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 (Amendment No. )
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Filed by a party other than the registrant [ ]
Check the appropriate box:
[X] Preliminary proxy statement [ ] Confidential, for Use of the
[ ] Definitive proxy Commission Only (as permitted by
[ ] Definitive additional materials Rule 14a-6(e)(2))
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
Sigma-Aldrich Corporation
(Name of Registrant as Specified in Its Charter)
Sigma-Aldrich Corporation
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of filing fee (Check the appropriate box):
[X] $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it is 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:
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(4) Date filed:
SIGMA-ALDRICH CORPORATION
3050 Spruce Street
St. Louis, Missouri 63103
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To be held May 7, 1996
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of Sigma-Aldrich
Corporation will be held at The Boatmen's National Bank of St. Louis, 800
Market Street, St. Louis, Missouri 63101, on Tuesday, May 7, 1996, at 11:00
A.M., Central Daylight Time, for the following purposes:
1. To elect eight directors;
2. To consider and vote upon a proposal to amend the Certificate of
Incorporation of the Company to increase the number of shares of
the Company's authorized common stock from 100,000,000 to
200,000,000 shares;
3. To consider and vote upon approval of the Third Amendment and
Restatement of the Company's Incentive Stock Bonus Plan; and
4. To transact such other business as may properly come before the
meeting and any adjournments thereof.
Only shareholders of record as of the close of business on March 8, 1996, are
entitled to notice of, and to vote at, the meeting.
By Order of the Board of Directors,
Thomas M. Tallarico, Secretary
March 29, 1996
Your vote is important. Even if you expect to attend the meeting in person,
please mark, date and sign the enclosed proxy and return it to the Company's
transfer agent, Boatmen's Trust Company, P.O. Box 14764, St. Louis, Missouri
63178-9926. A return envelope, which does not require postage if mailed in
the United States, is enclosed for your convenience. Shareholders who attend
the meeting may revoke their proxies and vote in person if they desire.
SIGMA-ALDRICH CORPORATION
PROXY STATEMENT
Annual Meeting of Shareholders
May 7, 1996
The enclosed proxy is solicited by the Board of Directors of Sigma-Aldrich
Corporation (the "Company") for use at the Annual Meeting of Shareholders (the
"Meeting") to be held on Tuesday, May 7, 1996, and any adjournments thereof.
Any shareholder giving the proxy has the power to revoke it at any time before
it is voted by written notice mailed to the Company's transfer agent, Boatmen's
Trust Company, P.O. Box 14764, St. Louis, Missouri 63178-9926, or by submitting
a later-dated proxy. If the proxy is not so revoked and it is not revoked in
person at the Meeting, such proxy will be voted as designated and, if no
designation is made, will be voted in favor of the nominees for directors, for
the amendment of the Certificate of Incorporation and for the approval of the
Third Amendment and Restatement of the Incentive Stock Bonus Plan.
Shareholders of record at the close of business on March 8, 1996, are entitled
to notice and will be entitled to vote at the Meeting and at any adjournments
thereof. As of the close of business on March 8, 1996, there was a total of
49,934,910 shares of common stock outstanding. Shareholders will be entitled
to one vote for each share held on all matters, including the election of
directors.
The cost of solicitation of proxies will be borne by the Company. In addition
to the use of the mails, proxies may be solicited personally, or by telephone or
telegraph, by employees of the Company without additional compensation. The
Company also may retain Georgeson & Company, Inc., a professional proxy
solicitor, or another professional solicitor, to assist in soliciting proxies.
The solicitor's fee is estimated at $5,000 to $10,000, plus expenses, depending
upon the extent of the solicitor's activities. Brokers, dealers, banks and
their nominees will be requested to forward proxy material to the beneficial
owners of stock held by them of record and the Company will reimburse them
for their reasonable out-of-pocket and clerical expenses upon their request.
This Proxy Statement and accompanying form of proxy are first being sent to
shareholders on or about March 29, 1996.
The mailing address of the Company's principal executive office is 3050 Spruce
Street, St. Louis, Missouri 63103.<PAGE>
ELECTION OF DIRECTORS
Eight directors of the Company are to be elected to hold office until the next
annual meeting and until their successors are elected and qualified. The
persons named as proxies in the accompanying proxy intend to vote for the
election of the nominees named below. If for any reason any of the nominees
shall be unavailable, the persons named in the proxy may exercise
discretionary authority to vote for substitutes proposed by the Board of
Directors.
Nominees for Board of Directors
Following are the nominees for directors of the Company, their principal
occupation, background, period of service as a director of the Company and age.
All of the nominees are presently directors of the Company and were elected
to their present terms as directors at the 1995 Annual Meeting of
Shareholders. There are no family relationships between any of the directors or
between any of the directors and any executive officer of the Company or its
subsidiaries.
Carl T. Cori Chairman of the Board and Chief Executive Officer of
the Company. Dr. Cori has been Chief Executive
Officer for more than five years. He was elected
Chairman of the Board in May 1991 and has been a
director of the Company since 1977. He served as
President of the Company for more than five years
until March 1995. Age 59.
David R. Harvey President and Chief Operating Officer of the Company.
Dr. Harvey has been Chief Operating Officer of the
Company for more than five years and was elected
President in March 1995, after serving as Executive
Vice President for more than five years. He has been
a director of the Company since 1981. Age 56.
David M. Kipnis Distinguished University Professor of Medicine,
Washington University School of Medicine, St. Louis,
Missouri, since October 1992. Prior to that time, he
was Chairman and Professor, Department of Medicine,
Washington University School of Medicine and
Physician-in-Chief, Barnes Hospital, St. Louis,
Missouri, for more than five years. Dr. Kipnis has been
a director of the Company since 1984. Age 68.
Andrew E. Newman Chairman of the Board and Chief Executive Officer of Race
Rock International, a theme restaurant, since September
1995. From 1987 to April 1995 he was Chairman of
the Board, Edison Brothers Stores, Inc., a specialty
fashion retailer, St. Louis, Missouri, for more than five
years. On November 3, 1995, Edison Brothers Stores,
Inc. filed a petition for reorganization under Chapter 11
of the federal bankruptcy code. Mr. Newman has been
a director of the Company since 1989. He is also a
director of Edison Brothers Stores, Inc., Boatmen's
Bancshares, Inc. and Lee Enterprises, Inc. Age 51.
William C. O'Neil, Jr. Chairman of the Board, President and Chief Executive
Officer, ClinTrials Research, Inc., a clinical research
services company, Nashville, Tennessee, for more
than five years. Mr. O'Neil has been a director of the
Company since 1987. He is also a director of
ClinTrials Research, Inc., American Healthcorp,
Advocat, Inc. and Atrix Laboratories, Inc. Age 61.
Jerome W. Sandweiss Of Counsel, Blumenfeld, Kaplan & Sandweiss, P.C.,
Attorneys at Law, St. Louis, Missouri, for more than
five years. Mr. Sandweiss has been a director of the
Company since 1975. Age 71.
D. Dean Spatz Chairman of the Board, President and Chief Executive
Officer of Osmonics, Inc., a manufacturer of water
purification, fluid separation and fluid handling products
and equipment, Minneapolis, Minnesota, for more than
five years. Mr. Spatz has been a director of the
Company since 1994. He is also a director of
Osmonics, Inc. and Structural Instrumentation, Inc.
Age 52.
Thomas N. Urban Chairman of the Board of Pioneer Hi-Bred
International, Inc., a developer and producer of hybrid
corn and other seeds, Des Moines, Iowa, for more than
five years. Mr. Urban has been a director of the
Company since 1990. He is also a director of Pioneer
Hi-Bred International, Inc. and Equitable of Iowa
Companies. Age 61.
Directors Meetings and Committees
The Board of Directors met four times during 1995. Each director attended at
least 75% of the aggregate of the meetings of the Board and its Committees on
which he served during 1995.
The Board of Directors has three committees which function throughout the year.
