<PAGE>
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 (S) 240.14a-11(c) or (S) 240.14a-12
KEMET Corporation
- --------------------------------------------------------------------------------
(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)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
-------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
-------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-------------------------------------------------------------------------
(5) Total fee paid:
-------------------------------------------------------------------------
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
-------------------------------------------------------------------------
(3) Filing Party:
-------------------------------------------------------------------------
(4) Date Filed:
-------------------------------------------------------------------------
Reg. (S) 240.14a-101.
SEC 1913 (3-99)
<PAGE>
KEMET Corporation
Notice of
1999 Annual Meeting
of Stockholders
and
Proxy Statement
Meeting Date
July 21, 1999
Your Vote is Important
Please mark, date and sign the enclosed proxy card and promptly
return it in the enclosed envelope.
<PAGE>
KEMET Corporation
P.O. Box 5928
Greenville, South Carolina 29606
June 21, 1999
Dear Stockholder:
You are cordially invited to attend the 1999 Annual Meeting of Stockholders
which will be held on Wednesday, July 21, 1999, at 1:00 p.m., local time, at the
Palmetto Exposition Center, Woodside Conference Center, 1 Exposition Avenue,
Greenville, South Carolina.
The notice of meeting, proxy statement and proxy are included with this
letter. The matters listed in the notice of meeting are more fully described in
the proxy statement.
It is important that your shares are represented and voted at the Annual
Meeting, regardless of the size of your holdings. Accordingly, please mark, sign
and date the enclosed proxy and return it promptly in the enclosed envelope. If
you attend the Annual Meeting, you may, of course, withdraw your proxy should
you wish to vote in person.
Sincerely,
/s/ David E. Maguire
David E. Maguire
Chairman, Chief Executive Officer
and President
<PAGE>
KEMET Corporation
P.O. Box 5928
Greenville, South Carolina 29606
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
The 1999 annual meeting of stockholders (the "Annual Meeting") of KEMET
Corporation (the "Corporation") will be held on Wednesday, July 21, 1999, at
1:00 p.m., local time, at the Palmetto Exposition Center, Woodside Conference
Center, 1 Exposition Avenue, Greenville, South Carolina, to consider and take
action with respect to the following matters:
1. The election of one director for a three-year term or until his
successor is duly elected and qualified.
2. The ratification of the appointment of KPMG Peat Marwick LLP as
independent public accountants for the fiscal year ending March 31, 2000.
3. The transaction of such other business as may properly come before the
Annual Meeting and any adjournments or postponements thereof.
Holders of record of the Corporation's Common Stock at the close of
business on June 1, 1999, are entitled to receive notice of and to vote on all
matters presented at the meeting and at any adjournments or postponements
thereof.
By order of the Board of Directors
/s/ Glenn H. Spears
Glenn H. Spears
Secretary
June 21, 1999
Whether or not you plan to attend the meeting in person and regardless of the
number of shares you own, please mark, sign and date the enclosed proxy and mail
it promptly in the envelope provided to ensure that your shares will be
represented. You may nevertheless vote in person if you attend the annual
meeting. In addition, your proxy is revocable at any time before it is voted by
written notice to the Secretary of the Corporation or by delivery of a later-
dated proxy.
<PAGE>
KEMET Corporation
P.O. Box 5928
Greenville, South Carolina 29606
----------------
PROXY STATEMENT
----------------
1999 Annual Meeting of Stockholders
July 21, 1999
----------------
This proxy statement is being furnished to the holders of common stock, par
value $0.01 per share (the "Common Stock"), of KEMET Corporation (the
"Corporation") in connection with the solicitation of proxies on behalf of the
Board of Directors of the Corporation (the "Board of Directors" or "Board")
for the 1999 annual meeting of stockholders (the "Annual Meeting") to be held
on July 21, 1999, at the Palmetto Exposition Center, Woodside Conference
Center, 1 Exposition Avenue, Greenville, South Carolina, and at any
adjournments or postponements thereof.
This proxy statement, the enclosed proxy and the Corporation's annual
report to stockholders are being mailed on or about June 21, 1999 to holders
of record of Common Stock at the close of business on June 1, 1999.
When you sign and return the enclosed proxy, the individuals identified as
proxies thereon will vote the shares represented by the proxy in accordance
with the directions noted thereon. If no direction is indicated, the proxies
will vote the shares represented thereby FOR the election of the director
described herein, FOR the ratification of the appointment of KPMG Peat Marwick
LLP as independent public accountants for the fiscal year ending March 31,
2000, and, as to any other business as may properly be brought before the
Annual Meeting and any adjournments or postponements thereof, in accordance
with the recommendation of the Corporation's management.
Returning your completed proxy will not prevent you from voting in person
at the Annual Meeting should you be present and wish to do so. In addition,
you may revoke your proxy any time before it is voted by written notice to the
Secretary of the Corporation prior to the Annual Meeting or by submission of a
later-dated proxy.
Each outstanding share of Common Stock entitles the holder thereof to one
vote. On June 1, 1999, the record date, there were 38,199,796 shares of Common
Stock outstanding. The presence in person or by proxy of a majority of such
shares of Common Stock shall constitute a quorum. Pursuant to Delaware law,
abstentions are treated as present and entitled to vote, and therefore are
counted in determining the existence of a quorum and will have the effect of a
vote against any matter requiring the affirmative vote of a majority of the
shares present and entitled to vote at the Annual Meeting. Under Delaware law,
broker "non-votes" are considered present but not entitled to vote, and thus
will be counted in determining the existence of a quorum but will not be
counted in determining whether a matter requiring approval of a majority of
the shares present and entitled to vote has been approved.
PROPOSAL TO ELECT ONE DIRECTOR
The Corporation's Restated Certificate of Incorporation provides that the
Board of Directors will consist of not more than nine nor fewer than three
directors with the number of directors to be established by the Board of
Directors by resolution. The Corporation currently has five directors: Messrs.
David E. Maguire, Stewart A. Kohl, Charles E. Volpe, E. Erwin Maddrey, II and
Paul C. Schorr IV.
