<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] Confidential, for Use of the
Commission Only (as permitted by
Rule 14c-5(d)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
The Carbide/Graphite Group, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
Payment of Filing Fee (Check the appropriate box):
[_] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
[_] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
Notes:
<PAGE>
[LOGO OF THE CARBIDE/GRAPHITE GROUP, INC.]
-----------------------------
One Gateway Center, 19th Floor
Pittsburgh, PA 15222
(412) 562-3700
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD DECEMBER 3, 1996
To The Stockholders:
The Annual Meeting of Stockholders of The Carbide/Graphite Group, Inc., a
Delaware corporation (the Company), will be held at the Pittsburgh Hilton and
Towers, Gateway Center, Pittsburgh, PA 15222 on Tuesday, December 3, 1996 at
10:00 A.M. EST (the Annual Meeting), for the following purposes:
To elect two nominees to the Board of Directors to hold office until the
1999 Annual Meeting of Stockholders and until their respective successors
are elected and qualified.
To approve the appointment of independent auditors for the fiscal year
ending July 31, 1997.
To transact such other business as may properly come before the Annual
Meeting.
Holders of record of the Company's $0.01 par value Common Stock (the Common
Stock) at the close of business on October 28, 1996 will be entitled to vote
at the Annual Meeting. All stockholders are cordially invited to attend the
Annual Meeting in person. However, whether or not you expect to attend the
Annual Meeting in person, it is requested that you promptly fill in, sign and
return the enclosed proxy card.
By order of the Board of Directors
Roger Mulvihill
Secretary
Pittsburgh, Pennsylvania
November 4, 1996
<PAGE>
-------------------------
PROXY STATEMENT
-------------------------
GENERAL INFORMATION
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors (the Board) of the Company for use at the
Annual Meeting to be held on December 3, 1996 at the Pittsburgh Hilton and
Towers, Gateway Center, Pittsburgh, PA 15222 and any adjournment(s) thereof.
The enclosed proxy is for the use of holders of record of Common Stock at the
close of business on October 28, 1996. This proxy is a means by which
stockholders may authorize the voting of their shares at the Annual Meeting.
Shares cannot be voted at the Annual Meeting unless the owner of record is
present to vote or is represented by a proxy. Shares represented by proxies
will be voted as specified by the stockholder. Except as otherwise indicated
on the proxy, shares will be voted for the election of the nominees for
director named herein and for the election of Coopers & Lybrand, LLP as
independent accountants for the fiscal year ending July 31, 1997. Any person
who has signed and returned a proxy may revoke it at any time before it is
exercised by submitting a subsequently executed proxy, by giving notice of
revocation to the Secretary of the Company or by voting in person at the
Annual Meeting. As of October 28, 1996, the date of record, 8,355,522 shares
of Common Stock were issued and outstanding, the holders of which are entitled
to one vote for each share they hold. Accordingly, a quorum will require the
presence, in person or by proxy, of the holders of at least 4,177,762 shares
of Common Stock. Abstentions are counted as votes present and entitled to vote
and have the effect of votes against a particular matter. Directors are
elected by a plurality of the votes cast with a quorum present. In all matters
other than the election of directors, the affirmative vote of those persons
holding of record in the aggregate at least a majority of shares of Common
Stock present in person or by proxy and entitled to vote at the Annual Meeting
or any adjournments thereof is necessary for approval by stockholders. Broker
non-votes are not counted in determining the number of shares voted for or
against a particular matter. Both abstentions and broker non-votes are counted
in determining the presence of a quorum. In the event there are not sufficient
votes for a quorum or to approve or ratify any proposal at the time of the
Annual Meeting, the Annual Meeting may be adjourned in order to permit the
further solicitation of proxies. The cost of soliciting proxies will be borne
by the Company. In addition to solicitation by mail, proxies may be solicited
personally or by telephone, telegraph or facsimile by officers or employees of
the Company. The Company will reimburse brokers, dealers, bankers and trustees
or their nominees for reasonable expenses incurred by them in forwarding proxy
materials to beneficial owners of Common Stock. The Proxy Statement,
accompanying proxy card and the Company's 1996 Annual Report to Stockholders
are first being sent or given to shareholders on or about November 4, 1996.
PRINCIPAL STOCKHOLDERS
The following table sets forth information as of September 27, 1996 with
respect to each stockholder who, to the Company's knowledge, has sole or
shared voting or investment power with respect to more than 5% of the
Company's outstanding Common Stock. This information is based on upon the
latest report furnished to the Company or filed with the Securities and
Exchange Commission by such stockholder and may not be current:
<TABLE>
<CAPTION>
NUMBER PERCENT OF
NAME OF SHARES CLASS
- ---- --------- ----------
<S> <C> <C>
The Capital Group of Companies, Inc. (1) 981,200 11.8%
333 South Hope Street
Los Angeles, California 90071
Wellington Management Company (2) 878,190 10.5
75 State Street
Boston, Massachusetts 02109
The Prudential Insurance Company of America (3) 662,800 8.0
Prudential Plaza
Newark, New Jersey 07102-3777
</TABLE>
Continued on page 2
<PAGE>
<TABLE>
<CAPTION>
NUMBER PERCENT OF
NAME OF SHARES CLASS
- ---- --------- ----------
<S> <C> <C>
Mr. Nicholas T. Kaiser (4) 476,000 5.6%
The Carbide/Graphite Group, Inc.
One Gateway Center, 19th Floor
Pittsburgh, Pennsylvania 15222
J. & W. Seligman & Co., Incorporated 475,000 5.7
100 Park Avenue
New York, New York 10017
</TABLE>
- --------
(1) Shares are owned directly or through The Capital Group of Companies,
Inc.'s wholly-owned subsidiaries Capital Research and Management Company
and Capital Guardian Trust Company.
(2) Wellington Management Company, in its capacity as investment adviser, is
the beneficial owner of the shares indicated which are owned by numerous
investment counsel clients.
(3) The Prudential Insurance Company of America may be deemed to have direct
or indirect voting and/or investment discretion over the shares indicated
which are held for the benefit of its clients.
(4) Number of shares indicated includes 250,000 shares of Common Stock and
226,000 shares issuable upon the exercise of Common Stock options. Such
shares issuable upon the exercise of Common Stock options were added to
the Company's total Common Stock outstanding for purposes of this
computation.
----------------
PROXY PROPOSAL NO. 1
ELECTION OF DIRECTORS
Under the Company's Restated Certificate of Incorporation and By-laws, its
directors are divided into three classes, each class to be elected at
successive Annual Meetings of Stockholders for terms of three years. The two
directors whose terms expire at the Annual Meeting are Ronald N. Clawson and
Walter B. Fowler. A third director in this class, Mark E. Jennings, retired
from the Board on July 31, 1996. Messrs. Clawson and Fowler have been
nominated by the Board to stand for reelection as directors at the Annual
Meeting and to hold office until the 1999 Annual Meeting of Stockholders and
until their respective successors are duly elected and qualified or their
earlier resignation or removal.