The Audit Committee, of which Messrs. Newman, Sandweiss and Spatz (Chairman)
are members, met once in the past year. The function of this Committee is to
recommend a public accounting firm to be retained for the coming year, to
review the scope and results of the annual audit by such firm and to review
the Company's financial statements. The Compensation Committee, consisting
of Messrs. Newman, O'Neil (Chairman) and Urban, reviews all areas of
executive compensation and advancement within the Company. The Committee
held one meeting in the past year. The Nominating Committee, of which
Dr. Kipnis and Messrs. Newman, O'Neil (Chairman) and Urban are members,
recommends nominees to the Board of Directors. It will consider nominees
recommended by shareholders for election to the Board of Directors
provided the names of such nominees, accompanied by relevant biographical
information, are submitted in writing to the Secretary of the Company. In
February of each year, the Nominating Committee generally proposes
to the Board nominees for directors to be elected at the Company's Annual
Meeting of Shareholders. Therefore, in order to be considered by the
Nominating Committee, prospective nominee recommendations should be
received by the Secretary no later than January 15th. The Committee held
one meeting in the past year.
Director Compensation and Transactions
Directors who are not employed or retained as legal counsel by the Company are
compensated by an annual fee of $10,000 and receive $2,500 for each directors
or committee meeting attended plus reimbursement of their travel expenses.
The Company retained Blumenfeld, Kaplan & Sandweiss, P.C., of which Mr.
Sandweiss is Of Counsel, during 1995 and expects to use the firm in 1996. Dr.
Kipnis rendered certain consulting services to the Company during 1995 for which
he received $54,000.
SECURITY OWNERSHIP OF DIRECTORS, EXECUTIVE
OFFICERS AND PRINCIPAL BENEFICIAL OWNERS
Directors and Executive Officers
The following table sets forth the amount of the Company's common stock
beneficially owned by each of the directors and executive officers of the
Company, and by all directors and executive officers of the Company as a
group, all as of March 8, 1996, based upon information obtained from such
persons:
Shares
Beneficially
Name Company Position Owned (1)(2)
- - --------------- ------------------------------- -----------
Carl T. Cori Director, Chairman of the Board 142,535
and Chief Executive Officer
Peter A. Gleich Vice President, Treasurer 78,740 (3)
and Chief Financial Officer
David R. Harvey Director, President and Chief 70,220
Operating Officer
David M. Kipnis Director 4,943
Andrew E. Newman Director 2,000
William C. O'Neil, Jr. Director 2,000
Kirk A. Richter Controller 30,500 (3)
Jerome W. Sandweiss Director 7,000
D. Dean Spatz Director 2,100
Thomas M. Tallarico Vice President and Secretary 19,200 (3)
Thomas N. Urban Director 2,453
Directors and executive 361,691 (3)
officers as a group
(1) Each nominee has both sole voting power and sole investment power with
respect to the shares set forth in the table opposite his name, except as
follows: Messrs. Gleich, Richter and Spatz share voting and investment
power as to 43,200, 19,500 and 2,100 shares, respectively, held in joint
tenancy with their spouses. Shares owned separately by spouses are not
included.
(2) Represents less than one percent (1%) of the Company's common stock
outstanding as of March 8, 1996, for each of the named individuals and the
group.
(3) Includes 19,000, 11,000, 19,000 and 49,000 shares subject to stock options
that are exercisable as of or within sixty days of March 8, 1996, for
Messrs. Gleich, Richter and Tallarico and for the directors and executive
officers as a group, respectively.
Principal Beneficial Owners
The following table sets forth information for each person who, to the knowledge
of the Company, beneficially owned more than five percent (5%) of the Company's
common stock. Each beneficial owner has sole voting power and sole investment
power with respect to the shares set forth opposite their name.
Shares Beneficially Percent of Shares
Name and Address Owned Outstanding
- - ---------------- ------------------- -----------------
Alfred R. Bader 2,881,030 (1) 5.8%
2961 North Shepard Avenue
Milwaukee, WI 53211
State Farm Mutual Automobile
Insurance Co. 4,239,040 (2) 8.5%
and its affiliates
One State Farm Plaza
Bloomington, IL 61710
(1) As set forth in such person's Schedule 13G, dated January 25, 1995, filed
with the Securities and Exchange Commission.
(2) As set forth in such company's Schedule 13G, dated January 23, 1996, filed
with the Securities and Exchange Commission.
Reporting Requirements
Section 16(a) of the Securities and Exchange Act of 1934 requires that the
Company's executive officers, directors and persons who own beneficially more
than ten percent of the Company's outstanding stock, file reports of ownership
and changes in ownership with the Securities and Exchange Commission and any
national securities exchange on which the Company's securities are listed and
furnish the Company with copies of all Section 16(a) reports so filed. Based
solely on a review of forms and certain written representations furnished to
the Company, the Company believes that its executive officers and directors
complied with all applicable Section 16(a) filing requirements during 1995.
INFORMATION CONCERNING EXECUTIVE COMPENSATION
The following table presents compensation information for each of the five
executive officers for the years ended December 31, 1995, 1994 and 1993:
<TABLE>
<CAPTION>
Summary Compensation Table
Long-term Compensation
-------------------------
Number of
Annual Compensation Shares
-------------------------- Underlying
Other Annual Options LTIP All Other
Name/Position Year Salary Comp. (1)(2) Granted Payouts (1) Comp. (3)
- - ------------- ---- -------- ------------ ------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
Carl T. Cori 1995 $660,000 $196,033 --- $299,000 $2,000
Chairman & CEO 1994 600,000 285,002 --- 434,700 2,000
1993 600,000 299,721 --- 457,150 2,858
Peter A. Gleich 1995 285,000 46,877 --- 71,500 2,000
Vice President, 1994 285,000 68,153 20,000 103,950 2,000
Treasurer and 1993 285,000 109,654 20,000 167,250 2,858
Chief Financial
Officer
David R. Harvey 1995 450,000 85,231 --- 130,000 2,000
President & COO 1994 400,000 123,914 --- 189,000 2,000
1993 400,000 175,446 --- 267,600 2,858
Kirk A. Richter 1995 185,000 23,439 --- 35,750 2,000
Controller 1994 172,000 34,076 10,000 51,975 2,000
1993 172,000 51,172 10,000 78,050 2,220
Thomas A. Tallarico 1995 250,000 --- --- --- 2,000
Vice President 1994 244,000 --- 10,000 --- 2,000
and Secretary 1993 244,000 --- 10,000 --- 2,858
<FN>
(1) The value of shares issued under the Incentive Stock Bonus
Plan in 1995, 1994 and 1993 relates to performance in 1989,
1988 and 1987, respectively, and is presented as long-term
incentive plan ("LTIP") payouts. Such values represent the
aggregate market value of shares of common stock issued on the
payout date. Cash payouts to cover Federal income taxes related
to the issuance of such shares are presented as other
annual compensation. Drs. Cori and Harvey and Messrs. Gleich,
Richter and Tallarico hold 24,567, 13,000, 3,750, 1,700 and 1,600
Bonus Units, respectively, as of December 31, 1995. Shares of
common stock issuable upon vesting of such Bonus Units have a value
of $1,216,067, $643,500, $185,625, $84,150 and $79,200, respectively,
based upon the closing price of the Company's common stock as of such
date. See "Incentive Stock Bonus Plan" for further information.
(2) Excludes the value of personal use of automobiles and club
memberships provided by the Company, the amounts of which are
immaterial for each executive officer.
(3) Represents amounts contributed for each executive officer under
the Company's 401(k) Retirement Savings Plan in 1995, 1994 and 1993.
</TABLE>
Incentive Stock Bonus Plan
The Company's Incentive Stock Bonus Plan is administered by the Compensation
Committee of the Board. See "Compensation Committee Report on Executive
Compensation - Incentive Compensation" on page 14 of this Proxy Statement for
information concerning the plan.
The LTIP payouts to each of the executive officers as presented in the Summary
Compensation Table for the years ended December 31, 1995, 1994 and 1993, relate
to performance in the years ended December 31, 1989, 1988 and 1987,
respectively. Additionally, LTIP payouts to the Company's senior management
group were $45,500, $138,175 and $189,550 for shares and $29,831, $72,330 and
$124,275 in cash for 1995, 1994 and 1993, respectively.
