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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
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement [ ] CONFIDENTIAL, FOR USE OF THE COMMISSION
ONLY (AS PERMITTED BY RULE 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
</TABLE>
THE GEON COMPANY
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
(NAME OF PERSON(S) FILING PROXY STATEMENT, IF OTHER THAN THE REGISTRANT)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies: .......
(2) Aggregate number of securities to which transaction applies: ..........
(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: ...........................................................
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<PAGE> 2
LOGO
THE GEON COMPANY
NOTICE OF 1999
ANNUAL MEETING OF STOCKHOLDERS
AND PROXY STATEMENT
<PAGE> 3
THE GEON COMPANY
NOTICE OF ANNUAL MEETING
OF STOCKHOLDERS
The Annual Meeting of Stockholders of The Geon Company will be held at The
Forum Conference & Education Center, 1375 E. Ninth Street, Cleveland, Ohio at
9:00 a.m. on Thursday, May 6, 1999. The purposes of the meeting are:
1. To elect Directors; and
2. To consider and transact any other business that may properly come
before the meeting.
Stockholders of record at the close of business on March 15, 1999, are
entitled to notice of and to vote at the meeting.
For the Board of Directors
/s/ Gregory L. Rutman
GREGORY L. RUTMAN
Secretary
April 12, 1999
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<PAGE> 4
THE GEON COMPANY
PROXY STATEMENT
The Board of Directors of The Geon Company (the "Company") respectfully
requests your proxy for use at the Annual Meeting of Stockholders to be held on
May 6, 1999, and at any adjournments of that meeting. This Proxy Statement is to
inform you about the matters to be acted upon at the meeting.
If you attend the meeting, you may vote your shares by ballot. If you do
not attend, your shares may still be voted at the meeting if you sign and return
the enclosed proxy card. Shares of Common Stock of the Company represented by a
properly signed card will be voted in accordance with the choices marked on the
card. If no choices are marked, the shares will be voted to elect the nominees
listed on pages 3 through 5. You may revoke your proxy before it is voted by
giving notice to the Company in writing or orally at the meeting. Participants
in the Company's Retirement Savings Plan will receive a separate voting
instruction card which must be signed and returned to the trustee of that plan
in order to instruct the trustee on how to vote the shares held under that plan
by the trustee. The voting instruction card may be revoked before the trustee
votes the shares held by it by giving notice in writing to the trustee.
This Proxy Statement and the enclosed proxy card and, for participants in
the Retirement Savings Plan, the voting instruction card, are being mailed to
stockholders on or about April 12, 1999. The Company's headquarters are located
at One Geon Center, Avon Lake, Ohio 44012. The Company's telephone number is
(440) 930-1000.
ELECTION OF DIRECTORS
The Company's Board of Directors currently consists of ten directors.
Effective with the 1999 Annual Meeting, the Board of Directors has reduced the
size of the Board to 8 directors. Each director serves for a one year term and
until a successor is duly elected and qualified. The Board met eight times
during the last fiscal year.
A stockholder who wishes to suggest a director candidate for consideration
by the Nominating and Governance Committee must provide written notice to the
Secretary of the Company in accordance with the procedures specified in Article
I, Section 9 of the Company's By-Laws. Generally, the notice must be received by
the Secretary of the Company not less than 60 nor more than 90 days prior to the
first anniversary of the preceding year's annual meeting. The notice must set
forth, as to each nominee, the name, age, principal occupations and employment
during the past five years, name and principal business of any corporation or
other organization in which such occupations and employment were carried on, and
a brief description of any arrangement or understanding between such person and
any others pursuant to which such person was selected as a nominee. The notice
must set forth, as to the stockholder giving the notice and any beneficial owner
on whose behalf the nomination is being made, the name and address of, and the
class and number of shares of the Company owned by, such stockholder, beneficial
owner, and any other stockholders believed to be supporting such nominee.
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<PAGE> 5
Nominees for election as directors for terms expiring in 2000 and a
description of the business experience of each nominee appear below. Each of the
nominees is a current member of the Board. William F. Patient, J. Douglas
Campbell, and James K. Baker have been directors since 1993. Gale Duff-Bloom, D.
Larry Moore and R. Geoffrey P. Styles have been directors since 1994. Thomas A.
Waltermire and Farah M. Walters have been directors since May 7, 1998. J. A.
Fred Brothers and John D. Ong, who have served as directors since 1993, are not
seeking re-election.
<TABLE>
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WILLIAM F. PATIENT, age 64, is Chairman of the Board and Chief Executive Officer of
W. F. PATIENT PHOTO the Company, and has served in this capacity since the Company's initial public
offering in April 1993 (the "IPO"). Mr. Patient served as President of the Company
from April 1993 to February 1998 and as Senior Vice President of The B.F.Goodrich
Company and as President of its Geon Vinyl Division from May 1989 to April 1993.
Prior to joining The B.F.Goodrich Company, Mr. Patient held various positions with
Borg-Warner Chemicals from 1962 to 1989. He serves on the Boards of Directors of
National City Bank and Navistar International Corporation.
JAMES K. BAKER, age 67, served as Vice Chairman of Arvin Industries, Inc., an auto
J. K. BAKER PHOTO parts supplier to the original equipment and replacement markets, until his
retirement in April 1998. Mr. Baker served as Chief Executive Officer of Arvin
Industries, Inc. from 1981 to 1993 and as Chairman from 1986 to February 1996. Mr.
Baker serves on the Boards of Directors of Cinergy Corp., Tokheim Corp., Amcast
Industrial Corp. and Veridian Corp., and served as Chairman of the United States
Chamber of Commerce.
GALE DUFF-BLOOM, age 59, is President of Marketing and Company Communications of
G. DUFF-BLOOM PHOTO J.C. Penney Company, Inc., a major retailer. Ms. Bloom has served in her current
position since February 1996. Ms. Bloom joined J.C. Penney in 1969 and was elected
Vice President and Director of Investor Relations in 1988. In 1990, Ms. Bloom was
appointed to the positions of Senior Vice President and Associate Director of
Merchandising. In 1993, she was appointed Executive Vice President and Director of
Administration, and, in 1995, she was appointed Senior Executive Vice President and
Director of Personnel and Company Communications. Ms. Bloom serves on the Boards of
Directors of Chase Bank of Texas and several professional and civic organizations.
She is the most recent past Chair of The National Council of the Better Business
Bureau.
</TABLE>
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<TABLE>
<S> <C>
J. DOUGLAS CAMPBELL, age 57, served as President and Chief Executive Officer and a
J. D. CAMPBELL Director of Arcadian Corporation, a nitrogen chemicals and fertilizer manufacturer,
PHOTO until his retirement in 1997. Mr. Campbell joined Arcadian Corporation as President
and Chief Executive Officer in December 1992. Prior to joining Arcadian Corporation,
he held various positions with Standard Oil (Ohio) and British Petroleum since 1966,
most recently as Deputy Chief Executive Officer of BP Chemicals.
D. LARRY MOORE, age 62, served as President and Chief Operating Officer of
D. L. MOORE PHOTO Honeywell, Inc., a multinational manufacturer of controls for use in homes,
buildings, industry, and space and aviation, until his retirement in 1997. In 1987,
Mr. Moore became Vice President of Honeywell, Inc.'s Commercial Flight Systems
Group, and in 1989 he became President of Honeywell, Inc.'s Space and Aviation
business. In 1990, he became Executive Vice President and Chief Operating Officer of
Honeywell, Inc.'s Industrial and Space and Aviation businesses. In April 1993, he
was elected President and Chief Operating Officer. Mr. Moore serves on the Boards of
Directors of Reynolds Metals Company, Cordant Technologies Inc., and Howmet
Corporation.
