<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:
[X] Preliminary Proxy Statement
[_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(E)(2))
[_] 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
2000 Annual Meeting
of Stockholders
and
Proxy Statement
Meeting Date
July 26, 2000
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 26, 2000
Dear Stockholder:
You are cordially invited to attend the 2000 Annual Meeting of Stockholders
which will be held on Wednesday, July 26, 2000, at 1:00 p.m., local time, at
the Embassy Suites, 670 Verdae Boulevard, 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 and Chief Executive Officer
<PAGE>
KEMET Corporation
P.O. Box 5928
Greenville, South Carolina 29606
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
The 2000 annual meeting of stockholders (the "Annual Meeting") of KEMET
Corporation (the "Corporation") will be held on Wednesday, July 26, 2000, at
1:00 p.m., local time, at the Embassy Suites, 670 Verdae Boulevard,
Greenville, South Carolina, to consider and take action with respect to the
following matters:
1. The election of two directors for three-year terms and one director
for a two-year term or until their successors are duly elected and
qualified.
2. The authorization to amend the Corporation's Restated Certificate of
Incorporation to provide for (i) an increase in the number of authorized
shares of Common Stock, par value $0.01 per share, to 300,000,000 shares
and (ii) a decrease in the number of authorized shares of Non-Voting Common
Stock, par value $0.01 per share, to zero.
3. The ratification of the appointment of KPMG LLP as independent public
accountants for the fiscal year ending March 31, 2001.
4. 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, 2000, 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
Executive Vice President and
Secretary
June 26, 2000
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
----------------
2000 Annual Meeting of Stockholders
July 26, 2000
----------------
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 2000 annual meeting of stockholders (the "Annual Meeting") to be held
on July 26, 2000, at the Embassy Suites, 670 Verdae Boulevard, 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 26, 2000 to holders
of record of Common Stock at the close of business on June 1, 2000.
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 directors
described herein, FOR the amendment to the Corporation's Restated Certificate
of Incorporation, FOR the ratification of the appointment of KPMG LLP as
independent public accountants for the fiscal year ending March 31, 2001, 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, 2000, the record date, there were 87,404,170 shares of Common
Stock outstanding (after giving effect to the 2-for-1 split of the Common
Stock distributed on June 1, 2000 to the holders of record on May 24, 2000
(the "Stock Split")). 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 THREE DIRECTORS
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.
The Board of Directors is currently comprised of five directors divided
into three classes. The term of each class expires in different years. The
nominees for election to the Board of Directors this year are (1)
<PAGE>
Charles E. Volpe and Paul C. Schorr IV, who are currently directors of the
Corporation and who have been nominated to serve for three-year terms or until
their successors are duly elected and qualified, and (2) Charles M. Culbertson
II, who is not currently a director of the Corporation and who has been
nominated to serve for a two-year term or until his successor is duly elected
and qualified. The Board of Directors expects the nominees named above to be
available for election. In case the nominees are not available, the proxy
holders may vote for substitutes, unless the Board of Directors reduces the
number of directors.
The directors 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
nominees for director, including age, as of June 1, 2000, 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 Messrs.
Volpe and Schorr to the Board of Directors to serve for three-year terms or
until their successors are duly elected and qualified and the election of Mr.
Culbertson to the Board of Directors to serve for a two-year term or until his
successor is duly elected and qualified.
Nominees for Board of Directors
Charles M. Culbertson II, 51, President and Chief Operating Officer, was
named such in June 1999. Mr. Culbertson served as Senior Vice President and
General Manager, Tantalum, from November 1997 to June 1999 and served as Vice
President and General Manager of Tantalum Surface-Mount Capacitors from
January 1996 to November 1997. Since June 1980, Mr. Culbertson has served in a
number of engineering and management positions in the Company.
Charles E. Volpe, 62, Director, was named such in December 1990. Mr. Volpe
also served as Executive Vice President and Chief Operating Officer, and most
recently served as President and Chief Operating Officer from October 1995
until his retirement on March 31, 1996. Mr. Volpe served as a Vice President
from March 1996 until July 1997. Mr. Volpe had also served as Executive Vice
President and Director of KEMET Electronics Corporation, a wholly-owned
subsidiary of the Corporation, since April 1987. From August 1966 until April
1987, Mr. Volpe served in a number of capacities with the KEMET capacitor
business of Union Carbide Corporation, most recently as General Manager. Mr.