No Bonus Units were awarded to the executive officers or the Company's senior
management group in 1995. Bonus Units to be awarded under the Incentive Stock
Bonus Plan for the year ended December 31, 1995 have yet to be determined.
Stock Options
The Company's Share Option Plan of 1995 is administered by the Compensation
Committee, which grants options to employees as the Committee determines,
taking into account the employees' duties, their present and potential
contributions to the success of the Company and such other factors as the
Committee deems relevant. The exercise price of the options is determined by
the Committee, however, no incentive stock option may have an exercise price
less than the fair market value of the shares at the date of the grant.
Full payment for stock being purchased must be made in cash or Company common
stock at the time an option is exercised. Options are not transferable other
than by will or by the laws of descent and distribution. Options expire ten
years from the date of grant or no later than three months after
an optionee's termination or retirement or twelve months after an optionee's
death or disability, if earlier. No options may be granted after February 21,
2005.
In May 1995 the Company terminated the operation and administration of its
Share Option Plan of 1987 (which contained terms and provisions substantially
similar to the Share Option Plan of 1995). No stock options under either plan
were granted to the named executive officers during the year ended December 31,
1995. Options to acquire 21,000 shares were granted to eight members of the
Company's management group at exercise prices ranging from $36.25 to $49.75
per share.
The following table presents (i) the unexercised options held by each executive
officer and (ii) the value of all in-the-money options as of December 31, 1995,
as if all such in-the-money options were vested and exercisable as of December
31, 1995:
<TABLE>
<CAPTION>
Option Values at December 31, 1995
Number of Shares
Underlying Unexercised Value of Unexercised
Options Held (1) In-the-Money Options (2)
---------------------------- -------------------------
Name Exercisable Unexercisable Exercisable Unexercisable
- - ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Carl T. Cori --- --- $ --- $ ---
Peter A. Gleich 15,000 28,000 61,250 212,000
David R. Harvey --- --- --- ---
Kirk A. Richter 9,000 14,000 34,750 106,000
Thomas M. Tallarico 16,250 14,750 142,688 108,063
<FN>
(1) No options were exercised by any of the executive officers during the year
ended December 31, 1995.
(2) Calculated as the aggregate closing market price per share of the Company's
common stock on December 31, 1995, for the total number of in-the-money
shares under option, net of the aggregate value of all option exercise
proceeds.
</TABLE>
Pension Plan
The Sigma-Aldrich Corporation Pension Plan provides all eligible employees,
including the executive officers, with a retirement benefit based upon a
formula. The current benefit formula provides an annual benefit equal to
1.5% of each year's actual compensation, as limited by the Internal Revenue
Code, in excess of "covered compensation" (compensation upon which social
security benefits are earned), plus 0.9% of "covered compensation" for each
year of service. The Company does not have a supplemental pension plan to
provide pension benefits based upon actual earnings, thus certain pension
credits have been and will continue to be restricted by the Internal Revenue
Code limitations. Based upon these limitations and assuming that each executive
officer continues employment until the normal retirement age of 65 at his
current cash compensation level, Drs. Cori and Harvey and Messrs. Gleich,
Richter and Tallarico would receive upon retirement an annual pension benefit
in the form of a single life annuity of $98,140, $88,058, $109,116, $71,064
and $40,464, respectively.
Employment and Change in Control Agreements
The Company has Employment Agreements ("Agreements") with Drs. Cori and Harvey
and Messrs. Gleich, Richter and Tallarico which provide severance compensation
(with an offset for monies earned elsewhere under certain defined situations)
to each of these executives in the event of his cessation of employment with
the Company or any of its subsidiaries after the occurrence of a change in
control of the Company. "Change in control" is defined in the Agreements to
have occurred when an individual, partnership, corporation or other entity
acquires more than thirty-five percent of the outstanding shares of the
Company's common stock and there is a change in the majority of the Directors
of the Board (or other body supervising the employment of officers) within
any four hundred day period. Prior to a change in control, the Agreement
may be terminated upon sixty-days notice given by either the executive or the
Company. Unless notice is given to the contrary, the three-year term of the
Agreements is automatically extended for an additional year at the end of each
agreement year. Compensation covered by the Agreements is set annually by
the Compensation Committee, except that after a change in control, if the
executive leaves, the level of severance pay is the amount last set by the
Compensation Committee immediately prior to the change in control. No payments
are made under the Agreements if the cessation of employment is due to death.
If a change in control of the Company had occurred as of March 8, 1996, and
the employment of the executive officers of the Company had been terminated,
Drs. Cori and Harvey and Messrs. Gleich, Richter and Tallarico would have
collectively received $3,812,000.
The Incentive Stock Bonus Plan also contains provisions that protect the
participants against the loss of Bonus Units earned if there shall have been
a change in control of the Company prior to the scheduled payout of stock and
cash for such earned Bonus Units. "Change in control" is defined in the
Incentive Stock Bonus Plan in the same manner as it is in the Agreements
above. If a change in control of the Company had occurred as of March 8,
1996, and the employment of the executive officers of the Company had been
terminated, Drs. Cori and Harvey and Messrs. Gleich, Richter and Tallarico
would have collectively received 37,250 shares of the Company's common stock
and $1,350,000.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Committee
The Committee is composed of the three members named below, none of whom is
an employee of or is involved in any interlocking relationship with the
Company.
Compensation Policy
The Committee believes that increasing share value on a long-term basis is
the goal of shareholders. The Company's compensation policy is designed to
motivate employees to improve productivity and performance, resulting in
increased profitability and, thus, improvement in shareholder value. To
align the financial interests of senior executives and managers with those of
shareholders, the Company uses incentive compensation that is tied directly
to the Company's operating results and is highly sensitive to the market
price of the Company's common stock. Accordingly, the Committee believes
that increasing profits and long-term growth in share value will be the goals
of both management and shareholders. The Company's policy is to structure
compensation such that any executive compensation in excess of $1 million is
tax deductible for the Company.
Compensation for the Company's executive officers includes two elements:
(1) salary and (2) longer term incentive compensation. The Company has no
long-term employment contracts with any of its executive officers other than
the Employment Agreements previously described in this Proxy Statement which
become applicable only if there should be a change in control of the Company.
Salary
At the end of each fiscal year, the Committee reviews with Dr. Cori an annual
salary plan for the Company's executive officers and then approves such plan
with any modifications it deems appropriate. The Committee approves the salary
plan after assessing the Company's overall performance, including a review of
the operating results of the Company and the executive officers'
responsibilities and after making judgments about past and expected future
contributions of the individual executive officers. The review of operating
results is general in nature, rather than being based upon any specific
weighting formula for measures which include the Company's sales, earnings
and earnings per share growth, profit margins, acquisition activities and
general financial condition. The Committee's assessment also considers the
difficulty of achieving performance levels based on its understanding of the
Company's business and market conditions as well as competitive pressures.
In reviewing the individual executive officers' responsibilities and
performance, the Committee also considers their non-financial contributions
to the Company, such as the quality and progress of research, marketing and
production activities. The Committee performs its review in a general,
subjective manner with consideration given to all factors, including general
knowledge of other executive officers' salaries and taking particular note of
the continued growth in sales and earnings per share, as illustrated by the
following graphs:
(Following are two bar-graphs depicting the following data):
Net Sales Earnings per Share
(In millions of dollars) (dollars)
------------------------- -----------------
1991 $589.4 $1.60
1992 654.4 1.92
1993 739.4 2.15*
1994 851.2 2.21
1995 959.8 2.64
Average Compounded Growth Rate:
Net Sales 14.1%
Earnings per Share 11.4%
*Before cumulative effect of accounting changes
Based upon the business knowledge and experience of the Committee members,
they believe that the executive officers' salaries are appropriate in view of
the level of responsibilities and contributions by each executive officer.
