28 158.96 153.07
8/96 114.57 188.59 152.39
</TABLE>
14
<PAGE> 17
EMPLOYMENT CONTRACTS AND CHANGE-IN-CONTROL ARRANGEMENTS
In January 1996, the Corporation replaced the 1990 employment agreements
with Messrs. Haines, Stefanko, Kushkin, Adam, and certain other senior personnel
and entered into an employment agreement with Mr. Emge. The employment
agreements of Messrs. Haines, Stefanko and Kushkin have an initial three-year
term. Such agreements automatically will be extended at the end of each month
for an additional month unless prior notice of termination is given, to
constitute at all times a three-year agreement; provided, however, that no such
monthly extension shall occur after August 31, 2008, January 31, 2005, or July
31, 2002, respectively. The employment agreement of Mr. Emge provides for a
two-year term expiring in December 1997 and the employment agreement of Mr. Adam
has an initial one-year term. Mr. Adam's agreement automatically will be
extended at the end of each month for an additional month unless prior notice of
termination is given, to constitute at all times a one-year agreement; provided,
however, that no such monthly extension shall occur after November 30, 2012. The
employment agreements provide that in the event employment is terminated as a
result of a merger, consolidation, liquidation, or change in control
(collectively, "Change in Control") of the Corporation, or for any other reason
except for death, disability or for cause, the employee shall be paid a lump sum
amount equal to a multiple (equal to the initial term of such agreement) of the
sum of (i) the higher of his annual salary payable prior to the event causing
the termination or salary payable prior to the Change in Control, plus (ii) an
amount equal to the higher of his bonus earned in the preceding fiscal year or
the average bonus earned in the most recent three fiscal years. In addition,
upon a Change in Control, each of the employment agreements provides that the
employee also will continue to receive certain insurance benefits not provided
to the employee by another source after termination, for a period of time equal
to the original term of such employee's employment agreement, and the employee
will be paid a lump sum amount equal to the sum of (i) any unpaid annual
incentive compensation previously awarded to the employee, the payment of which
was contingent only upon continued employment, and (ii) a pro rata portion of
his bonus for the fiscal year in which the termination occurred. If the
Corporation terminates an employee's employment without cause prior to the
expiration of the term of the employment agreement or prior to a Change in
Control, the employee shall receive his salary for the remaining term of his
employment agreement, plus a bonus each year for the remaining term of his
agreement in an amount equal to fifty percent of his average annual bonus during
the most recent five calendar years of employment. If the employee's employment
is terminated by reason of death, the Corporation shall pay a lump sum amount
equal to sixty percent of the employee's salary for twenty-four months. In
addition, the amounts described above payable under the employment agreements
for Messrs. Haines, Stefanko and Kushkin shall be "grossed up" to cover certain
taxes payable by the employee on certain of the amounts paid to such employee in
respect of a Change in Control of the Corporation. Notwithstanding the
foregoing, in respect of the employment agreements of Messrs. Emge and Adam, the
Corporation is not obligated to pay any amount which is in excess of the maximum
amount which it can deduct for federal income tax purposes. These employment
agreements may tend to discourage a takeover attempt of the Corporation inasmuch
as a Change in Control of the Corporation could result in increased compensation
expense.
The Corporation has a qualified Profit Sharing Plan (the "Profit Sharing
Plan") which provides that in any year the Corporation's Board of Directors, in
its discretion, may authorize the payment of contributions to the Corporation's
Profit-Sharing Trust, which contributions are
15
<PAGE> 18
allocated among participants. The maximum amount which may be allocated to a
participant generally is limited to the lesser of (i) $30,000 or (ii) 25% of the
participant's compensation. Participation in the Profit Sharing Plan is
available to all salaried employees of the Corporation (and participating
subsidiaries) who are employed on the last day of the Profit Sharing Plan Year.
Benefits under the Profit Sharing Plan vest in accordance with a specified
formula which provides for partial vesting starting after three years of
employment with the Corporation and full vesting after seven years of employment
with the Corporation. The assets of the Profit-Sharing Trust are invested, and
each participant's account reflects the aggregate investment performance of the
Trust assets. For the fiscal year ended August 31, 1996, the amounts contributed
to the Profit Sharing Plan accounts of the persons listed in the Summary
Compensation Table were: $15,000 for each of Messrs. Haines, Stefanko, Kushkin,
and Emge; and $12,200 for Mr. Adam.