Volpe is also a director of Encad, Inc.
Paul C. Schorr IV, 33, Director, was named such in April 1998. Mr. Schorr
has served as a Managing Director of Citicorp Venture Capital, Ltd. ("CVC"), a
subsidiary of Citibank, since January 2000 and served as a Vice President of
CVC from June 1996 to January 2000. Mr. Schorr was previously an engagement
manager for McKinsey and Company, Inc., a management consulting company, from
1993 to June 1996. Mr. Schorr also serves on the boards of ChipPAC
International Company Limited, Fairchild Semiconductor Corporation, Paper-Pak
Products and Sybron Chemicals, Inc.
Continuing Directors
David E. Maguire, 65, Chairman, Chief Executive Officer and Director, has
served as Chairman since August 1992. Mr. Maguire served as Chief Executive
Officer, President and Director from November 1997 until June 1999, and from
December 1990 until October 1996. Mr. Maguire also served as Chairman,
President and Chief Executive Officer of KEMET Electronics Corporation 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.
Stewart A. Kohl, 44, Director, was named such 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
2
<PAGE>
America, Inc., since 1988. Mr. Kohl also serves on the board of directors of
Agri-Max, Inc., Conferon Incorporated, Delta Petroleum Company, Hudson Sharp
Machine Company, Porcelain Products Company and Shore Bank and Trust Company.
E. Erwin Maddrey, II, 59, Director, was named such 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.
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 one time 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 three times
during the preceding fiscal year.
The Corporation does not have a standing nominating committee.
Compensation of Directors
Each director (other than any director that is employed by the Corporation
or CVC and its affiliates) is paid an annual director's fee of $20,000. Each
director that is employed by CVC or its affiliates is paid an annual
director's fee of $8,000, and no director that is employed by the Corporation
is paid any annual director's fee. All directors are reimbursed for out-of-
pocket expenses incurred in connection with attending meetings.
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.
3
<PAGE>
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, 1999 through
March 31, 2000, all Section 16(a) filing requirements applicable to its
officers, directors and greater than ten-percent beneficial owners were
complied with.
PROPOSAL TO AMEND THE CORPORATION'S RESTATED CERTIFICATE OF INCORPORATION
On May 15, 2000, the Board of Directors unanimously adopted a resolution
approving an amendment (the "Proposed Amendment") to Article Four of the
Corporation's Restated Certificate of Incorporation which would (1) increase
the number of authorized shares of Common Stock of the Corporation from
100,000,000 to 300,000,000 shares and (2) decrease the number of authorized
shares of Non-Voting Common Stock of the Corporation, par value $0.01 per
share (the "Non-Voting Common Stock"), from 12,000,000 to zero shares. The
Board further resolved that the Proposed Amendment be submitted to the
stockholders for their approval. The Proposed Amendment is set forth in Annex
A to this proxy statement.
As of June 1, 2000, 87,404,170 shares of Common Stock were issued and
outstanding and an aggregate of 3,681,510 unissued shares of Common Stock have
been reserved for issuance in connection with the 1992 Executive Stock Option
Plan, the 1992 Key Employee Stock Option Plan and the 1995 Executive Stock
Option Plan (after adjustment giving effect to the Stock Split). The Board of
Directors believes that the authorization of the additional shares of Common
Stock will provide the Corporation with the flexibility it needs to manage the
Corporation's business by enabling it to issue stock in connection with
possible acquisitions, to raise additional equity financing or to effect
possible future stock splits or stock dividends. The Corporation has no
current plan or proposal to engage in any transaction that would result in the
issuance of additional shares of Common Stock. No further action by the
Corporation's stockholders is required for the issuance of additional shares
of Common Stock except to the extent required by the rules of the New York
Stock Exchange or applicable law.
The Corporation has no shares of Non-Voting Common Stock outstanding. Since
the Board of Directors does not foresee any need for the Corporation to issue
any additional shares of Non-Voting Common Stock, the Board of Directors
recommended that the authorized shares of Non-Voting Common Stock be decreased
to zero shares so that the Corporation would not need to continue paying
franchise taxes with respect to its authorized but unissued shares of Non-
Voting Common Stock.