In connection with the acquisition of the outstanding common stock of KEMET
Electronics Corporation by the Corporation in 1990 (the "Acquisition"),
Messrs. David E. Maguire, Glenn H. Spears, D. Ray Cash and
<PAGE>
Harris L. Crowley, Jr. (the "Senior Managers") and Charles E. Volpe, John
Piper, Brian G. Hawthornthwaite, Bernd K. Scheumann, Robert A. Taylor, Jr.,
James J. Jerozal, Donald A. Adams, Donald J. Poinsette, Edwin H. Bost and
Kenneth L. Martin (retired "Senior Managers" but still a part of this
agreement), Citicorp Venture Capital, Ltd. ("CVC") and certain other
investors, have entered into an agreement (the "Voting Agreement") which
provides, among other things, for the nomination of and voting for up to seven
directors of the Corporation by such stockholders, which as of the record date
beneficially own approximately 20% of all outstanding Common Stock. Under the
Voting Agreement, CVC has the right to designate up to two directors if the
Board of Directors consists of five directors, and up to three directors if
the Board of Directors consists of seven directors. The two directors
designated by CVC are currently Stewart A. Kohl and Paul C. Schorr IV.
Each party to the Voting Agreement has agreed to vote his or its shares in
favor of the nominee. A majority of the directors has the right to nominate
the remainder of the directors, including up to two directors who are not
affiliated with the Corporation or CVC. Each director nominated by parties to
the Voting Agreement may be removed only at the request of the party who
nominated such director. The Voting Agreement terminates upon the earlier of
October 21, 2002, or at such time as CVC and its affiliates cease to own at
least 10% of the Corporation's Common Stock. The stockholders who are parties
to the Voting Agreement hold, in the aggregate, a substantial amount of the
voting power of the Corporation and thus, if acting in unison or in various
combinations, could likely be able to elect all the directors even if the
Voting Agreement were not in place.
The Board of Directors is currently comprised of five directors divided
into three classes. The term of each class expires in different years. The
nominee for election to the Board of Directors this year to serve for a three-
year term or until his successor is duly elected and qualified is E. Erwin
Maddrey, II, who is currently a director of the Corporation. The Board of
Directors expects the nominee named above to be available for election. In
case the nominee is not available, the proxy holders may vote for a
substitute, unless the Board of Directors reduces the number of directors.
The director will be elected at the Annual Meeting by a majority of the
votes cast at the meeting by the holders of shares represented in person or by
proxy. There is no right to cumulative voting as to any matter, including the
election of directors.
The following sets forth information as to each continuing director and the
nominee for director, including age, as of June 1, 1999, principal occupation
and employment during the past five years, directorships in other publicly
held companies and period of service as a director of the Corporation.
The Board of Directors recommends a vote "FOR" the re-election of Mr.
Maddrey to the Board of Directors.
Nominee for Board of Directors
E. Erwin Maddrey, II, 58, Director, was named a Director of the Corporation
in May 1992. Mr. Maddrey has been President, Chief Executive Officer and a
director of Delta Woodside Industries, Inc., a textile manufacturer, and its
predecessors since 1984. Prior thereto, Mr. Maddrey served as President and
Chief Operating Officer and director of Riegel Textile Corporation. Mr.
Maddrey also serves on the board of directors of Blue Cross of South Carolina
and Renfro Corp.
Continuing Directors
David E. Maguire, 64, Chairman, Chief Executive Officer, President and
Director, has served as Chairman of the Company since August 1992. Mr. Maguire
has served as Chief Executive Officer, President, and Director of the Company
since November 1997, and from December 1990 until October 1996. Mr. Maguire
also served as Chairman, President and Chief Executive Officer of KEMET
Electronics since April 1987. From January 1959 until April 1987, Mr. Maguire
served in a number of capacities with the KEMET capacitor business of Union
Carbide Corporation, most recently as Vice President from June 1978 until
April 1987.
2
<PAGE>
Stewart A. Kohl, 43, Director, was named a Director of the Corporation in
May 1992. Mr. Kohl has been a Managing General Partner in The Riverside
Company, an investment company, since October 1993. Mr. Kohl was previously a
Vice President of Citicorp North America, Inc., and had been employed by
various subsidiaries of Citicorp North America, Inc., since 1988. Mr. Kohl
also serves on the board of directors of Agri-Max, Inc., Hudson Sharp Machine
Company, Porcelain Products Company, Shore Bank and Trust Company and Trend
Technologies, Inc.
Charles E. Volpe, 61, Director, was named a Director of the Corporation in
December 1990. Mr. Volpe also served as Executive Vice President and Chief
Operating Officer ("COO"), and most recently served as President and COO from
October 1995 until his retirement on March 31, 1996. Mr. Volpe served as a
Vice President of the Corporation from March 1996 until July 1997. Mr. Volpe
had also served as Executive Vice President and Director of KEMET Electronics
since April 1987. From August 1966 until April 1987, Mr. Volpe served in a
number of capacities with the KEMET capacitor business of UCC, most recently
as General Manager. Mr. Volpe is also a director of Trend Technologies, Inc.,
and Encad, Inc.
Paul C. Schorr IV, 32, Director, was unanimously elected by members of the
Board of Directors on April 21, 1998. Mr. Schorr is a Vice President of
Citicorp Venture Capital, Ltd., a subsidiary of Citibank. Mr. Schorr joined
Citicorp Venture Capital, Ltd. in 1996. Mr. Schorr was previously a manager
for McKinsey and Company, Inc., a management consulting company, since 1993.
Mr. Schorr also serves on the boards of Inland Resources Company, Inc., Sybron
Chemicals, Inc. and Fairchild Semi-Conductors Company, Inc.
There are no family relationships among the foregoing persons.
Board and Committee Meetings
The Board of Directors held four meetings (exclusive of committee meetings)
during the preceding fiscal year. Each current director attended at least 75%
of the number of meetings held during the preceding fiscal year of the Board
of Directors and all committees on which such director served. The Board of
Directors has established the following committees, the functions and current
members of which are noted below.
