<PAGE>
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:
/ / 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)
- --------------------------------------------------------------------------------
(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)(1)
and 0-11.
(1) Title of each class of securities to which transaction applies:
-----------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
-----------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-----------------------------------------------------------------------
(5) Total fee paid:
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/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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<PAGE>
[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 Hilton Inn West, 3180 West Market Street,
Akron, Ohio, on Thursday, December 9, 1999 at 10:00 A.M., local time, for the
purpose of considering and acting upon:
1. The election of three (3) Directors for a three-year term expiring in
2002;
2. A proposal to amend the 1991 Stock Incentive Plan;
3. The ratification of the selection by the Board of Directors of
PricewaterhouseCoopers LLP as independent accountants for the fiscal
year ending August 31, 2000; and
4. 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 18, 1999 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 10, 1999
- --------------------------------------------------------------------------------
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.
- --------------------------------------------------------------------------------
<PAGE>
[LOGO]
3550 WEST MARKET STREET
AKRON, OHIO 44333
------------------------
PROXY STATEMENT
---------------------
November 10, 1999
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 9, 1999, and any adjournments thereof.
Stockholders of record at the close of business on October 18, 1999 (the
record date) will be entitled to vote at the Annual Meeting. At that date the
Corporation had issued and outstanding 31,077,155 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 15,538,578 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 10, 1999.
ELECTION OF DIRECTORS
The Board of Directors of the Corporation presently is comprised of ten
Directors. The Directors of the Corporation are divided into three classes;
presently, Classes I and III each consist of three Directors and Class II
consists of four Directors. At the Annual Meeting, three Directors of Class I
are to be elected to serve for three-year terms expiring in 2002 and until their
respective successors are duly elected and qualified. Robert G. Wallace,
currently a Class I Director, will retire at the Annual Meeting. Peggy Gordon
Elliott, currently a Class II Director, has been nominated to serve as a
Class I Director in Mr. Wallace's place. As a result, effective upon the
election of the Class I Directors at the Annual Meeting, the number of Directors
of the Corporation will be reduced to nine and the number of Class II Directors
will be reduced to three. The number of Class I and III Directors will remain
unchanged. In the event that Dr. Elliott is not elected as a Class I Director,
she will continue to serve the remainder of her current term as a Class II
Director, the number of Class II Directors will remain fixed at four and the
total number of Directors of the Corporation will remain unchanged at ten.
<PAGE>
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 three 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 shares represented by proxies
solicited hereby may vote such shares for a reduced number of nominees. For
election as a Director, a nominee must receive the affirmative vote of the
holders of a majority of shares represented at the meeting in person or by
proxy. Abstentions will be counted as votes cast and will count toward the
determination of the presence of a quorum, but will have the same effect as a
vote cast against the nominee. Broker non-votes will not be counted as votes
cast, but will count toward the determination of the presence of a quorum.
