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. )
Filed by the Registrant [X]
Filed by a party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of
[X] Definitive Proxy Statement the Commission Only (as
[ ] Definitive Additional Materials permitted by
[ ] Soliciting Material Pursuant to Rule Rule 14a-6(e)(2))
14a-11(c) or Rule 14-a-12
Sigma-Aldrich Corporation
---------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
---------------------------------------------------------
(Name of Person(s) Filing Proxy Statment, if other than the Registrant)
Payment of filing fee (Check appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing 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:
(2) Form, Schedule or Registration Statement No.:
(3) Filing party:
(4) Date filed:
SIGMA-ALDRICH CORPORATION
3050 Spruce Street
St. Louis, Missouri 63103
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To be held May 6, 1997
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 6, 1997, at 11:00 A.M., Central Daylight Time, for
the following purposes:
1. To elect nine directors;
2. To consider and vote upon a shareholder proposal as described
herein; and
3. 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 7, 1997,
are entitled to notice of, and to vote at, the meeting.
By Order of the Board of Directors,
Thomas M. Tallarico, Secretary
March 28, 1997
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 6, 1997
The enclosed proxy is solicited by the Board of Directors (the "Board")
of Sigma-Aldrich Corporation (the "Company") for use at the Annual
Meeting of Shareholders (the "Meeting") to be held on Tuesday, May 6,
1997, 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
and against the shareholder proposal described herein.
Shareholders of record as of the close of business on March 7, 1997, 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 7, 1997, there
was a total of 100,099,885 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 28, 1997.
The mailing address of the Company's principal executive office is 3050
Spruce Street, St. Louis, Missouri 63103.
ELECTION OF DIRECTORS
Nine 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
as proxies 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 1996 Annual Meeting of Shareholders, except Nina V. Fedoroff, who
was elected in June 1996. 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 Chairman of the Board and
Chief Executive Officer for more than five years.
He served as President of the Company for more than
five years until March 1995. He has been a director
of the Company since 1977. Age 60.
Nina V. Fedoroff Director of the Biotechnology Institute and Willaman
Professor of Life Sciences at Pennsylvania State
University, State College, Pennsylvania, since July
1995. Prior to that time, she was a staff member at
Carnegie Institute of Washington and a Professor at
Johns Hopkins University for more than five years.
She has been a director of the Company since 1996.
Age 54.
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 57.
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 69.
Andrew E. Newman Chairman of the Board and Chief Executive Officer of
Race Rock International, a theme restaurant company,
since July 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 Dave
& Busters, Inc. and Lee Enterprises, Inc. Age 52.
William C. O'Neil, Jr. Chairman of the Board, President and Chief Executive
Officer of 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., Central Parking, Inc.
and Atrix Laboratories, Inc. Age 62.
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 72.
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, Minnetonka, 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 S.I. Technologies, Inc. Age 53.
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. He also served as
President of Pioneer Hi-Bred International, Inc.
for more than five years until September 1995.
Mr. Urban has been a director of the Company since
1990. He is also a director of Pioneer Hi-Bred
International, Inc., Case Corporation and Equitable
of Iowa Companies. Age 62.
Directors Meetings and Committees
The Board of Directors met four times during 1996. 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 twice 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 three meetings 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.
Each director attended at least 75% of the aggregate of the meetings of the
Board and its Committees on which they served during 1996, except for
Mr. Urban, who attended five of eight meetings.
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 1996 and expects to use the firm in 1997.
Dr. Kipnis, under an agreement with the Company, rendered certain consulting
services to the Company during 1996 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 shown in the summary compensation table, and by all directors
and executive officers of the Company as a group, all as of March 7, 1997,
based upon information obtained from such persons:
Shares
Beneficially
Name Company Position Owned (1)(2)
- ----------------------- ------------------------------- ------------
Carl T. Cori Director, Chairman of the Board 295,070
and Chief Executive Officer
Nina V. Fedoroff Director 200
Peter A. Gleich Vice President, Treasurer and 175,480 (3)
Chief Financial Officer
David R. Harvey Director, President and Chief 139,840
Operating Officer
David M. Kipnis Director 9,886
Andrew E. Newman Director 4,000
William C. O'Neil, Jr. Director 4,000
Kirk A. Richter Controller 70,000 (3)
Jerome W. Sandweiss Director 14,000
D. Dean Spatz Director 4,200
Thomas M. Tallarico Vice President and Secretary 47,400 (3)
Thomas N. Urban Director 5,986
Directors and executive
officers as a group 773,312 (3)
(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 88,400, 20,000 and 4,200 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 7, 1997, for each of the named individuals and
the group.