Executive Committee. The Executive Committee of the Board of Directors
consists of Messrs. Maguire, Volpe and Kohl. The Executive Committee exercises
the powers of the Board of Directors during intervals between Board meetings
and acts as an advisory body to the Board by reviewing various matters prior
to their submission to the Board. The Executive Committee met three times
during the preceding fiscal year.
Compensation Committee. The Compensation Committee of the Board of Directors
consists of Messrs. Schorr, Kohl and Maddrey. The Compensation Committee
reviews and makes recommendations to the Board of Directors regarding
salaries, compensation and benefits of executive officers and key employees of
the Corporation and grants all options to purchase Common Stock of the
Corporation. The Compensation Committee met three times during the preceding
fiscal year.
Audit Committee. The Audit Committee of the Board of Directors consists of
Messrs. Schorr, Kohl and Maddrey. The Audit Committee, among other duties,
reviews the internal and external financial reporting of the Corporation,
reviews the scope of the independent audit and considers comments by the
auditors regarding internal controls and accounting procedures and
management's response to those comments. The Audit Committee met twice during
the preceding fiscal year.
The Corporation does not have a standing nominating committee.
Compensation of Directors
The Voting Agreement provides that each director (other than directors that
are employed by the Corporation or CVC and its affiliates) is entitled to an
annual directors' fee of $20,000. Directors that are employed by CVC or its
affiliates are entitled to an annual directors' fee of $8,000, and directors
that are employed by the Corporation are not entitled to an annual directors'
fee.
3
<PAGE>
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Corporation's officers, directors and persons who beneficially own more
than ten percent of a registered class of the Corporation's equity securities
to file reports of securities ownership and changes in such ownership with the
Securities and Exchange Commission (the "SEC"). Officers, directors and
greater than ten-percent beneficial owners also are required by rules
promulgated by the SEC to furnish the Corporation with copies of all Section
16(a) forms they file.
Based solely upon a review of the copies of such forms furnished to the
Corporation, or written representations that no Form 5 filings were required,
the Corporation believes that during the period from March 31, 1998 through
March 31, 1999, all Section 16(a) filing requirements applicable to its
officers, directors and greater than ten-percent beneficial owners were
complied with.
PROPOSAL TO RATIFY APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors, upon recommendation by the Audit Committee, has
appointed KPMG Peat Marwick LLP as independent public accountants to examine
the financial statements of the Corporation for the fiscal year ending
March 31, 2000 and to perform other appropriate accounting services.
A proposal will be presented at the Annual Meeting to ratify the
appointment of KPMG Peat Marwick LLP as the Corporation's independent public
accountants. One or more members of that firm are expected to be present at
the Annual Meeting to respond to questions and to make a statement if they
desire to do so. If the stockholders do not ratify this appointment by the
affirmative vote of a majority of the shares represented in person or by proxy
at the meeting, other independent public accountants will be considered by the
Board of Directors upon recommendation by the Audit Committee.
The Board of Directors recommends a vote "FOR" ratification of the
appointment of KPMG Peat Marwick LLP as the Corporation's independent public
accountants for the fiscal year ending March 31, 2000.
OTHER BUSINESS
At the date of this proxy statement, the Corporation has no knowledge of
any business other than that described above that will be presented at the
Annual Meeting. If any other business should come before the Annual Meeting,
the proxies will be voted in accordance with the recommendation of the
Corporation's management.
4
<PAGE>
SECURITY OWNERSHIP
As of June 1, 1999, the Corporation's issued and outstanding common stock
consisted of 38,199,796 shares of Common Stock and 1,096,610 shares of Non-
Voting Common Stock. The Non-Voting Common Stock generally is convertible
(subject to certain limitations) into an equal number of shares of Common
Stock at any time, at the option of the holder thereof.
The following information with respect to the outstanding shares of Common
Stock beneficially owned by each director and nominee for director of the
Corporation, the five executive officers (including the Chief Executive
Officer), the directors and executive officers as a group, and all beneficial
owners of more than 5% of the Common Stock is furnished as of June 1, 1999.
Except as otherwise indicated below, each of the persons named in the table
has sole voting and investment power with respect to the securities
beneficially owned by it or him as set forth opposite its or his name.
<TABLE>
<CAPTION>
Percent
Number of of
Directors, Executive Officers and 5% Stockholders Shares Class
------------------------------------------------- --------- -------
<S> <C> <C>
Citicorp Venture Capital, Ltd. (1)(2)......................... 5,713,910 14.5%
David E. Maguire (2)(3)....................................... 502,576 1.3
Charles M. Culbertson (3)..................................... 9,452 *
Harris L. Crowley (2)(3)...................................... 0 *
Glenn H. Spears (2)(3)........................................ 103,821 *
D. Ray Cash (2)(3)............................................ 381,472 1.0
Stewart A. Kohl (4)........................................... 10,000 *
Charles E. Volpe (2)(3)....................................... 455,266 1.2
E. Erwin Maddrey, II (5)...................................... 2,000 *
Paul C. Schorr IV (6)......................................... 0 *
First Pacific Advisors, Inc. (7).............................. 4,140,700 10.8
J. & W. Seligman & Co. Incorporated (8)....................... 2,001,883 5.2
Lazard Freres & Co. LLC (9)................................... 3,444,597 9.0
All Directors and Executive Officers as a group (9 persons)... 1,464,587 3.8
</TABLE>
- --------
* Less than one percent.
(1) The amount shown includes 4,617,300 shares of Common Stock and 1,096,610
shares of Non-Voting Common Stock beneficially owned by Citicorp Venture
Capital, Ltd. ("CVC"). Based solely on an Amendment No. 1 to Schedule 13G
filed by CVC, Citibank, N.A. ("Citibank"), Citicorp and Citigroup Inc.
("Citigroup") for the year ended December 31, 1998, each of (i) Citibank,
as the sole stockholder of CVC, (ii) Citicorp, as the sole stockholder of
Citibank, and (iii) Citigroup, as the sole stockholder of Citicorp, may be
deemed to share with CVC voting and dispositive power over these shares.
