<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934
<TABLE>
<S> <C> <C> <C>
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
[ ] Confidential, for Use of the Commission
Check the appropriate box: only (as permitted by Rule 14a-6(e)(2))
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule
14a-11(c) or Rule 14a-12
</TABLE>
THE CARBIDE/GRAPHITE GROUP, INC.
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
Payment of Filing Fee (check the appropriate box):
<TABLE>
<S> <C> <C>
[X] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11.
(1) Title of each class of securities to which transaction
applies:
Not Applicable
(2) Aggregate number of securities to which transaction applies:
Not Applicable
(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11:
Not Applicable
(4) Proposed maximum aggregate value of transaction:
Not Applicable
(5) Total fee paid:
Not Applicable
[ ] Fee paid previously with preliminary materials
Not Applicable
[ ] 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:
Not Applicable
(2) Form, Schedule or Registration Statement No.:
Not Applicable
(3) Filing Party:
Not Applicable
(4) Date Filed:
Not Applicable
</TABLE>
<PAGE> 2
CARBIDE/GRAPHITE LOGO
---------------------------------------
One Gateway Center, 19th Floor
Pittsburgh, PA 15222
(412) 562-3700
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD DECEMBER 3, 1998
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 Thursday, December 3, 1998 at
10:00 A.M. EST (the Annual Meeting), for the following purposes:
To elect three nominees to the Board of Directors to hold office until the
2001 Annual Meeting of Stockholders and until their respective successors
are elected and qualified.
To ratify the appointment of independent auditors for the fiscal year
ending July 31, 1999.
To approve the 1998 Stock-Based Incentive Compensation Plan.
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 26, 1998 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
October 28, 1998
<PAGE> 3
------------------------------------
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, 1998 at the Pittsburgh Hilton and
Towers, Gateway Center, Pittsburgh, PA 15222 and any adjournment(s) or
postponement(s) thereof. The enclosed proxy is for the use of holders of record
of Common Stock at the close of business on October 26, 1998. 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, for the appointment of PricewaterhouseCoopers LLP as
independent accountants for the fiscal year ending July 31, 1999 and for the
approval of the 1998 Stock-Based Incentive Compensation Plan. 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 26, 1998, the date of record, 8,362,342 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 4,181,172 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 1998 Annual Report on Form 10-K are first being sent or given
to shareholders on or about November 3, 1998.
PRINCIPAL STOCKHOLDERS
The following table sets forth information as of September 25, 1998 with
respect to each stockholder who beneficially owns 5% or more of the Company's
outstanding Common Stock. Except as set forth below, each stockholder has sole
voting and investment power over all shares. This information is based upon the
latest written report furnished to the Company or filed with the Securities and
Exchange Commission by such stockholder on or before September 25, 1998 and may
not be current. Common Stock outstanding as of September 25, 1998 was 8,552,342
shares.
<TABLE>
<CAPTION>
NUMBER
OF SHARES PERCENT OF
NAME BENEFICIALLY OWNED CLASS
- ---- ------------------ ----------
<S> <C> <C>
Southeastern Asset Management, Inc. (1) 1,379,700 16.1%
6075 Poplar Avenue, Suite 900
Memphis, Tennessee 38119
Wellington Management Company (2) 1,212,320 14.2
75 State Street
Boston, Massachusetts 02109
</TABLE>
Continued on page 2
<PAGE> 4
<TABLE>
<CAPTION>
NUMBER
OF SHARES PERCENT OF
NAME BENEFICIALLY OWNED CLASS
- ---- ------------------ ----------
<S> <C> <C>
The Prudential Insurance Company of America (3) 879,900 10.3%
Prudential Plaza
Newark, New Jersey 07102-3777
Harris Associates, L.P. (4) 775,000 9.1
Two N. LaSalle Street
Suite 500
Chicago, Illinois 60602-3790
The Capital Group of Companies, Inc. (5) 511,800 6.0
333 South Hope Street
Los Angeles, California 90071
</TABLE>
- ------------
(1) Shares are owned by Longleaf Partners Small-Cap Fund for which Southeastern
Asset Management, Inc. is the investment adviser.
(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) Subsequent to September 25, 1998, Harris Associates, L.P. filed a written
report with the Company indicating that their ownership in the Company's
outstanding Common Stock had decreased to 38,400 shares.
(5) Shares are owned by The Capital Group of Companies, Inc.'s wholly-owned
subsidiary Capital Research and Management Company.
------------------------
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 three directors
whose terms expire at the Annual Meeting are James G. Baldwin, James R. Ball and
Nicholas T. Kaiser. Messrs. Baldwin, Ball and Kaiser have been nominated by the
Board to stand for re-election as directors at the Annual Meeting and to hold
office until the 2001 Annual Meeting of Stockholders and until their respective
successors are duly elected and qualified or their earlier resignation or
removal.
The three nominees have indicated a willingness to serve as directors, but
in the event any 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 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
2
<PAGE> 5
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 of the Company's By-laws.
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 14, 1998.
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 EACH OF
THE 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 September 25, 1998.
<TABLE>
<CAPTION>
NAME AGE POSITION
- ---- --- --------
<S> <C> <C>
Walter B. Fowler (3)(5) 44 Chairman, President and Chief Executive Officer and Director
(Term expiring in 1999)
Walter E. Damian 58 Vice President--Human Resources
Ararat Hacetoglu 43 Vice President and General Manager--Carbide Products
Michael F. Supon 40 Vice President and General Manager--Electrodes and Graphite
Specialty Products
Jim J. Trigg 49 Vice President and General Manager--Seadrift Coke, L.P.
Stephen D. Weaver 44 Vice President--Finance and Chief Financial Officer
Nicholas T. Kaiser (3)(5) 64 Director (Nominee for term expiring in 2001)
James G. Baldwin (1)(4) 73 Director (Nominee for term expiring in 2001)
James R. Ball (1)(2)(5) 55 Director (Nominee for term expiring in 2001)
Paul F. Balser (1)(4) 56 Director (Term expiring in 2000)
Robert M. Howe (3)(4) 58 Director (Term expiring in 2000)
Ronald B. Kalich (1)(2)(5) 50 Director (Term expiring in 2000)
Charles E. Slater (3)(4) 64 Director (Term expiring in 1999)
Roger Mulvihill 62 Secretary
</TABLE>
- ------------
(1) Member of the Board's Compensation Committee.