The purposes of the Board of Directors in proposing the Proposed Amendment
are as stated above, although the availability for issuance of additional
shares of Common Stock could enable the Board of Directors to render more
difficult or discourage an attempt to obtain control of the Corporation. For
example, the issuance of shares of Common Stock in a public or private sale,
merger or similar transaction would increase the number of outstanding shares,
thereby possibly diluting the interest of a party attempting to obtain control
of the Corporation. The Corporation is not aware of any pending or threatened
efforts to obtain control of the Corporation.
The additional shares for which authorization is sought would be part of
the existing class of Common Stock and, if and when issued, would have the
same rights and privileges as the shares of Common Stock presently
outstanding. Authorized but unissued shares of Common Stock are generally
available for future issuance at the discretion of the Board of Directors.
Holders of Common Stock have no preemptive rights.
If approved, the Proposed Amendment would become effective upon filing with
the Secretary of State of the State of Delaware a Certificate of Amendment to
the Corporation's Restated Certificate of Incorporation, which filing is
expected to take place shortly after such approval. Under the provisions of
the General Corporation Law of Delaware, a favorable vote of a majority of the
outstanding shares of Common Stock of the Corporation entitled to vote on the
Proposed Amendment is required for adoption of the Proposed Amendment.
4
<PAGE>
Abstentions and broker "non-votes" with respect to the Proposed Amendment will
have the legal effect of a vote against the Proposed Amendment.
The Board of Directors recommends a vote "FOR" the amendment to the
Corporation's Restated Certificate of Incorporation.
PROPOSAL TO RATIFY APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors, upon recommendation by the Audit Committee, has
appointed KPMG LLP as independent public accountants to examine the financial
statements of the Corporation for the fiscal year ending March 31, 2001 and to
perform other appropriate accounting services.
A proposal will be presented at the Annual Meeting to ratify the
appointment of KPMG 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 LLP as the Corporation's independent public accountants
for the fiscal year ending March 31, 2001.
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.
5
<PAGE>
SECURITY OWNERSHIP
As of June 1, 2000, the Corporation's issued and outstanding common stock
consisted of 87,404,170 shares of Common Stock (after giving effect to the
Stock Split). 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, 2000
(after giving effect to the Stock Split). 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)............................ 6,427,820 7.4%
David E. Maguire (2)(3)....................................... 101,150 *
Charles M. Culbertson II (2).................................. 18,904 *
Glenn H. Spears (2)(4)........................................ 158,742 *
Harris L. Crowley, Jr. (2)(5)................................. 40,000 *
D. Ray Cash (2)............................................... 512,156 *
Stewart A. Kohl (6)........................................... 20,000 *
Charles E. Volpe (2).......................................... 610,532 *
E. Erwin Maddrey, II (7)...................................... 4,000 *
Paul C. Schorr IV (8)......................................... 0 *
First Pacific Advisors, Inc. (9).............................. 6,185,400 7.1
FMR Corp. (10)................................................ 5,749,400 6.6
All Directors and Executive Officers as a group (9 persons)... 1,465,484 1.7
</TABLE>
--------
* Less than one percent.
(1) The amount shown includes 6,427,820 shares of Common Stock beneficially
owned by CVC, as to which CVC has sole power to vote and sole power to
dispose. Based solely on an Amendment No. 2 to Schedule 13D filed by CVC,
Citibank, N.A. ("Citibank"), Citicorp, Citigroup Holdings Company
("Holdings"), Citigroup, Inc. ("Citigroup") and Citigroup Foundation
("Foundation") dated January 26, 2000, (i) each of Citibank, Citicorp and
Holdings, exclusively through their holding company structure, also
beneficially own the same 6,427,820 shares held by CVC, as to which each
of Citibank, Citicorp and Holdings has shared power to vote and shared
power to dispose, (ii) Citigroup, through its direct and indirect
subsidiaries, beneficially owns the same 6,427,820 shares held by CVC, as
to which Citigroup has shared power to vote and shared power to dispose
and (iii) Foundation beneficially owns no shares. In addition, Citigroup
reported in the Amendment No. 2 to Schedule 13D that it shares voting and
dispositive power over an additional 844,270 shares. The address of each
of CVC, Citibank and Citicorp, as so reported, was 399 Park Avenue, 14th
Floor, New York, New York 10043. The address of Holdings, as so reported,
was One Rodney Square, Wilmington, Delaware 19899. The address of each of
Citigroup and Foundation, as so reported, was 153 East 53rd Street, New
York, New York 10043.