In September 1996, Nicholas T. Kaiser, the Chairman, Chief Executive Officer
and President of the Company advised the Board of Directors that he intends to
retire as Chairman, Chief Executive Officer and President for personal reasons
in the near future, upon the selection of his successor and the completion of
a transition period, although he will continue as a director. In light of the
retirement of Mr. Jennings from the Board, the Board, on October 16, 1996
reduced the Board to eight members from nine and the class to be elected at
the Annual Meeting from three to two. In the event that the Board determines
at a future date to offer a directorship to Mr. Kaiser's successor as Chairman
and Chief Executive Officer, it may expand the Board to nine members and the
class elected at the Annual Meeting to three members and appoint such
successor to fill such vacancy. As of the date of this Proxy Statement, the
Board has not selected a successor for Mr. Kaiser.
Both nominees have indicated a willingness to serve as directors, but in the
event either nominee should become unavailable to serve as a director at the
time of the Annual Meeting, an event which the Board does not expect, the
Board will nominate a different person, and the proxies named on the enclosed
proxy card will vote for the election of such nominee.
Section 6 of Article II of the Company's By-laws requires that advance
notification of nominations of directors or other business by stockholders be
given to the Secretary of the Company not less than 60 days nor more than 90
days prior to the first anniversary of the preceding year's annual meeting or
under certain
2
<PAGE>
circumstances not later than the close of business on the tenth day following
the earlier of (A) the day on which notice of the date of the Annual Meeting
was delivered to stockholders in accordance with the By-laws and (B) the day
on which public announcement of the date of such Annual Meeting is first made
by the Company. In addition, the notice of nomination must set forth certain
information regarding any nominee including (x) as to each person whom the
stockholder proposes to nominate for election or reelection as a director, any
information relating to such person that is required to be disclosed in proxy
solicitations pursuant to Schedule 14A under the Securities Exchange Act of
1934, as amended (the Exchange Act) including such person's written consent to
be named in the Proxy Statement as a nominee and to serving as a director if
elected; (y) as to any other business that the stockholder proposes to bring
before the Annual Meeting, a brief description of the business desired to be
brought before the Annual Meeting, the reasons for conducting such business at
the meeting and any material interest in such business of such stockholder and
the beneficial owner, if any, on whose behalf the proposal is made; and (z) as
to the stockholder giving the notice and the beneficial owner, if any, on
whose behalf the nomination or proposal is made (I) the name and address of
such stockholder as it appears on the Company's books and of such beneficial
ownership and (II) the class and number of shares of Common Stock which are
owned beneficially and of record by such stockholder and such beneficial
owner. Nominations which are determined not to have been made in accordance
with the procedures established by Section 6 will be disregarded. The
foregoing summary of Section 6 is qualified in its entirety by reference to
the complete text.
Based on this provision and the date of mailing of this Notice and the
Annual Meeting, any nominations by stockholders for directors, together with
other required information and consents, should be delivered to the Secretary
of the Company by November 15, 1996.
If a quorum is present at the Annual Meeting, the election of directors will
require the affirmative vote of a plurality of the votes cast at the Annual
Meeting in person or by proxy.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR SUCH
NOMINEES.
THE BOARD OF DIRECTORS AND
OFFICERS OF THE COMPANY
The following is information as to each director, executive officer and
certain other officers of the Company as of July 31, 1996.
<TABLE>
<CAPTION>
NAME AGE POSITION
- ---- --- --------
<S> <C> <C>
Nicholas T. Kaiser (1) 62 Chairman of the Board, President, Chief Executive Officer and Director
(Term expiring in 1998)
Ronald N. Clawson 56 President--Carbide Products and Director (Nominee for term expiring
in 1999)
Walter B. Fowler 42 President--Electrodes and Graphite Specialty Products and Director
(Nominee for term expiring in 1999)
Walter E. Damian 56 Vice President--Human Resources
Stephen D. Weaver 42 Vice President--Finance and Chief Financial Officer
James G. Baldwin (2)(3) 71 Director (Term expiring in 1998)
James R. Ball (2)(4)(5) 53 Director (Term expiring in 1998)
Paul F. Balser (1)(2)(3) 54 Director (Term expiring in 1997)
Robert M. Howe 56 Director (Term expiring in 1997)
Ronald B. Kalich
(1)(4)(5) 49 Director (Term expiring in 1997)
Roger Mulvihill 60 Secretary
</TABLE>
- --------
(1) Member of the Board's Benefits Committee.
(2) Member of the Board's Nominating Committee.
3
<PAGE>
(3) Member of the Board's Compensation Committee.
(4) Member of the Board's Audit Committee.
(5) Member of the Board's 1995 Stock Option Plan Committee.
Officers of the Company are elected annually by the Board for a term
expiring at the next annual meeting of the Board or as otherwise determined by
the Board.
Nicholas T. Kaiser has been the Company's Chairman of the Board and Chief
Executive Officer since October 1994, has been President of the Company since
October 1991 and has been a member of the Company's Board since August 1988.
From August 1988 until October 1991, Mr. Kaiser was a Managing Director and
Executive Vice President of the Company. In September 1996, Mr. Kaiser advised
the Board that he would be retiring from his positions of Chairman of the
Board, President and Chief Executive Officer upon the selection of a successor
and the completion of a transition period. Mr. Kaiser will remain as a
director of the Company.
Ronald N. Clawson was elected to the Company's Board in September 1995. Mr.
Clawson has been President--Carbide Products of the Company since March 1995.
From July 1991 to March 1995, Mr. Clawson served as Vice President--General
Manager, Carbide Products of the Company and served as Vice President and
Plant Manager--Niagara Falls of the Company from August 1988 to July 1991.
Walter B. Fowler was elected to the Company's Board in September 1995. Mr.
Fowler has been President--Electrodes and Graphite Specialty Products of the
Company since March 1995 and had been Vice President--General Manager,
Graphite Electrode Products of the Company from January 1995 to March 1995 and
Vice President--General Manager, Graphite Specialties of the Company from July
1991 to March 1995. He served as Chief Financial Officer and Treasurer of the
Company from October 1988 to October 1991, and Vice President--Finance and
Assistant Secretary from August 1988 to July 1991.
Walter E. Damian has been the Company's Vice President--Human Resources
since August 1988.
Stephen D. Weaver has been Vice President--Finance and Chief Financial
Officer of the Company since October 1991. Mr. Weaver previously served from
1988 to 1991 with the Corporate Finance Group of PNC Financial Corporation as
Managing Director, responsible for acquisition-related financings and loan
syndications activity.
James G. Baldwin is a director of the Company who was the Company's Chairman
of the Board and Chief Executive Officer from August 1988 to October 1994.
James R. Ball was elected to the Company's Board in March 1994. From July
1992 to December 1994, Mr. Ball was President and Chief Executive Officer of
Vista Chemical Company. Mr. Ball also currently serves on the Board of
Directors of Rexene Corporation.