(2) Member of the Board's Stock Option Committee.
(3) Member of the Board's Nominating Committee.
(4) Member of the Board's Audit Committee.
(5) Member of the Board's Governance 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.
Walter B. Fowler was elected as the Company's Chairman, President and Chief
Executive Officer in March 1997 and has been a director of the Company since
September 1995. Previously, Mr. Fowler was
3
<PAGE> 6
President--Electrodes and Graphite Specialty Products of the Company from March
1995 to March 1997 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.
Ararat Hacetoglu has been Vice President and General Manager, Carbide
Products since April 1997. Previously, Mr. Hacetoglu was Vice President and
Plant Manager--Louisville in the Carbide Products segment of the Company from
March 1993 to April 1997.
Michael F. Supon has been Vice President and General Manager, Electrodes
and Graphite Specialty Products since April 1997. Previously, Mr. Supon was Vice
President--Technical from December 1996 to April 1997. Also, Mr. Supon served as
Director of Product Engineering and Quality Services from January 1996 to
December 1996 and Director of Product and Process Engineering from March 1991 to
January 1996. All of Mr. Supon's positions have been with the Graphite Electrode
Products segment of the Company.
Jim J. Trigg has been Vice President and General Manager, Seadrift Coke,
L.P. since June 1994. Previously, Mr. Trigg was Vice President and Plant
Manager--Seadrift of the Company from February 1993 to June 1994 and Production
Manager--Seadrift from August 1988 to February 1993.
Stephen D. Weaver has been Vice President--Finance and Chief Financial
Officer of the Company since October 1991.
Nicholas T. Kaiser has been a member of the Company's Board of Directors
since August 1988. Mr. Kaiser was the Company's Chairman of the Board and Chief
Executive Officer from October 1994 to March 1997 and was President of the
Company from October 1991 to March 1997. Mr. Kaiser received $11,000 in
compensation for his services as a director of the Company for fiscal 1998.
James G. Baldwin has been a director of the Company since August 1988 and
he was the Company's Chairman of the Board and Chief Executive Officer from
August 1988 to October 1994. Mr. Baldwin received $20,500 in compensation for
his services as a director of the Company for fiscal 1998.
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. Since 1995, he has been a consultant and private
investor. Mr. Ball also currently serves on the Board of Directors of Quanta
Services, Inc. and he previously served on the Board of Rexene Corporation from
April 1996 to August 1997. Mr. Ball received $29,000 in compensation for his
services as a director of the Company for fiscal 1998.
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., Scientific Games Holdings, Inc. and a
number of privately held companies. Mr. Balser received $29,500 in compensation
for his services as a director of the Company for fiscal 1998.
Robert M. Howe has been a member of the Company's Board since April 1996.
From March 1986 to December 1995, Mr. Howe was the President, Chief Operating
Officer and a director of MAPCO, Inc. Mr. Howe is also currently a director of
T.D. Williamson, Inc. Mr. Howe received $25,000 in compensation for his services
as a director of the Company for fiscal 1998.
Ronald B. Kalich was elected to the Company's Board in March 1994. Mr.
Kalich is currently a Group President in 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. Mr. Kalich is also currently a director
of Thomas & Betts, Inc. and National-Standard Company. Mr. Kalich received
$29,000 in compensation for his services as a director of the Company for fiscal
1998.
4
<PAGE> 7
Charles E. Slater was elected to the Company's Board in September 1997. Mr.
Slater is currently the President of The Concrete Reinforcing Steel Institute, a
position he has held since March 1998. Previously, Mr. Slater was the Executive
Director of the Iron & Steel Society, a position he held since 1992. Mr. Slater
received $21,000 in compensation for his services as a director of the Company
for fiscal 1998.
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.
In connection with its investigation of price fixing by producers of
graphite products in the United States and abroad, the Antitrust Division of the
Department of Justice (DOJ) has granted the Company and certain former and
present senior executives entrance into its Corporate Leniency Program. Pursuant
to this program, the Company has entered into an agreement with the DOJ under
which the Company and such executives who cooperate will not be subject to
criminal prosecution. Messrs. Baldwin and Kaiser, among other present or former
executives, have agreed to participate in the Corporate Leniency Program.
Messrs. Baldwin and Kaiser are nominees for re-election as directors for terms
expiring in 2001.
COMMITTEES OF THE BOARD OF DIRECTORS
The committees of the Board of Directors for fiscal 1998 are described
below.
Compensation and Stock Option Committees
The Compensation Committee consists of four directors and is responsible
for policies, procedures and other matters relating to compensation of the
executive officers as a group and the chief executive officer individually. In
addition, the Compensation Committee reviews the operations of the Company's
pension plans and its medical insurance plans. During fiscal 1998, the
Compensation Committee held two meetings.
The Stock Option Committee consists of two directors and has authority to
grant options pursuant to the Company's stock option plans. During fiscal 1998,
the Stock Option Committee held two meetings.
Nominating Committee
The Nominating Committee consists of four 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 1998, the Nominating Committee held
one meeting.
Audit Committee
The Audit Committee consists of four 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 1998, the Audit Committee held two meetings.
Governance Committee
The Governance Committee consists of four members. The Governance Committee
is responsible for Board governance matters, such as Board compensation,
evaluation and committee assignments. During fiscal 1998, the Governance
Committee held two meetings.
The Board has also formed a special committee, which currently consists of
Messrs. Ball, Balser, Howe, Kalich and Slater, to review and make
recommendations to the Board regarding various aspects of certain antitrust
claims involving the Company that are the subject of previously reported Grand
Jury proceedings and several civil antitrust actions currently pending.