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>
FIRST
PRINCIPAL OCCUPATION DURING PAST FIVE YEARS BECAME
NAME OF NOMINEE OR DIRECTOR AND AGE AS OF OCTOBER 18, 1999 DIRECTOR
- --------------------------- ----------------------------------------------------------- --------
<S> <C> <C>
NOMINEES TO SERVE UNTIL 2002 ANNUAL MEETING OF STOCKHOLDERS (CLASS I)
Alan L. Ockene(3)(4)...................... Member, Executive Committee of Akron Regional Development 1992
Board; prior thereto, Chairman, Akron Regional Development
Board, 1995-1997; formerly, President and Chief Executive
Officer of General Tire, Inc. 1991-1994; and Vice
President of Goodyear Tire & Rubber
Company--International, 1985-1991; Age 68
Willard R. Holland(3)(4).................. Chairman of the Board of FirstEnergy Corp. (electric 1995
utility) since November 1, 1996; President and Chief
Executive Officer, FirstEnergy Corp. since 1993; Chairman
of the Board and Chief Executive Officer of FirstEnergy
Corp.'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 63
Dr. Peggy Gordon Elliott(2)(4)............ President, South Dakota State University since January 1994
1998; prior thereto, Senior Fellow, National Center for
Higher Education 1996-1998; President, The University of
Akron 1992-1996; and Chancellor and Chief Executive
Officer, Indiana University Northwest, 1984-1992; Age 62
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
FIRST
PRINCIPAL OCCUPATION DURING PAST FIVE YEARS BECAME
NAME OF NOMINEE OR DIRECTOR AND AGE AS OF OCTOBER 18, 1999 DIRECTOR
- --------------------------- ----------------------------------------------------------- --------
<S> <C> <C>
CONTINUING DIRECTORS SERVING UNTIL 2000 ANNUAL MEETING OF STOCKHOLDERS (CLASS II)
Robert A. Stefanko(1)..................... Chairman of the Board of the Corporation since 1991; 1980
Executive Vice President--Finance and Administration of
the Corporation since 1989; Age 56
Rene C. Rombouts.......................... General Manager of the Corporation's European subsidiaries 1992
since 1993 and Director of European
Marketing--Manufactured Products of the Corporation since
1983; Age 61
James S. Marlen(2)........................ Chairman of the Board of Ameron International Corporation 1995
(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 58
CONTINUING DIRECTORS SERVING UNTIL 2001 ANNUAL MEETING OF STOCKHOLDERS (CLASS III)
Terry L. Haines(1)........................ President and Chief Executive Officer of the Corporation 1990
since 1991; formerly, Chief Operating Officer, 1990-1991;
Age 53
Dr. Paul Craig Roberts(2)(3).............. Columnist for THE WASHINGTON TIMES since 1988 and for 1992
INVESTOR'S BUSINESS DAILY since 1998; Chairman of
Institute for Political Economy since 1985; nationally
syndicated Columnist for Creators Syndicate since March
1997; formerly, Distinguished Fellow, Cato Institute,
1993-1996; Columnist for BUSINESS WEEK, 1982-1998;
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 60
James A. Karman(2)........................ Vice Chairman, RPM, Inc. (coatings, sealants and specialty 1995
chemicals) since August 1999; formerly President of RPM,
Inc., 1978-1999; Chief Financial Officer, RPM, Inc.
1982-1993; Age 62
</TABLE>
- ------------------------------
(1) Member of Executive Committee
(2) Member of Audit Committee
(3) Member of Nominating Committee
(4) Member of Compensation Committee
3
<PAGE>
Mr. Haines is a Director of FirstMerit Corporation and Ameron International
Corporation. Dr. Roberts is a Director of 12 of the Value Line Mutual Funds.
Dr. Elliott is a Director of The Lubrizol Corporation. Messrs. Marlen and Ockene
are Directors of Ameron International Corporation. Mr. Karman is a Director of
RPM, Inc., Shiloh Industries, Inc. and Metropolitan Financial Corporation.
Mr. Holland is a Director of FirstEnergy Corp.
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 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, 1999.
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, 1999.
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, 1999.
The Board of Directors held seven meetings during the year ended August 31,
1999. 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,
except Mr. Ockene and Mr. Karman.
COMPENSATION OF DIRECTORS
Each Director of the Corporation who is not an employee of the Corporation
receives an annual Director's fee of $27,000, plus $1,100 for each Board or
committee meeting attended. Further, any Director serving as a Chairman of a
committee receives an additional annual fee of $2,000. Each Director has the
option to defer payment of all or a specified portion of his or her Director's
fees and to receive, in lieu thereof, a number of units equivalent to the amount
to be paid, divided by the closing price of the Corporation's Common Stock on
the last business day of the prior year. Upon surrender of the units, the
Director will receive a cash payment in an amount determined by multiplying the
number of units times the market price of the Common Stock on the day before the
surrender date. 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 1,000 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
preceding the date of grant.