(2) The address of these individuals is c/o KEMET Corporation, P.O. Box 5928,
Greenville, South Carolina 29606.
(3) The amount shown includes 96,000 shares subject to currently exercisable
options.
(4) The amount shown includes 20,000 shares subject to currently exercisable
options.
(5) The amount shown includes 40,000 shares subject to currently exercisable
options.
(6) The address of this individual is c/o The Riverside Company, The Terminal
Tower, 50 Public Square, Suite 4000, Cleveland, Ohio 44113.
(7) The address of this individual is c/o Delta Woodside Industries, Inc., 233
North Main Street, Greenville, South Carolina 29601.
6
<PAGE>
(8) The address of this individual is c/o Citicorp Venture Capital, Ltd., 399
Park Avenue, 14th Floor, New York, New York 10043.
(9) First Pacific Advisors, Inc. ("First Pacific") reported shared voting
power over 1,728,400 shares and shared dispositive power over 6,185,400
shares. The information set forth herein is based solely on an Amendment
No. 2 to Schedule 13G filed by First Pacific for the year ended December
31, 1999. The address of First Pacific, as so reported, was 11400 West
Olympic Boulevard, Suite 1200, Los Angeles, California 90064.
(10) FMR Corp. ("FMR") reported sole voting power over 306,000 shares and sole
dispositive power over 5,749,400 shares. Each of Edward C. Johnson III
and Abigail P. Johnson also reported sole dispositive power over
5,749,400 shares. The information set forth herein is based solely on a
Schedule 13G filed by FMR, Mr. Johnson and Ms. Johnson for the year ended
December 31, 1999. The address of FMR, Mr. Johnson and Ms. Johnson, as so
reported, was 82 Devonshire Street, Boston, Massachusetts 02109.
7
<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, 2000, 1999 and 1998.
<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........ 2000 $480,000 $1,037,000 200,000 $76,180
Chairman and Chief 1999 456,000 0 96,000 48,197
Executive Officer 1998 434,000 476,000 48,000 45,261
Charles M. Culbertson
II..................... 2000 $278,000 $ 478,000 120,000 $32,881
President and Chief 1999 230,000 0 48,000 25,660
Operating Officer 1998 187,000 121,000 24,000 22,557
Glenn H. Spears......... 2000 $240,500 $ 319,000 80,000 $36,378
Executive Vice
President and 1999 220,000 0 48,000 29,601
Secretary 1998 210,000 135,000 24,000 26,832
Harris L. Crowley, Jr. . 2000 $248,750 $ 319,000 80,000 $33,648
Senior Vice President, 1999 230,000 0 48,000 25,650
Technology and
Engineering 1998 187,000 121,000 24,000 21,850
D. Ray Cash............. 2000 $205,000 $ 269,000 60,000 $30,490
Senior Vice President
of Administration, 1999 175,000 0 48,000 22,388
Treasurer and Assistant
Secretary 1998 158,000 102,000 24,000 20,700
</TABLE>
--------
(1) Includes $113,775, $56,700, $41,963, $42,581 and $35,550 in fiscal year
2000 deferred by Messrs. Maguire, Culbertson, Spears, Crowley and Cash,
respectively, $34,200, $16,813, $16,500, $16,813 and $13,125 in fiscal
year 1999 and $62,175, $20,075, $24,300, $18,650 and $16,500 in fiscal
year 1998 pursuant to a 401(k) account and personal investment account.
(2) Pursuant to Corporation policy, bonuses for a fiscal year are paid in May
of the following fiscal year. The amounts recorded above relate to the
fiscal year for which the bonuses were earned.
(3) All stock option grants were made pursuant to the Corporation's 1995
Executive Stock Option Plan. The amounts shown have been adjusted to
reflect the Stock Split.
(4) Represents payments made by the Corporation for the named executives
pursuant to a 401(k) account and personal investment account, imputed
income from Corporation-funded group term life insurance policies and
imputed income for personal use of company car/car allowance.