R. GEOFFREY P. STYLES, age 68, served as Vice Chairman of the Royal Bank of Canada
R. G. P. STYLES until his retirement in December 1987. He is currently Chairman and a Director of
PHOTO Grosvenor International Holdings Ltd. Mr. Styles is also a Director of several
Canadian corporations, including The Royal Trust Company, Echo Bay Mines Ltd., and
Onex Corporation.
THOMAS A. WALTERMIRE, age 49, is President and Chief Operating Officer of the
T. A. WALTERMIRE Company and has served in this capacity since February 1998. From May 1997 to
PHOTO February 1998, Mr. Waltermire served as Executive Vice President and Chief Operating
Officer and from October 1993 until May 1997 as Chief Financial Officer of the
Company. Mr. Waltermire joined the Company as Senior Vice President and Treasurer in
March 1993 just prior to the IPO. Prior to joining the Company, Mr. Waltermire held
various positions with The B.F.Goodrich Company.
</TABLE>
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<TABLE>
<S> <C>
FARAH M. WALTERS, age 54, is President and Chief Executive Officer of University
F. M. WALTERS Hospitals and has served in this capacity since 1992. Ms. Walters joined University
PHOTO Hospitals in 1986. She held positions of increasing responsibility until her
appointment as Chief Executive Officer in 1992. In 1993, she was appointed to Hillary
Rodham Clinton's National Health Care Reform Task Force. Ms. Walters is a Director of
LTV Corporation, Kerr-McGee Corporation, University HealthSystem Consortium in Chicago,
Illinois, Cleveland Tomorrow, the Greater Cleveland Hospital Association, and
University Circle, Inc., and is also on the visiting committee of Case Western Reserve
University's Weatherhead School of Management.
</TABLE>
COMMITTEES OF THE BOARD OF DIRECTORS; ATTENDANCE
The present members of the Audit Committee are Ms. Duff-Bloom and Messrs.
Campbell, Moore, and Styles. Mr. Styles serves as Chairperson of the Committee.
The Audit Committee meets with appropriate Company financial and legal personnel
and independent public accountants to review the internal controls of the
Company and its financial reporting. The Audit Committee recommends to the Board
of Directors the appointment of the independent public accountants to serve as
auditors in examining the corporate accounts of the Company. The Audit Committee
met three times during the last fiscal year.
The present members of the Compensation Committee are Mss. Duff-Bloom and
Walters and Messrs. Baker, Moore, and Ong. Ms. Duff-Bloom serves as Chairperson
of the Committee. The Compensation Committee reviews and approves compensation
and benefits afforded the executive officers and highly-compensated personnel of
the Company. The Committee also has oversight responsibilities for all
broad-based compensation and benefit programs of the Company. The Compensation
Committee met six times during the last fiscal year.
The present members of the Nominating and Governance Committee are Ms.
Duff-Bloom and Messrs. Baker, Campbell, and Ong. Mr. Ong serves as Chairperson
of the Committee. The Nominating and Governance Committee recommends to the
Board of Directors candidates for nomination as directors of the Company. The
Nominating and Governance Committee is also authorized to recommend to the Board
of Directors a successor to the Chairman of the Board, Chief Executive Officer,
President and Chief Operating Officer, if any, of the Company and, together with
the Chief Executive Officer, to plan and monitor the development of candidates
for executive personnel positions reporting to the Chief Executive Officer. The
Nominating and Governance Committee met five times during the last fiscal year.
The present members of the Environmental, Health, and Safety Committee are
Ms. Walters and Messrs. Brothers, Campbell, Moore, Styles and Waltermire. Mr.
Moore serves as Chairperson of the Committee. The Environmental, Health, and
Safety Committee exercises oversight with respect to the Company's
environmental, health, and safety policies and practices and its compliance with
related laws and regulations. The Environmental, Health, and Safety Committee
met twice during the last fiscal year.
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<PAGE> 8
The present members of the Financial Policy Committee are Messrs. Baker,
Brothers, Ong, Styles, and Waltermire. Mr. Baker serves as Chairperson of the
Committee. The Financial Policy Committee reviews the policies underlying the
Company's financial planning to assure adequacy and soundness of the Company's
capital plans; reviews proposed major financing activities prior to action by
the Board of Directors; and reviews methods under consideration by the Company
for financing proposed major investments prior to action by the Board of
Directors. The Financial Policy Committee met twice during the last fiscal year.
During the last fiscal year, each Director attended at least 75% of the
meetings of the Board of Directors and of the Committees on which he or she
served.
COMPENSATION OF DIRECTORS
Directors unaffiliated with the Company are paid an annual retainer of
$20,000 and fees of $1,000 for each Board and Committee meeting attended. In
addition, the chairperson of each Committee receives a fixed annual retainer of
$3,000. In addition, upon retirement from the Board of Directors after reaching
the age of 55 with at least ten years of service as a Director, any Director
unaffiliated with the Company is entitled to receive an annual amount equal to
the fixed compensation level in effect at the time of retirement. A retiring
Director who has reached age 55 and has served for at least five but less than
ten years is entitled to a reduced amount equal to 50% of the fixed compensation
level in effect at retirement, plus 10% of such compensation level for each
additional year of service (rounded to the nearest whole year) up to ten.
Directors are reimbursed for their expenses associated with each meeting
attended.
Under The Geon Company Non-Employee Directors' Deferred Compensation Plan
(the "Directors Deferred Compensation Plan"), each Director who is not an
employee may defer payment of all or a portion of his or her compensation as a
Director. The compensation may be deferred as cash or converted into Common
Stock of the Company (at a rate equal to 125% of the cash compensation amount).
Deferred compensation, whether in the form of cash or Common Stock, is held in
trust for the participating Directors. Interest earned on the cash amounts and
dividends on the Common Stock accrue for the benefit of the participating
Directors.
Under the Company's 1995 Incentive Stock Plan, each current Director who
was not an employee of the Company was granted on the date of the 1995 Annual
Meeting an option to acquire 5,000 shares of Common Stock. Since that date, each
new Director who was not an employee of the Company has been granted at the time
of his or her election or appointment as a Director an option to acquire 5,000
shares of Common Stock. Directors who have continued in office following the
initial grant have received an additional Director option to acquire 1,000
shares of Common Stock annually.
Under the Company's 1999 Incentive Stock Plan, it is the Company's current
expectation that each new Director who is not an employee of the Company will be
granted at the time of his or her election or appointment as a Director an
option to acquire 5,000 shares of Common Stock. It is the Company's current
expectation that each Director who continues in office following the initial
grant will receive an additional Director option to acquire 1,000 shares of
Common Stock annually on the date of each succeeding annual meeting.
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OWNERSHIP OF COMMON STOCK
The following table shows the number of shares of Common Stock beneficially
owned on March 15, 1999 (including options exercisable within 60 days of that
date) by each of the Directors and nominees, each of the executive officers
named in the Summary Compensation Table on page 15, and by all Directors and
executive officers as a group.