5
<PAGE> 8
In September 1998, the Board also formed a committee which currently
consists of Messrs. Howe, Kalich and Slater to explore various strategic
opportunities.
The Board held seven meetings during fiscal 1998. 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 summary of the beneficial ownership of the Company's
Common Stock as of September 25, 1998 by the Company's directors, executive
officers and by all such officers and directors as a group. Each of the
Company's officers and directors can be reached through the Company's corporate
offices located at One Gateway Center, 19th Floor, Pittsburgh, PA 15222.
<TABLE>
<CAPTION>
NAME OF OFFICER OR DIRECTOR NUMBER OF SHARES BENEFICIALLY OWNED (1) PERCENTAGE OF CLASS (2)
- --------------------------- --------------------------------------- -----------------------
<S> <C> <C>
Officers:
Walter B. Fowler (3) 133,000 1.5%
Walter E. Damian (4) 42,500 0.5
Ararat Hacetoglu (5) 57,000 0.7
Michael F. Supon (6) 36,000 0.4
Jim J. Trigg (7) 44,500 0.5
Stephen D. Weaver (8) 43,520 0.5
Roger Mulvihill 8,000 0.1
Directors:
Nicholas T. Kaiser (9) 206,000 2.4
James G. Baldwin (10) 40,700 0.5
James R. Ball (11) 20,700 0.2
Ronald B. Kalich (12) 15,700 0.2
Robert M. Howe (13) 8,700 0.1
Paul F. Balser (14) 11,700 0.1
Charles E. Slater (15) 7,000 0.1
All executive officers and directors as
a group
(14 persons) 675,020 7.6
</TABLE>
- ------------
(1) Unless otherwise noted, each stockholder has or will have 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 58,000 shares of Common Stock, 30,000
shares of Common Stock issuable upon the exercise of fully vested stock
options and 45,000 shares of Common Stock issuable upon the exercise of
non-vested stock options.
(4) Number of shares indicated includes 8,000 shares of Common Stock, 11,000
shares of Common Stock issuable upon the exercise of fully vested stock
options and 23,500 shares of Common Stock issuable upon the exercise of
non-vested stock options.
(5) Number of shares indicated includes 2,000 shares of Common Stock, 28,000
shares of Common Stock issuable upon the exercise of fully vested stock
options and 27,000 shares of Common Stock issuable upon the exercise of
non-vested stock options.
(6) Number of shares indicated includes 7,000 shares of Common Stock, 2,000
shares of Common Stock issuable upon the exercise of fully vested stock
options and 27,000 shares of Common Stock issuable upon the exercise of
non-vested stock options.
6
<PAGE> 9
(7) Number of shares indicated includes 5,000 shares of Common Stock, 11,833
shares of Common Stock issuable upon the exercise of fully vested stock
options and 27,667 shares of Common Stock issuable upon the exercise of
non-vested stock options.
(8) Number of shares indicated includes 7,520 shares of Common Stock, 6,500
shares of Common Stock issuable upon the exercise of fully vested stock
options and 29,500 shares of Common Stock issuable upon the exercise of
non-vested stock options.
(9) Number of shares indicated includes 195,000 shares of Common Stock, 9,000
shares of Common Stock issuable upon the exercise of vested stock options
and 2,000 shares of Common Stock issuable upon the exercise of non-vested
stock options.
(10) Number of shares indicated includes 35,000 shares of Common Stock, 3,700
shares of Common Stock issuable upon the exercise of fully vested stock
options and 2,000 shares of Common Stock issuable upon the exercise of
non-vested stock options.
(11) Number of shares indicated includes 15,000 shares of Common Stock, 3,700
shares of Common Stock issuable upon the exercise of fully vested stock
options and 2,000 shares of Common Stock issuable upon the exercise of
non-vested stock options.
(12) Number of shares indicated includes 10,000 shares of Common Stock, 3,700
shares of Common Stock issuable upon the exercise of fully vested stock
options and 2,000 shares of Common Stock issuable upon the exercise of
non-vested stock options.
(13) Number of shares indicated includes 3,000 shares of Common Stock, 3,700
shares of Common Stock issuable upon the exercise of fully vested stock
options and 2,000 shares of Common Stock issuable upon the exercise of
non-vested stock options.
(14) Number of shares indicated includes 6,000 shares of Common Stock, 3,700
shares of Common Stock issuable upon the exercise of fully vested stock
options and 2,000 shares of Common Stock issuable upon the exercise of
non-vested stock options.
(15) Number of shares indicated represents 3,000 shares of Common Stock, 2,000
shares of Common Stock issuable upon the exercise of vested stock options
and 2,000 shares of Common Stock issuable upon the exercise of non-vested
stock options.
7
<PAGE> 10
EXECUTIVE COMPENSATION
The following table sets forth certain information concerning compensation
received by the chief executive officer and each of the four next most highly
compensated executive officers who received compensation in excess of $100,000
(collectively, the Named Executive Officers) for services rendered in all
capacities during the Company's indicated fiscal years.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION ------------------
-------------------------------------- COMMON STOCK
NAME AND OTHER ANNUAL UNDERLYING ALL OTHER
PRINCIPAL POSITION YEAR SALARY BONUS(1) COMPENSATION OPTIONS(2) COMPENSATION
------------------ ---- ------ -------- ------------ ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
Walter B. Fowler 1998 $316,668 -- -- 30,000 $23,307(3)
Chairman of the Board, 1997 259,336 $195,602 -- 30,000 26,596
President and Chief 1996 221,591 -- -- 15,000 20,771
Executive Officer
Stephen D. Weaver 1998 191,341 -- -- 15,000 16,687(4)
Vice President-Finance, 1997 177,336 106,402 -- 15,000 18,326
Chief Financial Officer 1996 158,625 -- -- 13,500 15,178
and Assistant Secretary
Michael F. Supon 1998 151,667 -- -- 15,000 13,426(5)
Vice President & General 1997 117,336 56,934 -- 15,000 14,087
Manager-Electrodes and 1996 92,835 25,000 -- 6,000 8,881
Graphite Speciality
Products
Ararat Hacetoglu 1998 151,667 -- -- 15,000 12,545(6)
Vice President & General 1997 124,000 59,600 -- 15,000 13,971
Manager-Carbide Products 1996 104,587 -- -- 6,000 9,569
Jim J. Trigg 1998 151,538 -- -- 15,000 15,294(7)
Vice President & General 1997 135,333 64,133 -- 15,000 14,968
Manager-Seadrift Coke L.P. 1996 118,769 -- -- 8,000 11,565
</TABLE>
- ------------
(1) Except for Mr. Supon, all amounts shown in this column represent a bonus
earned in fiscal 1997 under the Incentive Bonus Plan (See "Bonus Plans" on
page 16). Mr. Supon's bonus amounts include the following: 1997--$59,934
related to a bonus earned in fiscal 1997 under the Incentive Bonus Plan;
1996--$25,000 related to a special bonus paid in October, 1995.