Incentive Compensation
Incentive Stock Bonus Plan. Awards from the Company's Incentive Stock Bonus
Plan (the "Plan"), a shareholder-approved plan implemented in 1978, are tied
directly to the Company's annual operating results. The Plan provides
generally that, if the Company's pre-tax operating income has increased by at
least 10% over the prior year, the Committee establishes a Bonus Pool, with
the maximum amount determined by the following formula:
Maximum Bonus Pool
Percentage as a percentage of the
increase in pre-tax increase in pre-tax
operating income operating income
----------------------- -----------------------
Less than 10% ---
10.0-12.5% 3.0%
12.5-15.0% 4.0%
Greater than 15% 5.0%
The Committee then divides the Bonus Pool into Bonus Units, with each Bonus
Unit being valued at the closing market price per share of the Company's
common stock on the day prior to the award date. The Committee reviews with
Dr. Cori its recommendation for awards of Bonus Units to the executive
officers (other than Dr. Cori) and other senior managers. In the course of
this review, the Committee considers performance evaluations of each of the
executives and senior managers and separately considers and sets the award to
Dr. Cori. In establishing the amount of the Bonus Pool and the specific
awards to the executive officers, including Dr. Cori, the Committee takes
into account operating results and other criteria in a review similar to that
described under Salary above. Because their responsibilities have more
impact on the Company's current and future operating results, the Committee
feels that Drs. Cori and Harvey should have a greater proportion of their
annual compensation tied directly to the Company's performance. Accordingly,
Drs. Cori and Harvey have a greater participation in the Incentive Stock
Bonus Plan than do the other executive officers and do not participate in the
Share Option Plan.
The Plan provides for issuance of one share of the Company's common stock for
each Bonus Unit awarded. Shares are issued only after the participant has
been employed for five years following the year for which an award has been
made (or earlier in certain limited circumstances). As a result, the value
of Bonus Units awarded for any year under the Plan is sensitive to the market
price of the Company's common stock over a five-year period, thus providing
the participant with a longer-term perspective. The Plan also provides for
payment of cash when the shares are issued so that the participant is not
compelled to sell any of the shares in order to pay U.S. Federal income
taxes. The cost of the Plan since its inception has ranged between 1.0% and
1.4% of cumulative pre-tax income, except for 1994 where no bonus units were
awarded. The Committee expects that the future cost will continue to
constitute about 1% of the Company's cumulative pre-tax income. The Committee
has approved certain amendments to the Plan in order to ensure the tax
deductibility of compensation under the Plan as described in "Proposal to
Approve the Incentive Stock Bonus Plan" on page 18 of this Proxy Statement.
Share Option Plan of 1995. Each year, the Committee considers the
desirability of granting options under the Company's Share Option Plan of
1995 to key employees. The Committee believes that granting stock options
is desirable because it directly correlates long-term compensation of key
employees with share price appreciation. In determining grants, the
Committee generally considers the same factors as those discussed under
Salary above. The Committee does not consider the amount or terms of prior
stock option grants in determining current grants. Drs. Cori and Harvey do
not currently participate in this plan for the reasons described under
Incentive Stock Bonus Plan above. No options were granted to the other
executive officers in 1995. See Stock Options on page 11 of this Proxy
Statement for additional information concerning this plan.
1995 CEO and Executive Officer Compensation
The Committee's approach is to have a large amount of Dr. Cori's compensation
dependent on Company performance. In measuring performance, emphasis is
placed on the year-to-year increases in earnings, which is the criteria used
to establish the maximum Bonus Pool under the Company's Incentive Stock Bonus
Plan.
In 1995, sales for the Company increased 12.8% to $959.8 million, net income
grew by 19.3% to $131.7 million and net income per share increased 19.5% to
$2.64. In setting Dr. Cori's salary for 1995, the Committee recognized Dr.
Cori's leadership in the growth of sales and earnings by increasing his 1995
salary 10.0%. No Incentive Stock Bonus Units were awarded to Dr. Cori or
other executive officers in 1995 since the increase in earnings for 1994 did
not meet plan minimums. For 1994, Dr. Cori's salary was equal to his 1993
salary. Dr. Cori's Incentive Stock Bonus Plan award in 1994, for the
Company's performance in 1993, was 6,500 Bonus Units. Historically, Dr. Cori
has been awarded approximately 40% of the total Bonus Units awarded each
year. This allocation reflects the Committee's judgment of the appropriate
amount to recognize Dr. Cori's responsibilities and his contribution to the
growth of the Company.
For the other executive officers, the Committee determined that 1995
compensation should reflect the Company's performance and level of the
officers' responsibilities. The Committee believes that the compensation
policies and programs it has implemented have committed the executive
officers of the Company to achieving continuous long-term improvement in
operating results.
COMPENSATION COMMITTEE
Andrew E. Newman
William C. O'Neil, Jr., Chairman
Thomas N. Urban
PERFORMANCE GRAPH
The following performance graph compares the Company's cumulative shareholder
return (stock price appreciation plus reinvestment of dividends) for a five
year period ended December 31, 1995, with that of the Standard and Poor's 500
Composite Stock Price Index and an index of the companies included in the
Value Line Chemical Specialty Industry Group, assuming that $100 was invested
in each on December 31, 1990, and that all dividends were reinvested. These
indices are only included for comparative purposes as required by Securities
and Exchange Commission rules and do not necessarily reflect management's
opinion that such indices are an appropriate measure of the relative
performance of the Company's common stock, and are not intended to forecast or
be indicative of possible future performance of the common stock.
<TABLE>
<CAPTION>
COMPARATIVE FIVE-YEAR RETURNS
(Following is a line graph depicting the following data)
1990 1991 1992 1993 1994 1995
------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
Sigma-Aldrich $100.00 $181.40 $197.83 $166.15 $115.23 $174.34
S&P 500 100.00 130.55 140.72 154.91 157.39 216.42
Value Line
Chemical Specialty 100.00 143.04 164.80 188.48 186.85 230.46
</TABLE>
In the Proxy Statement for its 1996 Annual Meeting of Shareholders, the
Company used as a performance graph comparison index those companies comprising
the Value Line Chemical Specialty Industry Group (the "Group"). The 1995
Group includes the following companies: Airgas Inc., Avery Dennison Corp.,
Betz Labs Inc., Calgon Carbon Corp., Chemed Corp., Crompton & Knowles Corp.,
Ecolab Inc., Engelhard Corp., Ferro Corp., H.B. Fuller Co., Furon Co., Great
Lakes Chem. Corp., Guardsman Prods. Inc., M.A. Hanna Co., Hercules Inc.,
Int'l. Flavors & Fragrances, Lawter Int'l. Inc., Learonal Inc., Lilly
Industries Inc., Loctite Corp., Lubrizol Corp., Material Sciences Corp.,
Morton Int'l. Inc. Industries, Nalco Chem. Co., NCH Corp., Petrolite Corp.,
PPG Inds. Inc., Praxair Inc., Quaker Chem. Corp., Raychem Corp., Rohm & Haas
Co., RPM Inc. Ohio, A. Schulman Inc., Sherwin Williams Co., Valspar Corp.,
WD-40 Co., Wellman Inc., and Witco Corp. The 1995 Group added Material
Sciences Corp., PPG Inds. Inc., Praxair, Inc. and deleted Grow Group Inc.
from the 1994 Group. With these exceptions, which resulted solely from the
independent action of Value Line, the 1995 and 1994 Groups are identical.
PROPOSAL TO AMEND CERTIFICATE OF INCORPORATION
TO INCREASE NUMBER OF SHARES OF AUTHORIZED COMMON STOCK
The Company is authorized by its Certificate of Incorporation, as amended, to
issue 100,000,000 shares of $1.00 par value common stock. The Board of
Directors proposes to increase the authorized common stock to 200,000,000
shares.
As of March 8, 1996, the Company had 49,934,910 shares of common stock
outstanding. The Incentive Stock Bonus Plan permits the issuance of a maximum
of 1,200,000 shares of common stock. As of March 8, 1996, 825,855 shares
remain to be awarded. The Share Option Plan of 1995 permits the granting of
stock options to purchase up to 2,000,000 shares of common stock through 2005.
As of March 8, 1996, options to purchase 16,000 shares of common stock had
been granted with no options having been exercised. As of March 8, 1996 the
Share Option Plan of 1987 had 852,188 shares of common stock subject to
options. No further options will be issued under the Share Option Plan of
1987.