<TABLE>
<CAPTION>
NUMBER OF
NAME SHARES (1)
---- ----------
<S> <C>
James K. Baker.............................................. 16,361(2)(3)
Gale Duff-Bloom............................................. 11,564(2)(3)
J.A. Fred Brothers.......................................... 20,496(2)(3)
J. Douglas Campbell......................................... 17,148(2)(3)
Donald P. Knechtges......................................... 120,313(2)(3)
D. Larry Moore.............................................. 12,122(2)(3)
John D. Ong................................................. 9,000(3)
William F. Patient.......................................... 505,284(2)(3)
Gregory L. Rutman........................................... 137,408(2)(3)
R. Geoffrey P. Styles....................................... 11,000(3)
Thomas A. Waltermire........................................ 189,896(2)(3)
Farah M. Walters............................................ 5,000(3)
W. David Wilson............................................. 90,600(2)(3)
13 Directors and executive officers as a group.............. 1,146,192(2)(3)
</TABLE>
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(1) Except as otherwise stated in the notes below, beneficial ownership of the
shares held by each individual consists of sole voting power and sole
investment power, or of voting power and investment power that is shared
with the spouse of the individual. It includes the approximate number of
shares credited to the named executives' accounts in the Company's
Retirement Savings Plan, a tax-qualified defined contribution plan. No
Director, nominee or executive officer, other than William F. Patient,
beneficially owned on March 15, 1999, more than 1% of the outstanding Common
Stock of the Company. As of that date, Mr. Patient beneficially owned
approximately 2.12% of the outstanding Common Stock and the Directors and
executive officers as a group beneficially owned approximately 4.72% of the
outstanding Common Stock.
(2) Includes shares with respect to which the following Directors and executive
officers have only sole voting power as follows: J.K. Baker, 7,561 shares;
G. Duff-Bloom, 3,564 shares; J.A. Fred Brothers, 8,496 shares; J.D.
Campbell, 8,648 shares; D.P. Knechtges, 14,029 shares; D.L. Moore, 4,122
shares; W.F. Patient, 80,388 shares; Gregory L. Rutman, 14,761 shares; T.A.
Waltermire, 31,130 shares; and W. David Wilson, 10,342 shares; and the
Directors and executive officers as a group, 183,041 shares. With respect to
Ms. Duff-Bloom and Messrs. Baker, Brothers, Campbell, and Moore, these
shares are held under the Directors Deferred Compensation Plan.
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(3) Includes shares the individuals have a right to acquire on or before May 15,
1999, as follows: each of the Directors upon the exercise of director
options, 8,000 shares, with the exception of Messrs. Patient and Waltermire
who are not eligible to receive director options, and Ms. Walters who was
granted an option to acquire 5,000 shares at the time of her election on May
7, 1998, which option vests May 7, 1999; D.P. Knechtges, 91,901 shares; W.F.
Patient, 357,299 shares; Gregory L. Rutman, 95,015 shares; T.A. Waltermire,
125,489 shares; W. David Wilson, 63,580 shares; and the Directors and
executive officers as a group, 794,284 shares.
The following table shows certain information with respect to all persons
who, as of March 15, 1999, were known by the Company to beneficially own more
than five percent of the outstanding shares of Common Stock of the Company based
on information provided in Schedule 13G filings with the Securities and Exchange
Commission (the "Commission"):
<TABLE>
<S> <C> <C>
Brinson Partners, Inc. ................................. 1,556,616(1) 6.7%
209 South LaSalle Street
Chicago, Illinois 60604-1295
UBS AG............................................. (1)
Bahnhofstrasse 45
8021, Zurich, Switzerland
Citigroup Inc. ......................................... 1,392,581(2) 6.0%
153 East 53rd Street
New York, New York 10043
Salomon Smith Barney Holdings Inc. ................ (2)
388 Greenwich Street
New York, New York 10013
Harris Associates L.P. ................................. 2,804,850(3) 8.91%
Harris Associates, Inc.
Two North LaSalle Street
Suite 500
Chicago, Illinois 60602-3790
Harris Associates Investment Trust................. (3)
Two North LaSalle Street
Suite 500
Chicago, Illinois 60602-3790
J.P. Morgan & Co. Incorporated.......................... 1,203,700(4) 5.1%
60 Wall Street
New York, New York 10260
</TABLE>
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<TABLE>
<S> <C> <C>
State Street Bank and Trust Company, as Trustee for
The Geon Company Retirement Savings Plan.............. 2,782,000(5) 10.0%
225 Franklin Street
Boston, Massachusetts 02110
Wellington Management Company, LLP...................... 2,480,700(6) 10.62%
75 State Street
Boston, Massachusetts 02109
Vanguard/Windsor Funds, Inc. ...................... (6)
c/o The Vanguard Group
100 Vanguard Boulevard
P.O. Box 2600
Malvern, Pennsylvania 19355
</TABLE>
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(1) As of February 16, 1999, based upon information contained in a Schedule 13G
filed with the Commission. Brinson Partners, Inc. ("Brinson"), as a
registered investment advisor, has shared voting power and shared
dispositive power with respect to all of these shares with UBS AG. UBS AG is
the ultimate parent holding company of Brinson through its wholly-owned
subsidiary, UBS (USA) Inc.
(2) As of February 12, 1999, based upon information contained in a Schedule 13G
filed with the Commission. Citigroup Inc., as a holding company reporting on
behalf of its subsidiaries, has shared voting and dispositive power with
respect to all of these shares. Included in the 1,392,581 are 1,382,181
(5.9% of the outstanding Common Stock of the Company) beneficially owned by
its wholly-owned subsidiary, Salomon Smith Barney Holdings Inc. ("SSB
Holdings"), a holding company reporting on behalf of its subsidiaries. SSB
Holdings shares voting and dispositive power with respect to these 1,382,181
shares with Citigroup.
(3) As of January 28, 1999, based upon information contained in a Schedule 13G
filed with the Commission. Of the 2,081,750 shares beneficially owned by
Harris Associates L.P. ("Harris"), as a registered investment adviser,
together with Harris Associates, Inc., Harris' sole general partner, Harris
has sole dispositive power with respect to 1,028,150 shares, shared
dispositive power with respect to 1,053,600 shares and shared voting power
with respect to all of these shares. Included in the 1,053,600 shares with
respect to which Harris has shared voting and investment power are 971,600
shares beneficially owned by the Harris Associates Investment Trust ("Harris
Trust"), through its various series. Harris Trust, a registered investment
company for which Harris serves as investment adviser, shares voting and
dispositive power with respect to these 971,600 shares with Harris.
(4) As of February 22, 1999, based upon information contained in a Schedule 13G
filed with the Commission. J.P. Morgan & Co. Incorporated, as a holding
company reporting on behalf of its subsidiaries, has sole voting power with
respect to 991,200 of these shares and has sole dispositive power with
respect to all of these shares.
(5) As of February 8, 1999, based upon information contained in a Schedule 13G
filed with the Commission. State Street Bank and Trust Company, as Trustee
for The Geon Company Retirement
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Savings Plan and for various collective investment funds for employee
benefit plans and other index accounts, as a bank, has sole voting and
sole dispositive power with respect to 121,828 of these shares and shared
voting and shared dispositive power with respect to 2,660,172 of these
shares.