(2) Options were granted under the 1995 Plan. All options granted in fiscal
1998 have an exercise price of $21.53125 per share and expire in July 2008.
All options granted in fiscal 1998 vest and become exercisable at a rate of
one-third per year on July 31, 1999, 2000 and 2001, respectively. All
options granted in fiscal 1997 have an exercise price of $22.375 per share
and expire on March 31, 2007. Except for Mr. Fowler's, all options granted
in fiscal 1997 vest and become exercisable at a rate of one-third per year
on March 31, 1998, 1999 and 2000, respectively. One-third of Mr. Fowler's
options granted in 1997 vested immediately, while the remaining options
vest at a rate of one-half per year on March 31, 1998 and 1999,
respectively. All options granted in fiscal 1996 have an exercise price of
$15.75 per share and expire on July 31, 2006. All options granted in fiscal
1996 vest and become exercisable at a rate of one-third per year on July
31, 1997, 1998 and 1999, respectively.
(3) All other compensation for 1998 includes: $477 of premiums for group term
life insurance; and $7,630 of Company match contributions and $15,200 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).
8
<PAGE> 11
(4) All other compensation for 1998 includes: $275 of premiums for group term
life insurance; and $6,112 of Company match contributions and $10,300 of
profit sharing under the Savings Investment Plan.
(5) All other compensation for 1998 includes: $116 of premiums for group term
life insurance; and $4,810 of Company match contributions and $8,500 of
profit sharing under the Savings Investment Plan.
(6) All other compensation for 1998 includes: $217 of premiums for group term
life insurance; and $3,828 of Company match contributions and $8,500 of
profit sharing under the Savings Investment Plan.
(7) All other compensation for 1998 includes: $464 of premiums for group term
life insurance; and $6,330 of Company match contributions and $8,500 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 1998.
COMMON STOCK OPTIONS GRANTED IN FISCAL 1998
<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>
Walter B. Fowler 30,000 19.5% $21.53125 7/31/2008 $406,227 $1,029,458
Stephen D. Weaver 15,000 9.7 21.53125 7/31/2008 203,113 514,729
Michael F. Supon 15,000 9.7 21.53125 7/31/2008 203,113 514,729
Ararat Hacetoglu 15,000 9.7 21.53125 7/31/2008 203,113 514,729
Jim J. Trigg 15,000 9.7 21.53125 7/31/2008 203,113 514,729
</TABLE>
- ------------
(1) All options granted during fiscal 1998 were granted at the fair market
value on July 31, 1998, the grant date, under the 1995 Plan. All options
vest and become exercisable at a rate of one-third per year on July 31,
1999, 2000 and 2001, respectively.
(2) The dollar amounts are the result of calculations at the 5% and 10% annual
capital appreciation rates prescribed by the Securities and Exchange
Commission and are not intended to forecast any possible appreciation of
the Company's stock price.
9
<PAGE> 12
The following table provides information related to options exercised by
the Named Executive Officers during fiscal 1998 and the number and value of
options held as of July 31, 1998.
AGGREGATE OPTION EXERCISES IN FISCAL 1998 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, 1998 AS OF JULY 31, 1998(1)
ON VALUE ---------------------------- ----------------------------
NAME EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- -------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Stephen D. Weaver 28,250 $728,894(2) 6,500(3) 29,500(4) $ 9,375 $ 35,156
Walter B. Fowler 20,000 672,500(5) 30,000(6) 45,000(7) 62,500 45,313
Ararat Hacetoglu 6,000 189,000(8) 28,000(9) 27,000(10) 432,500 19,531
Jim J. Trigg 3,500 114,000(11) 11,833(12) 27,667(13) 63,331 23,700
Michael F. Supon 7,000 66,625(14) 2,000(15) 27,000(16) 12,500 19,531
</TABLE>
- ------------
(1) Value is calculated based on the difference between $22.00, the fair market
value of the Company's Common Stock on July 31, 1998, and the exercise
price of options outstanding. Options with an exercise price greater than
$22.00 per share were not included in this computation.
(2) 20,750 of the options exercised had an exercise price of $2.00 per share
and were exercised when the fair value of the Company's Common Stock ranged
from $27.875 to $37.875 per share. 7,500 of the options exercised had an
exercise price of $15.75 per share and were exercised when the fair market
value of the Company's Common Stock ranged from $22.00 to $34.125 per
share.
(3) All options were granted under the 1995 Plan. 1,500 of the options have an
exercise price of $15.75 per share and expire in July 2006. 5,000 of the
options have an exercise price of $22.375 per share and expire in March
2007.
(4) All options were granted under the 1995 Plan. 4,500 of the options have an
exercise price of $15.75 per share, vest in July 1999 and expire in July
2006. 10,000 of the options have an exercise price of $22.375 per share,
vest at a rate of 5,000 per year in March 1999 and 2000, respectively, and
expire in March 2007. 15,000 of the options have an exercise price of
$21.53125 per share, vest at a rate of 5,000 per year in July 1999, 2000
and 2001, respectively, and expire in July 2008.
(5) All options had an exercise price of $2.00 per share and were exercised
when the fair market value of the Company's Common Stock was $35.625 per
share.