The purposes for which the additional 100,000,000 shares of common stock might
be used from time to time may include stock dividends, stock splits, mergers,
acquisitions, public offerings, employee benefit plans and other corporate
purposes. Although there is no present intent to so issue any of the
additional common stock, if authorized, nevertheless the Board deems it
advisable and recommends that the Company have the stock available for
issuance, if, when and as future facts and circumstances dictate. These
shares will be available for issuance at such times and for such purposes as
the Board of Directors deems advisable without further action of the Company's
shareholders, except as may be limited by applicable laws and regulations.
The Board does not intend to issue any stock except on terms or for reasons
which it deems to be in the best interest of the Company. In the Board's
judgment the additional 100,000,000 authorized shares, together with the
existing authorized but unissued shares, should provide adequate common stock
for the purposes recited above for the next few years, and thus, eliminate the
time and expense involved in any similar future shareholder votes on such
proposal.
Because shareholders will have no preemptive rights to acquire any of the
proposed authorized shares of common stock, the issuance of common stock,
other than on a pro-rata basis to all current shareholders, would reduce the
current shareholders proportionate interests. However, in any such event,
shareholders wishing to maintain their interests may be able to do so through
normal market purchases. Authorizations to increase the common stock will not
affect the rights of existing shareholders to receive cash dividends from
funds legally available for dividend payments.
Further, although the proposal to increase the Company's authorized common
stock is not intended to encourage or discourage any attempts by third parties
to gain control of the Company, it is possible that the proposal, if approved
by the shareholders, could theoretically have such an effect. For example,
such additional authorized shares, upon issuance by the Company, could have
the effect of diluting the voting power of the present outstanding shares of
the Company which would, in turn, have the practical effect of frustrating the
efforts of third parties attempting a merger or otherwise trying to gain
control of the Company. Therefore, the proposal could be deemed to be
disadvantageous by preventing the shareholders from participating in an offer
from a third party whereby the shareholders could receive for all or some of
their shares a premium above market value at the time of the attempt to gain
control.
An affirmative vote by the holders of a majority of the outstanding stock as
of March 8, 1996 entitled to vote is required to authorize the proposed
increase in the authorized shares.
The Board of Directors recommends a vote FOR the approval of the amendment
to the Company's Certificate of Incorporation.
PROPOSAL TO APPROVE THE INCENTIVE STOCK BONUS PLAN
The purpose of this proposal is to seek approval of the Third Amendment and
Restatement of the Company's long-standing Incentive Stock Bonus Plan (the
"Plan"), a shareholder-approved plan implemented in 1978. The Plan is being
submitted to shareholders for approval in response to Federal income tax
legislation which imposes limits on the Company's ability to deduct the full
amount of compensation paid to certain executive officers, unless certain
requirements are met. The Plan is being amended so that the compensation paid
pursuant to the Plan to the Chief Executive Officer (the "CEO") and the Chief
Operating Officer (the "COO") will be fully tax deductible by the Company.
The following discussion sets forth the material terms of the Plan under which
the Company intends to pay performance-based incentive awards to certain key
executive employees. The discussion is qualified in its entirety by reference
to the complete text of the Plan as set forth in Appendix A.
Principal Features of the Plan
The purpose of the Plan is to provide a means by which the Company and/or its
subsidiary corporations will be able to attract and retain competent employees
(including officers and directors who are employees) and provide those
employees with incentives in addition to current compensation reflecting
their efforts, initiative and skill.
Participation in the Plan is limited to key executive employees of the Company
or any subsidiary of the Company who hold less than 2% of the outstanding
stock of the Company. It is intended that only those top executives whose
responsibilities and activities have a substantial and direct impact on total
corporate performance will participate. It is currently estimated that
approximately 15 persons would be eligible to participate in the Plan.
The initial number of shares authorized under the Plan in 1978 was 100,000.
Giving effect to stock splits since the Plan's implementation, the Plan now
permits the issuance of a maximum of 1,200,000 shares of the Company's common
stock. The number of shares reserved for issuance will be adjusted during the
continuance of the Plan to reflect any stock split, stock dividend,
reclassification, reorganization or other capital adjustment of the Company's
shares of common stock. The shares to be issued are expected to be treasury
shares purchased on the open market, but with the approval of two-thirds of
the Board of Directors, they may be newly issued shares. A total of 374,145
units have been issued under the Plan to date, leaving 825,855 units eligible
for future issuance. Subsequent to the effective date of the amendment, an
individual employee may be awarded a maximum of 400,000 Incentive Stock Bonus
Units ("Incentive Units") and an equal number of Tax Offset Bonus Units ("Tax
Units") (together, the "Units"). The Tax Units, however, will not be counted
against the maximum number of shares eligible for issuance under the Plan.
The Plan is administered by the Compensation Committee of the Board of
Directors (the "Committee"), which must consist of at least three members of
the Board of Directors each of whom must be both (i) an "Outside Director" as
defined under Section 162(m) of the Internal Revenue Code of 1986, as amended,
i.e., a director who is not a current employee of the Company, is not a former
employee of the Company who receives compensation for prior services (other
than benefits under a tax-qualified retirement plan) during that year, has
never been an officer of the Company, and who receives no remuneration from
the Company in any capacity other than as a director and (ii) a "Disinterested
Person" as defined in Rule 16b-3 under The Securities Exchange Act of 1934,
i.e., a director who is not at the time he or she exercises discretion in
administering the Plan, or at any time within one year prior thereto, eligible
for participation in the Plan or any other plan of the Company which would
entitle him to acquire stock, stock options or stock appreciation rights of
the Company. The Committee has broad authority to administer and interpret
the Plan and its provisions as it deems appropriate. The Committee's powers
include authority, within the limitations set forth in the Plan, to select the
persons to be granted awards, to prescribe, amend and rescind rules and
regulations relating to the Plan, and to make all other determinations
necessary or advisable for the administration of the Plan.
Awards from the Plan are dependent upon increases in the Company's annual
operating results. If the increase in the Company's pre-tax operating income
for the year has exceeded by at least a specified percentage (10%, 12.5% or
15%, as indicated below in the table) the greater of (i) the prior year's
pre-tax operating income, or (ii) an amount of pre-tax operating income which
would represent a cumulative increase equal to such specified percentage per
year through the prior year over fiscal 1977, the Committee establishes a
Bonus Pool, with the maximum amount determined by the following formula:
Maximum Bonus Pool
Percentage as a percentage of the
increase in pre-tax increase in pre-tax
operating income operating income
---------------------- ----------------------
Less than 10% ----
10.0-12.5% 3.0%
12.5-15.0% 4.0%
Greater than 15% 5.0%
If the Company acquires any additional business through any merger or
acquisition, the percentage increase will be determined by including the pre-tax
operating income of the merged or acquired business for all of the years
involved in determining the maximum Bonus Pool. If a portion of the Company's
business is discontinued, sold or transferred, then the percentage increase
will be determined by excluding the pre-tax operating income of the
discontinued, sold or transferred business for all of the years involved in
determining the maximum Bonus Pool.
Within the first 90 days of each calendar year, the Committee sets the maximum
dollar amount of Incentive Units and Tax Units which may be awarded to the CEO
and COO, respectively. After the end of each calendar year, but prior to the
award of Units, the Committee will certify in writing whether the performance
goals under the Plan have been met. If pre-tax operating income for the year
has reached a level sufficient to generate a Bonus Pool, the Committee will
allocate Incentive Units and Tax Units to the CEO and COO in an amount not to
exceed the maximum set by the Committee during the first 90 days of the
calendar year. If a positive value remains in the Bonus Pool after
subtracting the value of the Incentive Units awarded to the CEO and COO, the
remaining Incentive Units may be awarded by the Committee to participants
designated by the Committee. The Units will initially be valued at the
closing price of the Company's common stock on the day before the date of the
awards. All awards will be made within 30 days after the end of the first
quarter of the year following the year for which the awards are earned.