4
<PAGE>
CERTAIN RELATED TRANSACTIONS
Terry L. Haines, President and Chief Executive Officer, received a
non-interest bearing loan from the Corporation to be applied in part to pay
taxes relating to the vesting of certain shares of restricted stock of the
Corporation previously granted to Mr. Haines and in part for general purposes.
The largest amount of such indebtedness to the Corporation outstanding during
the fiscal year was $67,233. As of October 31, 1999, the amount of such
indebtedness outstanding was $31,300.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
This report describes the Corporation's executive compensation programs and
the basis on which fiscal year 1999 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 determining the base
salary level and bonus for the Chief Executive Officer and 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 periodically 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.
5
<PAGE>
BASE SALARIES
The Compensation Committee regularly reviews each executive's base salary.
Base salaries for executives initially are determined by evaluating the
executives' respective levels of responsibility, prior experience, breadth of
knowledge, internal equity issues and external pay practices. Increases to base
salaries are driven by individual performance and Corporation profitability.
Individual performance is evaluated based on sustained levels of individual
contribution to the Corporation.
In determining Mr. Haines' base salary in 1999, 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.
Under the Corporation's bonus program, the Corporation established a total
target award for each executive officer approximately equal to the average award
provided to persons holding similar positions at comparable companies. The award
was measured by stated threshold, target, and maximum percentages of salary. The
executive officer's actual award was increased or decreased for the total target
award based upon both Corporation and individual performance. Approximately
one-half of the total target award potential was determined by the financial
performance of the Corporation. This financial performance portion of the bonus
was based upon (i) the world-wide performance of the Corporation for Mr. Haines,
the President and Chief Executive Officer, and for the Chairman and Chief
Financial Officer and (ii) the Corporation's performance in North America for
all other officers. The remaining one-half of the total target award level was
based upon each executive officer's individual performance. Mr. Haines' 1999
bonus award 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 the prior year, the executives'
respective levels of responsibility, prior experience, and historical award
data, and compensation practices at the comparison companies.
Stock options were granted in 1999 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 1999 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
6
<PAGE>
anniversary of the date of grant of the option, so long as the holder remains
employed by the Corporation or a subsidiary.
In 1999, Mr. Haines received options to purchase 50,000 shares at the fair
market value ($18.3125) 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 1999.
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 1999, Mr. Haines received
an award of 10,000 shares of restricted stock.
The Compensation Committee:
Willard R. Holland, Chairman
Robert G. Wallace, Retiring Director
Alan L. Ockene
Dr. Peggy Gordon Elliott
7
<PAGE>
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, 1999, exceeded $100,000:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
-------------------------
AWARDS
-------------------------
ANNUAL COMPENSATION(1) RESTRICTED
FISCAL ---------------------- STOCK OPTIONS ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS AWARD(S)(2) (#) COMPENSATION(3)
- --------------------------- -------- -------- -------- ----------- -------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Terry L. Haines .................... 1999 $400,000 $181,200 $183,125 50,000 $136,557(4)
President and Chief Executive 1998 $380,000 $228,000 $189,063 40,000 $132,011
Officer 1997 $360,000 $165,000 $ 0 37,000 $139,328
Robert A. Stefanko ................. 1999 $340,000 $154,500 $146,500 40,000 $ 92,526(4)
Chairman of the Board of 1998 $315,000 $189,000 $151,250 35,000 $ 87,981
Directors, Chief Financial Officer 1997 $300,000 $165,000 $ 0 31,000 $ 93,950
and Executive Vice
President--Finance and
Administration
Larry A. Kushkin ................... 1999 $268,000 $ 80,400 $ 0 0 $ 46,675(4)
Executive Vice President-- 1998 $225,000 $117,000 $ 0 0 $ 42,375
International Automotive 1997 $215,000 $145,000 $ 0 22,000 $ 43,215
Operations until August 31, 1999
Gordon L. Trimmer .................. 1999 $145,000 $ 43,500 $ 45,781 11,000 $ 15,610(4)
Vice President--North American 1998 $135,000 $ 70,000 $ 47,266 10,000 $ 63,642
Sales and Marketing 1997 $ 88,537(5) $ 52,000 $ 0 8,000 $ 11,006
John M. Myles ...................... 1999 $142,800 $ 42,840 $ 27,469 11,000 $ 15,390(4)
Vice President--North American 1998 $133,140 $ 35,000 $ 37,813 8,000 $ 14,424
Purchasing 1997 $122,490 $ 25,000 $ 0 5,000 $ 10,711
</TABLE>
- ------------------------
(1) Includes amounts earned in fiscal year, whether or not deferred.