(3) Includes 54,000, 30,000, 46,000 and 133,250 shares subject to stock
options that are exercisable as of, or within sixty days of, March 7,
1997, 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 5,631,760 (1) 5.6%
2961 North Shepard Avenue
Milwaukee, WI 53211
State Farm Mutual Automobile 8,478,080 (2) 8.5%
Insurance Co. and its affiliates
One State Farm Plaza
Bloomington, IL 61710
(1) As set forth in such person's Schedule 13G, dated February 4, 1997, filed
with the Securities and Exchange Commission.
(2) As set forth in such company's Schedule 13G, dated January 3, 1997, filed
with the Securities and Exchange Commission.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities 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 1996, except for Nina V.
Fedoroff, who filed the initial statement and one report covering one
transaction late.
SHAREHOLDER PROPOSED RESOLUTION CONCERNING LINKING EXECUTIVE
COMPENSATION TO FINES OR PENALTIES
The Company has been informed that Dr. Alfred Bader, 2961 North Shepard
Avenue, Milwaukee, Wisconsin 53211, the beneficial owner of more than
2,500,000 shares of the common stock of Sigma-Aldrich Corporation,
intends to present the following resolution for adoption at the meeting:
PROPOSED RESOLUTION
RESOLVED, that the shareholders recommend to the Board of Directors (the
"Board") that the Board and its Compensation Committee adopt an executive
compensation policy under which the annual salary that each executive
officer (which shall include all of the Company's "officers" as defined
by Rule 16a-1(f) under the Securities Exchange Act of 1934, as amended)
will earn in the Company's next fiscal year (as calculated pursuant to
the Compensation Committee's present, or any future, salary plan) will
be reduced by such executive officer's pro-rata portion of the amount of
fines or penalties that the Company paid in the immediately preceding
year to any federal, state, local or other governing or regulatory body.
For purposes of this resolution, an executive officer's pro-rata portion
shall mean the percentage that such executive officer's annual salary in
the immediately preceding year represents of the total annual salary in
the immediately preceding year of all executive officers of the Company.
STATEMENT IN SUPPORT OF PROPOSAL
According to an investigation by the Bureau of Export Administration of
the U.S. Department of Commerce (the "Department"), the Company exported,
on forty-eight occasions from July 1992 to January 1993, toxins to
seventeen countries without the licenses required by U.S. export laws.
Pursuant to such investigation, the Company agreed in July 1996 to pay
a $480,000 fine to settle allegations by the Department that it had
illegally exported toxins that could be used to make biological weapons.
Fines and penalties assessed against the Company, as well as negative
publicity from them, can hurt the Company's financial performance and
shareholder value. Executive officers are ultimately responsible for the
operation and performance of the Company and their financial interests
should be aligned with those of the Company's shareholders. Future
compensation of the executive officers of the Company, therefore, should
be reduced by the amount of fines or penalties that the Company must pay.
Linking executive compensation to fines or penalties will create an
incentive for the executive officers of the Company to ensure that the
Company operates in accordance with all applicable laws and regulations.
Avoiding fines or penalties for illegal activities in the future, such
as the $480,000 fine paid to the Department, can increase the Company's
financial performance and shareholder value.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST THIS PROPOSED
RESOLUTION FOR THE FOLLOWING REASONS:
First, the Board does not believe that adopting the proposed resolution
would further align the interests of management with those of
shareholders, as the proponent has suggested. The Company's Incentive
Stock Bonus Plan and stock option program serve to align the financial
interests of management with those of shareholders and, in the Board's
view, management already has sufficient incentive to increase profits and
is already well aware that negative publicity can hurt shareholder value.
Second, the Board believes that adopting the proposed resolution would
be harmful to the Company and its shareholders because it would severely
impair the Company's ability to attract and retain qualified management.
This impairment would arise because:
The proposed executive compensation policy would be viewed as unfair
because it could penalize an officer without regard to the officer's
oversight responsibility or in cases where the officers are blameless,
such as when other employees act criminally or maliciously.