When a participant has been employed by the Company or any subsidiary for five
full years after the year for which the award is made, or upon the
participant's earlier death, permanent and total disability or retirement
after the age of 65 (or prior thereto with the consent of the Board of
Directors), or after the occurrence of a change in control (as defined in
Section 6(c) of the Plan attached hereto in Appendix A) of the Company, the
Company within 90 days after the occurrence of any of such events, will issue
to the participant (or the personal representative or heirs of a deceased
participant): (i) that number of shares of the Company's common stock which
equals the number of Incentive Units previously awarded the participant which
have vested as a result of such event; and (ii) that amount of cash equal to
the market value of that number of shares of common stock equal to the number
of Tax Units awarded the CEO and COO which have vested as a result of such
event. At that time, it will also pay to any participant receiving shares
(other than the CEO and COO) that amount of cash which is equal to the amount
of Federal taxes which such participant will be required to pay, during such
year of payment, by reason of his or her receipt of such stock and cash if he
or she were subject to the highest marginal Federal income tax rate; provided,
however, that the Committee may reduce the amount of cash payable to the CEO
and/or COO under a Tax Unit if the Committee determines that such reduction is
appropriate in light of the marginal Federal income tax rate in effect at the
time such cash is to be paid. The market value of the shares to be used to
determine cash payments for Tax Units will be based on the closing price of
the common stock on the day before issuance or payment.
If shareholders receive stock pursuant to a transaction resulting in a change
of control, the new stock shall be issued to participants in lieu of the
Company's common stock in the same ratio as received by the Company's other
shareholders.
If a participant's employment is terminated for any reason other than death,
permanent and total disability or retirement after age 65, any rights under
the Plan, except shares and cash previously issued and paid or required to
have been issued and paid, will be forfeited unless the Board of Directors
determines otherwise.
The Company will deduct from any compensation due to any participant under the
Plan that amount of cash necessary to pay any withholding taxes for the
account of such participant. The rights arising under the Plan are non-
transferable, except by will or the laws of descent and distribution.
If approved, the Plan, as amended will become effective for 1996. The
Committee may modify the Plan at any time; provided, however, that (i) such
modification may not materially change the Company's obligations under the
Plan unless approved by the Board; (ii) such modification may not reduce the
benefits to which any participant would be entitled under awards previously
made without his or her consent in writing; and (iii) in the event any
modification increases the aggregate maximum number of shares to be issued
under the Plan beyond 1,200,000 or changes the manner in which the maximum
amount of the Bonus Pool for any given year is determined or the class of
employees eligible to participate in the Plan, such amendment will be subject
to ratification by the affirmative vote of the shareholders.
Proposed Amendments to the Incentive Stock Bonus Plan
The principal changes to the Plan proposed to be effected by the Third
Amendment are as follows:
(1) In order for a director to be a member of the Committee, such
director must now meet the definition of "Outside Director" (as defined
above), in addition to the definition of "Disinterested Person" (as defined
above).
(2) The manner in which the Committee determines the amount and
allocation of the awards has been amended to reflect the new requirement that
the Committee fix the maximum dollar amount of the Units which may be awarded
to the CEO and COO for a given year during the first 90 days of such year.
(3) After the end of each year, but prior to awarding the Units, the
Committee is now required to certify in writing whether the Company's pre-tax
operating income for the year has exceeded one or more of the levels set forth
in the formula for determining the amount of the Bonus Pool (see table above
for the respective levels).
(4) The Plan has been amended to reflect the fact that the Committee may,
subsequent to the effective date of the amendment, award no more than 400,000
Incentive Units to any individual employee and may now award Tax Units to the
CEO and COO in addition to the Incentive Units, in lieu of the entitlement to
receive a payment of cash to pay Federal income taxes, subject to the
Committee's discretion to reduce the amount of cash payable to an amount equal
to the taxes due at the highest marginal Federal tax rate in effect at the
time of such payment.
* * * * *
The Company is not able to determine the Incentive Units to be awarded in 1996
for 1995 performance. No Incentive Units were awarded in 1995 for performance
in 1994.
A favorable vote of the majority of the outstanding shares represented in
person or by proxy and entitled to vote will be required for approval of the
adoption of the Plan.
The Board of Directors recommends a vote FOR approval of the plan.
RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS
The principal accountant selected by the directors for the current year is
Arthur Andersen LLP, independent accountants. Representatives of Arthur
Andersen LLP are expected to be present at the Meeting and will have the
opportunity to make a statement if they wish to do so, and are expected to be
available to respond to appropriate questions.
OTHER MATTERS
The affirmative vote of the holders of a majority of the shares outstanding
entitled to vote thereon is required to approve the amendment to the
Certificate of Incorporation. The affirmative vote of the holders of a
majority of the shares which are present in person or represented by proxy at
the Meeting is required to elect directors, approve the Third Amendment and
Restatement of the Company's Incentive Stock Bonus Plan and any other matters
properly brought before the Meeting. Shares represented by proxies which are
marked "withhold authority" with respect to the election of any one or more
nominees as directors and proxies which are marked abstain or to deny
discretionary authority on other matters will be counted for the purpose of
determining the number of shares represented by proxy at the Meeting. Such
proxies will thus have the same effect as if the shares represented thereby
were voted against such nominee or nominees and against such other matters,
respectively. Shares not voted on one or more but less than all such matters
on proxies returned by brokers will be treated as not represented at the
Meeting as to such matter or matters.
The Company knows of no other matters to be presented for consideration at the
Meeting. If any other matters are properly brought before the Meeting, the
persons named in the accompanying proxy intend to vote or act with respect to
them in accordance with their best judgment.
SHAREHOLDER PROPOSALS
Written proposals of shareholders to be included in the Proxy Statement and
Proxy for the next Annual Meeting of Shareholders must be received at the
Company's principal executive office, 3050 Spruce Street, St. Louis, Missouri
63103, no later than November 29, 1996. Upon receipt of any such proposal,
the Company will determine whether or not to include such proposal in the
Proxy Statement and Proxy in accordance with regulations governing the
solicitation of proxies.
Under the Company's by-laws, timely notice must be received by the Company in
advance of a shareholders' meeting to nominate a candidate for director or to
bring other business before the meeting. Such notice must be received not less
than ten days before the first anniversary of the preceding year's annual
meeting. If the date of the annual meeting is changed by more than thirty days
from such anniversary date, notice must be received not later than the tenth day
preceding the date of the meeting as announced in the notice of the meeting or
as otherwise publicly disclosed. Any shareholder filing a notice of nomination
must include certain information, including certain information about the
nominee; and any notice regarding a proposal of other business must include
certain information, including a description of the proposed business, the
reasons therefor, and any interest the shareholder has in such business, as well
as for either notice, the name and address of the shareholder and the number of
shares of common stock held by the shareholder. These requirements are separate
from, and in addition to, the Securities and Exchange Commission's requirements
that a shareholder must meet to have a proposal included in the Company's Proxy
Statement.
In each case, the proposals or notices described above must be submitted in
writing to Thomas M. Tallarico, Secretary, Sigma-Aldrich Corporation, 3050
Spruce Street, St. Louis, Missouri 63103.
By Order of the Board of Directors,
Thomas M. Tallarico, Secretary
March 29, 1996
APPENDIX A
THIRD AMENDMENT AND RESTATEMENT OF THE SIGMA-ALDRICH CORPORATION
INCENTIVE STOCK BONUS PLAN
WHEREAS, Sigma-Aldrich Corporation (the "Corporation") previously
established the Sigma-Aldrich Corporation Incentive Stock Bonus Plan ("Plan");
and
WHEREAS, the Corporation reserved the right to amend the Plan pursuant to
Paragraph 15 thereof; and
WHEREAS, the Corporation desires to amend and restate the Plan effective
January 1, 1996;
NOW, THEREFORE, effective January 1, 1996, the Plan is amended and restated
as follows:
1. Purpose
The purpose of the Incentive Stock Bonus Plan (the "Plan") is to provide a means
by which Sigma-Aldrich Corporation (the "Corporation") and/or its subsidiary
corporations shall be able to attract and retain competent key employees
(including officers and directors who are employees) and provide such personnel
with incentives in addition to current compensation reflecting their efforts,
initiative and skill.