(2) The amounts set forth in this column represent grants of restricted stock
during the fiscal year, valued at the fair market value of the Corporation's
Common Stock on the grant date ($18.3125). The total number of restricted
shares and the aggregate market value at August 31, 1999 (based upon the
fair market value at August 31, 1999 of $18.00) in respect of each named
executive officer are as follows: Mr. Haines held 28,000 shares valued at
$504,000; Mr. Stefanko held 22,500 shares valued at $405,000; Mr. Kushkin
held no shares; Mr. Trimmer held 6,700 shares valued at $120,600; and
Mr. Myles held 3,500 shares valued at $63,000. Dividends accrue but are not
paid on the restricted shares until the restrictions thereon lapse.
(3) 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.
8
<PAGE>
(4) Amounts shown include the following: Corporation contributions to Profit
Sharing Plan--$16,000 for each of Messrs. Haines, Stefanko, and Kushkin,
$14,500 for Mr. Trimmer, and $14,280 for Mr. Myles; amounts accrued by the
Corporation for the fiscal year ended August 31, 1999 under non-qualified
profit sharing plan--$26,000 for Mr. Haines, $19,500 for Mr. Stefanko, and
$10,800 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, 1999--$75,061 for Mr. Haines ($15,012 of which was not vested),
$37,530 for Mr. Stefanko ($3,753 of which was not vested) and $18,765 for
Mr. Kushkin; and Director's fees received from the Corporation's Belgian
subsidiary--$18,386 for each of Messrs. Haines and Stefanko.
(5) A portion of Mr. Trimmer's compensation in respect of 1997 was paid in
Canadian dollars. The amounts shown reflect the currency exchange ratio at
August 31, 1997, which was $1 CN to $.6038 US.
STOCK OPTIONS
The following table contains information concerning the grant of stock
options during fiscal year 1999 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 $23.37 and $29.49, respectively. No gain
to the optionees is possible without an increase in stock price which will
benefit all stockholders proportionately. Actual gains, if any, on an option
exercise are dependent upon future performance of the Corporation's Common Stock
and overall market conditions. There can be no assurance that the potential
realizable values shown in this table will be achieved.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
INDIVIDUAL GRANTS IN 1999 VALUE AT ASSUMED
------------------------------------------------------ ANNUAL RATES OF STOCK
% OF TOTAL PRICE APPRECIATION FOR
OPTIONS EXERCISE 5-YEAR OPTION TERM
GRANTED TO OR BASE -----------------------
OPTIONS EMPLOYEES IN PRICE(3) EXPIRATION 5% ($) 10% ($)
NAME (#)GRANTED(1) FISCAL YEAR(2) ($/SH) DATE (4) (4)
- ---- ------------- -------------- -------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Terry L. Haines............ 50,000 12.70% $18.3125 7/7/04 $252,875 $558,875
Robert A. Stefanko......... 40,000 10.16% $18.3125 7/7/04 $202,300 $447,100
Larry A. Kushkin........... 0 0% N/A N/A $ 0 $ 0
Gordon L. Trimmer.......... 11,000 2.80% $18.3125 7/7/04 $ 55,633 $122,953
John M. Myles.............. 11,000 2.80% $18.3125 7/7/04 $ 55,633 $122,953
</TABLE>
- ------------------------
(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 393,600 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 31,077,155 shares of
Common Stock outstanding of $157.2 million or $347.4 million, respectively,
over the five-year term of the options.