The risk of potential reduction in salary would place the Company
at a severe competitive disadvantage since it is believed no other
Company has a similar compensation policy.
Third, the Board is not aware of any other public company with a
compensation policy comparable to that being proposed, even in industries
that are more prone to fines and penalties. The Board also believes the
proposed policy is inconsistent with public policy in that Congress and
the various legislatures have generally written the laws to fine the
company, rather than its individual company officers, except in unusual
circumstances.
Further, shareholders should be aware that the proponent is a former
member of the Board of Directors and was not renominated to the Board in
1992 by unanimous vote of the continuing directors. The proponent has
made three other proposals since 1993. The first two, in 1993 and 1994,
also related to executive compensation and were not presented in the
applicable proxy statement after the staff of the Securities and Exchange
Commission determined there was a basis to exclude the proposals in
accordance with applicable securities law and regulations. The third
concerned earnings announcements and was presented for shareholder vote
at the 1995 annual meeting of shareholders and defeated by 80% of the
vote.
ACCORDINGLY, YOUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE
AGAINST THE PROPOSED RESOLUTION AND PROXIES WILL BE SO VOTED UNLESS
SHAREHOLDERS SPECIFY IN THEIR PROXIES EITHER A CONTRARY CHOICE OR A
DESIRE TO ABSTAIN.
INFORMATION CONCERNING EXECUTIVE COMPENSATION
The following table presents compensation information for the Chief
Executive Officer and the four other most highly compensated executive
officers based on salary and bonus in 1996 for the years ended December
31, 1996, 1995 and 1994:
<TABLE>
Summary Compensation Table
--------------------------
<CAPTION>
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 1996 $690,000 $134,655 -- $205,383 $6,000
Chairman & CEO 1995 660,000 196,033 -- 299,000 2,000
1994 600,000 285,002 -- 434,700 2,000
Peter A. Gleich 1996 295,000 33,109 -- 50,500 6,000
Vice President, Treasurer 1995 285,000 46,877 -- 71,500 2,000
& CFO 1994 285,000 68,153 20,000 103,950 2,000
David R. Harvey 1996 480,000 66,219 -- 101,000 6,000
President & COO 1995 450,000 85,231 -- 130,000 2,000
1994 400,000 123,914 -- 189,000 2,000
Kirk A. Richter 1996 192,000 9,933 -- 15,150 6,000
Controller 1995 185,000 23,439 -- 35,750 2,000
1994 172,000 34,076 10,000 51,975 2,000
Thomas M. Tallarico 1996 255,000 -- -- -- 6,000
Vice President 1995 250,000 -- -- -- 2,000
& Secretary 1994 244,000 -- 10,000 -- 2,000
<FN>
(1) The value of shares issued under the Incentive Stock Bonus Plan in
1996, 1995 and 1994 relates to performance in 1990, 1989 and 1988,
respectively, and are 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 61,450, 34,450, 7,500, 4,800 and 5,200 Bonus
Units, respectively, as of December 31, 1996. Shares of common stock
issuable upon vesting of such Bonus Units have a value of $1,918,392,
$1,075,486, $234,141, $149,850 and $162,337, 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 1996, 1995 and 1994.
</FN>
</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, 1996, 1995
and 1994, relate to performance in the years ended December 31, 1990,
1989 and 1988, respectively. Additionally, LTIP payouts to the
Company's senior management group were $20,200, $45,500 and $138,175
for shares and $13,244, $29,831 and $72,330 in cash for 1996, 1995 and
1994, respectively.
The following table presents the Bonus Units awarded to each of the
executive officers in 1996 for performance in 1995.
Long-Term Incentive Plan Awards in 1996
---------------------------------------
Number of Performance or Estimated Future
Bonus Units Other Period Until Payouts of
Name Awarded Maturation or Payout (1) Bonus Units (1)
- ------------------- ---------- ------------------------ ---------------
Carl T. Cori 20,450 5 Years 20,450
Peter A. Gleich 2,000 5 Years 2,000
David R. Harvey 12,450 5 Years 12,450
Kirk A. Richter 2,000 5 Years 2,000
Thomas M. Tallarico 2,000 5 Years 2,000
(1) The Bonus Units become payable to each of the executive officers in
January 2001 in the form of one share of common stock for each Bonus Unit
awarded plus cash as described under "Compensation Committee Report on
Executive Compensation - Incentive Compensation" on page 14.