(6) As of February 10, 1999, based upon information contained in a Schedule 13G
filed with the Commission by Wellington Management Company. Wellington
Management Company, as a registered investment adviser, has shared voting
power with respect to 700 of these shares and shared dispositive power with
respect to all of these shares. Of the 2,480,700 shares with respect to
which Wellington Management Company has shared dispositive power, 2,480,000
shares (10.61% of the outstanding shares of Common Stock of the Company) are
held by Vanguard/Windsor Funds, Inc., an investment advisory client of
Wellington Management Company. As of February 10, 1999, based upon
information contained in a Schedule 13G filed with the Commission by
Vanguard/ Windsor Funds, Inc., as a registered investment company,
Vanguard/Windsor Funds, Inc. has sole voting power and shared dispositive
power with respect to all of those shares.
10
<PAGE> 13
EXECUTIVE COMPENSATION
REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors (the "Committee") is
currently comprised of Gale Duff-Bloom, its Chairperson, James K. Baker, D.
Larry Moore, John D. Ong, and Farah M. Walters.
The Committee's responsibilities include, but are not limited to, reviewing
and approving executive compensation, including base salary, cash bonuses and
stock incentive awards for the Chief Executive Officer and all other executive
officers of the Company.
GENERAL COMPENSATION PHILOSOPHY
The Committee believes that the total compensation package for executive
officers should be performance-oriented, tying a significant amount of
compensation to short and long-term financial and strategic objectives,
including increases in stockholder value. The Committee established the
following guiding principles for the Company's executive compensation program:
- A significant portion of executive officers' total compensation will
depend on the Company's annual and long-term performance, including
creation of stockholder value.
- Non-cash compensation programs will be designed to provide stock-based
incentives which will encourage stock ownership by executives in order to
better align stockholder and executive interests.
- Significant ownership of Company Common Stock by executive officers will
be encouraged.
At the Committee's February 1, 1995, meeting, the Committee adopted Company
stock ownership guidelines for the participants in the Company's Senior
Executive Management Incentive Plan (the "Executive MIP") and the Company's
Management Incentive Plan (the "MIP"). Under these guidelines, goals regarding
levels of stock ownership by executives were established to emphasize the
importance of stock ownership by management. The specified levels of stock
ownership (based on market prices), which are intended to be achieved over a
five-year period, range from five times annual salary for the Chief Executive
Officer, to four times annual salary for the Chief Operating Officer, three
times annual salary for designated executive officers who participate in either
the Executive MIP or the MIP, and one times annual salary for all other
participants in the MIP.
EXECUTIVE COMPENSATION
BASE SALARIES
In 1998, the Company established salaries based on salaries of comparable
positions included in published surveys and a survey of a group of companies
provided by the Committee's independent executive compensation consultant,
Frederic W. Cook & Co., Inc. The survey prepared by Frederic W. Cook & Co., Inc.
includes companies that generally compete with the Company for executive talent
and from whom the Company may recruit future executives. This comparison group
also includes compa-
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<PAGE> 14
nies from many different industries and therefore differs from the group of
companies used in the performance graph appearing below under the heading
"Company Stock Performance" on page 21. The companies used in the performance
graph are generally the companies with which the Company competes for capital
and may be considered useful and appropriate for comparing the Company's stock
performance.
In December 1998, in light of the Company's performance and to reflect the
substantial increase and shift in individual responsibilities as a result of the
Company's restructuring, the Committee adjusted the salary of each executive
officer, other than the Chief Executive Officer. Each adjustment was effective
as of January 4, 1999.
INCENTIVE COMPENSATION
Deduction Limitation on Executive Compensation. Section 162(m) of the
Internal Revenue Code of 1986, as amended, and the regulations promulgated
thereunder ("Section 162(m)") preclude a publicly-held corporation from taking a
deduction for certain compensation in excess of $1 million paid or accrued with
respect to certain executive officers. It is the Committee's intent that the
Company's executive compensation program be designed to allow maximum possible
deductibility of executive compensation by the Company.
The Executive MIP was approved by the stockholders at the 1995 Annual
Meeting and provides for awards that are wholly contingent on the attainment of
performance goals established by the Committee, eliminates the Committee's
discretion to increase the amount of incentive awards, and provides for
administration by a committee of outside directors. The Committee believes that
the Executive MIP satisfies the Internal Revenue Service's requirements for
"performance-based" compensation under Section 162(m). Under Section 162(m),
performance-based compensation is not subject to the deductibility limitation
under current Internal Revenue Service regulations.
Cash and Stock Incentives. The executive officers, including the Chief
Executive Officer, are eligible annually to receive bonus awards, consisting of
restricted stock or a combination of both restricted stock and cash, under the
Company's Executive MIP or the Company's MIP. Each year the Committee
establishes performance measures to be used to determine an appropriate payout,
if any, under the Executive MIP and the MIP. Target awards, stated as a
percentage of salary, are determined by the Committee at the beginning of the
plan year, although the Committee retains the discretion to reduce such award
depending on an executive officer's (including the Chief Executive Officer)
individual performance and the Company's performance in meeting established
goals. The Executive MIP and the MIP also establish threshold levels below which
no incentives will be paid.
The 1999 Incentive Stock Plan, which is being submitted to stockholders for
their approval at the Special Meeting of Stockholders on April 19, 1999,
includes provisions for the award of performance-based compensation that would
not be subject to the deductibility limitations. The Committee will continue to
monitor its compensation policy, including compensation, if any, paid under the
Executive MIP, the MIP, and the 1999 Incentive Stock Plan, for deductibility
under Section 162(m).
12
<PAGE> 15
The performance measures used for 1998 under the Executive MIP and the MIP
were based on Company and business unit return on equity/adjusted cash flow,
business-unit operating income, certain non-financial performance measures, and
relative total return to stockholders, as applicable to each participant. Had
Company or business unit performance met the established goal for each
performance measure, cash flow performance would have contributed 40% of the
total award; business unit operating income performance would have contributed
30%; non-financial measures would have contributed 10%; and relative total
return to stockholders performance would have contributed 20%.
Company performance exceeded threshold levels for each of the enumerated
performance measures and, on average, was approximately 88% of target. This
compares favorably to 1997 performance which was approximately 75% of target.
In determining the actual awards to key executive officers for 1998 under
the Executive MIP and the MIP, the Committee considered each key executive's
performance against personal goals as well as the Company's overall performance
against established goals. The net result of performance relative to the 1998
performance guidelines and the Committee's review of individual executive
officer performance resulted in an average award to the key executive officers
of approximately 50% of each executive officer's salary.
Under the terms of the Executive MIP and the MIP, as more fully described
in footnote 1 to the Summary Compensation Table appearing on page 15, 40% of any
award under the Executive MIP or the MIP to the executive officers, including
the Chief Executive Officer, is paid in the form of restricted stock awarded
under a Company stock option plan. Executive officers who receive awards under
the Executive MIP and the MIP may elect to receive the balance of any such award
in the form of restricted stock, so that up to 100% of any award under the
Executive MIP or the MIP may be paid in the form of restricted stock. To the
extent that any award is paid in the form of stock, that payment is enhanced by
a 25% premium, i.e., for every $100 otherwise payable under the Executive MIP to
an executive, $125 worth of restricted stock is awarded to that executive. With
respect to 1998 awards to executive officers under the Executive MIP and MIP,
approximately 55% of those awards were paid in the form of restricted stock.