9
<PAGE>
SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN BENEFICIAL OWNERS
The following table sets forth information as of October 18, 1999 in respect
of beneficial ownership of shares of the Corporation's Common Stock by each
Director, by each named executive officer, by all Directors and executive
officers as a group, and by each person known to the Corporation to own 5% or
more of its Common Stock:
<TABLE>
<CAPTION>
AMOUNT AND NATURE
OF BENEFICIAL PERCENT OF
NAME OWNERSHIP(1)(2)(3) OUTSTANDING
- ---- ------------------ -----------
<S> <C> <C>
DIRECTORS AND EXECUTIVE OFFICERS
Robert A. Stefanko.......................................... 177,662 *
Terry L. Haines............................................. 148,200 *
Rene C. Rombouts............................................ 135,490 *
Larry A. Kushkin............................................ 38,500 *
Gordon L. Trimmer........................................... 22,701 *
Robert G. Wallace(4)........................................ 9,843 *
John M. Myles............................................... 8,325
Dr. Peggy Gordon Elliott.................................... 5,468 *
James S. Marlen............................................. 5,343 *
Alan L. Ockene.............................................. 4,793 *
Dr. Paul Craig Roberts...................................... 4,623(5) *
Willard R. Holland.......................................... 4,343 *
James A. Karman............................................. 3,343 *
All Directors and Executive Officers as a group
(14 persons).............................................. 580,907 1.87%
5% STOCKHOLDERS
Berger Associates, Inc. .................................... 1,777,300(6) 5.72%
Suite 900
201 University Boulevard
Denver, Colorado 80206
</TABLE>
- ------------------------
* 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: 78,500 by Terry L. Haines; 66,000
by Robert A. Stefanko; 38,500 by Larry A. Kushkin; 56,500 by Rene C.
Rombouts; 16,000 by Gordon L. Trimmer; 4,500 by John M. Myles and 268,875 by
all Directors and executive officers as a group.
(2) 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 1992 Non-Employee Directors' Stock Option Plan: 2,218 by each
of Alan L. Ockene, Robert G. Wallace, and Dr. Paul Craig Roberts; 4,468 by
Dr. Peggy Gordon Elliott; 1,343 by each of Willard R. Holland, James A.
Karman, and James S. Marlen; and 15,151 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; 28,000 for Terry L.
Haines, 22,500 for Robert A. Stefanko, 14,000 for Rene C. Rombouts, 6,700
for Gordon L. Trimmer, 3,500 for John M. Myles and 79,500 for all Directors
and executive officers as a group.
(4) Mr. Wallace, whose term as a Class I Director of the Corporation will expire
as of the date of the Annual Meeting, will retire from the Board of
Directors effective as of such date.
(5) Includes 100 shares held by Dr. Roberts as trustee for his son, the
beneficial ownership of which Dr. Roberts disclaims.
10
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(6) Berger Associates, Inc., through its sub-advisor, Perkins, Wolf, McDonnell &
Company, a registered investment adviser, has confirmed to the Corporation
its ownership of more than 5% of the Corporation's Common Stock. The share
ownership information presented is based upon information dated October 6,
1999 posted on Nasdaq-AMEX Online-SM-.