Additionally, 9,500 Bonus Units were awarded to seven members of the
Company's senior management group. Bonus units to be awarded under the
Incentive Stock Bonus Plan for the year ended December 31, 1996 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.
No stock options under the 1995 plan were granted to the named executive
officers during the year ended December 31, 1996. In 1996, options to
acquire 50,000 shares were granted to other executive officers at
exercise prices ranging from $26.19 to $26.62, options to acquire 80,000
shares were granted to three members of the Company's senior management
group at an exercise price of $29.19 and options to acquire 854,000
shares were granted to 446 members of the management group at exercise
prices ranging from $25.50 to $31.25 per share.
The following table presents (i) the unexercised options held by each
named executive officer and (ii) the value of all in-the-money options
as of December 31, 1996, as if all such in-the-money options were vested
and exercisable as of December 31, 1996:
<TABLE>
<CAPTION>
Option Values at December 31, 1996
----------------------------------
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 54,000 32,000 344,443 327,000
David R. Harvey -- -- -- --
Kirk A. Richter 30,000 16,000 194,298 163,500
Thomas M. Tallarico 46,000 16,000 399,798 163,500
<FN>
(1) No options were exercised by any of the named executive officers
during the year ended December 31, 1996.
(2) Calculated as the aggregate closing market price per share of the
Company's common stock on December 31, 1996, for the total number of
in-the-money shares under option, net of the aggregate value of all
option exercise proceeds.
</FN>
</TABLE>
Retirement Security Value Plan (Pension Plan)
The Sigma-Aldrich Retirement Security Value Plan provides all eligible
employees, including the executive officers, with a retirement benefit
based upon a formula. The plan changed to a cash balance plan effective
January 1, 1996. The plan provides an annual addition to each
participant's compensation, ranging from 2% to 5% of salary, depending
on years of service. Each account is also credited with interest
annually. In no event will the benefit provided by the Retirement
Security Value Plan at retirement be less than the benefit provided by
the previous pension plan formula for any employee who was a participant
in the plan as of January 1, 1996. Pension credits have been and will
continue to be restricted by the Internal Revenue Code limitations above
certain levels of compensation and the Company does not have a
supplemental plan to provide benefits based upon earnings above these
limitations. Taking into account these limitations and assuming that each
executive officer continues employment until the normal retirement age
of 65 at his current cash compensation level and that interest rates
remain at December 31, 1996 levels, 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 $99,445, $66,524,
$110,004, $73,393 and $42,331, 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 7, 1997, 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 $4,063,000.
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 7, 1997, 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 94,400 shares of
the Company's common stock and $1,930,000.
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)
------------------------ ------------------
1992 $ 654.4 $ .96
1993 739.4 1.08*
1994 851.2 1.11
1995 959.8 1.32
1996 1,034.6 1.48
Average Compound Growth Rate:
Sales 11.9%
EPS 13.1%
* 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
and amended in 1996, 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% --
10.0-12.4% 3.0%
12.5-14.9% 4.0%
15% and above 5.0%
The Committee fixes the maximum dollar amount of Bonus Units and Tax
Offset Bonus Units which may be awarded to Dr. Cori and Dr. Harvey during
the first 90 days of each calendar year. 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
pretax operating income for the year has reached a level sufficient to
generate a Bonus Pool, the Committee will allocate Bonus Units to Dr.
Cori and Dr. Harvey 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 Bonus
Units awarded to Dr. Cori and Dr. Harvey, the remaining Bonus 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 are
made within 30 days after the end of the first quarter of the year
following the year for which the awards are earned.
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 Federal income taxes and, in the case of Drs. Cori and Harvey, Tax
Offset Bonus Units. The cost of the Plan since its inception has ranged
between 1.0% and 1.5% 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 between 1.0% and 1.5% of the Company's
cumulative pre-tax income. In 1996, certain amendments to the Plan were
approved to ensure tax deductibility. See "Incentive Stock Bonus Plan"
on page 10 of this Proxy Statement for additional information concerning
this plan.
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 named executive officers in 1996. See Stock
Options on page 10 of this Proxy Statement for additional information
concerning this plan.