(6) All options were granted under the 1995 Plan. 10,000 of the options have an
exercise price of $15.75 per share and expire in July 2006. 20,000 of the
options have an exercise price of $22.375 per share and expire in March
2007.
(7) All options were granted under the 1995 Plan. 5,000 of the options have an
exercise price of $15.75 per share, vest in July 1999 and expire in July
2006. 10,000 of the options have an exercise price of $22.375 per share,
vest in March 1999 and expire in March 2007. 30,000 of the options have an
exercise price of $21.53125 per share, vest at a rate of 10,000 per year in
July 1999, 2000 and 2001, respectively, and expire in July 2008.
(8) 4,000 of the 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
$39.25 per share. 2,000 of the options exercised had an exercise price of
$15.75 per share and were exercised when the fair market value of the
Company's Common Stock was $35.75 per share.
(9) 21,000 of the options were granted under the 1993 Plan. The options have an
exercise price of $2.00 per share and expire in March 2000. The remaining
options were granted under the 1995 Plan. 2,000 of the options have an
exercise price of $15.75 per share and expire in July 2006. 5,000 of the
options have an exercise price of $22.375 per share and expire in March
2007.
10
<PAGE> 13
(10) All options were granted under the 1995 Plan. 2,000 of the options have an
exercise price of $15.75 per share, vest in July 1999 and expire in July
2006. 10,000 of the options have an exercise price of $22.375 per share,
vest at a rate of 5,000 per year in March 1999 and 2000, respectively, and
expire in March 2007. 15,000 of the options have an exercise price of
$21.53125 per share, vest at a rate of 5,000 per year in July 1999, 2000
and 2001, respectively, and expire in July 2008.
(11) All 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 ranged
between $34.00 and $35.00 per share.
(12) 1,500 of the options were granted under the 1993 Plan. The options have an
exercise price of $2.00 per share and expire in March 2000. The remaining
options were granted under the 1995 Plan. 5,333 of the options have an
exercise price of $15.75 per share and expire in July 2006. 5,000 of the
options have an exercise price of $22.375 per share and expire in March
2007.
(13) All options were granted under the 1995 Plan. 2,667 of the options have an
exercise price of $15.75 per share, vest in July 1999 and expire in July
2006. 10,000 of the options have an exercise price of $22.375 per share,
vest at a rate of 5,000 per year in March 1999 and 2000, respectively, and
expire in March 2007. 15,000 of the options have an exercise price of
$21.53125 per share, vest at a rate of 5,000 per year in July 1999, 2000
and 2001, respectively, and expire in July 2008.
(14) 2,000 of the options exercised had an exercise price of $15.75 per share
and 5,000 of the options exercised had an exercise price of $22.375 per
share. All options exercised were exercised when the fair market value of
the Company's Common Stock was $30.00 per share.
(15) All options were granted under the 1995 Plan. The options have an exercise
price of $15.75 per share and expire in July 2006.
(16) All options were granted under the 1995 Plan. 2,000 of the options have an
exercise price of $15.75 per share, vest in July 1999 and expire in July
2006. 10,000 of the options have an exercise price of $22.375 per share,
vest at a rate of 5,000 per year in March 1999 and 2000, respectively, and
expire in March 2007. 15,000 of the options have an exercise price of
$21.53125 per share, vest at a rate of 5,000 per year in July 1999, 2000
and 2001, respectively, and expire in July 2008.
11
<PAGE> 14
PERFORMANCE GRAPH
The following graph compares the cumulative total return on the Company's
Common Stock with the cumulative total 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, the date on which
the Common Stock began public trading, to July 31, 1998. As compared to a basis
of $100 as of September 14, 1995, the Company's index was $147, the NASDAQ Index
was $186 and the S&P Index was $87, all as of July 31, 1998.
COMPARISON OF 34 MONTH CUMULATIVE TOTAL RETURN*
AMONG THE CARBIDE/GRAPHITE GROUP, INC., THE NASDAQ STOCK MARKET (US) INDEX
AND THE S&P IRON & STEEL INDEX
<TABLE>
<CAPTION>
THE NASDAQ
MEASUREMENT PERIOD CARBIDE/GRAPHITE STOCK S&P IRON &
(FISCAL YEAR COVERED) GROUP MARKET-US STEEL
<S> <C> <C> <C>
9/95 100 100 100
10/95 88 102 92
1/96 107 104 110
4/96 118 117 104
7/96 107 107 84
10/96 109 120 86
1/97 139 136 94
4/97 151 124 95
7/97 193 158 115
10/97 238 158 102
1/98 227 161 95
4/98 215 186 115
7/98 147 186 87
</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
Refer to "The Board of Directors and Officers of the Company" section
beginning on page 3 of this Proxy Statement for details on compensation of each
outsider director for fiscal 1998. 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). Mr. Fowler received no compensation for his service as Chairman of the
Board and a director of the Company in fiscal 1998.
Non-employee directors receive a $5,000 per year retainer for services as a
member of the Board. Also, each Board committee chair receives a $1,500 per year
Chairmanship fee. For Board activities, each non-employee director receives
$2,000 for in-person Board meetings, $1,000 for conference call Board meetings,
$1,000 for in-person Board committee meetings and $500 for conference call Board
committee meetings.
On August 26, 1996, the Company established the Directors' Plan. Pursuant
to the Directors' Plan, each non-employee director was granted on August 26,
1996 an option to purchase 1,700 shares of Common Stock of
12
<PAGE> 15
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 became exercisable in full if the non-employee director was
a member of the Board on July 31, 1997. Pursuant to the Directors' Plan, each
non-employee director who was then a member of the Board was also 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 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. In June 1997 the number
of shares subject to such options was increased from 1,700 shares to 2,000
shares effective with the grant on July 31, 1997. The exercise price of such
options was $28.875 and $21.53125 per share, the fair market value of the Common
Stock on July 31, 1997 and 1998, respectively.
EMPLOYMENT AND SEVERANCE AGREEMENTS
The Company is a party to employment, termination or severance agreements
with Messrs. Fowler, Weaver, Damian, Trigg and Kaiser.