PERFORMANCE GRAPH
The following graph compares total stockholder returns in respect of shares
of the Corporation's Common Stock 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
shares of the Corporation's Common Stock, 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.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
A. SCHULMAN, INC. S&P 500 S&P SPECIALTY CHEMICALS
<S> <C> <C> <C>
8/94 $100.00 $100.00 $100.00
8/95 $101.19 $121.35 $125.81
8/96 $84.45 $144.03 $124.95
8/97 $86.55 $202.41 $148.97
8/98 $64.22 $218.84 $119.58
8/99 $74.58 $305.90 $160.20
</TABLE>
11
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EMPLOYMENT CONTRACTS AND CHANGE-IN-CONTROL ARRANGEMENTS
The Corporation has employment agreements with Messrs. Haines, Stefanko,
Kushkin, Trimmer, Myles and certain other senior personnel. The employment
agreements of Messrs. Haines, Stefanko, Kushkin, Trimmer and Myles have an
initial three-year term. Such agreements automatically are 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, June 23, 2006, or October 31, 2008, respectively. 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. Trimmer and Myles,
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 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, 1999, the amounts contributed to the Profit Sharing Plan
12
<PAGE>
accounts of the persons listed in the Summary Compensation Table were: $16,000
for each of Messrs. Haines, Stefanko, and Kushkin, $14,500 for Mr. Trimmer, and
$14,280 for Mr. Myles.
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, 1999,
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, $26,000; Mr. Stefanko, $19,500; and Mr. Kushkin $10,800.
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. As a result of Mr. Kushkin's retirement on
August 31, 1999, Mr. Kushkin has commenced receiving benefits under his
Agreements. Except in the case of disability or death, to the extent that
Messrs. Haines and Stefanko are employed by the Corporation for less than ten
years from the date of their agreements, any amounts payable at retirement will
be reduced proportionately. The effective dates of Mr. Haines' Agreement is 1991
and of Mr. Stefanko's two agreements are 1985 and 1991. 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 and Stefanko 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.
PROPOSAL TO AMEND THE A. SCHULMAN, INC. 1991 STOCK INCENTIVE PLAN
The Board of Directors has approved and recommends that the stockholders
approve an amendment to the A. Schulman, Inc. 1991 Stock Incentive Plan, as
heretofore amended (the "1991 Plan"), to increase the number of shares of the
Corporation's Common Stock which may be issued under the 1991 Plan by 2,000,000.
As previously approved by the stockholders, the 1991 Plan authorized grants
for up to 1,875,000 shares of the Corporation's Common Stock (giving effect to
splits in the Corporation's Common Stock subsequent to adoption of the 1991
Plan). Grants made since 1991 have substantially depleted this number of shares
and the ability to grant additional shares is required to enable the Corporation
to maintain its ability to attract, motivate and retain employees who have made
or are expected to make material contributions to the Corporation's success.
Giving effect to the proposed amendment, 2,433,114 shares will be available for
future grants under the 1991 Plan.
13
<PAGE>
The Corporation has no other stock option plan providing for the grant of
options to its employees. Information concerning options granted under the 1991
Plan and the Corporation's 1992 Non-Employee Directors' Stock Option Plan is
included elsewhere in this Proxy Statement.
The full text of the proposed Amendment to the 1991 Plan is set forth in
Exhibit A to this Proxy Statement.
Approval of the amendment to the 1991 Plan will require the affirmative vote
of the holders of the majority of the total votes cast on this proposal in
person or by proxy. Abstentions will be counted as votes cast and will have the
same effect as votes cast against the proposal. Broker non-votes will not be
counted as votes cast.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" APPROVAL OF THE AMENDMENT TO
THE 1991 PLAN.
SELECTION OF ACCOUNTANTS
Upon the recommendation of its Audit Committee, the Board of Directors of
the Corporation has selected PricewaterhouseCoopers LLP as independent
accountants to examine the books, records and accounts of the Corporation and
its subsidiaries for the fiscal year ending August 31, 2000. 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. PricewaterhouseCoopers LLP was the
independent accountant of the Corporation for the fiscal year ended August 31,
1999, and is considered by the Board of Directors to be well qualified.
Representatives of PricewaterhouseCoopers 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 total votes cast on this proposal in person or by
proxy. Abstentions will be counted as votes cast and will have the same effect
as votes cast against the proposal. Broker non-votes will not be counted as
votes cast. If the resolution is rejected, or if PricewaterhouseCoopers 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. All such persons timely
filed their respective reports during the year ended August 31, 1999.