Paul F. Balser has been a member of the Company's Board since August 1988
and was Vice President of the Company from August 1988 until June 1992. He was
a partner of Centre Partners L.P., the managing general partner of Centre
Capital Investors L.P. (CCI) from 1986 until August 1995. In August 1995, Mr.
Balser resigned as an officer of the managing general partner of Centre
Partners L.P., to become a founding partner of Generation Capital Partners
L.P., a private investment partnership. Mr. Balser currently serves on the
Boards of Directors of Kansas City Southern Industries, Inc. and Scientific
Games Holdings, Inc.
Robert M. Howe has been a member of the Company's Board since April 1996.
From December 1984 to December 1995, Mr. Howe was the President and Chief
Operating Officer of MAPCO, Inc.
Ronald B. Kalich was elected to the Company's Board in March 1994. Mr.
Kalich is currently Group President of The Marmon Group, Inc., a position he
has held since 1993. Previously, Mr. Kalich served as Group Vice President of
Danaher Corporation from 1991 to 1993.
4
<PAGE>
Roger Mulvihill has been a Secretary of the Company since August 1988. He
has been a partner with the law firm of Dechert Price & Rhoads since December
1991.
COMMITTEES OF THE BOARD OF DIRECTORS
Audit Committee
The Audit Committee consists of two directors. The Audit Committee is
responsible for policies, procedures and other matters relating to accounting,
internal financial controls and financial reporting, including the engagement
of independent auditors and the planning, scope, timing and cost of any audit
and any other services they may be asked to perform, and will review with the
auditors their report on the Company's financial statements following
completion of each such audit. During fiscal 1996, the Audit Committee held
two meetings.
Nominating Committee
The Nominating Committee consists of three directors, a majority of whom may
not be employees of the Company. The Nominating Committee is responsible for
nominating individuals for election as directors of the Company. The
Nominating Committee will consider nominees for election as directors
recommended by stockholders (See "Election of Directors" on page 2 of this
Proxy Statement for a discussion of the procedures under the By-laws relating
to the recommendation of nominees by stockholders). During fiscal 1996, the
Nominating Committee held two meetings.
Compensation Committee
The Compensation Committee consists of two directors. The Compensation
Committee is responsible for policies, procedures and other matters relating
to compensation of the executive officers as a group and the chief executive
officer individually. During fiscal 1996, the Compensation Committee held
three meetings.
Benefits and 1995 Stock Option Plan Committee
The Company's Board has established a Benefits Committee, which consists of
three directors and reviews the operations of the Company's pension plans and
its medical insurance plans. During fiscal 1996, the Benefits Committeee held
one meeting.
The Company's Board has established the 1995 Stock Option Plan Committee,
which consists of two directors and has authority to grant options pursuant to
a management stock option plan adopted in April 1995 (the 1995 Plan). During
fiscal 1996, the Stock Option Committee held four meetings.
The Board held eight meetings during fiscal 1996. Each incumbent director
attended at least 75% of the aggregate number of meetings of the Board and the
committees of the Board on which such director served.
OWNERSHIP OF SECURITIES BY DIRECTORS, EXECUTIVE OFFICERS AND CERTAIN OTHER
OFFICERS
The following is a summarization of the ownership of the Company's Common
Stock as of September 27, 1996 by the Company's directors, executive officers,
certain other officers and by the executive officers and directors as a group:
<TABLE>
<CAPTION>
NAME OF OFFICER OR DIRECTOR NUMBER OF SHARES BENEFICIALLY OWNED (1) PERCENTAGE OF CLASS (2)
- --------------------------- --------------------------------------- -----------------------
<S> <C> <C>
Officers:
Nicholas T. Kaiser (3) 476,000 5.6%
Ronald N. Clawson (4) 155,000 1.8
Walter B. Fowler (5) 85,000 1.0
Stephen D. Weaver (6) 43,500 0.5
</TABLE>
5
<PAGE>
<TABLE>
<CAPTION>
NAME OF OFFICER OR DIRECTOR NUMBER OF SHARES BENEFICIALLY OWNED (1) PERCENTAGE OF CLASS (2)
- --------------------------- --------------------------------------- -----------------------
<S> <C> <C>
Walter E. Damian (7) 35,500 0.4%
Roger Mulvihill 8,000 0.1
Directors:
James G. Baldwin (8) 76,700 0.9
James R. Ball (9) 16,700 0.2
Ronald B. Kalich (10) 11,700 0.1
Robert M. Howe (11) 2,700 *
Paul F. Balser (12) 1,700 *
All executive officers
and directors as a group
(10 persons) 904,500 10.3
</TABLE>
- --------
* Less than 0.1%.
(1) Unless otherwise noted, each stockholder has sole voting and investment
power with respect to the shares shown.
(2) Shares issuable upon the exercise of Common Stock options were added to
the Company's total Common Stock outstanding for purposes of this
computation, if applicable.
(3) Number of shares indicated includes 250,000 shares of Common Stock,
205,000 shares of Common Stock issuable upon the exercise of fully vested
stock options and 21,000 shares of Common Stock issuable upon the exercise
of non-vested stock options.
(4) Number of shares indicated includes 80,000 shares of Common Stock, 60,000
shares of Common Stock issuable upon the exercise of fully vested stock
options and 15,000 shares of Common Stock issuable upon the exercise of
non-vested stock options.
(5) Number of shares indicated includes 50,000 shares of Common Stock, 20,000
shares of Common Stock issuable upon the exercise of fully vested stock
options and 15,000 shares of Common Stock issuable upon the exercise of
non-vested stock options.
(6) Number of shares indicated includes 30,000 shares of Common Stock issuable
upon the exercise of fully vested stock options and 13,500 shares of
Common Stock issuable upon the exercise of non-vested stock options.
(7) Number of shares indicated includes 25,000 shares of Common Stock issuable
upon the exercise of fully vested stock options and 10,500 shares of
Common Stock issuable upon the exercise of non-vested stock options.
(8) Number of shares indicated includes 40,000 shares of Common Stock, 35,000
shares of Common Stock issuable upon the exercise of fully vested stock
options and 1,700 shares of Common Stock issuable upon the exercise of
non-vested stock options.
(9) Number of shares indicated includes 15,000 shares of Common Stock and
1,700 shares of Common Stock issuable upon the exercise of non-vested
stock options.
(10) Number of shares indicated includes 10,000 shares of Common Stock and
1,700 shares of Common Stock issuable upon the exercise of non-vested
stock options.
(11) Number of shares indicated includes 1,000 shares of Common Stock and
1,700 shares of Common Stock issuable upon the exercise of non-vested
stock options.
(12) Number of shares indicated are 1,700 shares of Common Stock issuable upon
the exercise of non-vested stock options.
EXECUTIVE COMPENSATION
The following table sets forth certain information concerning compensation
received by the chief executive officer and each of the other four most highly
compensated executive officers who received cash compensation in excess of
$100,000 (collectively, the Named Executive Officers) for services rendered in
all capacities during the Company's indicated fiscal years.