1996 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 criterion used to establish the maximum Bonus Pool under the
Company's Incentive Stock Bonus Plan.
In 1996, sales for the Company increased 7.8% to $1,034.6 million, net
income grew by 12.3% to $147.9 million and net income per share increased
12.1% to $1.48. In setting Dr. Cori's salary for 1996, the Committee
recognized Dr. Cori's leadership in the growth of sales and earnings by
increasing his 1996 salary 4.5%. Dr. Cori's Incentive Stock Bonus Plan
award in 1996, for the Company's performance in 1995, was 10,225 Bonus
Units. Sales and net income for 1995 increased by 12.8% and 19.3%,
respectively. Dr. Cori's salary for 1995 increased 10% over 1994. 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. 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. In
1996, certain amendments to the Incentive Stock Bonus Plan were approved
to ensure tax deductibility.
For the other executive officers, the Committee determined that 1996
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, 1996, 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, 1991, 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>
Comparative Five-Year Returns
(Following is a line graph depicting the following data)
<CAPTION>
1991 1992 1993 1994 1995 1996
------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
SIGMA-ALDRICH CORP. 100.00 109.06 91.60 63.52 96.11 122.07
Standard & Poor's 500 100.00 107.79 118.66 120.56 165.78 204.30
Value Line
Chemical Specialty 100.00 114.53 127.71 126.35 156.12 179.23
</TABLE>
In this Proxy Statement, the Company used as a performance graph
comparison index those companies comprising the Value Line Chemical
Specialty Industry Group (the "Group"). The 1996 Group includes the
following companies: Airgas Inc., Avery Dennison Corp., Betz Laboratories
Inc., Calgon Carbon Corp., Chemed Corp., Crompton & Knowles Corp., Ecolab
Inc., Engelhard Corp., Ethyl Corp., Ferro Corp., H.B. Fuller Co., Furon
Co., Great Lakes Chemical Corp., M.A. Hanna Co., Hercules Inc.,
International Flavors & Fragrances, Lawter International Inc., Learonal
Inc., Lilly Industries Inc., Loctite Corp., Lubrizol Corp., Material
Sciences Corp., Morton International Inc., Nalco Chemical Co., NCH Corp.,
Petrolite Corp., PPG Industries Inc., Praxair Inc., Quaker Chemical
Corp., Raychem Corp., Rohm & Haas Co., RPM Inc., A. Schulman Inc.,
Sherwin Williams Co., Valspar Corp., WD-40 Co., Wellman Inc., and Witco
Corp.
The 1996 Group added Ethyl Corp. and deleted Guardsman Products Inc. from
the 1995 Group. With these exceptions, which resulted solely from the
independent action of Value Line, the 1996 and 1995 Groups are identical.
RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS
The principal accountant selected by the directors for the current year
is Arthur Andersen LLP, independent public 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 which are
present in person or represented by proxy at the Meeting is required to
elect directors, approve the shareholder proposal 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 28, 1997. 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 28, 1997
SIGMA-ALDRICH CORPORATION
ANNUAL MEETING OF SHAREHOLDERS TO BE HELD MAY 6, 1997
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 6, 1997, 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, Nina V. Fedoroff, David R. Harvey, David M. Kipnis,
Andrew E. Newman, William C. O'Neil, Jr., Jerome W. Sandweiss, D. Dean Spatz,
Thomas N. Urban
The Board of Directors recommends a vote AGAINST the following proposal:
(2) Approval of a shareholder proposal regarding executive compensation.
___ For
___ Against
___ Abstain
(3) 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)
The undersigned acknowledges receipt of the Notice of Annual Meeting and
accompanying Proxy Statement, each dated March 28, 1997, and hereby revokes
all proxies heretofore given by the undersigned for said meeting. This proxy
may be revoked prior to its exercise.
This Proxy will be voted FOR item 1, and AGAINST the shareholder proposal in
item 2, unless otherwise directed, and in the discretion of the proxies on
whatever other business may properly come before the meeting.
Dated this ______ day of __________, 1997
_________________________________________
_________________________________________
If Stock is owned in joint names all owners
must sign. If signing for estates, trusts
or corporations, please indicate title or
capacity.
If address appearing above is incorrect, kindly make correction.