8
<PAGE>
Option Grants in Last Fiscal Year
The following table sets forth certain information with respect to stock
options granted during the fiscal year ended March 31, 2000 to the named
executives. The amounts shown have been adjusted to reflect the Stock Split.
<TABLE>
<CAPTION>
Individual Grants
-----------------------------------------
Potential Realizable
Number of % of Total Value at Assumed
Securities Options Annual Rates of Stock
Underlying Granted to Price Appreciation
Options Employees Exercise for Option Term
Granted in Fiscal Price Expiration ---------------------
Name (#)(1)(2) Year ($/SH) Date 5%($)(3) 10%($)(3)
---- ---------- ---------- -------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
David E. Maguire........ 200,000 15.0% $14.50 10/20/09 $1,823,793 $4,621,853
Charles M. Culbertson
II..................... 120,000 9.0 14.50 10/20/09 1,094,276 2,773,112
Glenn H. Spears......... 80,000 6.0 14.50 10/20/09 729,517 1,848,741
Harris L. Crowley, Jr. . 80,000 6.0 14.50 10/20/09 729,517 1,848,741
D. Ray Cash............. 60,000 4.5 14.50 10/20/09 547,138 1,386,556
</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 2000 to each of these officers was calculated by multiplying those
options by the excess of (a) the assumed market value, as of October 20,
2009, 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 $23.62 and such
value at a 10% assumed annual appreciation rate over that term is $37.61.
The 5% and 10% assumed appreciation rates are set forth in the Securities
and Exchange Commission rules and no representation is made that the
Common Stock will appreciate at these rates or at all.
Aggregated Option Exercises in Last Fiscal Year and Fiscal Year-End Option
Values
The following table sets forth certain information concerning the value of
unexercised stock options held by the named executives as of March 31, 2000.
The amounts shown have been adjusted to reflect the Stock Split.
<TABLE>
<CAPTION>
Number of
Securities
Underlying Value of
Unexercised Unexercised In-
Options at FY- The-Money Options
Shares End(#) at FY-End($)
Acquired Value Exercisable/ Exercisable/
Name on Exercise Realized($) Unexercisable Unexercisable
---- ----------- ----------- -------------- ---------------------
<S> <C> <C> <C> <C>
David E. Maguire........ 144,000 1,656,215 0/296,000 $ 0/$5,885,000
Charles M. Culbertson
II..................... 72,000 708,513 0/160,000 $ 0/$3,080,000
Glenn H. Spears......... 72,000 763,781 0/120,000 $ 0/$2,395,000
Harris L. Crowley, Jr.
....................... 72,000 763,844 0/120,000 $ 0/$2,395,000
D. Ray Cash............. 0 0 72,000/ 92,000 $1,857,720/$1,847,500
</TABLE>
9
<PAGE>
Ten-Year Option Repricings
The following table sets forth certain information with respect to all
repricings of options held by any of the named executives during the last ten
fiscal years. The amounts shown have been adjusted to reflect the Stock Split.
<TABLE>
<CAPTION>
Length of
Market Original
Number of Price of Option
Securities Common Exercise Term
Underlying Stock at Price at New Remaining
Options Time of Time of Exercise at Date
Repriced Repricing Repricing Price of
Name Date (#) ($) ($) ($) Repricing
---- ------ ---------- --------- --------- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
David E. Maguire........ 4/1/99 48,000 $6.00 $16.0625 $6.00 6.5 years
4/1/99 48,000 6.00 9.625 6.00 7.5 years
4/1/99 48,000 6.00 12.875 6.00 8.5 years
Charles M. Culbertson
II..................... 4/1/99 16,000 6.00 16.0625 6.00 6.5 years
4/1/99 24,000 6.00 9.625 6.00 7.5 years
4/1/99 24,000 6.00 12.875 6.00 8.5 years
Glenn H. Spears......... 4/1/99 16,000 6.00 16.0625 6.00 6.5 years
4/1/99 24,000 6.00 9.625 6.00 7.5 years
4/1/99 24,000 6.00 12.875 6.00 8.5 years
Harris L. Crowley, Jr. . 4/1/99 16,000 6.00 16.0625 6.00 6.5 years
4/1/99 24,000 6.00 9.625 6.00 7.5 years
4/1/99 24,000 6.00 12.875 6.00 8.5 years
D. Ray Cash............. 4/1/99 16,000 6.00 16.0625 6.00 6.5 years
4/1/99 16,000 6.00 9.625 6.00 7.5 years
4/1/99 24,000 6.00 12.875 6.00 8.5 years
</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.