6
<PAGE>
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
-------------------------------- ------------------
NAME AND OTHER ANNUAL COMMON STOCK ALL OTHER
PRINCIPAL POSITION (1) YEAR SALARY BONUS (2) COMPENSATION UNDERLYING OPTIONS COMPENSATION
---------------------- ---- -------- ---------- ------------ ------------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Nicholas T. Kaiser 1996 $322,254 -- $25,380(3) 21,000(4) $67,361(5)
Chairman of the Board, 1995 309,169 -- 25,380(3) -- 66,156
President and Chief Executive
Officer 1994 281,174 $1,120,000 23,913(3) -- 42,999
Ronald N. Clawson 1996 221,591 -- -- 15,000(4) 22,272(6)
President-Carbide Products 1995 202,508 -- -- -- 20,438
1994 180,834 366,000 -- 40,000(7) 13,958
Walter B. Fowler 1996 221,591 -- -- 15,000(4) 20,771(8)
President-Electrodes and 1995 202,508 -- -- -- 19,519
Graphite Specialty Products 1994 180,834 366,000 -- 40,000(7) 13,254
Stephen D. Weaver 1996 158,625 -- -- 13,500(4) 15,178(9)
Vice President-Finance and 1995 145,125 133,334 -- -- 14,016
Chief Financial Officer 1994 135,750 80,166 -- 90,000(7) 10,025
Walter E. Damian 1996 128,671 -- -- 10,500(4) 12,496(10)
Vice President-Human 1995 122,504 -- -- -- 11,203
Resources 1994 115,591 260,000 -- -- 8,791
</TABLE>
- --------
(1) The positions listed for each of the Named Executive Officers are those
held during the fiscal year ended July 31, 1996.
(2) Except for Mr. Weaver, all amounts shown in this column represent a
special bonus paid in fiscal 1994. Mr. Weaver's bonus amounts include the
following: 1995--$133,334 related to a bonus paid on September 30, 1995;
1994--$66,666 related to a bonus paid on September 30, 1995 and $13,500
for the special bonus paid in fiscal 1994.
(3) Other annual compensation represents payments to adjust for the tax
effects of the Company's payment of term life insurance premiums.
(4) Represents options for Common Stock granted under the 1995 Plan. The
options were granted on July 31, 1996 and vest and become exercisable at a
rate of one-third per year on July 31, 1997, 1998 and 1999, respectively.
The options expire on July 31, 2006 and have an exercise price of $15.75
per share.
(5) All other compensation for 1996 includes: $34,000 of premiums for life
insurance paid by the Company during fiscal 1996; $3,791 of premiums for
group term life insurance; and $8,750 of Company match contributions and
$20,820 of profit sharing under the Company's savings investment plan
adopted pursuant to Section 401(k) of the Internal Revenue Service Code of
1986, as amended (the Savings Investment Plan).
(6) All other compensation for 1996 includes: $2,184 of premiums for group
term life insurance; and $5,748 of Company match contributions and $14,340
of profit sharing under the Savings Investment Plan.
(7) The exercise price of options granted under the Company's various
management stock option plans (the MSOP) in fiscal 1992 was lowered from
$4.70 per share of Common Stock to $2.00 per share of Common Stock in
conjunction with a refinancing completed in August 1993.
(8) All other compensation for 1996 includes: $337 of premiums for group term
life insurance; and $6,094 of Company match contributions and $14,340 of
profit sharing under the Savings Investment Plan.
7
<PAGE>
(9) All other compensation for 1996 includes: $199 of premiums for group term
life insurance; and $4,719 of Company match contributions and $10,260 of
profit sharing under the Savings Investment Plan.
(10) All other compensation for 1996 includes: $947 of premiums for group term
life insurance; and $3,389 of Company match contributions and $8,160 of
profit sharing under the Savings Investment Plan.
The following table sets forth certain information regarding awards of
options for Common Stock to the Named Executive Officers during fiscal 1996.
COMMON STOCK OPTIONS GRANTED IN FISCAL 1996
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
----------------------------------------- POTENTIAL REALIZABLE
% OF TOTAL VALUE AT ASSUMED
OPTIONS ANNUAL RATES OF STOCK
SHARES GRANTED TO PRICE APPRECIATION
UNDERLYING EMPLOYEES FOR OPTION TERM(2)
OPTIONS IN FISCAL EXERCISE EXPIRATION ----------------------
NAME GRANTED(1) YEAR PRICE DATE 5% 10%
- ---- ---------- ---------- -------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
Nicholas T.
Kaiser 21,000 16.8% $15.75 7/31/2006 $208,007 $527,130
Ronald N.
Clawson 15,000 12.0 15.75 7/31/2006 148,576 376,522
Walter B.
Fowler 15,000 12.0 15.75 7/31/2006 148,576 376,522
Stephen D.
Weaver 13,500 10.8 15.75 7/31/2006 133,719 338,869
Walter E.
Damian 10,500 8.4 15.75 7/31/2006 104,004 263,565
</TABLE>
- --------
(1) All options granted in fiscal 1996 were granted at fair market value on
the date of grant under the 1995 Plan. The options vest and become
exercisable at a rate of one-third per year on July 31, 1997, 1998 and
1999, respectively.
(2) The dollar amounts are the result of calculations at the 5% and 10% rates
prescribed by the Securities and Exchange Commission and are not intended
to forecast any possible appreciation on the Company's stock price.
----------------
The following table provides information related to options exercised by the
Named Executive Officers during fiscal 1996 and the number and value of
options held as of July 31, 1996.
AGGREGATE OPTION EXERCISES IN FISCAL 1996 AND FISCAL YEAR END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SHARES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
SHARES OPTIONS AS OF IN-THE-MONEY OPTIONS
ACQUIRED JULY 31, 1996 AS OF JULY 31, 1996
ON VALUE --------------------------- -----------------------------
NAME EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- -------- ---------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Nicholas T. Kaiser 75,000 $ 975,000(1) 205,000(2) 21,000(3) $3,023,750(4) --(5)
Ronald N. Clawson 70,000 1,100,000(6) 60,000(7) 15,000(3) 845,000(8) --(5)
Walter B. Fowler 110,000 1,552,500(9) 20,000(10) 15,000(3) 275,000(11) --(5)
Stephen D. Weaver 60,000 791,250(12) 30,000(10) 13,500(3) 412,500(11) --(5)
Walter E. Damian 40,000 565,000(13) 25,000(2) 10,500(3) 368,750(4) --(5)
</TABLE>
- --------
(1) Options exercised had an exercise price of $1.00 per share and were
exercised when the fair market value of the Company's Common Stock was
$14.00 per share.
(2) Options have an exercise price of $1.00 per share and are fully vested and
exercisable. Options expire in August 1997.
8
<PAGE>
(3) Represents options for Common Stock granted under the 1995 Plan. The
options vest and become exercisable at a rate of one-third per year on
July 31, 1997, 1998 and 1999, respectively. The options expire on July 31,
2006.