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.
14
<PAGE>
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 (ii) for approval of the
amendment to the 1991 Stock Incentive Plan and (iii) for ratification of the
selection of the independent accountants.
STOCKHOLDER PROPOSALS
Proposals of stockholders intended to be presented in accordance with
Rule 14a-8 of the Securities and Exchange Commission at the next Annual Meeting
of Stockholders, presently scheduled for December 2000, must be received by the
Corporation no later than July 12, 2000 for consideration for inclusion in the
proxy statement and form of proxy for that meeting. Proposals of stockholders
intended to be presented outside of the requirements of such Rule at such Annual
Meeting must be received by the Corporation by September 26, 2000.
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 may reimburse 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. Further, the Corporation has retained
Corporate Investor Communications to perform solicitation services in connection
with this proxy statement. For such services, Corporate Investor Communications
will receive a fee of approximately $4,000 and will be reimbursed for certain
out-of-pocket expenses and indemnified against certain liabilities incurred in
connection with this proxy solicitation.
By order of the Board of Directors
JAMES H. BERICK
SECRETARY
November 10, 1999
15
<PAGE>
EXHIBIT A
SECOND AMENDMENT
TO
A. SCHULMAN, INC.
1991 STOCK INCENTIVE PLAN
1. PURPOSE OF AMENDMENT.
The A. Schulman, Inc. 1991 Stock Incentive Plan, as heretofore amended (the
"Plan"), provides that the total number of Shares (this term and all other
capitalized terms which are not defined herein shall have the meanings ascribed
to such terms in the Plan) available for grant under the Plan may not exceed
one million eight hundred seventy-five thousand (giving effect to splits in the
Corporation's Common Stock subsequent to adoption of the Plan). The purpose of
this Amendment is to increase the number of Shares available for grant by
two million, such that, as of the effective date of this Second Amendment, two
million four hundred thirty-three thousand one hundred and fourteen Shares will
be available for future grants.
2. AMENDMENT.
Pursuant to the power reserved by the Board in Section 12.1 of the Plan, and
subject to the approval thereof by the stockholders of the Company, Section 4.1
of the Plan is hereby amended and restated in its entirety as follows:
"5.1 NUMBER OF SHARES. Subject to adjustment as provided in Section 4.3
herein, the total number of Shares available for grant under the Plan
may not exceed three million eight hundred seventy-five thousand, two
million four hundred thirty-three thousand one hundred and fourteen
Shares of which will be available for future grants as of the effective
date of this Second Amendment. All Shares available for grant under the
Plan may be either authorized but unissued or reacquired Shares."
3. EFFECTIVE DATE.
The effective date of this Second Amendment shall be October 20, 1999,
provided, however, that if this Second Amendment is not approved by the
stockholders of the Company at or prior to the Company's 1999 Annual Meeting of
Stockholders, this Second Amendment shall be null and void and of no effect
whatsoever.
A-1
<PAGE>
PROXY
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 18, 1999 at the annual meeting of
Stockholders to be held on December 9, 1999 and at any adjournments thereof.
Election of Class I Directors, Nominees:
Alan L. Ockene, Willard R. Holland and Dr. Peggy Gordon Elliott
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
DETACH CARD
<PAGE>
2066
Please mark your
votes as in this
example.
This proxy when properly executed will be voted in the manner directed herein.
If no direction is made, this proxy will be voted FOR proposals 1, 2 and 3.
1. Election of Class I Directors FOR WITHHELD
(see reverse)
For, except vote withheld from the following nominee(s):
2. To approve the proposal to amend the 1991 Stock Incentive Plan.
FOR AGAINST ABSTAIN
3. To ratify the selection of PricewaterhouseCoopers LLP as independent
accountants for the fiscal year ending August 31, 2000.
FOR AGAINST ABSTAIN
4. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting.
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.
SIGNATURE (S) DATE
DETACH CARD