In addition, Citigroup reported in the Amendment No. 1 to Schedule 13G
that it shares voting and dispositive power over an additional 650,094
shares. The address for each of CVC, Citibank and Citicorp, as so
reported, was 399 Park Avenue, 14th Floor, New York, New York 10043. The
address of Citigroup, as so reported, was 153 East 53rd Street, New York,
New York 10043.
(2) All of these parties have entered into an agreement providing for the
election of directors. Each such party disclaims beneficial ownership of
shares of Common Stock owned by each other party.
(3) The address of these individuals is c/o KEMET Corporation, P.O. Box 5928,
Greenville, South Carolina 29606.
(4) The address of this individual is c/o The Riverside Company, The Terminal
Tower, 50 Public Square, Suite 4000, Cleveland, Ohio 44113.
(5) The address of this individual is c/o Delta Woodside Industries, Inc., 233
North Main Street, Greenville, South Carolina 29601.
(6) The address of this individual is c/o Citicorp Venture Capital, Ltd., 399
Park Avenue, 14th Floor, New York, New York 10043.
5
<PAGE>
(7) First Pacific Advisors, Inc. ("First Pacific") reported shared voting
power over 974,100 shares and shared dispositive power over 4,140,700
shares. The information set forth herein is based solely on an Amendment
No. 1 to Schedule 13G filed by First Pacific for the year ended December
31, 1998. The address of First Pacific, as so reported, was 11400 West
Olympic Boulevard, Suite 1200, Los Angeles, CA 90064.
(8) J. & W. Seligman & Co. Incorporated ("JWS") reported shared voting power
over 1,510,400 shares and shared dispositive power over 2,001,883 shares.
William C. Morris reported shared voting power over 1,510,400 shares and
shared dispositive power over 2,001,883 shares. The information set forth
herein is based solely on an Amendment No. 1 to Schedule 13G filed by JWS
and Mr. Morris for the year ended December 31, 1998. The address of JWS
and Mr. Morris, as so reported, was 100 Park Avenue, New York, NY 10017.
(9) Lazard Freres & Co. LLC ("Lazard Freres") reported sole voting power over
2,956,330 shares and sole dispositive power over 3,444,597 shares. The
information set forth herein is based solely on a Schedule 13G filed by
Lazard Freres for the year ended December 31, 1998. The address of Lazard
Freres, as so reported, was 30 Rockefeller Plaza, New York, NY 10020.
6
<PAGE>
EXECUTIVE COMPENSATION
Summary Compensation Table
The following summary compensation table specifies the components of the
compensation packages for the Corporation's five executive officers (including
the Chief Executive Officer) (the "named executives") for the fiscal years
ended March 31, 1999, 1998 and 1997.
<TABLE>
<CAPTION>
Annual Compensation
------------------------
Securities
Underlying All Other
Name and Principal Option Compensation
Position Fiscal Year Salary($)(1) Bonus($)(2) Awards(#)(3) ($)(4)
- ------------------ ----------- ------------ ----------- ------------ ------------
<S> <C> <C> <C> <C> <C>
David E. Maguire......... 1999 $456,000 $ 0 48,000 $46,140
Chairman, Chief 1998 434,000 476,000 24,000 41,112
Executive Officer and 1997 411,000 395,000 24,000 56,037
President
Charles M. Culbertson.... 1999 $230,000 $ 0 24,000 $ 9,794
Senior Vice President, 1998 187,000 121,000 12,000 10,557
General Manager Tantalum 1997 156,000 90,000 12,000 12,137
Harris L. Crowley........ 1999 $230,000 $ 0 24,000 $10,506
Senior Vice President, 1998 187,000 121,000 12,000 9,850
General Manager Ceramics 1997 158,000 71,000 12,000 12,034
Glenn H. Spears.......... 1999 $220,000 $ 0 24,000 $11,500
Senior Vice President 1998 210,000 135,000 12,000 14,832
and 1997 200,000 114,000 12,000 18,973
Secretary
D. Ray Cash.............. 1999 $175,000 $ 0 24,000 $ 9,763
Senior Vice President, 1998 158,000 102,000 12,000 8,700
Administration/Treasurer 1997 138,000 62,000 8,000 10,449
</TABLE>
- --------
(1) Includes $34,200, $16,813, $16,813, $16,500 and $13,125 in fiscal year
1999 deferred by Messrs. Maguire, Culbertson, Crowley, Spears and Cash,
respectively, $62,175, $20,075, $18,650, $24,300 and $16,500 in fiscal
year 1998 and $93,150, $23,400, $23,100, $32,850 and $20,100 in fiscal
year 1997 pursuant to a 401(k) account and personal investment account.
(2) Pursuant to Corporation policy, bonuses for a fiscal year are paid in May
of the following year. The amounts recorded above relate to the fiscal
year for which the bonuses were earned.
(3) All stock option grants were made pursuant to the Corporation's 1995
Executive Stock Option Plan.
(4) Represents payments made by the Corporation for the named executives
pursuant to a 401(k) account and personal investment account and for the
payment of premiums on the term portion of life insurance.
7
<PAGE>
Option Grants in Last Fiscal Year
The following table sets forth certain information with respect to stock
options granted during the fiscal year ended March 31, 1999 to the named
executives.
<TABLE>
<CAPTION>
Individual Grants
-----------------------------------------
Potential
Realizable Value
Number of % of Total at Assumed Annual
Securities Options Rates of Stock
Underlying Granted to Price Appreciation
Options Employees Exercise for Option Term
Granted in Fiscal Price Expiration ------------------
Name (#)(1)(2) Year ($/SH) Date 5%($)(3) 10%($)(3)
- ---- ---------- ---------- -------- ---------- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
David E. Maguire........ 48,000 8.1% $11.47 10/28/08 $346,080 $877,440
Charles M. Culbertson... 24,000 4.0 11.47 10/28/08 173,040 438,720
Harris L. Crowley....... 24,000 4.0 11.47 10/28/08 173,040 438,720
Glenn H. Spears......... 24,000 4.0 11.47 10/28/08 173,040 438,720
D. Ray Cash............. 24,000 4.0 11.47 10/28/08 173,040 438,720
</TABLE>
- --------
(1) These options are granted under the 1995 Executive Stock Option Plan to
acquire shares of Common Stock.