2. Administration
(a) The Plan shall be administered by the Compensation Committee (the
"Committee") of the Board of Directors of the Corporation (the "Board") as such
Committee may be constituted from time to time. The Committee shall consist of
at least three members of the Board selected by the Board all of whom shall be
both "Disinterested Persons" as defined in Rule 16b-3 under the Securities
Exchange Act of 1934, and "Outside Directors" as defined in Regulations
promulgated under Section 162(m) of the Internal Revenue Code of 1986, as
amended.
(b) All determinations of the Committee shall be made by all of its members
unless specifically approved, authorized or ratified by the Board, in which
event a determination by a majority of its members shall be sufficient. Any
decision or determination reduced to writing and signed by all of the members of
the Committee shall be fully effective as if it had been made by a vote at a
meeting duly called and held.
(c) Subject to the express provisions of the Plan, the Committee also shall
have complete authority to interpret the Plan, to prescribe, amend and rescind
rules and regulations relating to it, and to make all other determinations
necessary or advisable for the administration of the Plan. The determinations
of the Committee on the matters referred to in this Paragraph 2 shall be
conclusive.
(d) Participants in the Plan shall be selected by the Committee from key
executive employees of the Corporation or any subsidiary of the Corporation who
hold less than two percent (2%) of the outstanding stock of the Corporation (the
"Participants"). It is intended that Participants include only those top
executives whose responsibilities and activities have a substantial and direct
impact on total corporate performance.
(e) The Committee shall designate Participants each year and such
Participants may, but need not, be the same as those who were designated in any
preceding year; that is to say, employees designated as Participants in one year
may be omitted in any and all subsequent years; new or additional Participants
may be designated in any year.
3. Stock Bonus Pool
(a) The maximum amount of the Bonus Pool for any given year shall be
determined as follows: If the increase in the Corporation's pre-tax operating
income for the year shall have exceeded by at least 10% but less than 12-1/2%
the greater of (a) the prior year's pre-tax operating income or (b) an amount
of pre-tax operating income which would represent a 10% per year cumulative
increase through the prior year over fiscal year 1977, the maximum amount
shall be 3% of the dollar amount of such increase; if the increase in pre-tax
operating income for the year shall have exceeded by at least 12-1/2% but
less than 15% the greater of (a) the prior year's pre-tax operating income or
(b) an amount of pre-tax operating income which would represent a 12-1/2% per
year cumulative increase through the prior year over fiscal year 1977, the
maximum amount shall be 4% of the dollar amount of such increase; and if the
increase in pre-tax operating income for the year shall have exceeded by at
least 15% the greater of (a) the prior year's pre-tax operating income or
(b) an amount of pre-tax operating income which would represent a 15% per
year cumulative increase through the prior year over fiscal year 1977, the
maximum amount shall be 5% of the dollar amount of such increase.
(b) In the event any additional business shall be acquired by the
Corporation as the result of any merger or acquisition, then the percentage
increase shall be determined by including the pre-tax operating income of the
merged or acquired business or businesses for all of the years involved in
determining the maximum Bonus Pool.
(c) In the event any portion of the Corporation's business shall be
discontinued, sold or otherwise transferred, then the percentage increase shall
be determined by excluding the pre-tax operating income of the discontinued,
sold or transferred business for all of the years involved in determining the
maximum Bonus Pool.
4. Awards of Incentive Stock Bonus Units
(a) Within the first 90 days of each calendar year, the Committee shall set
the maximum dollar amount of incentive stock bonus units ("Incentive Stock Bonus
Units") and tax offset bonus units ("Tax Offset Bonus Units") which may be
awarded to the Corporation's Chief Executive Officer ("CEO") and Chief
Operating Officer ("COO"), respectively.
(b) After the end of each calendar year but prior to the award of units,
the Committee shall certify, in writing, whether the Corporation's pre-tax
operating income for the year has exceeded one or more of the levels set in
Paragraph 3(a). If, and only if, pre-tax operating income for the year shall
have reached a level sufficient to generate a Bonus Pool under Section 3, the
Committee shall allocate Incentive Stock Bonus Units and Tax Offset Bonus Units
for the CEO and COO. The number of Incentive Stock Bonus Units and Tax
Offset Bonus Units awarded to the CEO and COO can be less than, but cannot
exceed, the number fixed by the Committee during the first 90 days of the
calendar year.
(c) After the Committee has determined the number of Units to be awarded
to the CEO and COO, the Committee shall subtract from the Bonus Pool determined
under Section 3 the dollar value of the Incentive Stock Bonus Units awarded to
the CEO and COO. If a positive value remains in the stock Bonus Pool after such
subtraction, the remaining dollar value of Incentive Stock Bonus Units shall be
awarded by the Committee to Participants (other than the CEO and COO) designated
by it, in such proportions as the Committee believes appropriate based upon each
Participant's relative contribution to the year's performance. Incentive Stock
Bonus Units (and Tax Offset Bonus Units) shall initially be valued at the last
price or closing price of the Corporation's shares of common stock on the day
before the date of the awards, as reported in the Midwest Edition of The Wall
Street Journal or such other source as the Committee shall determine properly
reflects the market price.
(d) All awards shall be made within thirty (30) days after the end of the
first quarter of the year following the year for which the awards are earned.
5. Discontinuance
The Board may discontinue the Committee's authority to award said Incentive
Stock Bonus Units and Tax Offset Bonus Units or discontinue the Plan at any
time. Notice of termination shall be given to all members of the Committee and
all previous Participants still in the employ of the Corporation prior to April
30 of the year for which such termination shall become effective.
6. Delivery and Payment
(a) Conditioned upon (i) the Participant's continued employment by the
Corporation and/or its subsidiaries for five (5) full years after the year for
which the award is made, or (ii) upon the Participant's earlier death, permanent
and total disability or retirement after the age of 65 (or prior thereto with
the consent of the Board of Directors) or (iii) after the occurrence of a
change in control, as defined in subparagraph (c) below, of the Corporation, the
Corporation within ninety (90) days after the occurrence of any of such
events, shall issue to the Participant (or the personal representative or
heirs of a deceased Participant) that number of shares of the Corporation's
common stock which equals the number of Incentive Stock Bonus Units previously
awarded the Participant which have vested as a result of such event; and that
amount of cash equal to the value of that number of shares of common stock
equal to the number of Tax Offset Bonus Units awarded the CEO and COO which have
vested as a result of such event. At that time, it shall also pay to any
Participant receiving shares (other than the CEO and COO) that amount of cash
which is equal to the amount of Federal taxes which such Participant will be
required to pay, during such year of payment, by reason of his receipt of
such stock and cash if he were subject to the highest marginal Federal income
tax rate.
For example, if, in the year of payment, the market value of
the stock is $100,000 and the highest Federal income tax rate
is 40%, then subtract 40% from 100% yielding 60% and divide the
market value of the stock issued ($100,000) by 60% which equals
$166,666. Then subtract the market value of the stock
($100,000) leaving the sum of $66,666, which is the amount of
cash to be paid.
The market value of the shares and cash issued to him shall be based upon the
last price or closing price of the Corporation's stock on the day before the
date of issuance and/or payment as reported in the Midwest Edition of The Wall
Street Journal or such other source as the Committee shall determine is
representative of the market price (or in the event the shares of the
Corporation are listed on any exchange, based upon the closing price on the
day before the date of issuance); provided, however, that if the Participant's
employment shall have been terminated as a result of early retirement prior to
the expiration of said five year period and the Board of Directors shall
determine that his interest in the Plan to the extent awarded during the five
years prior to such termination or any portion thereof shall continue, then
and in that event, he shall receive all or such portion of the awards
previously made to him at such time and in such amounts as the Board of
Directors may in its absolute discretion determine;
provided further, that the Committee may reduce the amount of cash payable to
the CEO and/or COO under a Tax Offset Bonus Unit if the Committee determines
that such reduction is appropriate in light of the marginal Federal income tax
rate in effect at the time such cash is to be paid.
(b) When some or all of the shareholders of the Corporation receive stock
pursuant to a transaction resulting in a change of control, that new stock shall
be issued to the Participant in lieu of the Corporation's stock which would have
otherwise been issued under this Paragraph 6 and in the same ratio as received
by the Corporation's other shareholders for their shares.