The Corporation also has a non-qualified Profit Sharing Plan (the
"Non-Qualified Plan") which provides that in any year the Corporation's Board of
Directors, in its discretion, may authorize the accrual by the Corporation of
certain amounts for the benefit of the Non-Qualified Plan's participants, in
order to restore to such participants amounts not available to them under the
Profit Sharing Plan due to certain limitations thereunder. Benefits under the
Non-Qualified Plan vest in accordance with a specified formula which provides
for partial vesting starting after three years of employment with the
Corporation and full vesting after seven years of employment with the
Corporation. In addition, upon a Change in Control of the Corporation, benefits
become fully vested. Amounts accrued by the Corporation under the Non-Qualified
Plan for the benefit of each participant reflect the investment performance
which would have been realized had a corresponding amount been invested for the
benefit of such participant during such year in the Profit Sharing Trust
pursuant to the Profit Sharing Plan. For the fiscal year ended August 31, 1996,
the amounts accrued by the Corporation pursuant to the Non-Qualified Plan for
the benefit of the persons listed in the Summary Compensation Table were: Mr.
Haines, $22,984; Mr. Stefanko, $16,370; and Mr. Kushkin $7,067.
The Corporation also has deferred compensation agreements with Messrs.
Haines, Stefanko and Kushkin, providing for the payment of benefits for ten
years following retirement, disability or death in the annual amount of $100,000
for Mr. Haines, $100,000 (under two agreements for $50,000 each) for Mr.
Stefanko and $75,000 (under two agreements for $50,000 and $25,000,
respectively) for Mr. Kushkin, except that any amounts payable at retirement
will be reduced proportionately to the extent that Messrs. Haines, Stefanko and
Kushkin are employed by the Corporation for less than ten years from the date
of their agreements. The effective dates of Mr. Haines' Agreement is 1991, of
Mr. Stefanko's two agreements are 1985 and 1991, and of Mr. Kushkin's two
agreements are 1985 and 1992. No additional benefits are payable under the
agreements upon a Change in Control of the Corporation; however, payment of all
of the benefits of Messrs. Haines, Stefanko and Kushkin will be accelerated in
the event of a termination of employment following certain Changes in Control.
The Corporation owns and is the beneficiary of life insurance policies upon the
lives of Messrs. Haines, Stefanko and Kushkin, in the amount of $1,000,000,
$1,000,000 and $500,000, respectively.
16
<PAGE> 19
SELECTION OF ACCOUNTANTS
Upon the recommendation of its Audit Committee, the Board of Directors of
the Corporation has selected Price Waterhouse LLP as independent accountants to
examine the books, records and accounts of the Corporation and its subsidiaries
for the fiscal year ending August 31, 1997. In accordance with past practice,
this selection is being presented to stockholders for ratification or rejection
at this Annual Meeting. The Board of Directors recommends that such selection be
ratified. Price Waterhouse LLP is the independent accountant of the Corporation
for the fiscal year ended August 31, 1996, and is considered by the Board of
Directors to be well qualified. Representatives of Price Waterhouse LLP will be
present at the Annual Meeting to make a statement if they desire to do so and
will be available to respond to appropriate questions.
For ratification, this proposal will require the affirmative vote of the
holders of a majority of the shares of Common Stock represented at the meeting
in person or by proxy. If the resolution is rejected, or if Price Waterhouse LLP
declines to act or becomes incapable of action, or if its employment is
discontinued, the Board will appoint other public accountants whose continued
employment after the following Annual Meeting of Stockholders will be subject to
ratification by stockholders.
COMPLIANCE WITH SECTION 16(a) OF
THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the
Corporation's officers and Directors, and persons who own more than 10% of the
Corporation's Common Stock, to file reports of ownership and changes in
ownership with the Securities and Exchange Commission. Mr. Wallace, a Director
of the Corporation, filed his statement of beneficial ownership on Form 4
reporting a December 1995 transaction subsequent to the due date for such
filing.