(4) Value is calculated based on the difference between $15.75, the fair
market value of the Company's Common Stock on July 31, 1996, and $1.00,
the option exercise price.
(5) Options were granted on July 31, 1996 at $15.75, the fair market value of
the Company's Common Stock.
(6) Options exercised had an exercise price of $1.00 per share and 30,000 were
exercised when the fair market value of the Company's Common Stock was
$14.00 per share and 40,000 were exercised when the fair market value was
$18.75 per share.
(7) 20,000 of the options have an exercise price of $1.00 per share, are fully
vested and exercisable and expire in August 1997. The remaining 40,000
options have an exercise price of $2.00 per share, are fully vested and
exercisable and expire in September 1998.
(8) Value is calculated based on the difference between $15.75, the fair
market value of the Company's Common Stock on July 31, 1996, and $1.00,
the option exercise price for 20,000 of the options and $2.00, the option
exercise price for the remaining 40,000 options.
(9) 90,000 of the options exercised had an exercise price of $1.00 per share
and 80,000 were exercised when the fair market value of the Company's
Common Stock was $14.00 per share and 10,000 were exercised when the fair
market value was $18.75. The remaining 20,000 options exercised had an
exercise price of $2.00 per share and were exercised when the fair market
value of the Company's Common Stock was $18.75 per share.
(10) The options have an exercise price of $2.00 per share, are fully vested
and exercisable and expire in September 1998.
(11) Value is calculated based on the difference between $15.75, the fair
market value of the Company's Common Stock on July 31, 1996, and $2.00,
the option exercise price.
(12) Options exercised had an exercise price of $2.00 per share and 45,000
were exercised when the fair market value of the Company's Common Stock
was $14.00 per share and 15,000 were exercised when the fair market value
was $18.75 per share.
(13) Options exercised had an exercise price of $1.00 per share and 30,000
were exercised when the fair market value of the Company's Common Stock
was $14.00 per share and 10,000 were exercised when the fair market value
was $18.50.
9
<PAGE>
PERFORMANCE GRAPH
The following graph compares total stockholder return on the Company's
Common Stock with the cumulative total stockholder return of the companies
listed in the Nasdaq Stock Market--US Index (the Nasdaq Index) and the S&P
Iron and Steel Index (the S&P Index) for the period from September 14, 1995 to
July 31, 1996. As compared to a basis of $100 as of September 14, 1995, the
Company's index and the Nasdaq Index as of July 31, 1996 were each $107 and
the S&P Index was $84.
<TABLE>
[GRAPH APPEARS HERE]
COMPARISON OF TEN MONTH CUMULATIVE RETURN
AMONG THE CARBIDE/GRAPHITE GROUP, INC., THE NASDAQ STOCK
MARKET-US INDEX AND THE S & P IRON & STEEL INDEX
<CAPTION>
Measurement period
(Fiscal year Covered) CGGI NASDAQ S&P IRON & STEEL
- --------------------- ------------------- ------- ----------------
<S> <C> <C> <C>
Measurement PT -
FYE 9/14/96 $100 $100 $100
FYE 7/ /96 $107 $107 $ 84
</TABLE>
*$100 INVESTED ON 9/14/95 IN STOCK OR ON 8/31/95 IN INDEX--
INCLUDING REINVESTMENT OF DIVIDENDS.
FISCAL YEAR ENDING JULY 31.
COMPENSATION OF DIRECTORS
For fiscal 1996, Messrs. Baldwin, Ball and Kalich each earned $25,000 in
directors' fees. Mr. Balser and Mr. Mark E. Jennings, who retired from the
Board in July 1996, each earned $21,000 in directors fees for fiscal 1996. Mr.
Howe, who was elected to the Company's Board in April 1996, earned $9,000 in
director fees for fiscal 1996. A portion of directors fees earned by each
outside director were credited to a deferred compensation plan established in
fiscal 1996. Such deferral was at the discretion of the director, subject to
limitations summarized in the plan documents (see the Deferral Plan described
below). Messrs. Clawson, Fowler and Kaiser received no compensation for their
services as directors of the Company in fiscal 1996. Each of the non-employee
directors will receive fees of $25,000 for services on the Board and its
committees in fiscal 1997.
On August 26, 1996, the Company established a Non-Employee Director Stock
Option Plan (the Directors' Plan) pursuant to which each non-employee director
was granted an option to purchase 1,700 shares of Common Stock of the Company,
subject to certain adjustments provided for under the Directors' Plan, at
$18.25 per share, the fair market value of the Common Stock on the date of
grant. The option is exercisable in full if the non-employee director is a
member of the Board on July 31, 1997. Pursuant to the Directors' Plan, each
non-employee director who is then a member of the Board will also be granted
options to purchase an additional 1,700 shares of Common Stock on July 31,
1997 and July 31, 1998 at the fair market value on such
10
<PAGE>
dates, subject to similar requirements regarding exercisability. Future non-
employee directors are eligible for participation in the Directors' Plan. The
options have a term of ten years and may be exercised for cash or, under
certain circumstances, Common Stock or additional unexercised options of the
Company.
EMPLOYMENT AGREEMENTS
The Company entered into a restated employment agreement with Mr. Kaiser as
of January 1, 1995 pursuant to which Mr. Kaiser was to continue to serve as
the Chief Executive Officer of the Company until December 31, 1997, and will
provide consulting services to the Company for a period of one year
thereafter. The employment agreement provides for a minimum annual salary of
$320,000 during the employment period, and the payment of $2,500 per month for
the duration of the consulting period. Mr. Kaiser will be entitled, upon
termination or expiration of the agreement under certain circumstances
(including a change of control), to certain severance benefits, including
continuation of health and life insurance benefits, and continuation of salary
under various circumstances for specific periods up to a year following
termination.
Messrs. Clawson, Fowler and Weaver, by letter agreements with the Company
each dated March 1, 1995, currently have employment agreements pursuant to
which Mr. Clawson will serve as President--Carbide Products, Mr. Fowler will
serve as President--Electrodes and Graphite Specialties and Mr. Weaver will
serve as Vice President--Finance and Chief Financial Officer. The employment
agreements of Messrs. Clawson and Fowler expire on December 31, 1997 and
provide for a minimum annual salary of at least $220,000. Mr. Weaver's
employment agreement expires on April 1, 1997 and provides for a minimum
annual salary of at least $144,000. Upon the termination or expiration of
their employment under certain circumstances (including in the event of
certain adverse developments), Messrs. Clawson, Fowler, Weaver and Damian are
entitled to certain severance benefits, including continuation of health and
life insurance benefits, and continuation of salary under various
circumstances for a period of two years for Messrs. Clawson and Fowler and one
year for Messrs. Weaver and Damian, each from the date of termination.
James G. Baldwin retired from his position as Chairman of the Board and
Chief Executive Officer of the Company in October 1994 and as an employee of
the Company on July 31, 1995. Pursuant to his employment agreement, Mr.