In 1998, the Committee granted long-term performance awards under the
1998-2000 Long-Term Incentive Plan. Under the 1998-2000 Long-Term Incentive Plan
the Committee may grant to executive officers incentive awards in the form of
Time-Vested Options, Performance Shares or Challenge Grant Stock Appreciation
Rights ("SARs"). Time-Vested Options are stock options that will vest December
31, 2003, unless accelerated based upon the stock price performance of the
Company. Performance Shares are awards of Common Stock based upon the Company's
three-year performance ending December 31, 2000, relative to targets approved by
the Committee for cumulative normalized earnings per share and relative total
shareholder return. Such awards may be 0% to 200% of established targets.
Challenge Grant SARs are SARs that will vest upon the achievement of certain
stock prices at specified times. The 1998-2000 Long-Term Incentive Plan is
intended to align the interests of the executive officers with those of the
Company and its stockholders and to encourage superior performance over time.
13
<PAGE> 16
CHIEF EXECUTIVE OFFICER
Mr. Patient received a salary increase effective for 1998 based upon the
Committee's review of his existing compensation arrangements, comparable
compensation for chief executive officers of other companies and the performance
of Mr. Patient and the Company. Mr. Patient did not receive a salary increase
for 1999.
Mr. Patient participates in the Executive MIP under similar terms and
conditions as other executive officers and as described above. Based on Company
performance and a review of Mr. Patient's individual performance, Mr. Patient
received an award of $400,000 under the Executive MIP. This award represents
approximately 64% of his salary, as compared to his 1997 award of $280,000 which
represented approximately 48% of his 1997 salary. As more fully described in
footnote 1 to the Summary Compensation Table appearing on page 15, 100% of this
amount was deferred in the form of restricted stock.
In lieu of participation in the Company's 1998-2000 Long-Term Incentive
Plan, Mr. Patient received options under the 1995 Incentive Stock Plan to
acquire 105,000 shares of Common Stock of the Company at an exercise price of
$20.625 per share, and also 11,000 shares of restricted stock. In determining
the amount of this award, the Committee assessed Mr. Patient's leadership of the
Company and his critical role in implementing Geon's Strategy.
THE COMPENSATION COMMITTEE OF
THE BOARD OF DIRECTORS
Gale Duff-Bloom, Chairperson
James K. Baker
D. Larry Moore
John D. Ong
Farah M. Walters
April 12, 1999
14
<PAGE> 17
The following table sets forth the compensation received for the three
years ended December 31, 1998 by the Company's Chief Executive Officer and the
persons who were at December 31, 1998 the four other most highly paid executive
officers.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
----------------------------------------
ANNUAL COMPENSATION AWARDS PAYOUTS
---------------------------------- --------------------- ----------------
OTHER OPTIONS/ ALL
ANNUAL RESTRICTED SARS LTIP OTHER
NAME AND COMPEN- STOCK (# OF PAYOUTS COMPEN-
PRINCIPAL POSITION YEAR SALARY BONUS(1) SATION(2) AWARDS(3) SHARES) (# OF SHARES)(4) SATION(5)
------------------ ---- ------ -------- --------- ---------- -------- ---------------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
William F. Patient, 1998 $623,269 $500,000 $53,570 $253,000 105,000 10,921 $61,397
Chairman of the Board and 1997 580,000 350,000 79,639 -0- 36,000 -0- 51,100
Chief Executive Officer 1996 578,308 159,500 52,706 -0- 35,000 -0- 44,269
Thomas A. Waltermire, 1998 390,192 270,000 46,360 -0- 202,446 4,100 36,372
President and Chief 1997 298,173 182,500 39,736 -0- 11,700 -0- 26,151
Operating Officer 1996 249,193 75,000 34,581 -0- 11,000 -0- 19,451
Donald P. Knechtges, 1998 232,115 137,500 59,243 -0- 96,402 3,546 41,647
Senior Vice President, 1997 222,500 114,400 30,330 -0- 9,800 -0- 37,942
Technology/Business 1996 222,058 49,500 24,920 -0- 9,000 -0- 38,596
W. David Wilson 1998 219,231 130,900 26,475 -0- 96,402 1,628 18,998
Vice President, Chief 1997 177,952 91,300 5,739 -0- 4,000 -0- 16,264
Financial Officer 1996 134,040 18,475 6,025 -0- 5,000 -0- 9,948
Gregory L. Rutman, 1998 209,423 114,400 50,810 -0- 96,402 3,093 40,022
Vice President, General 1997 195,000 87,750 35,196 -0- 7,000 -0- 36,660
Counsel and Secretary 1996 194,577 48,750 29,825 -0- 7,500 -0- 37,219
</TABLE>
- ---------------
(1) Amounts represent the aggregate bonus payments to the named executive under
the Executive MIP or the MIP for 1998, 1997 and 1996. The Executive MIP and
the MIP provided that a minimum of 40% of the named executives' bonus
awards, if any, under the plan would be paid in the form of restricted stock
awarded under the Company's incentive stock plans. The participant may also
elect to receive all or any portion of the balance in the form of restricted
stock. For each $1 of the bonus amount paid in the form of restricted stock,
$1.25 worth of restricted stock is awarded. The portion of the award, if
any, not paid in restricted stock is paid in cash. Under the terms of the
restricted stock award, the restricted stock awarded may not be transferred
for the three-year period following the date of award. In the event a
participant leaves the employ of the Company prior to the lapse of the
restrictions (other than by reason of death, disability or retirement), the
participant will forfeit up to 100% of the 25% premium received in respect
of the award. The amount of cash (including payments in respect of
fractional shares) and the market value and number of the shares of
restricted stock received by the named executive officers, respectively, in
respect of the 1998 bonus payments for each of the named executive officers
is as follows: W.F. Patient, $9 and $499,991 (21,390 shares); T.A.
Waltermire, $19 and $269,981 (11,550 shares); D.P. Knechtges, $74,995 and
$62,505 (2,674 shares); W.D. Wilson, $71,411 and $59,489 (2,545 shares); and
G.L. Rutman, $62,414 and $51,986 (2,224 shares). For 1997, such amounts were
as follows: W.F. Patient, $6 and $349,994 (14,973 shares); T.A. Waltermire,
$11 and $182,489 (7,807 shares); D.P. Knechtges, $62,414 and $51,986 (2,224
shares); W.D. Wilson, $49,809 and $41,491 (1,775 shares); and G.L. Rutman,
$39,013 and $48,737 (2,085 shares). For 1996, such amounts were as follows:
W.F. Patient, $3 and $159,497 (8,025 shares); T.A. Waltermire, $12 and
$74,988 (3,733 shares);
15
<PAGE> 18
D.P. Knechtges, $27,001 and $22,499 (1,132 shares); W.D. Wilson, $10,090 and
$8,385 (422 shares); and G.L. Rutman $11 and $48,734 (2,452 shares).
(2) For 1998, amounts include tax gross-ups on personal benefits as follows:
W.F. Patient, $14,566; T.A. Waltermire, $12,591; D.P. Knechtges, $15,811;
W.D. Wilson, $8,205; and G.L. Rutman, $13,818. For 1997, amounts include tax
gross-ups on personal benefits as follows: W.F. Patient, $32,909; T.A.
Waltermire, $15,447; D.P. Knechtges, $12,284; W.D. Wilson, $1,741; and G.L.
Rutman, $9,548. For 1996, amounts include tax gross-ups on personal benefits
as follows: W.F. Patient, $22,542; T.A. Waltermire, $10,383; D.P. Knechtges,
$10,443; W.D. Wilson, $0; and G.L. Rutman, $11,987.