In April 1997, Mr. Fowler entered into an employment agreement with the
Company as Chief Executive Officer which terminates on March 31, 1999. Pursuant
to the terms of the agreement, he is to receive annual cash compensation of at
least $300,000 and incentive compensation in the form of stock options to
purchase up to 30,000 shares of Common Stock and annual incentive awards up to
100% of his base pay pursuant to the terms of the Incentive Bonus Plan. In the
event of termination by the Company for other than death, disability or cause,
as defined therein, Mr. Fowler will receive his salary for the remainder of the
term of the agreement or 24 months, whichever is longer. If terminated due to a
change of control event, Mr. Fowler would receive a lump sum payment equal to
2.99 times his base salary at the time of termination. The agreement also
provides for certain payments in the event of Mr. Fowler's death or disability.
Effective February 1, 1998, Mr. Weaver entered into an employment agreement
with the Company as Vice President--Finance and Chief Financial Officer which
terminates on January 31, 2000. Pursuant to the terms of the agreement, he is to
receive annual cash compensation of at least $190,000 and incentive awards of up
to 60% of his base pay pursuant to the terms of the Incentive Bonus Plan. In the
event of termination by the Company for other than death, disability or cause,
as defined therein, Mr. Weaver will receive his salary for the remainder of the
term of the agreement or 24 months, whichever is longer. If terminated due to a
change of control event, Mr. Weaver will receive a lump sum payment equal to
2.99 times his base salary at the time of termination. The agreement also
provides for certain payments in the event of Mr. Weaver's death or disability.
The Company entered into severance agreements with Messrs. Trigg and Damian
with respect to their employment as, respectively, Vice President and General
Manager--Seadrift Coke, L.P. and Vice President-- Human Resources. Pursuant to
the terms of the agreements, Messrs. Trigg and Damian will each be granted one
year of severance pay and medical coverage if terminated other than for cause.
In March 1997, Mr. Kaiser retired from his positions with the Company,
other than his position as a director. Pursuant to his March 1997 revised
employment agreement, Mr. Kaiser is to receive his annual base salary at the
time of his retirement, $347,000, for the remainder of 1997 and as severance for
1998. In addition, the Company will provide for the continuation of health
insurance benefits until January 1, 2001.
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
received the continuation of his health and life insurance benefits through
fiscal 1998. Mr. Baldwin also 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, including the Named Executive Officers. Employee
contributions of not more than 6% of employee compensation are
13
<PAGE> 16
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 17 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.
1995 STOCK-BASED INCENTIVE COMPENSATION PLAN
Introduction. The Board adopted the 1995 Stock-Based Incentive Compensation
Plan (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
Secretary of the Company.
Administration. The Stock Option Committee (the Committee) designated by
the Board 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.
14
<PAGE> 17
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."
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.
As of September 25, 1998, all 400,000 options for Common Stock available
for grant under the 1995 Plan had been granted. Of the 400,000 options granted
under the 1995 Plan, 371,500 options for Common Stock, representing 4.3% of the
Common Stock outstanding, had not yet been exercised as of September 25, 1998.
The closing price of the Company's Common Stock as reported on the NASDAQ
National Market System on September 25, 1998 was $11.125 per share. The average
exercise price of outstanding options granted under the 1995 Plan is $21.36 per
share.
Term. The 1995 Plan became effective in May 1995 and will 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, will 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 has been held for more than one year, equal to the
difference between the sale price of the
15
<PAGE> 18
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
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%,
30% or 50% 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%, 60% or 100%, respectively, depending on management levels. Approximately 31
salaried employees are currently eligible to participate in the Incentive Bonus
Plan, including the Named Executive Officers. The Company did not pay any
bonuses under the Incentive Bonus Plan for fiscal 1998.
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 an amount equal
to 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, Ball, Balser and Kalich, none of whom currently is an executive
officer of the Company; however, Messrs. Baldwin and Balser served as officers
of the Company in the past. Executive officer compensation is determined by the
Compensation Committee.
STOCK OPTION COMMITTEE
The Stock Option Committee of the Board of Directors is comprised of Mr.
Ball and Mr. Kalich, neither of whom currently is an executive officer of the
Company or receives any compensation from the Company in any capacity other than
as a director. Awards under the proposed 1998 Plan would be determined by the
Stock Option Committee.
16
<PAGE> 19
REPORT OF COMPENSATION COMMITTEE
The Compensation Committee, which is currently comprised of four
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. The Compensation Committee
considers, among other things, compensation statistics for executives of
companies that are similar in size and other characteristics to the Company in
determining the compensation of its executives. Messrs. Fowler, Weaver, Damian
and Trigg have entered into employment and/or severance agreements with the
Company. See "Employment Agreements" on page 13 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. 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%, 30% or 50%). Exceeding EBITDA
targets will increase bonuses subject to maximum payments of 20%, 40%, 60% or
100% 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 10 years and will vest ratably 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.
The proposed 1998 Stock-Based Incentive Compensation Plan (the 1998 Plan)
will permit awards to eligible employees of stock options and/or SARs that
qualify as "performance based compensation" under Section 162(m) of the Internal
Revenue Code. Stock options may be either incentive stock options or
non-qualified stock options under Section 422 of the Internal Revenue Code. The
total number of shares of the Company's Common Stock available for awards under
the 1998 Plan will be 450,000 shares (subject to adjustments for stock splits,
stock dividends and the like). Option exercise prices will be at least equal to
fair market value of the Company's Common Stock or 110% of fair market value for
certain incentive stock options.
CEO Compensation. Mr. Fowler, the Chief Executive Officer of the Company,
is compensated pursuant to the terms of his Employment Agreement with the
Company. See "Employee Agreements" on page 13 of this Proxy Statement. In
developing Mr. Fowler's compensation, the Compensation Committee considered Mr.