Baldwin has provided consulting services to the Company for the one year
period ending July 31, 1996 at a monthly rate of $2,500. The agreement
provides for the continuation of health and life insurance benefits through
fiscal 1998. Mr. Baldwin has agreed to serve as a director of the Company at
least until the expiration of his current term as a director in 1998.
SAVINGS INVESTMENT PLAN
The Company has adopted the Savings Investment Plan for substantially all
salaried employees. Employee contributions of not more than 6% of employee
compensation are matched 50% by the Company in lieu of a pension plan.
Additional employer contributions may be made at the discretion of the Board
based on the Company's current year performance.
DEFERRAL PLAN
The Company has implemented a compensation deferral plan (the Deferral Plan)
for the benefit of its directors and officers, currently 18 individuals,
including the Named Executive Officers. The Deferral Plan became effective for
compensation that would otherwise be paid on or after January 1, 1996. Under
the Deferral Plan, participants are allowed to defer a portion or all of their
base salary, director's fees or bonuses. Contributions to the Deferral Plan
are invested, as the participants direct, into a variety of fixed income,
balanced and equity funds. The Deferral Plan also restores the Saving
Investment Plan matching contribution lost on deferred compensation up to
$235,840 (as such amounts may be increased under Section 415(d) of the Code).
Distributions from the Deferral Plan generally will be made upon retirement,
disability or upon termination of employment, unless further deferred by the
participant.
11
<PAGE>
1995 STOCK-BASED INCENTIVE COMPENSATION PLAN
Introduction. The Board adopted the 1995 Plan in April 1995, and the
shareholders of the Company approved the 1995 Plan in August 1995. The purpose
of the 1995 Plan is to assist the Company, and its Subsidiaries and
Affiliates, in attracting and retaining valued employees by offering them a
greater stake in the Company's success and a closer identity with it, and to
encourage ownership of the Company's Common Stock by such employees. The 1995
Plan permits awards of stock options and/or stock appreciation rights (SARs)
to eligible employees that qualify as "performance-based compensation" under
Section 162(m) of the Internal Revenue Code of 1986, as amended (the Internal
Revenue Code).
The total number of shares of the Company's Common Stock available for
awards under the 1995 Plan is 400,000 shares (subject to adjustments for stock
splits, stock dividends and the like). No employee may be granted (i) an award
of, or exercisable for, more than a specified number of shares of Common Stock
in any one calendar year, or (ii) incentive stock options first exercisable in
any one calendar year for shares of Common Stock having an aggregate fair
market value in excess of $100,000.
The following summary description of the 1995 Plan is qualified in its
entirety by the full text of the 1995 Plan, as amended, copies of which may be
obtained by the Company's stockholders upon request to the Office of the
Corporate Secretary of the Company.
Administration. The 1995 Stock Option Plan Committee designated by the Board
(the Committee) has full power to interpret and administer the 1995 Plan and
full authority to act in selecting the employees to whom awards of options or
SARs under the 1995 Plan (Awards) shall be granted, in determining the type
and amount of Awards to be granted to each such employee, the terms and
conditions of Awards granted under the 1995 Plan and the terms and agreements
that shall be entered into with employees to whom an Award is granted (the
Holders). Effective August 1996, all grants under the 1995 Plan must be
approved by the Committee. The Committee members must be Board members who are
not employees of the Company and, for periods prior to August 1996, who are
not eligible to participate in the 1995 Plan. The Board has the power to
amend, suspend or terminate the 1995 Plan at any time except that stockholder
approval is required to increase the total number of shares available for
issuance pursuant to the 1995 Plan, change the class of employees eligible to
be Holders, decrease the price at which the Common Stock may be purchased upon
the exercise of an option, withdraw the administration of the 1995 Plan from
the Committee, change the provisions of Section 9 of the 1995 Plan, or take
any other action that requires stockholder approval under Section 16(b) of the
1934 Act.
Eligibility. Any employee is eligible to receive an Award, except that any
employee employed by an affiliate (any entity (other than a 50% or more
subsidiary) in which the Company has a substantial direct or indirect equity
interest, as determined by the Board) shall not be eligible to receive an
incentive stock option. "Employee" means an officer or other key employee,
consultant or advisor of the Company, a subsidiary or an affiliate, including
a director who is such an employee, consultant or advisor.
Awards. Under the 1995 Plan, eligible employees may be awarded stock options
and/or SARs. Stock options may be either incentive stock options or non-
qualified stock options. Incentive stock options are intended to be "incentive
stock options" under Section 422 of the Internal Revenue Code; non-qualified
stock options are those stock options which do not qualify under Section 422
of the Internal Revenue Code. The price at which shares of Common Stock may be
purchased upon the exercise of an option is determined by the Committee but
must be at least equal to the fair market value of such shares on the date of
the award. Payment of the option price must be paid in full in cash at the
time of exercise or, with the consent of the Committee, in whole or in part in
shares of Common Stock valued at fair market value. With the consent of the
Committee, payment upon the exercise of a non-qualified stock option may be
made in whole or in part by the delivery of additional, unexercised non-
qualified stock options (based on the difference between the fair market value
of the Common Stock for which they are exercisable and the exercise price of
such additional non-qualified stock options) or by a "cashless exercise."
12
<PAGE>
A SAR entitles the recipient to receive a payment equal to the excess of the
fair market value of the shares of Common Stock covered by the SAR on the date
of exercise over the exercise price of the SAR. Such payment may be in cash,
in shares of Common Stock, or any combination thereof, as the Committee may
determine. A SAR may be awarded in tandem with options or separately.
Stock options and SARs will be exercisable over a period to be designated by
the Committee, but not prior to six months or more than ten years (or five
years for certain incentive stock options) after the date of the award. All
options and SARs awarded under the 1995 Plan are non-transferable other than
by will or by operation of the laws of descent and distribution. The total
number of shares of the Company's Common Stock available for awards under the
1995 Plan is 400,000 shares (subject to adjustments for stock splits, stock
dividends and the like), which equals approximately 4.8% of the total number
of shares of Common Stock outstanding as of September 27, 1996. The closing
price of Common Stock reported on the NASDAQ National Market System at
September 27, 1996 was $18.25.
Term. The 1995 Plan became effective in May 1995 and shall remain in full
force and effect until the earlier of May 1, 2005 or the date it is terminated
by the Board.
Performance-Based Compensation. It is intended that all compensation income
recognized by any Holder as the result of the exercise of options or SARs, or
the disposition of shares of common stock acquired on
exercise of options or SARs, shall be considered performance-based
compensation excludable from such Holder's "applicable employee remuneration"
pursuant to section 162(m)(4)(C) of the Internal Revenue Code.
Federal Tax Treatment. Under the present federal tax laws, the federal
income tax treatment of stock options and SARs under the 1995 Plan is as
follows:
An employee recognizes no taxable income and the Company is not entitled to
a deduction when an incentive stock option is awarded or exercised. If an
employee sells Common Stock acquired upon exercise, after complying with
requisite holding periods, any gain or loss realized upon such sale will be
long-term capital gain or loss. The Company will not be entitled to take a
deduction as a result of any such sale. If the employee disposes of such
Common Stock before complying with requisite holding periods, the employee
generally will recognize ordinary income equal to the difference between the
fair market value of the Common Stock on the date of exercise and the exercise
price, and the Company will be entitled to a corresponding income tax
deduction.