(3) In 1998, William F. Patient was awarded 11,000 shares of restricted stock
and 105,000 options in lieu of participation in the Company's 1998-2000
Long-Term Incentive Plan. Except as described in footnote 1, there were no
other awards of restricted stock in 1998, 1997, or 1996 to the named
executive officers other than those awarded under the Executive MIP or MIP.
(4) Amounts for 1998 represent the number of shares paid out to the named
executive on January 1, 1998 in respect of performance shares awarded to the
named executive in 1995 under the Company's 1995-1997 Long-Term Incentive
Plan. The number of shares awarded was based on the Company's achievement of
performance objectives specified under such plan for the three-year period
ended December 31, 1997, and are net of withholding taxes.
(5) Amounts for 1998 represent, respectively, the Company's cash contributions
on behalf of the named executives to the Company's Retirement Savings Plan,
amounts accrued under a benefit restoration plan providing for benefits in
excess of the amounts permitted to be contributed under the Retirement
Savings Plan (and amounts accrued with respect to the Executive MIP and
MIP), and premium payments by the Company under a split dollar life
insurance program as follows: W. F. Patient, $9,600, $51,797, and $0; T. A.
Waltermire, $9,600, $26,772, and $0; D. P. Knechtges, $9,600, $11,071, and
$20,976; W. D. Wilson, $9,600, $9,398, and $0; and G. L. Rutman, $9,600,
$7,802, and $22,620. For 1997, such amounts were as follows: W.F. Patient,
$9,000, $42,100, and $0; T. A. Waltermire, $9,000, $17,151, and $0; D. P.
Knechtges, $9,000, $7,966, and $20,976; W.D. Wilson, $9,500, $6,764, and $0;
and G. L. Rutman, $9,500, $4,540, and $22,620. For 1996, such amounts are as
follows: W. F. Patient, $9,000, $35,269, and $0; T. A. Waltermire, $9,000,
$10,451, and $0; D.P. Knechtges, $9,000, $8,770, and $20,826; W.D. Wilson,
$9,000, $948, and $0; and G. L. Rutman, $9,000, $7,810, and $22,620.
16
<PAGE> 19
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
NO. OF
SECURITIES
UNDERLYING % OF TOTAL
OPTIONS/SARS OPTIONS/
GRANTED SARS GRANTED EXERCISE OR GRANT DATE
(# OF TO EMPLOYEES BASE PRICE EXPIRATION FAIR
NAME SHARES)(1) IN FISCAL YEAR ($/SH) DATE VALUE(2)
---- ------------ -------------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C>
W. F. Patient........... 105,000 7.2% $20.625 2-4-08 $ 672,000
T. A. Waltermire........ 202,446 13.8 20.625 2-4-08 1,295,654
D. P. Knechtges......... 96,402 6.6 20.625 2-4-08 616,973
W. D. Wilson............ 96,402 6.6 20.625 2-4-08 616,973
G. L. Rutman............ 96,402 6.6 20.625 2-4-08 616,973
</TABLE>
(1) Of the options granted to W. F. Patient, 70,000 will become exercisable on
August 1, 1999, and 35,000 will become exercisable upon achievement of stock
price performance targets on or before December 31, 2001, as specified in
the Company's 1998-2000 Long-Term Incentive Plan. Two-thirds of the options
granted to the other four named executives vest in six years, with
accelerated vesting upon achievement of stock price performance targets
defined in the 1998-2000 Long-Term Incentive Plan. The remaining one-third
of the options granted will vest only upon achievement of stock price
performance targets on or before December 31, 2001, as defined in the plan.
All of the options were granted with limited stock appreciation rights which
generally entitle the optionee to elect to receive the appreciation on the
option in cash for a 60 day period following a "change in control" and were
granted with exercise prices not less than 100% of the fair market value of
Common Stock.
(2) The grant date fair values shown in the table were determined pursuant to
the Black-Scholes option valuation model (a widely used stock option
valuation methodology), using the following assumptions: stock price
volatility factor of .2990; dividend yield of 2.58%; interest rate of 4.80%;
and a ten year term. There were no adjustments made for non-transferability
or risk of forfeiture. The actual value, if any, that an executive officer
may realize from his or her stock options (assuming that they are exercised)
will depend solely on any gain in stock price over the exercise price when
the shares are sold.
17
<PAGE> 20
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR END OPTION/SAR VALUES
<TABLE>
<CAPTION>
VALUE OF
NUMBER OF UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS/SARS OPTIONS/SARS
AT FY-END AT FY-END
(# OF SHARES) ($) (2)
SHARES ACQUIRED -------------------- ----------------------
ON EXERCISE VALUE REALIZED EXERCISABLE/ EXERCISABLE/
NAME (# OF SHARES) ($) (1) UNEXERCISABLE UNEXERCISABLE
---- --------------- -------------- ------------- -------------
<S> <C> <C> <C> <C>
W. F. Patient........... -0- -0- 352,299/105,000 $1,281,431/$249,375
T. A. Waltermire........ 7,677 8,232 123,542/211,919 487,270/500,103
D. P. Knechtges......... -0- -0- 80,253/110,449 314,378/245,202
W. D. Wilson............ 1,791 1,921 63,078/99,851 273,535/235,049
G. L. Rutman............ 3,040 3,260 96,074/103,200 365,790/243,170
</TABLE>
(1) Represents the difference between the option exercise price and the last
sale price of a share of Common Stock as reported on the New York Stock
Exchange on the date prior to exercise.
(2) Based on the last sale price of a share of Common Stock of $23.00 as
reported on the New York Stock Exchange on December 31, 1998. The ultimate
realization of profit, if any, on the sale of Common Stock underlying the
option is dependent upon the market price of the shares on the date of sale.
RETIREMENT PENSIONS
The Company has in effect a pension plan for salaried employees which
provides pensions payable at retirement to each eligible employee. The plan
makes available a pension which is paid from funds provided through
contributions by the Company and contributions by the employee, if any, made
prior to 1972. The amount of an employee's pension depends on a number of
factors including Final Average Earnings ("FAE") and years of credited service
to the Company. The following chart shows the annual pension amounts currently
available to employees who retire with the combinations of FAE and years of
credited service shown in the chart, which should be read in conjunction with
the notes following the chart. As of January 1, 1989, the plan generally
provides a benefit of 1.15% of FAE times all years of pension credit plus 0.45%
of FAE in excess of covered compensation times years of pension credit up to 35
years. In addition, employees actively at work on December 31, 1989, may receive
an additional pension credit of up to 4 years up to a maximum of 24 years of
pension credit. Benefits become vested after 5 years of service.
18
<PAGE> 21
PENSION PLAN TABLE
<TABLE>
<CAPTION>
YEARS OF CREDITED SERVICE
------------------------------------------------------------------------------
15 20 25 30 35
FINAL --------------------- --------------------- -------- -------- --------
AVERAGE EARNINGS (1) (2) (1) (2)
---------------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
$ 100,000......... $ 21,892 $ 27,738 29,199 $ 35,038 $ 36,498 $ 43,798 $ 51,097
$ 200,000......... 45,892 58,139 61,198 73,438 76,498 91,798 107,097
$ 300,000......... 69,892 88,539 93,198 111,838 116,498 139,798 163,097
$ 400,000......... 93,892 118,938 125,199 150,238 156,498 187,798 219,097
$ 500,000......... 117,892 149,339 157,198 188,638 196,498 235,798 275,097
$ 600,000......... 141,892 179,739 189,198 227,038 236,498 283,798 331,097
$ 700,000......... 165,892 210,138 221,199 265,438 276,498 331,798 387,097
$ 800,000......... 189,892 240,539 253,198 303,838 316,498 379,798 443,097
$ 900,000......... 213,892 270,939 285,198 342,238 356,498 427,798 499,097
$ 1,000,000......... 237,892 301,338 317,199 380,638 396,498 475,798 555,097
$ 1,100,000......... 261,892 331,739 349,198 419,038 436,498 523,798 611,097
$ 1,200,000......... 285,892 362,139 381,198 457,438 476,398 571,798 667,097
</TABLE>
- ---------------
(1) Assumes actively employed January 1, 1990 and after.