Fowler's prior performance in senior managerial roles with the Company's
electrodes unit, its largest business unit. Mr. Fowler served as President of
the Electrodes and Graphite Specialty Products of the Company from March 1995
through March 1997, as Vice President--General Manager, Graphite Electrode
Products of the Company from January 1995 through March 1995 and as Vice
President--General Manager, Graphite Specialties of the Company from July 1991
to March 1995. The Committee also considered the importance of the
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Company's capital expenditure program, including its modernization plan and Mr.
Fowler's contribution in this regard in reaching its determination.
Respectfully Submitted,
Compensation Committee
/S/ James G. Baldwin
/S/ James R. Ball
/S/ Paul F. Balser
/S/ Ronald B. Kalich
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 and fees paid under such policies in fiscal 1998
totaled $419,875. Both policies were extended for fiscal 1999 for premiums
totaling $268,755.
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.
On October 31, 1997, the Company purchased from Mr. Fowler, the Company's
Chairman, President and Chief Executive Officer, 12,000 shares of the Company's
Common Stock at $35.625 per share, which was the per share closing price of the
Company's Common Stock reported on the NASDAQ National Market System on such
date. Mr. Fowler had acquired the shares upon the formation of the Company in
1988. Mr. Fowler used the proceeds from this sale to fund the exercise of 20,000
vested, compensatory stock options. Mr. Fowler did not sell any of the shares of
Common Stock received in connection with the option expense.
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 1998 all Section 16(a) filing
requirements applicable to its directors, officers and greater than 10%
beneficial owners were met, with the exception of Mr. Richard M. Dippolito who
was late on the filing of his Form 4, Statement of Changes in Beneficial
Ownership, for the month of July 1998. Mr. Dippolito's statement was
subsequently filed with the Commission.
------------------------
PROXY PROPOSAL NO. 2
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
The Company's independent auditors for the fiscal year ended July 31, 1998
were PricewaterhouseCoopers LLP, independent public accountants. On September
16, 1998, the Board appointed PricewaterhouseCoopers LLP to audit the financial
statements of the Company for the fiscal year ending July 31, 1999. The Board
desires to obtain the stockholders' ratification of such appointment. A
resolution ratifying the appointment will be
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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 representatives of PricewaterhouseCoopers LLP will be
present at the Annual Meeting to respond to appropriate questions, and will have
the opportunity to make a statement if they chose to do so.
THE BOARD RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR THE RATIFICATION OF
PRICEWATERHOUSECOOPERS LLP AS THE COMPANY'S INDEPENDENT AUDITORS FOR THE FISCAL
YEAR ENDING JULY 31, 1999.
------------------------
PROXY PROPOSAL NO. 3
APPROVAL OF THE 1998 STOCK-BASED INCENTIVE COMPENSATION PLAN
General. The 1998 Stock-Based Incentive Compensation Plan (the "1998 Plan")
providing for the granting of stock options to purchase shares of Common Stock
and the granting of related stock appreciation rights ("SARs") to employees of
the Company and its subsidiaries and affiliates, including Seadrift Coke, L.P.
(Seadrift), is proposed to be approved by the stockholders. The purpose of the
1998 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. No employee may be granted
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
aggregate number of shares of the Company's Common Stock issued under the 1998
Plan will not exceed 450,000 shares (subject to adjustments for stock splits,
stock dividends and the like).
The 1998 Plan would permit awards to eligible employees of stock options
and/or SARs that qualify as "performance-based compensation" under Section
162(m) of the Internal Revenue Code of 1986, as amended (the Internal Revenue
Code). Section 162(m) of the Code limits the deductibility of compensation paid
to the Company's Chief Executive Officer and to each of the next four most
highly paid officers unless that compensation is "performance based."
Shareholder approval of the 1998 Plan is necessary in order for compensation
under the 1998 Plan to be deemed "performance based."
The following summary description of the 1998 Plan is qualified in its
entirety by the full text of the 1998 Plan, copies of which may be obtained by
the Company's stockholders upon request to the Office of the Secretary of the
Company.
Administration. The Committee would have the full power to interpret and
administer the 1998 Plan and full authority to act in selecting the employees to
whom awards of options or SARs under the 1998 Plan (Awards) will 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 1998 Plan and the terms and
agreements that will be entered into with employees to whom an Award is granted
(the Holders). All grants under the 1998 Plan would have to be approved by the
Committee. The Committee members would have to be Board members who are not
employees of the Company or any parent, subsidiary, or Seadrift or any
affiliate. No Committee member could receive any compensation from the Company
except in his capacity as director. All would have to otherwise qualify as
"outside directors" under Section 162(m) of the Code and "non-employee
directors" under Rule 16b-3 promulgated by the Securities and Exchange
Commission. The Board would have the power to amend, suspend or terminate the
1998 Plan at any time, except that stockholder approval would be required to
increase the total number of shares available for issuance pursuant to the 1998
Plan, change the class of employees eligible to be Holders, withdraw the
administration of the 1998 Plan from the Committee, change the provisions of the
1998 Plan describing when a shareholder vote is required for plan modification,
or take any other action that would require stockholder approval under the
"short swing profit recapture" rules of Section 16(b) of the Securities Exchange
Act of 1934.
Eligibility. Employees, consultants and advisors of the Company, or a
subsidiary or Seadrift or any other affiliate, including any director who is an
employee, consultant or advisor, would be eligible to receive Awards. A
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total of approximately 30 persons would be so eligible. Directors, consultants
and advisors who are not employees, and employees of Seadrift or any other
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), will not, however, be eligible to receive incentive stock options. A
total of approximately 5 persons would be so eligible to receive Awards other
than incentive stock options. Employees, consultants, and advisors of the
Company or a subsidiary would be eligible to receive incentive stock options as
well as non-qualified options and SARs. A total of approximately 25 persons
would be so eligible.
Awards. Under the 1998 Plan, eligible employees could be awarded stock
options and/or SARs. Stock options may be either incentive stock options or
non-qualified stock options. Incentive stock options would be intended to be
"incentive stock options" under Section 422 of the Internal Revenue Code.