An employee recognizes no taxable income and the Company is not entitled to
an income tax deduction when a non-qualified option is awarded. Upon exercise
of a non-qualified option, an employee generally will realize ordinary income
in an amount equal to the excess of the fair market value of the Common Stock
over the exercise price, and, provided that the applicable conditions of
Section 162(m) of the Internal Revenue Code are met, the Company will be
entitled to a corresponding income tax deduction. Upon sale of the Common
Stock acquired, the employee will realize short-term or long-term capital gain
or loss, depending upon whether the Common Stock been held for more than one
year, equal to the difference between the sale price of the Common Stock and
the fair market value of the Common Stock on the date that the employee
recognizes income with respect to the option exercise.
An employee recognizes no taxable income and the Company is not entitled to
an income tax deduction when a SAR is awarded. Upon exercise of a SAR, an
employee generally will realize ordinary income in an amount equal to the
difference between the fair market value of the Common Stock on the date of
exercise and the exercise price under the SAR, and, provided the applicable
conditions of Section 162(m) of the Internal Revenue Code are met, the Company
will be entitled to a corresponding income tax deduction.
BONUS PLANS
Pursuant to a refinancing completed in fiscal 1994, the Company paid special
bonuses totaling $5.1 million to certain key employees.
13
<PAGE>
The Company has adopted an incentive bonus plan for certain executives,
including the Named Executive Officers (the Incentive Bonus Plan). The
Incentive Bonus Plan provides for the award of annual bonuses based on the
Company's meeting or exceeding a performance target relating to earnings
before interest, taxes, depreciation and amortization (EBITDA) which is
established annually by the Board. Satisfaction of EBITDA targets will trigger
awards equal to 10%, 20% or 30% of base pay depending on management levels.
EBITDA in excess of the established targets will increase bonus awards subject
to maximum awards of 20%, 40% or 60%, respectively, depending on management
levels. In fiscal 1997, approximately 33 salaried employees are eligible to
participate in the plan, including the Named Executive Officers.
The Company has also adopted a discretionary bonus plan for salaried
employees not eligible for the Incentive Bonus Plan (the Discretionary Bonus
Plan). The Discretionary Bonus Plan provides for the payment of up to 2% of
the total annual salaries of non-executive employees. Awards under the
Discretionary Bonus Plan are solely at management's discretion.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee of the Board of Directors is comprised of Messrs.
Baldwin and Balser. Mr. Jennings was also a member of the Compensation
Committee until his retirement from the Board on July 31, 1996. Messrs.
Baldwin, Balser and Jennings are not currently executive officers of the
Company; however, all three have served as officers of the Company in the
past. Executive officer compensation is determined by the Compensation
Committee.
REPORT OF COMPENSATION COMMITTEE
The Compensation Committee, which is currently comprised of two non-employee
directors, is responsible for guiding the Company in the development and
implementation of the Company's compensation policies, plans and programs. The
intended purposes of these programs are to: (i) promote the interests of the
Company and its stockholders by attracting and retaining officers and other
key employees of exceptional ability; (ii) maximize the Company's long-term
success and investment returns to stockholders; (iii) provide officers and key
employees who are important to the Company's sustained growth with a
proprietary interest in, and greater incentives to contribute to the success
of, the Company through ownership of the Company's Common Stock and stock
options; and (iv) provide incentives for officers and other key employees
which are competitive with those offered by other corporations in the business
and geographic areas in which the Company operates. The Compensation Committee
reviews and recommends the annual compensation of the Company's executive
officers and other members of management, which consists principally of base
salary, annual bonuses and stock option grants. Messrs. Kaiser, Clawson,
Fowler and Weaver have entered into employment agreements with the Company.
See "Employment Agreements" on page 11 of this Proxy Statement.
Base Salary. Base salary is designed to compensate executives and other key
employees for individual performance. Such base salaries are intended to (x)
take into consideration the relative intrinsic value of the subject executive
position to the Company, as measured by the position's scope of
responsibility, strategic importance, technological requirements and
complexity; (y) competitive salaries; and (z) individual performance.
Executives and other key employees may or may not receive annual base salary
increases, depending upon performance in the prior year and upon the
achievement of individual and corporate performance goals.
Annual Incentive Awards. Commencing in fiscal 1997, annual incentive awards
will be granted under the Incentive Bonus Plan and are based on EBITDA targets
which have been established by the Board. Meeting EBITDA objectives will
trigger awards as a percentage of base pay dependent on management level (10,
20 or 30%). Exceeding EBITDA targets will increase bonuses subject to maximum
payments of 20%, 40% or 60% depending on management levels. EBITDA results in
excess of targets, but below maximum levels, will result in awards calculated
linearly between such points.
Long Term Incentives. Long term incentives are provided through annual stock
option grants to executives, principally through the 1995 Plan. Generally,
stock options will have a term of ten years and will
14
<PAGE>
vest equally over three years. Option exercise prices will equal the fair
market value of the Common Stock on the date of grant. Incentive stock options
will be granted to the extent permitted by applicable tax law and options
granted in excess of such amounts will be non-qualified options. Outstanding
options held by an employee are considered in connection with the award of new
options.
CEO Compensation. Compensation of the Chief Executive Officer is made under
the Company's employment agreement with Mr. Kaiser. See "Employment
Agreements" on page 11 of this Proxy Statement. In structuring Mr. Kaiser's
compensation package under his employment agreement, the Company considered
its past performance and strategic direction and Mr. Kaiser's instrumental
role in both respects.
Respectfully Submitted,
/S/ James G. Baldwin
/S/ Paul F. Balser
DIRECTORS AND OFFICERS LIABILITY INSURANCE
The Company maintains $20 million of insurance providing payment either to
the Company for indemnification provided to its directors or officers, or
directly to its directors and officers, for certain liabilities which the
Company's directors and officers may incur in such capacities. The insurance
policies are issued by National Union Fire Insurance Company and The Reliance
Insurance Company. The premiums paid under such policies in fiscal 1996
totaled $545,000. Both policies were extended for fiscal 1997 for premiums
totaling $390,000.
CERTAIN TRANSACTIONS AND RELATIONSHIPS
Pursuant to an agreement entered into in connection with the Company's
initial public offering of Common Stock in September 1995, the Company filed a
registration statement under the Securities Act of 1933, as amended (the
Securities Act), which became effective in March 1996, with respect to the
sale of certain shares of Common Stock held by management stockholders and
agreed to keep such registration in effect for at least 36 months. Shares of
Common Stock owned by the Company's directors are also covered by such
registration statement. Under agreements entered into in 1988 in connection
with the formation of the Company, the Company registered the shares of Common
Stock owned by CCI and certain shares owned by Mr. Baldwin under the
Securities Act for sale in the initial public offering, which offering closed
in September 1995. Mr. Balser, a director of the Company, was a partner of
Centre Partners L.P., the managing general partner of CCI.