(2) Includes an additional 4 years of service applicable to pre-January 1, 1990
employees.
(3) The pension plan uses either a "final average earnings" formula or a
"service credit" formula to compute the amount of an employee's pension,
applying the formula which produces the higher amount. The above chart was
prepared using the FAE formula, since the service credit formula would
produce lower amounts than those shown. Under the FAE formula, a pension is
based on the highest four consecutive calendar years of an employee's
earnings. Earnings include salary, overtime pay, holiday pay, vacation pay,
and certain incentive payments including annual cash bonuses, but exclude
awards under long-term incentive programs and the Company match in the
Company savings plans. As of December 31, 1998, final average earnings for
the individuals named in the Summary Compensation Table were as follows: W.
F. Patient -- $873,493.29; T. A. Waltermire -- $435,410.27; D. P.
Knechtges -- $316,556.37; W. D. Wilson -- $222,642.28; and G. L. Rutman --
$271,670.31.
(4) In computing the pension amounts shown, it was assumed that an employee
would retire at age 65 and elect to receive a five year certain and
continuous annuity under the pension plan and that the employee would not
elect any of the available "survivor options," which would result in a lower
annual pension. Pensions are not subject to any reduction for Social
Security or any other offset amounts.
(5) As of December 31, 1998, the five executive officers named in the cash
compensation table had the following years of credited service under the
pension plan or subsidiary plans or supplemental agreements: W. F. Patient,
9 years, 6 months; T. A. Waltermire, 24 years, 6 months; D. P. Knechtges, 33
years, 6 months; W.D. Wilson, 20 years, 11 months; and G.L. Rutman, 24
years, 2 months.
19
<PAGE> 22
(6) W. F. Patient became vested in benefits immediately and earns an additional
benefit equal to 1.6 percent of his final average annual earnings for each
of his first 15 years with the Company. These benefits are payable under an
unfunded, non-qualified supplemental plan.
(7) Benefits shown in the chart that exceed the level of benefits permitted to
be paid from a tax-qualified pension plan under the Internal Revenue Code of
1986, as amended, and certain additional benefits not payable under the
qualified pension plan because of certain exclusions from compensation taken
into account thereunder, are payable under an unfunded, non-qualified
supplemental pension plan.
MANAGEMENT CONTINUITY AGREEMENTS
The Company has entered into management continuity agreements (the
"Continuity Agreements") with certain employees, including all of the executive
officers named in the Summary Compensation Table. The purpose of the Continuity
Agreements is to encourage the individuals to carry out their duties in the
event of the possibility of a "change of control" of the Company. The Continuity
Agreements do not provide any assurance of continued employment unless there is
a change of control. The Continuity Agreements generally provide for a two-year
period of employment commencing upon a change of control, which generally is
deemed to have occurred if: (i) any person becomes the beneficial owner of 20%
or more of the combined voting power of the Company's outstanding securities
(subject to certain exceptions), (ii) there is a change in the majority of the
Board of Directors of the Company, (iii) certain corporate reorganizations occur
where the existing stockholders do not retain more than 60% of the common stock
and combined voting power of the outstanding voting securities of the surviving
entity, or (iv) there is shareholder approval of a complete liquidation or
dissolution of the Company.
The Continuity Agreements generally provide for the continuation of
employment of the individuals in the same positions and with the same
responsibilities and authorities that they possessed immediately prior to the
change of control and with the same benefits and level of compensation,
including average annual increases. If the individual's employment is terminated
by the Company or its successor for reasons other than "cause" or is terminated
voluntarily by the individual for "good reason" (in each case as defined in the
Continuity Agreements), generally the individual would be entitled to receive:
(i) compensation for a period of up to three years, commencing at the
individual's base salary rate in effect at the time of the termination and
including average annual increases thereafter, (ii) the continuation of all
employee benefits and perquisites, and (iii) a lump sum equal to the total of
(A) up to three times the individual's annualized incentive compensation, which
shall be equal to the greater of that paid with respect to the calendar year
prior to such termination or the "target incentive amount" (as defined in the
Continuity Agreements) for the year of the change of control or the year of
termination and (B) up to three times the "calculated market value" of the
"restricted stock" and "performance stock" awarded to the individual in the
Company's most recent "plan cycle" (in each case as defined in the Continuity
Agreements). The Continuity Agreements also provide for a tax gross-up for any
excise tax due under the Code for any payments or distributions made under the
agreements.
20
<PAGE> 23
COMPANY STOCK PERFORMANCE
Following is a graph which compares the cumulative return from investing
$100 at April 29, 1993, the time of the IPO, the S&P 500 index and the S&P
Chemicals index, with dividends assumed to be reinvested when received. The S&P
Chemicals index includes a broad range of chemical manufacturers. Because of the
relationship of the Company's business within the chemical industry, it is felt
that comparison with this broader index is also appropriate.
COMPARISON OF CUMULATIVE TOTAL RETURN
AMONG THE GEON COMPANY, S&P 500
INDEX AND S&P CHEMICALS INDEX
<TABLE>
<CAPTION>
THE GEON COMPANY S&P CHEMICALS S&P 500
---------------- ------------- -------
<S> <C> <C> <C>
12/31/93 100.00 100.00 100.00
12/31/94 118.00 115.80 101.30
12/31/95 107.10 151.20 139.40
12/30/96 88.10 199.70 171.40
12/31/97 107.40 245.50 228.50
12/31/98 108.20 223.60 293.80
</TABLE>
21
<PAGE> 24
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION; CERTAIN OTHER
RELATIONSHIPS
As discussed on page 5, the Compensation Committee is currently comprised
of James K. Baker, Gale Duff-Bloom, D. Larry Moore, John D. Ong, and Farah M.
Walters. J. A. Fred Brothers and Harry A. Hammerly served as members of the
Compensation Committee during 1997 and resigned from the Committee on February
5, 1998. Mr. Brothers is Executive Vice President of Ashland Inc. Ashland
Chemical Co., a wholly-owned subsidiary of Ashland Inc., purchased, directly and
indirectly through affiliates, approximately $49.8 million of product from the
Company in 1998 and expects to continue to purchase product from the Company in
the future. The amount of purchases and prices thereof were, and will continue
to be, determined on an arms-length basis.
INDEPENDENT AUDITORS
Ernst & Young LLP served as the Company's independent auditors for the
fiscal year ended December 31, 1998, and will continue to serve in that role
until the appointment of independent auditors by the Board of Directors in 1999.