Non-qualified stock options would be those options that do not qualify under
Section 422 of the Internal Revenue Code. The price at which shares of Common
Stock could be purchased upon the exercise of an option is determined by the
Committee, but would have to be at least equal to the fair market value of such
shares (or 110% of fair market value for certain incentive stock options) on the
date of the Award. Payment of the option price would have to be made 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
could 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."
A SAR would entitle 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 could be in
cash, in shares of Common Stock, or in any combination thereof, as the Committee
may determine. A SAR could be awarded in tandem with options or separately.
Stock options and SARs would 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
incentive stock options awarded under the 1998 Plan would be 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 that would be available for
Awards under the 1998 Plan is 450,000 shares (subject to adjustments for stock
splits, stock dividends and the like), which equals approximately 5.3% of the
total number of shares of Common Stock outstanding as of September 25, 1998. The
closing price of Common Stock reported on the NASDAQ National Market System on
September 25, 1998 was $11.25 per share.
The Committee would retain the power to amend the terms of, or cancel and
regrant, stock options and SARs for the benefit of any Holder. All terms of the
options and SARs could be amended, subject to the specific limitations set forth
in the Plan. Any incentive stock option amended by the Committee would become a
non-qualified option.
In the event of a dissolution or liquidation of the Company, a merger or
consolidation in which the Company is not the surviving corporation, or any
other transaction wherein the Company's stockholders give up all their equity
interest in the Company, the successor company, if any, could substitute its own
substantially similar options and SARs, or it could elect to terminate the Plan.
Termination would result in expiry of all awards at such a time and on such
conditions as the Board determines.
Term. If shareholders approve the 1998 Plan (see "Vote Required for
Approval of the Plan," below), it will become effective December 3, 1998 and
will remain in full force and effect until the earlier of December 3, 2008 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, would 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.
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Federal Tax Treatment. Under the present federal tax laws, the federal
income tax treatment of stock options and SARs under the 1998 Plan would be as
follows:
An employee would recognize no taxable income and the Company would not be
entitled to a deduction when an incentive stock option is awarded or exercised.
If an employee were to sell Common Stock acquired upon exercise, after complying
with requisite holding periods, any gain or loss realized upon such sale would
be long-term capital gain or loss. The Company would 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 option holder would recognize no taxable income and the Company would
not be entitled to an income tax deduction if a non-qualified option were
awarded. Upon exercise of a non-qualified option, the Holder generally would
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 would be entitled to a corresponding income tax deduction. Upon sale
of the Common Stock acquired, the Holder would realize short-term or long-term
capital gain or loss, depending upon whether the Stock had 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 Holder
recognizes income with respect to the option exercise.
The employee, director, consultant or advisor would recognize no taxable
income and the Company would not be entitled to an income tax deduction if a SAR
were awarded. Upon exercise of a SAR, the Holder generally would 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 any applicable conditions of Section 162(m) of the
Internal Revenue Code were met, the Company would be entitled to a corresponding
income tax deduction.
Vote Required for Approval of the 1998 Plan. The affirmative vote of
holders of at least a majority of the shares of Common Stock present in person
or by proxy and entitled to vote at the Annual Meeting, voting together as a
single class, is required to approve the 1998 Plan.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE 1998
STOCK-BASED INCENTIVE COMPENSATION PLAN.
SHAREHOLDER PROPOSALS FOR 1999
Shareholder proposals intended to be presented at the 1999 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, 1999. 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.
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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, 1998. REQUESTS SHOULD BE DIRECTED
TO:
WILLIAM M. THALMAN,
MANAGER OF INVESTOR RELATIONS
AND RISK MANAGEMENT
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
October 28, 1998
CARGB-PS-98
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[X] PLEASE MARK VOTES
AS IN THIS EXAMPLE
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THE CARBIDE/GRAPHITE GROUP, INC.
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COMMON STOCK
Mark box at right if an address change or comment has been noted on the reverse
side of this card. [ ]
RECORD DATE SHARES:
--------------------
Please be sure to sign and date this Proxy. Date
- -------------------------------------------------------------------------------
- --------- Stockholder sign here ----------------------- Co-owner sign here ----
1. Election of each of the following three 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.
FOR ALL WITH- FOR ALL
NOMINEES HOLD EXCEPT
[ ] [ ] [ ]
NOMINEES FOR THREE YEAR TERM EXPIRING IN 2001:
JAMES G. BALDWIN, JAMES R. BALL AND NICHOLAS T. KAISER
IF YOU DO NOT WISH YOUR SHARES VOTED "FOR" A PARTICULAR NOMINEE, MARK THE
"FOR ALL EXCEPT" BOX AND STRIKE A LINE THROUGH THE NAME(S) OF THE
NOMINEE(S). YOUR SHARES WILL BE VOTED FOR THE REMAINING NOMINEE(S).
2. Ratification of the appointment of PricewaterhouseCoopers LLP as
independent auditors for the Company for the fiscal year ending July 31,
1999.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
3. Approval of the 1998 Stock-Based incentive Compensation Plan.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
4. In their discretion, the proxies are authorized to vote upon any other
business that may properly come before the meeting or at any adjournment(s)
thereof.
DETACH CARD DETACH CARD
<PAGE> 26
THE CARBIDE/GRAPHITE GROUP, INC.
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS - DECEMBER 3, 1998
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby authorizes and appoints Walter B. Fowler and Stephen D.
Weaver, 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 Thursday, December 3, 1998
at 10:00 a.m., EST, 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 DIRECTION, THIS PROXY WILL BE VOTED FOR EACH OF
THE NOMINEES NAMED IN PROPOSAL 1, FOR PROPOSAL 2 AND FOR PROPOSAL 3 AND (II) IN
ACCORDANCE WITH THE BEST JUDGMENT OF THE PERSONS VOTING SUCH PROXIES.
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PLEASE VOTE, DATE AND SIGN ON REVERSE AND
RETURN PROMPTLY IN THE ENCLOSED ENVELOPE.
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Signature(s) must correspond exactly with the name(s) as shown on the reverse.
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.
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HAS YOUR ADDRESS CHANGED? DO YOU HAVE ANY COMMENTS?
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