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
10
<PAGE>
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.
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, Spears, Crowley and
Cash was $1,039,650, $368,357, $399,600, $343,257 and $293,550,
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, 2000, credited years of service
under that Plan for Messrs. Maguire, Culbertson, Spears, Crowley and Cash
were 41, 20, 23, 25 and 30, respectively.
(2) Average annual compensation of highest five years covered remuneration for
pension purposes in ten years preceding normal retirement age.
11
<PAGE>
Termination Benefits
In May 1999, the Corporation entered into Change in Control Severance
Compensation Agreements (the "Agreements") with Messrs. Maguire, Culbertson,
Spears, Crowley 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 expire
in May 2002.
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 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-term 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.
12
<PAGE>
. 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.
Option Repricing. On April 1, 1999, the Compensation Committee determined
that the options which had been granted to the Corporation's executive
officers from October 25, 1995 through October 23, 1997 at exercise prices
ranging from $9.625 to $16.0625 per share (after adjustment giving effect to
the Stock Split) would no longer provide sufficient incentives to, or
encourage continued service from, the executive officers as a result of the
decline in the market price of the Common Stock due to factors beyond the
Corporation's control. In addition, the executive officers agreed to forego
the cash bonuses that they would otherwise have received pursuant to the
Executive Bonus Plan. Accordingly, the Compensation Committee authorized the
"repricing" of those options by authorizing the cancellation of the
outstanding options and the grant of the same number of new options at an
exercise price of $6.00 per share (after adjustment giving effect to the Stock
Split), the closing market price of the Common Stock on the date of grant.
Options to purchase 392,000 shares (after adjustment giving effect to the
Stock Split) held by the named executives were repriced. Because option grants
generally are made only once each year, the option repricing in April 1999 had
no effect on option grants for the remainder of fiscal year 2000.
Repriced options were granted to the following named executives (each after
adjustment giving effect to the Stock Split): David E. Maguire, option to
purchase 144,000 shares; Charles M. Culbertson II, option to purchase 64,000
shares; Glenn H. Spears, option to purchase 64,000 shares; Harris L. Crowley,
Jr., option to purchase 64,000 shares; and D. Ray Cash, option to purchase
56,000 shares. The repriced options become exercisable over an eight-year
period and are not exercisable until, in the earliest case, the six month
anniversary of the date of grant, which is later than when a portion of the
cancelled options would have become exercisable. As a result, the repriced
options provide an incentive to the optionees to work to build shareholder
value and encourage continued service to the Corporation.
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").
Annual Bonus. The Executive Bonus Plan provides cash bonuses to the
Corporation's top officers, including the named executives, 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. For fiscal year 2000, the annual incentive base percent
was set between 40% and 85%, and was 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 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. For fiscal year 2000, the Multiplier ranged from 0 at 72.5% of the
target EBDAIT (base performance) to 2 at 132.5% 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. Each participant, including the CEO,
will separately receive a
13
<PAGE>
guaranteed bonus payment which will initially be equal to 0.5 times the annual
incentive base value. For example, using the annual incentive base percent and
maximum Multiplier for fiscal year 2000, since the Corporation achieved the
maximum performance level, the Corporation's CEO was entitled to an incentive
bonus equal to 2.5 times 85% of his base salary. 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. For information regarding amounts received with
respect to fiscal year 2000 by the Corporation's CEO and the other named
executives, see the Bonus column of the Summary Compensation Table.
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 2000 to
purchase an aggregate of 688,000 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.
Compensation of Chief Executive Officer. The 2000 fiscal year compensation
for Mr. Maguire, the Corporation's Chairman and Chief Executive Officer, was
set by the Board of Directors at $488,000 based on, among other factors, the
results of the Hay Survey. Because of the level of performance of the
Corporation in comparison to the ABB, Mr. Maguire was entitled to a bonus of
$1,037,000 for fiscal year 2000, which was paid in May 2000 pursuant to the
Executive Bonus Plan. The Compensation Committee set Mr. Maguire's base salary
at $525,000 for fiscal year 2001.