(2) These options were granted at fair market value at the time of the grant
and are generally not exercisable until two years after grant.
(3) The potential realizable value of the options, if any, granted in fiscal
year 1999 to each of these officers was calculated by multiplying those
options by the excess of (a) the assumed market value, as of October 28,
2008, of Common Stock if the market value of Common Stock were to increase
5% or 10% in each year of the option's 10-year term, over (b) the base
price shown. This calculation does not take into account any taxes or
other expenses which might be owed. The assumed market value at a 5%
assumed annual appreciation rate over the 10-year term is $18.68 and such
value at a 10% assumed annual appreciation rate over that term is $29.75.
The 5% and 10% assumed appreciation rates are set forth in the Securities
and Exchange Commission rules and no representation is made that the
Common Stock will appreciate at these rates or at all.
Aggregated Option Exercises in Last Fiscal Year and Fiscal Year-End Option
Values
The following table sets forth certain information concerning the value of
unexercised stock options held by the named executives as of March 31, 1999.
<TABLE>
<CAPTION>
Number of
Securities Value of
Underlying Unexercised In-
Unexercised The-Money
Options at Options
Shares FY-End(#) at FY-End($)
Acquired Value Exercisable/ Exercisable/
Name on Exercise Realized($) Unexercisable Unexercisable
- ---- ----------- ----------- ------------- ---------------
<S> <C> <C> <C> <C>
David E. Maguire.......... -- -- 48,000/72,000 $0/$1,440
Charles M. Culbertson..... -- -- 20,000/36,000 0/ 720
Harris L. Crowley......... -- -- 20,000/36,000 0/ 720
Glenn H. Spears........... -- -- 20,000/36,000 0/ 720
D. Ray Cash............... -- -- 16,000/36,000 0/ 720
</TABLE>
Compensation Committee Interlocks and Insider Participation
The members of the Corporation's Compensation Committee are Messrs. Schorr,
Kohl and Maddrey. No officers of the Corporation serve on the Compensation
Committee.
8
<PAGE>
Defined Benefit Plan
The Corporation maintains a noncontributory defined benefit plan (the
"Defined Benefit Plan" or the "Plan") for all U.S. employees in active
employment with the Corporation on or after April 27, 1987, who have met
certain minimum service requirements. The Defined Benefit Plan provides a full
retirement pension with an unreduced benefit to the following participants:
participants who have reached age 62 if they have at least ten years of
service with the Corporation; participants who have reached age 65 or older if
they have at least five years of service with the Corporation; and
participants who have a combined age and years of service with the Corporation
equal to at least 85, as long as such participants had a combined age and
years of service with the Corporation equal to at least 75 on April 26, 1988.
The Company also maintains a supplementary retirement plan in which key
managers, including the named executive officers, participate. Under the terms
of the Deferred Compensation Plan for key managers ("DCKM Plan") additions to
a participant's account are made to offset contributions to which each was
entitled under the Company's noncontributory defined benefit plan which was
limited by the Employee Retirement Security Act of 1974 and the Internal
Revenue Code.
The benefit provided under the Defined Benefit and the DCKM Plan is the
equivalent of a single life annuity for a participant's life commencing the
month following the participant's last day of employment with the Corporation
in a monthly amount equal to the sum of: (A) the greater of (1) 1.2% of the
participant's average monthly compensation (based on a participant's five
highest calendar year earnings (including certain bonuses) with the
Corporation over the last ten years worked or, if greater, the final 60 months
prior to a participant's retirement) multiplied by the participant's years of
credited service prior to April 27, 1988, plus $12.00 per month; or (2) 1.5%
of a participant's average monthly compensation multiplied by the
participant's years of credited service prior to April 27, 1988, less the
product of (x) the participant's estimated Social Security benefit based on
the law in effect at actual retirement assumed to commence at the later of
retirement or age 62, and (y) a factor determined to be the least of: 1.5%
multiplied by the participant's years of credited service prior to April 27,
1988 (up to a maximum of 33 1/3 years), 50%, or the maximum offset based on
Internal Revenue Service integration rules in effect at actual retirement; or
(3) $5.00 per month for each year of credited service prior to April 27, 1988,
for the first ten years, $7.00 per month for each year of credited service
prior to April 27, 1988, for the next ten years, and $9.00 per month for each
year of credited service prior to April 27, 1988, in excess of 20 years, plus
10% of a participant's average monthly compensation reduced by 1% for each
year by which credited service is less than eight years, plus $12.00 per
month; plus (B) 0.8% of a participant's average monthly compensation
multiplied by the participant's years of credited service after April 26,
1988; plus (C) 0.6% of the excess of a participant's average monthly
compensation over a participant's covered compensation (defined as the average
of the Social Security Taxable Wage Base for the same period over which the
pay is averaged in calculating Social Security benefits under the Federal
Social Security Act in effect at the time of a participant's termination)
multiplied by the participant's years of credited service after April 26,
1988. Notwithstanding the foregoing, the amount of a participant's monthly
benefits under the Defined Benefit Plan shall be offset and reduced by the
amount of any benefits payable to such participant or former participant under
the Union Carbide Retirement Program in effect on April 27, 1987, or under
certain other plans. Reduced benefits are payable in the case of early
retirement and to participants who terminate employment prior to retirement,
provided they have completed at least five years of credited service.
9
<PAGE>
The following table shows the total estimated annual benefits payable under
the Defined Benefit Plan's Trust Fund and the DCKM Plan on a single-life
annuity basis upon normal retirement to participants in specified years of
Corporation service and average annual compensation. Annual benefits payable
to the Corporation's employees from Union Carbide's Retirement Program in
effect on April 27, 1987 will offset and reduce the annual benefit listed
below.