The Board of Directors expects to appoint independent auditors for the fiscal
year ending December 31, 1999, upon recommendation by the Audit Committee, at
its May 1999 meeting. A representative of Ernst & Young LLP is expected to be
present at the Annual Meeting of Stockholders. The representative will be given
an opportunity to make a statement if desired and to respond to questions
regarding Ernst & Young LLP's examination of the Company's consolidated
financial statements and records for the year ended December 31, 1998.
GENERAL
VOTING AT THE MEETING
Stockholders of record at the close of business on March 15, 1999, are
entitled to vote at the meeting. On that date, a total of 23,477,835 shares of
Common Stock were outstanding. Each share is entitled to one vote.
Holders of shares of Common Stock have no cumulative voting rights.
Directors are elected by a plurality of the votes of shares present, in person
or by proxy, and entitled to vote on the election of directors at a meeting at
which a quorum is present. The affirmative vote of a majority of the shares of
Common Stock represented and voting, in person or by proxy, at any meeting of
stockholders at which a quorum is present is required for action by stockholders
on any matter, unless the vote of a greater number of shares or voting by
classes or series is required under Delaware law.
Votes may be cast in favor of or withheld from each nominee in the election
of directors. Votes that are withheld will be excluded entirely from the vote
and will have no effect. Brokers holding shares in street name that do not
receive instructions are entitled to vote on the election of directors. Under
Delaware law, a broker nonvote will have no effect on the outcome of the
election of directors.
If any of the nominees listed on pages 3 through 5 becomes unable or
declines to serve as a director, each properly signed proxy card will be voted
for another person recommended by the Board of Directors. However, the Board has
no reason to believe that this will occur.
22
<PAGE> 25
The Board of Directors knows of no other matters that will be presented at
the meeting. However, if other matters do properly come before the meeting, the
persons named in the proxy card will vote on these matters in accordance with
their best judgment.
STOCKHOLDER PROPOSALS
Any stockholder who wishes to submit a proposal to be considered for
inclusion in next year's Proxy Statement should send the proposal to the Company
addressed to the Secretary of the Company so that it is received on or before
November 19, 1999. The Company suggests that all proposals be sent by certified
mail, return receipt requested.
The Company's proxies for the 2000 Annual Meeting of Stockholders will
confer discretionary authority to vote on any matter if the Company does not
receive timely written notice of such matter in accordance with Section 9 of
Article I of the Company's By-Laws. In general, Section 9 provides that, to be
timely, a stockholder's notice must be delivered to the principal executive
offices of the Company not less than 60 nor more than 90 days prior to the first
anniversary of the preceding year's annual meeting.
The Company's 1999 Annual Meeting of Stockholders will be held on May 6,
1999. Sixty days prior to the first anniversary of the 1999 Annual Meeting will
be March 5, 2000, and 90 days prior to the first anniversary of such meeting
will be February 4, 2000. For business to be properly requested by a stockholder
to be brought before the 2000 Annual Meeting of Stockholders, the stockholder
must comply with all of the requirements of Section 9, not just the timeliness
requirements set forth above.
PROXY SOLICITATION
The Company is making this proxy solicitation and will bear the expense of
preparing, printing, and mailing this Notice and Proxy Statement. In addition to
requesting proxies by mail, officers and regular employees of the Company may
request proxies by telephone or in person. The Company has retained Morrow &
Co., Inc., 445 Park Avenue, New York, NY 10022, to assist in the solicitation
for an estimated fee of $5,000 plus reasonable expenses. The Company will ask
custodians, nominees, and fiduciaries to send proxy material to beneficial
owners in order to obtain voting instructions. The Company will, upon request,
reimburse them for their reasonable expenses for mailing the proxy material.
The Company's Annual Report to Stockholders, including consolidated
financial statements for the year ended December 31, 1998, is being mailed to
stockholders of record with this Proxy Statement.
For the Board of Directors
The Geon Company
/s/ Gregory L. Rutman
Gregory L. Rutman, Secretary
April 12, 1999
23
<PAGE> 26
April 12, 1999
To Our Stockholders:
You are cordially invited to attend the Annual Meeting of Stockholders to be
held at The Forum Conference & Education Center, 1375 E. Ninth Street,
Cleveland, Ohio, at 9:00 a.m. on Thursday, May 6, 1999.
The Notice of Annual Meeting of Stockholders and the Proxy Statement describe
the matters to be acted upon at the meeting.
Regardless of the number of shares you own, your vote on these matters is
important. Whether or not you plan to attend the meeting, we urge you to mark
your choices on the attached proxy card and to sign, date, and return it in the
envelope provided. If you later decide to vote in person at the meeting, you
will have an opportunity to revoke your proxy and vote personally by ballot.
IF YOU PLAN TO ATTEND THE MEETING, PLEASE MARK THE BOX PROVIDED ON THE PROXY
CARD.
We look forward to seeing you at the meeting.
/s/ William F. Patient
William F. Patient
Chairman of the Board
and Chief
Executive Officer
Detach Proxy Card Here
- -
- -------------------------------------------------------------------------------
The Board of Directors recommends a vote FOR the Director nominees listed in
Item 1.
1. ELECTION OF DIRECTORS
term to expire at next
Annual Meeting.
FOR all nominees WITHHOLD AUTHORITY to vote *EXCEPTIONS
listed below [X] for all nominees listed below. [X] [X]
Nominees: William F. Patient, James K. Baker, Gale Duff-Bloom, J. Douglas
Campbell, D. Larry Moore, R. Geoffrey P. Styles, Thomas A. Waltermire,
and Farah M. Walters.
[INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, MARK
THE "EXCEPTIONS" BOX AND WRITE THAT NOMINEE'S IN THE SPACE PROVIDED BELOW.]
* Exceptions:_________________________________________________________________
2. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting or any adjournment thereof
and matters incident to the conduct of the meeting.
Change of Address and I Will Attend
or Comments Mark Here [X] the Meeting [X]
Please sign exactly as the name appears hereon.
When shares are held by joint owners, both owners
sign. When signing as attorney, executor,
administrator, trustee or guardian, please give
full title as such. If a corporation, please sign
in full corporate name by President or other
authorized officer and affix corporate seal. If a
partnership, please sign in partnership name by
general partner.
Dated: ,1999
-------------------------------------
(SEAL)
-------------------------------------------
Signature
(SEAL)
-------------------------------------------
Signature if held jointly
VOTES MUST BE INDICATED
(X) IN BLACK OR BLUE INK.
Please mark, sign, date and return this proxy promptly using the enclosed
envelope.
<PAGE> 27
THE GEON COMPANY
PROXY
ANNUAL MEETING OF STOCKHOLDERS, MAY 6, 1999
THIS PROXY IS SOLICITED ON BEHALF OF THE CORPORATION'S BOARD OF DIRECTORS
The undersigned hereby appoints William F. Patient and Gregory L. Rutman,
and each of them jointly and severally, Proxies, with full power of
substitution, to vote, as designated on the reverse side, all shares of Common
Stock of The Geon Company held on May 6, 1999, or any adjournment thereof.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF THE NOMINEES
TO SERVE AS DIRECTORS. The shares represented by this Proxy will be voted as
specified on the reverse side. IF NO DIRECTION IS GIVEN IN THE SPACE PROVIDED ON
THE REVERSE SIDE, THIS PROXY WILL BE VOTED "FOR" THE ELECTION OF NOMINEES
SPECIFIED IN ITEM 1.
(Continued and to be dated and signed on the reverse side.)
THE GEON COMPANY
P.O. BOX 11343
NEW YORK, N.Y. 10203-0343