(c) "Change in control", as used in this Paragraph 6, shall be deemed to
have occurred if any individual, corporation, partnership or other person or
entity, together with its Affiliates and Associates, acquires as the Beneficial
Owner more than thirty-five percent (35%) in the aggregate of the outstanding
shares of the Corporation entitled to vote in the election of Directors, and
within a 400-day period thereafter a majority of Directors elected to the Board,
or a majority of the persons constituting a group authorized to hire or
terminate employment of officers, if other than the Board, are different from
the Directors or persons constituting the Board or group just prior to the
start of such period or a group other than the Board is created to hire or
terminate employment of officers. The term "Affiliate," "Associate" and
"Beneficial Owner" as used in this subparagraph (c) shall be defined by
reference to the Securities Exchange Act of 1934 and rules in effect
thereunder as of the date of the amendment of this Paragraph 6.
7. Forfeiture
In the event of the Participant's termination of employment with the Corporation
and its subsidiaries for any reason other than death, permanent and total
disability or retirement after the age of 65, any rights under this Plan, except
shares and cash theretofore issued and paid or required to have been issued and
paid, shall be forfeited, except as otherwise determined by the Board of
Directors as provided in 6, above.
8. Nature of Rights
The Incentive Stock Bonus Units and Tax Offset Bonus Units shall be used solely
as a device for measurement and determination of the amount of shares and cash
to be issued and paid to Participants as provided in the Plan. The Incentive
Stock Bonus Units and Tax Offset Bonus Units shall not constitute nor be treated
as property or as a trust fund of any kind. All amounts at any time
attributable to the Incentive Stock Bonus Units and Tax Offset Bonus Units shall
be treated as property of the Corporation and the Participant's rights
hereunder are limited to the rights to receive cash and shares of common
stock of the Corporation as herein provided. The award of Incentive Stock
Bonus Units and Tax Offset Bonus Units shall not entitle Participants to any
rights as shareholders but only such rights as are specified in the Plan.
9. Securities Act of 1933
Upon issuance of common stock of the Corporation to the Participant (or the
personal representative or heirs of a deceased Participant) the recipient of
such stock shall represent that the shares of stock are taken for investment and
not resale and make such other representations as may be necessary to qualify
the issuance of the shares as exempt from the Securities Act of 1933 or to
permit registration of the shares and shall represent that the recipient shall
not dispose of such shares in violation of the Securities Act of 1933. The
Corporation reserves the right to place a legend on any stock certificate issued
pursuant to the Plan to assure compliance with this Paragraph 9. No shares of
common stock of the Corporation shall be required to be distributed until the
Corporation shall have taken such action, if any, as is then required to comply
with the provisions of the Securities Act of 1933 or any other then applicable
securities law.
10. Maximum Shares Issued
The aggregate number of shares of common stock of the Corporation which may be
issued under the Plan shall not exceed 1,200,000. The initial number of shares
authorized under the Plan in 1978 was 100,000. Giving effect to stock splits
since the Plan's inception, the number of shares covered by the Plan is
1,200,000 as of the effective date of this Third Amendment and Restatement.
Prior to 1996, 374,145 units have been awarded, leaving a balance of 825,855
units. On and after the effective date of this Amendment, a person may be
awarded under this Plan up to a maximum of 400,000 Incentive Stock Bonus Units
(and an equal number of Tax Offset Bonus Units). The Corporation shall, from
time to time, purchase its own shares on the open market for treasury shares in
such amounts as may be necessary for the purpose of carrying out the terms of
this Plan; provided, however, upon a two-thirds (2/3) affirmative vote of the
Board, the Corporation may issue its unissued shares of common stock in lieu of
such treasury shares.
11. Withholding of Tax
There shall be deducted from any compensation due any Participant under the
Plan, whether in the form of cash or stock distribution, cash in the amount of
any tax required by any governmental authority to be withheld and paid over by
the Corporation to such governmental authority for the account of the person
entitled to such distribution.
12. Effective Date
This Amendment shall become effective for the year 1996; provided, however, that
no Participant shall be entitled to any distribution of shares or cash
thereunder unless and until this Third Amendment shall have been ratified by the
affirmative vote of the holders of a majority of the shares of common stock of
the Corporation represented at any meeting thereof at which a quorum is present.
13. Dilution
In the event of a stock split, stock dividend, reclassification, reorganization
or other capital adjustment of shares of common stock of the Corporation, the
number of Stock Bonus Units and Tax Offset Bonus Units of a Participant shall be
adjusted in the same manner as shares of the Corporation's common stock
reflected by such Stock Bonus Unit or Tax Offset Bonus Unit would be adjusted.
14. Transferability
Any rights arising under the Plan shall not be transferable otherwise than by
will or the laws of descent and distribution.
15. Termination, Amendment or Extension of Plan
Unless the Plan or authority of the Committee has been discontinued by the Board
as provided in Paragraph 5 above, the Committee may, but need not, make awards
under the Plan so long as the maximum number of shares authorized in Paragraph
10 shall not have been reserved and/or awarded. The Committee may modify the
Plan at any time; provided, however, that (a) such modification shall not
materially change the Corporation's obligations under the Plan unless approved
by the Board; (b) such modification shall not reduce the benefits to which any
Participant would be entitled under awards previously made without his consent
in writing; and (c) in the event any modification shall increase the aggregate
maximum number of shares to be issued under the Plan beyond those authorized in
Paragraph 10 or shall change the manner in which the maximum amount of the Bonus
Pool for any given year is determined under Paragraph 3 or the class of
employees eligible to participate as provided in Section 2(d), such amendment
shall be subject to ratification by the affirmative vote of the shareholders in
the same manner as provided in Paragraph 12 hereof with respect to the original
ratification of the Plan.
SIGMA-ALDRICH CORPORATION
ANNUAL MEETING OF SHAREHOLDERS TO BE HELD MAY 7, 1996
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints ANDREW E. NEWMAN and WILLIAM C. O'NEIL, JR., or
either of them, the true and lawful attorneys-in-fact, agents and proxies, with
the power of substitution and revocation, to represent the undersigned at the
Annual Meeting of Shareholders of SIGMA-ALDRICH CORPORATION to be held at The
Boatmen's National Bank of St. Louis, 800 Market Street, St. Louis, Missouri
63101 on May 7, 1996, at 11:00 A.M., Central Daylight Time (including all
adjournments thereof), and there to vote all shares of stock which the
undersigned is entitled to vote, with all powers which the undersigned would
possess if personally present, as follows:
The Board of Directors recommends a vote FOR the following:
(1) ELECTION OF DIRECTORS:
FOR all nominees listed
(except as marked to the contrary below) ___
WITHHOLD AUTHORITY
to vote for all nominees below ___
Instructions: To withhold authority to vote for any individual nominee strike a
line through the nominee's name in the list below.
Carl T. Cori, David R. Harvey, David M. Kipnis, Andrew E. Newman, William C.
O'Neil, Jr., Jerome W. Sandweiss, D. Dean Spatz, Thomas N. Urban
(2) Proposal to amend the Certificate of Incorporation of the Company to
increase the number of shares of the Company's authorized common stock
from 100,000,000 to 200,000,000 shares.
___ For
___ Against
___ Abstain
(3) Approval of the Third Amendment and Restatement of the Company's
Incentive Stock Bonus Plan.
___ For
___ Against
___ Abstain
(4) Upon such other business as may properly come before the meeting and any
adjournments thereof.
(Continued and to be signed on other side)
(Continued from other side)
This proxy will be voted FOR Proposals 1, 2 and 3 and in the discretion of
the proxies on whatever other business may properly come before the meeting.
The undersigned acknowledges receipt of the Notice of Annual Meeting and Proxy
Statement dated March 29, 1996, and hereby revokes all proxies heretofore given
by the undersigned for said meeting. This proxy may be revoked prior to its
exercise.
Dated,_____________________,1996
________________________________
________________________________
Please sign name or names as appearing on this proxy. If signing for estates,
trusts or corporations, title or capacity should be stated. If shares are
held jointly, every holder should sign.
PLEASE SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