PROXY PROPOSAL NO. 2
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
The Company's independent auditors for the fiscal year ended July 31, 1996
were Coopers & Lybrand LLP, independent public accountants. On August 26,
1996, the Board appointed Coopers & Lybrand, LLP to audit the financial
statements of the Company for the fiscal year ending July 31, 1997. The Board
desires to obtain the stockholders' ratification of such appointment. A
resolution ratifying the appointment will be offered at the Annual Meeting. If
the resolution is not adopted, the adverse vote will be considered as
direction to the Board to select other auditors. Ratification requires the
affirmative vote by holders of at least a majority of the shares of Common
Stock voting on such matter.
It is expected that a representative of Coopers & Lybrand LLP will be
present at the Annual Meeting to respond to appropriate questions.
THE BOARD RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR THE RATIFICATION OF
COOPERS & LYBRAND LLP AS THE COMPANY'S INDEPENDENT AUDITORS FOR THE FISCAL
YEAR ENDING JULY 31, 1997.
15
<PAGE>
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934.
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
officers and directors, and persons who own more than 10% of a registered
class of the Company's equity securities, to file reports of ownership and
change in ownership with the Securities and Exchange Commission. Officers,
directors and greater than 10% shareholders are required by Securities and
Exchange Commission regulations to furnish the Company with copies of all
Section 16(a) forms they file. Based solely on the review of the copies of
such forms furnished to the Company, the Company believes that during fiscal
1996 all Section 16(a) filing requirements applicable to its directors,
officers and greater than 10% beneficial owners were met, with the exception
of filings by Mr. Jeffrey T. Jones and Mr. Robert M. Howe, who were each late
on the filing of their respective Form 3, Initial Statement of Beneficial
Ownership. Both statements were subsquently filed with the Commission.
SHAREHOLDER PROPOSALS FOR 1997
Shareholder proposals intended to be presented at the 1997 Annual Meeting of
Stockholders must be received by the Company for inclusion in its Proxy
Statement and form of proxy relating to that meeting by June 30, 1997.
Reference is also made to Section 6 of Article II of the Company's By-laws
regarding nomination of directors as discussed on page 2 of this Proxy
Statement.
ANNUAL REPORT ON FORM 10-K
UPON WRITTEN OR ORAL REQUEST BY ANY STOCKHOLDER SOLICITED HEREBY, THE
COMPANY WILL PROVIDE WITHOUT CHARGE A COPY OF THE COMPANY'S ANNUAL REPORT ON
FORM 10-K FOR THE FISCAL YEAR ENDED JULY 31, 1996. REQUESTS SHOULD BE DIRECTED
TO:
WILLIAM M. THALMAN,
MANAGER OF INVESTOR RELATIONS
AND EXTERNAL REPORTING
THE CARBIDE/GRAPHITE GROUP, INC.
ONE GATEWAY CENTER, 19TH FLOOR
PITTSBURGH, PA 15222
(412) 562-3752
ANY BENEFICIAL OWNER SHOULD INCLUDE A GOOD FAITH REPRESENTATION THAT AS OF THE
RECORD DATE HE OR SHE IS A BENEFICIAL OWNER OF THE COMMON STOCK.
OTHER MATTERS
The Company knows of no other matters to be presented for action at the
Annual Meeting. However, if any other matters should properly come before the
Annual Meeting, it is intended that votes will be cast pursuant to the proxy
in respect thereto in accordance with the best judgment of the persons acting
as proxies.
The Board of Directors
November 4, 1996
16
<PAGE>
[X]PLEASE MARK VOTES
AS IN THIS EXAMPLE
RECORD DATE SHARES: With- For All
For hold Except
1.) Election of each of the following two persons to the [ ] [ ] [ ]
Board of Directors for the length of term set forth
below for such person and until his successor is
elected and qualified.
NOMINEES FOR THREE YEAR TERM EXPIRING IN 1999:
Ronald N. Clawson and Walter B. Fowler
If you do not wish you shares voted "FOR" a particular nominee, mark
the "For All Except" box, and strike a line through the nominee(s) name.
Your shares shall be voted for the remaining nominees.
For Against Abstain
2.) Approval of the selection of Coopers & Lybrand [ ] [ ] [ ]
L.L.P. as independent auditors for the Company
for fiscal year 1997.
3.) In their discretion, the proxies are authorized to vote upon such other
matters as may properly come before the Annual Meeting.
Mark box at right if comments or address change have been
noted on the reverse side of this card. [ ]
Please be sure to sign and date this Proxy. Date
Shareholder sign here Co-owner sign here
DETACH CARD DETACH CARD
THE CARBIDE/GRAPHITE GROUP, INC.
Dear Shareholder:
Please take note of the important information in the proxy materials
enclosed with this Proxy Ballot.
Your vote counts, and you are strongly encouraged to exercise your right
to vote your shares.
Please mark the boxes on the proxy card to indicate how your shares shall
be voted. Then sign the card, detach it and return your proxy vote in the
enclosed postage paid envelope.
Your vote must be received prior to the Annual Meeting of Stockholders,
December 9, 1996.
Thank you in advance for your prompt consideration of these matters.
Sincerely,
Nicholas T. Kaiser
Chairman and Chief Executive Officer
<PAGE>
THE CARBIDE/GRAPHITE GROUP, INC.
Proxy for Annual Meeting of Stockholders - December 3, 1996
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby authorizes and appoints Nicholas T. Kaiser, James G.
Baldwin and Paul F. Baiser, or either of them, as proxies with full power of
substitution in each, to vote all shares of $0.01 par value common stock, of The
Carbide/Graphite Group, Inc. (the Company) held of record by the undersigned at
the Annual Meeting of Stockholders (the Annual Meeting) to be held at The
Pittsburgh Hilton and Towers, Gateway Center, Pittsburgh, PA 15222 on Tuesday,
December 3, 1996 at 10:00 A.M. local time, and at any adjournments or
postponements thereof, on all matters that may properly come before the Annual
Meeting.
This proxy when properly executed will be voted (i) as directed on the reverse
side, or in the absence of such directions, this proxy will be voted FOR each of
the Nominees named in Proposal 1 and FOR Proposal 2 and (ii) in accordance with
the best judgment of the persons voting such proxies.
PLEASE VOTE, DATE, AND SIGN ON OTHER SIDE AND RETURN PROMPTLY
IN ENCLOSED ENVELOPE
Signature(s) must correspond exactly with the name(s) as shown above. Where
stock is registered jointly in the names of two or more persons, ALL must sign.
If this proxy is submitted by a corporation or partnership, it must be executed
in the full corporate or partnership name by a duly authorized person. When
signing in a fiduciary or representative capacity (as attorney, trustee,
corporate officer, etc.), give your full title as such.
HAS YOUR ADDRESS CHANGED? DO YOU HAVE ANY COMMENTS?
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