OTHER MATTERS
The Board of Directors knows of no matters to be presented for action at
the Annual Meeting other than those described in this Proxy Statement. Should
other matters come before the meeting, the shares represented by proxies
solicited hereby will be voted in respect thereof in accordance with the best
judgment of the proxy holders.
GENERAL INFORMATION
VOTING OF PROXIES
Shares represented by properly executed proxies will be voted at the
meeting, and if a stockholder has specified how the shares represented thereby
are to be voted, they will be voted in accordance with such specification. It is
intended that shares represented by proxies on which no specification has been
made will be voted (i) for the election of Directors and (ii) for ratification
of the selection of the independent accountants.
17
<PAGE> 20
STOCKHOLDER PROPOSALS
Proposals of stockholders intended to be presented at the next Annual
Meeting of Stockholders, presently scheduled for December 1997, must be received
by the Corporation no later than July 17, 1997 for consideration for inclusion
in the proxy statement and form of proxy for that meeting.
REVOCATION OF PROXIES
A proxy may be revoked at any time before a vote is taken or the authority
granted is otherwise exercised. Revocation may be accomplished by the execution
of a later proxy with regard to the same shares or by giving notice in writing
or in open meeting.
SOLICITATION OF PROXIES
The cost of soliciting the accompanying proxies will be borne by the
Corporation. The Corporation does not expect to pay any compensation for the
solicitation of proxies but may pay brokers, nominees, fiduciaries and
custodians their reasonable expenses for sending proxy material to principals
and obtaining their instructions. In addition to solicitation by mail, proxies
may be solicited in person, by telephone or telegraph or by officers, Directors
and regular employees of the Corporation.
By order of the Board of Directors
JAMES H. BERICK
Secretary
November 12, 1996
18
<PAGE> 21
P
R
O
X
Y
A. SCHULMAN, INC.
THIS PROXY IS SOLICITED ON BEHALF OF
THE BOARD OF DIRECTORS
The undersigned hereby appoints TERRY L. HAINES, ROBERT A. STEFANKO, and JAMES
H. BERICK and each of them as Proxies, each with the full power to appoint his
substitute, and hereby authorizes them to represent and to vote, as designated
below, all the shares of Common Stock of A. Schulman, Inc. held of record by the
undersigned on October 22, 1996 at the annual meeting of Stockholders to be held
on December 5, 1996 and at any adjournments thereof.
<TABLE>
<S> <C>
Election of Class I Directors, Nominees:
Larry A. Kushkin, Franz A. Loehr, Alan L. Ockene, Robert G.
Wallace and Willard R. Holland
</TABLE>
YOU ARE ENCOURAGED TO SPECIFY YOUR CHOICES BY MARKING THE
APPROPRIATE BOXES, SEE REVERSE SIDE, BUT YOU NEED NOT MARK ANY BOXES
IF YOU WISH TO VOTE IN ACCORDANCE WITH THE BOARD OF DIRECTORS'
RECOMMENDATIONS. THE PROXIES CANNOT VOTE YOUR SHARES UNLESS YOU SIGN
AND RETURN THIS CARD.
SEE REVERSE
SIDE
<PAGE> 22
<TABLE>
<S> <C>
[X] PLEASE MARK YOUR SHARES IN YOUR NAME
VOTES AS IN THIS
EXAMPLE.
</TABLE>
<TABLE>
<CAPTION>
FOR WITHHELD FOR AGAINST ABSTAIN
<S> <C> <C> <C> <C> <C> <C> <C>
1. Election of [ ] [ ] 2. To ratify the se- [ ] [ ] [ ] 3. In their discretion,
Class I lection of Price the Proxies are au-
Directors Waterhouse LLP thorized to vote
(see reverse) as independent upon such other
accountants business as may
for the fiscal properly come
year ending before the meeting.
August 31, 1997.
</TABLE>
For, except vote withheld from the following nominee(s):
--------------------------------------------------------
SIGNATURE(S) __________________________________________________ DATE ________
SIGNATURE(S) __________________________________________________ DATE ________
NOTE: Please sign exactly as name appears hereon. Joint owners should each
sign. When signing as attorney, executor, administrator, trustee or
guardian, please give full title as such.