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 Compensation 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
14
<PAGE>
PERFORMANCE GRAPH
The following graph compares the Corporation's cumulative total stockholder
return for the past five fiscal years, beginning on March 31, 1995, with The
Nasdaq Stock Market (National Market) Index and a peer group (the "Peer Group")
comprised of certain companies which manufacture capacitors and with which the
Corporation generally competes. The Peer Group is comprised of AVX Corporation,
Thomas & Betts Corp. and Vishay Intertechnology, Inc.
Comparison of Total Return*
KEMET Corporation, Nasdaq Index and Peer Group
[LINE CHART]
NASDAQ STOCK
KEMET MARKET (NATIONAL
DATE CORPORATION PEER GROUP MARKET) INDEX
---- ----------- ---------- ----------------
3/31/1995 $100.00 $100.00 $100.00
3/29/1996 $120.27 $107.60 $134.51
3/31/1997 $ 99.67 $108.09 $150.48
3/31/1998 $ 98.67 $131.43 $227.41
3/31/1999 $ 61.13 $ 88.83 $297.18
3/31/2000 $336.21 $273.84 $547.25
* Total Return assumes reinvestment of dividends.
15
<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, Messrs. Maguire, Spears, Crowley
and Cash 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.
STOCKHOLDER PROPOSALS FOR 2001 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 2001 Annual Meeting, which is expected to be held on
July 25, 2001, must be received by the Corporation no later than February 26,
2001. 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,
2000, 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
Executive Vice President and
Secretary
KEMET CORPORATION
P.O. Box 5928
Greenville, South Carolina 29606
June 26, 2000
16
<PAGE>
Annex A
FORM OF
CERTIFICATE OF AMENDMENT OF
RESTATED CERTIFICATE OF INCORPORATION
OF
KEMET CORPORATION
Article Four
Section 1. The aggregate number of shares of stock which the Corporation
has authority to issue is 310,000,000, consisting of 10,000,000 shares of
Series Preferred Stock, par value $0.10 per share (the "Series Preferred
Stock"), 300,000,000 shares of Common Stock, par value $0.01 per share (the
"Common Stock"), and zero shares of Non-Voting Common Stock, par value $0.01
per share (the "Non-Voting Common Stock"). The Common Stock and the Non-Voting
Common Stock are collectively referred to herein as the "Common Securities."
All of such shares shall be issued as fully paid and non-assessable shares,
and the holder thereof shall not be liable for any further payments in respect
thereof.
<PAGE>
Solicited by the Board of Directors
KEMET CORPORATION
P.O. Box 5928
Greenville, South Carolina 29606
2000 Annual Meeting of Stockholders
The undersigned hereby appoints DAVID E. MAGUIRE and GLENN H. SPEARS, and each
of them, proxies, with full 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 2000 annual meeting of stockholders scheduled to be
held July 26, 2000, 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 nominees listed, FOR
Item 2 and FOR Item 3.
PLEASE VOTE, DATE AND SIGN ON REVERSE AND RETURN PROMPTLY IN THE ENCLOSED
ENVELOPE.
Please sign exactly as 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>
DETACH CARD DETACH CARD
---
X
PLEASE MARK VOTES
AS IN THIS EXAMPLE
-------------------------------------------------------------------------------
KEMET CORPORATION
-------------------------------------------------------------------------------
1. Election of three Directors.
Charles M. Culbertson II
Charles E. Volpe
Paul C. Schorr IV
To withhold authority for an individual nominee, draw a line through his
name.
For the
Nominees
Withhold Authority
2. The amendment to the Corporation's Restated Certificate of Incorporation.
For
Against
Abstain
3. The ratification of the appointment of KPMG LLP as independent public
accountants for the year ending March 31, 2001.
For
Against
Abstain
Mark box at right if an address change or comment has been noted on the
reverse side of this card.
------------------------------------------------------
Please be sure to sign Date
and date this Proxy.
-------------------------------------------------------------------------------
--- ----------- -----------------------------------------------
Stockholder Co-
sign owner
here sign
here