<TABLE>
<S> <C> <C> <C> <C>
Annual Benefit for Years of Service
Indicated (1)
-----------------------------------
Remuneration (2) 10 Years 20 Years 30 Years 35 Years
------------------------------------- -------- -------- -------- --------
$ 25,000........................... $ 2,000 $ 5,391 $ 8,011 $ 9,511
50,000........................... 4,660 10,841 16,611 19,611
75,000........................... 8,160 17,220 26,196 30,750
100,000........................... 11,660 24,283 37,139 43,567
125,000........................... 15,160 31,475 48,081 56,385
150,000........................... 18,660 38,668 59,024 69,202
175,000........................... 22,160 45,860 69,966 82,020
200,000........................... 25,660 53,053 80,909 94,837
500,000........................... 67,660 139,363 212,219 248,647
750,000........................... 102,660 211,288 321,644 376,822
1,250,000........................... 172,660 355,138 540,494 633,172
</TABLE>
- --------
(1) The compensation used to determine benefits under the Defined Benefit Plan
and the DCKM Plan for Messrs. Maguire, Culbertson, Crowley, Spears and
Cash was $829,450, $237,437, $262,707, $330,900 and $230,550,
respectively. Included in the total estimated annual benefit is a payment
from Union Carbide's Defined Benefit Plan in the form of annuity contracts
on a single-life annuity basis. This benefit under that Plan is based on
service up to April 27, 1987, and the highest three years of the preceding
ten years of compensation prior to March 31, 1987. The offset payment from
Union Carbide's retirement program could be as high as 64% of the annual
benefit listed above. As of March 31, 1999, credited years of service
under that Plan for Messrs. Maguire, Culbertson, Crowley, Spears and Cash
were 40, 19, 24, 22 and 29, respectively.
(2) Average annual compensation of highest five years covered remuneration for
pension purposes in ten years preceding normal retirement age.
Termination Benefits
In 1996, the Corporation entered into Change in Control Severance
Compensation Agreements (the "Agreements") with Messrs. Maguire, Culbertson,
Crowley, Spears and Cash and certain other officers. The Agreements were a
result of a determination by the Board of Directors that it was important and
in the best interests of the Corporation and its shareholders to ensure that,
in the event of a possible change in control of the Corporation, the stability
and continuity of management would continue unimpaired, free of the
distractions incident to any such change in control. These agreements expired
in August 1998.
For purposes of the Agreements, a "change in control" includes (i) the
acquisition by any person of 15% or more of the Corporation's voting
securities, (ii) persons who were directors of the Corporation on the date of
the Agreements ceasing to constitute a majority of the Board, unless the new
directors were approved by a majority vote of the continuing directors, (iii)
a consolidation or merger of the Corporation in which the Corporation is not
the continuing or surviving corporation or pursuant to which shares of the
Corporation's common stock would be converted into cash, securities or other
property, other than a transaction in which at least 50% of the shares of the
surviving corporation are held by the Corporation's stockholders and the
proportionate ownership of the common stock of the surviving corporation
remains substantially unchanged, or (iv) a shareholder-approved plan or
proposal for the complete liquidation or dissolution of the Corporation.
Benefits are payable under the Agreements only if a change in control has
occurred and thereafter the officer's employment is terminated involuntarily
without cause or voluntarily by the officer for reasons such as
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<PAGE>
demotion, relocation, loss of benefits or other changes. The principal
benefits to be provided to officers under the Agreements are (i) a lump sum
payment equal to up to one and one-half years' compensation (base salary), and
(ii) continued participation in the Corporation's employee benefit programs or
equivalent for up to one and one-half years following termination.
The Agreements are not employment agreements, and do not impair the right
of the Corporation to terminate the employment of the officer with or without
cause prior to a change in control or absent a potential or pending change in
control, or the right of the officer to voluntarily terminate his employment.
Compensation Committee Report on Executive Compensation
The Compensation Committee of the Board of Directors (the "Compensation
Committee") is pleased to present its report on executive compensation. The
Compensation Committee reviews and makes recommendations to the Board of
Directors regarding salaries, compensation and benefits of executive officers
and key employees of the Corporation and grants all options to purchase Common
Stock of the Corporation. This Compensation Committee report documents the
components of the Corporation's executive officer compensation programs and
describes the bases upon which compensation will be determined by the
Compensation Committee with respect to the executive officers of the
Corporation, including the named executives. This Compensation Committee
report 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 that the Corporation specifically incorporates this information by
reference, and shall not otherwise be deemed filed under such Acts.
Compensation Philosophy. The compensation philosophy of the Corporation is
to endeavor to directly link executive compensation to individual and team
contributions, continuous improvements in corporate performance, and increases
in stockholder value. The Compensation Committee has adopted the following
objectives as guidelines for compensation decisions:
. Display a willingness to pay levels of compensation that are necessary to
attract and retain highly qualified executives.
. Be willing to compensate executive officers in recognition of superior
individual performance, new responsibilities, or new positions within the
Corporation.
. Take into account historical levels of executive compensation and the
overall competitiveness of the market for high-quality executive talent.
. Implement a balance between short- and long-term compensation to
complement the Corporation's annual and long-term business objectives and
strategy and to encourage executive performance in furtherance of the
fulfillment of those objectives.
. Provide variable compensation opportunities based on the performance of
the Corporation, encourage stock ownership by executives, and align
executive remuneration with the interests of stockholders.
Compensation Program Components. The Compensation Committee regularly
reviews the Corporation's compensation program to ensure that pay levels and
incentive opportunities are competitive with the market and reflect the
performance of the Corporation. The particular elements of the compensation
program for executive officers are further explained below.
Base Salary. The Corporation's base pay levels are determined by
responsibilities of the position held and the experience of the individual and
by comparing the salary scale with companies of similar size and complexity.
Actual base salaries are kept within a competitive salary range for each
position that is established through job evaluation and market comparisons and
targeted at the 50th percentile or median for jobs of equal description and
scope as determined by the Hay Management Consultants' National Industrial Job
Database which is updated each year by the Hay Annual Salary Survey of
Industrial Jobs ("Hay Survey").
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<PAGE>
Annual Bonus. The Executive Bonus Plan provides cash bonuses to the
Corporation's top officers, including the executive officers, if certain
targets are met. The objective of the bonus is to enhance management's
contribution to stockholder value by providing competitive levels of
compensation for the attainment of financial objectives. In particular, the
Executive Bonus Plan focuses corporate behavior on consistent and steady
earnings growth by basing performance on a comparison of actual results to the
Corporation's Annual Business Budget ("ABB"). Prior to the ninetieth day of
each fiscal year, the Board will approve the ABB for the Corporation for such
year. The Compensation Committee or such other committee as is designated by
the Board (the "Committee") will then establish the base salary, the annual
incentive base percent and the annual incentive base value for each
participant in the Executive Bonus Plan. The annual incentive base percent
will initially be between 40% and 85%, and will be applied to the
participant's base salary to determine the annual incentive base value for
each participant. The annual incentive base percent increases with the level
of responsibility of an officer, with the CEO at the highest level. The
Compensation Committee will then set earnings before depreciation,
amortization, interest and taxes ("EBDAIT") goals at several levels, including
the base, target and maximum performance levels for the Corporation and will
also set the Corporation performance multiplier (the "Multiplier") that
corresponds to the applicable level of EBDAIT. The Multiplier will initially
range from 0 at 75% of the target EBDAIT (base performance) to 1 at 130% of
the target EBDAIT (maximum performance). In the event that the achieved EBDAIT
is below the base level for such year, the Multiplier will be 0 and no
incentive bonus will be payable. The Multiplier will be applied to the annual
incentive base value to determine the bonus award for such year. For example,
using the annual incentive base percent and maximum Multiplier for fiscal year
1999, if the Corporation achieved the maximum performance level, the
Corporation's CEO would be entitled to an incentive bonus equal to 85% of his
base salary. Each participant, including the CEO, will separately receive a
guaranteed bonus payment which will initially be equal to 0.5 times the annual
incentive base value. Within 90 days of the end of each fiscal year, the
Committee will determine and approve the EBDAIT level achieved for such fiscal
year and will approve the grant and payment of the bonus awards in the
aggregate to all participants and to each of the executive officers, including
the CEO. Except in the case of death or total disability, a participant must
be employed by the Corporation on the date the Committee approves the awards
in order to receive an award under the Executive Bonus Plan.
The amounts that any participant in the Executive Bonus Plan, including the
Corporation's CEO, will receive is not determinable in advance prior to the
completion of the Corporation's fiscal year and the determination by the
Committee (as described above) of the actual performance level achieved by the
Corporation for such year. With respect to fiscal year 1999, the Committee,
based on the recommendation of management as a result of the competitive
conditions facing the Corporation at the end of fiscal year 1999, determined
to not pay any bonuses under the Executive Bonus Plan.
Stock Option Program. The Compensation Committee strongly believes that, by
providing those persons who have substantial responsibility over the
management and growth of the Corporation with an opportunity to increase their
ownership of the Corporation's stock, the interests of stockholders and
executives will be closely aligned. To that end, the Corporation adopted the
1995 Executive Stock Option Plan, pursuant to which certain officers of the
Corporation, including the named executives, received options during fiscal
year 1999 to purchase an aggregate of 264,000 shares of Common Stock at an
exercise price equal to 100% of the fair market value of such Common Stock on
the date of grant.
Stock Ownership. As a result of the Acquisition and stock option grants,
the executive officers collectively own approximately 2.6% of the
Corporation's outstanding Common Stock, which further serves to align
stockholder and management interests.
Compensation of Chief Executive Officer. The 1999 fiscal year compensation
for Mr. Maguire, the Corporation's Chairman, Chief Executive Officer and
President, was set by the Board of Directors at $456,000 based on, among other
factors, the results of the Hay Survey. Mr. Maguire was entitled to a bonus of
$193,800 for fiscal year 1999 pursuant to the Executive Bonus Plan. However,
Mr. Maguire recommended that the Committee suspend any bonuses to executive
officers for fiscal year 1999 and that the Committee delay any
12
<PAGE>
change in base salary compensation for fiscal year 2000 until operating
margins improve. The Committee determined not to pay such bonuses for fiscal
year 1999 and to defer changes in base salaries. Mr. Maguire's base salary for
fiscal year 2000 remains at $456,000.
The Omnibus Budget Reconciliation Act of 1994, signed by President Clinton
on April 10, 1993, added Section 162(m) to the Internal Revenue Code of 1986,
as amended. That Section limits the deductibility of compensation paid or
accrued by the Corporation to the five most highly compensated employees in
excess of $1,000,000, unless certain forms of compensation meet certain
performance or other criteria mandated by law. The Committee structured the
Executive Bonus Plan, approved by the Corporation's stockholders at the 1996
Annual Meeting, to comply with these tax law requirements, and believes that
compensation under the Executive Bonus Plan will be deductible for federal
income tax purposes.
Summary. After its review of all existing programs, the Compensation
Committee continues to believe that the total compensation program for
executives of the Corporation is focused on increasing values for stockholders
and enhancing corporate performance. In particular, the Compensation Committee
feels that providing a high proportion of compensation in the form of an
annual bonus based on achieving certain targets based on the ABB will enhance
corporate performance. The Compensation Committee currently believes that the
compensation of executive officers is properly tied to stock appreciation
through the 1995 Executive Stock Option Plan and through high levels of direct
stock ownership. The Compensation Committee believes that executive
compensation levels of the Corporation are competitive with the compensation
programs provided by other corporations with which the Corporation competes.
The foregoing report has been approved by all members of the Compensation
Committee.
COMPENSATION COMMITTEE
Paul C. Schorr IV
Stewart A. Kohl
E. Erwin Maddrey, II
13
<PAGE>
PERFORMANCE GRAPH
The following graph compares the Corporation's cumulative total stockholder
return for the past 5 fiscal years, beginning on March 31, 1994, with The
Nasdaq Stock Market (National Market) Index and a peer group (the "1999 Peer
Group") comprised of certain companies which manufacture capacitors and with
which the Corporation generally competes. The 1999 Peer Group is comprised of
AVX Corporation, Thomas & Betts Corp. and Vishay Intertechnology, Inc. The
graph also shows the peer group to which the Corporation compared its
performance in its proxy statement relating to the 1998 Annual Meeting (the
"1998 Peer Group"). The 1998 Peer Group was comprised of AMP Incorporated,
Amphenol Corp., CTS Corp., Molex Incorporated, Thomas & Betts Corp. and Vishay
Intertechnology, Inc. Management believes that the product offerings of the
companies contained in the 1999 Peer Group are more similar to the
Corporation's product offerings than the products offerings of the companies
contained in the 1998 Peer Group.
Comparison of Total Return*
KEMET Corporation, Nasdaq Index, 1999 Peer Group and 1998 Peer Group
[PERFORMANCE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
1999 1998
Measurement KEMET Nasdaq Peer Peer
Period Corporation Index Group Group
------------ ----------- --------- -------- --------
<S> <C> <C> <C> <C>
3/31/94 $100.00 $100.00 $100.00 $100.00
3/31/95 231.54 106.09 126.49 137.54
3/29/96 278.46 142.70 137.96 150.95
3/31/97 230.77 159.75 139.84 159.64
3/31/98 228.46 241.26 170.90 248.37
3/31/99 141.54 315.28 115.73 197.05
</TABLE>
* Total Return assumes reinvestment of dividends.
14
<PAGE>
CERTAIN INTERESTS AND TRANSACTIONS
Pursuant to the terms of a Registration Agreement, dated as of December 21,
1990, as amended (the "Registration Agreement"), among the Corporation and
certain stockholders of the Corporation, CVC, the Senior Managers and certain
other investors have the right, under certain circumstances and under certain
conditions, to require the Corporation to register shares of the Corporation's
Common Stock held by them under the Securities Act of 1933. Under the
Registration Agreement, the Corporation is required to pay certain expenses and
provide certain indemnifications in connection with any such registration. The
Corporation also agreed to reimburse certain of its existing stockholders for
certain expenses associated with the ownership of Common Stock or Non-Voting
Common Stock.
STOCKHOLDER PROPOSALS FOR 2000 ANNUAL MEETING
From time to time, stockholders present proposals which may be proper
subjects for consideration at the Annual Meeting. To be considered for inclusion
in the proxy statement, proposals must be submitted on a timely basis. Proposals
for the 2000 Annual Meeting, which is expected to be held on July 19, 2000, must
be received by the Corporation no later than February 22, 2000. In addition, the
Corporation's By-Laws establish advance notice procedures as to (1) business to
be brought before an annual meeting of stockholders other than by or at the
direction of the Board of Directors and (2) the nomination, other than by or at
the direction of the Board of Directors, of candidates for election as
directors. Any stockholder who wishes to submit a proposal to be acted upon at
next year's annual meeting or who proposes to nominate a candidate for election
as a director must comply with such procedures. Any such proposals, as well as
any questions related thereto, should be submitted in writing to the Secretary
of the Corporation at the address below.
ADDITIONAL INFORMATION
This solicitation is being made by the Corporation. All expenses of the
Corporation in connection with this solicitation will be borne by the
Corporation. In addition to the solicitation by mail, proxies may be solicited
by directors, officers and other employees of the Corporation by telephone,
telex, in person or otherwise, without additional compensation. The Corporation
will request brokerage firms, nominees, custodians and fiduciaries to forward
proxy materials to the beneficial owners of shares held of record by such
persons and will reimburse such persons and the Corporation's transfer agent for
their reasonable out-of-pocket expenses in forwarding such materials.
The Corporation will furnish without charge to each person whose proxy is
being solicited, upon the written request of any such person, a copy of the
Corporation's Annual Report on Form 10-K for the fiscal year ended March 31,
1999, as filed with the Securities and Exchange Commission, including the
financial statements and schedules thereto. Requests for copies of such Annual
Report on Form 10-K should be directed to the Secretary of the Corporation at
the address below. Please complete the enclosed proxy and mail it in the
enclosed postage-paid envelope as soon as possible.
By order of the Board of Directors
/s/ Glenn H. Spears
Glenn H. Spears
Secretary
KEMET CORPORATION
P.O. Box 5928
Greenville, South Carolina 29606
June 21, 1998
15
<PAGE>
Solicited by the Board of Directors
KEMET CORPORATION
2835 Kemet Way
Simpsonville, South Carolina 29681
1999 Annual Meeting of Stockholders
The undersigned hereby appoints DAVID E. MAGUIRE and GLENN H. SPEARS, and each
of them, proxies, with power of substitution and revocation, acting by a
majority of those present and voting or, if only one is present and voting then
that one, to vote the stock of KEMET Corporation which the undersigned is
entitled to vote, at the 1999 annual meeting of stockholders scheduled to be
held July 21, 1999, and at any adjournments or postponements thereof, with all
the powers the undersigned would possess if present, with respect to the matters
on the reverse side.
Your shares will be voted as directed herein. If the proxy is signed and no
direction is given for any item, it will be voted FOR the nominee listed and FOR
Item 2.
- --------------------------------------------------------------------------------
PLEASE VOTE, DATE AND SIGN ON REVERSE AND RETURN PROMPTLY IN THE ENCLOSED
ENVELOPE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Please sign exactly as your name(s) appear(s) hereon. If the securities are
jointly owned, both owners should sign. Full title of one signing in
representative capacity should be clearly designated after signature.
- --------------------------------------------------------------------------------
HAS YOUR ADDRESS CHANGED? DO YOU HAVE ANY COMMENTS?
- ------------------------------------- -------------------------------------
- ------------------------------------- -------------------------------------
- ------------------------------------- -------------------------------------
<PAGE>
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KEMET CORPORATION
- -------------------------------------------------------------------------------
CONTROL NUMBER:
RECORD DATE SHARES:
------------------------
Please be sure to sign and date this Proxy. Date
- -------------------------------------------------------------------------------
- ------ Stockholder sign here ------------------------ Co-owner sign here ------
1. Election of one Director. For the Nominee Withhold
E. Erwin Maddrey, II [_] [_]
2. The ratification of the appointment For Against Abstain
of KPMG Peat Marwick LLP as
independent public accountants for [_] [_] [_]
the year ending March 31, 2000.
Mark box at right if an address change [_]
or comment has been noted on the
reverse side of this card.
DETACH CARD DETACH CARD
