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 Statement, if other than the Registrant)
Payment of filing fee (Check appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rule 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 the 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 5, 1998
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of
Sigma-Aldrich Corporation will be held at NationsBank, N.A., 800 Market
Street, St. Louis, Missouri 63101, on Tuesday, May 5, 1998, at 11:00
A.M., Central Daylight Time, for the following purposes:
1. To elect nine directors;
2. To consider and vote upon the Directors' Nonqualified Share
Option Plan of 1998; 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
6, 1998 are entitled to notice of, and to vote at, the meeting.
By Order of the Board of Directors,
Thomas M. Tallarico, Secretary
March 27, 1998
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, Harris Trust and Savings Bank, P.O. Box A3504,
Chicago, Illinois 60690-3504. 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 5, 1998
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 5, 1998, 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, Harris Trust
and Savings Bank, P.O. Box A3504, Chicago, Illinois 60690-3504 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 for the Directors' Share Option Plan of
1998.
Shareholders of record as of the close of business on March 6, 1998,
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 6,
1998, there were a total of 100,486,867 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 27, 1998.
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 1997 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 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 61.
Nina V. Fedoroff Director, Life Sciences Consortium & 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 55.
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 58.
David M. Kipnis Distinguished University Professor of Medicine,
Washington University School of Medicine, St. Louis,
Missouri, for more than five years. Dr. Kipnis has been
a director of the Company since 1984. Age 70.
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.
Edison Brothers Stores, Inc. filed a petition for
reorganization under Chapter 11 of the federal
bankruptcy code in November 1995 and emerged from those
proceedings in September 1997. 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 53.
William C. O'Neil, Jr. Chairman of the Board of ClinTrials Research,
Inc., a clinical research services company, Nashville,
Tennessee, for more than five years. He also served as
President and Chief Executive Officer of ClinTrials
Research, Inc. for more than five years until February
1998. 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
63.
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 73.
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 54.
Thomas N. Urban Former Chairman of the Board of Pioneer Hi-Bred
International, Inc., a developer and producer of hybrid
corn and other seeds, Des Moines, Iowa. He served as
Chairman of the Board of Pioneer Hi-Bred International,
Inc. for more than five years until December 1996 and
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.
and Case Corporation. Age 63.
Directors Meetings and Committees
The Board of Directors met four times during 1997. The Board of
Directors has three committees which function throughout the year. The
Audit Committee, of which Ms. Fedoroff and 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. 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 1997.
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 director 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 1997 and expects to use the firm
in 1998. Dr. Kipnis, under an agreement with the Company, rendered
certain consulting services to the Company during 1997 for which he
received $54,000. The agreement for consulting services with Dr.
Kipnis terminated at the end of 1997.
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 6, 1998, based upon information obtained from such
persons:
Shares Beneficially
Name Company/Position Owned (1)(2)
- ------------------ ------------------------------------ -------------------
Larry S. Blazevich Vice President, Information Services 12,000 (3)
Carl T. Cori Director, Chairman of the Board 313,070
and Chief Executive Officer
Nina V. Federoff Director 500
Peter A. Gleich Vice President and Chief Financial 187,480 (3)
Officer
David R. Harvey Director, President and Chief 148,340
Operating Officer
David M. Kipnis Director 6,686
Andrew E. Newman Director 4,000
William C. O'Neil, Jr. Director 4,000
Jerome W. Sandweiss Director 14,000
D. Dean Spatz Director 4,200
Thomas M. Tallarico Vice President and Secretary 46,600 (3)
Thomas N. Urban Director 6,756
Directors and executive 842,632 (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 and Spatz share voting and
investment power as to 90,400 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 6, 1998, for each of the named
individuals and the group.
(3) Includes 12,000, 70,000, 44,000 and 180,000 shares subject to
stock options that are exercisable as of, or within
sixty days of, March 6, 1998, for Messrs. Blazevich, Gleich 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 whom, 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 5,294,260 (1) 5.3%
2961 North Shepard Avenue
Milwaukee, WI 53211
State Farm Mutual Automobile 8,478,080 (2) 8.4%
Insurance Co. and its affiliates
One State Farm Plaza
Bloomington, IL 61710
(1) As set forth in such person's Schedule 13G, dated February 11,
1998, filed with the Securities and Exchange Commission.
(2) As set forth in such company's Schedule 13G, dated January 20,
1998, 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
1997.
PROPOSAL TO APPROVE THE SIGMA-ALDRICH CORPORATION DIRECTORS'
NONQUALIFIED SHARE OPTION PLAN OF 1998
On February 17, 1998, the Board of Directors of the Company
adopted the Directors' NonQualified Share Option Plan of 1998 (the
"Directors' Plan"), which provides for the grant of nonqualified stock
options to those members of the Board of Directors who are not
employees of the Company. The purpose of the Directors' Plan is to
provide an opportunity for individuals serving as non-employee
directors of the Company to acquire shares of the Common Stock,
providing an equity interest in the Company and additional
compensation based on appreciation of the value of such stock. The
Directors' Plan provides for the grant of stock options which are not
incentive stock options as defined in Section 422 of the Internal
Revenue Code of 1986, as amended (the "Code"), as an incentive to
service or continued service to the Company in order to aid the
Company in obtaining and retaining directors of outstanding ability.
The closing price of the Common Stock on the NASDAQ Market on
March 6, 1998 was $40.375 per share.
Principal Features of the Directors' Plan
The complete text of the Directors' Plan is set forth as Exhibit
A to this Proxy Statement. The following summary of certain
provisions of the Directors' Plan is qualified in its entirety by
reference to the text of such Plan.
The Directors' Plan permits the award of options for an aggregate
of 400,000 shares of Common Stock which may either be authorized and
unissued shares of Common Stock or treasury shares. If an option
expires or terminates for any reason without being exercised in full,
the shares subject thereto which have not been purchased will again be
available for purposes of the Directors' Plan. The total number of
shares reserved for issuance under the Directors' Plan and the number
of shares as to which options may be granted under the Directors' Plan
will be proportionately adjusted in the event of any stock dividend,
stock split, share combination or similar recapitalization, involving
the Common Stock, any merger, consolidation, share exchange or
reorganization, or any spin-off, spin-out or other significant
distribution of assets to stockholders for which the Company receives
no consideration.
Subject to the other terms of the Directors' Plan, options may be
granted to directors of the Company who are not also employees of the
Company or its subsidiaries, whether or not they receive other
remuneration from the Company or its subsidiaries as directors, as
consultants, or in any other capacity.
An option to acquire 10,000 shares of Common Stock will be
granted to each director of the Company who is not an employee of the
Company or its subsidiaries and who does not beneficially own more
than 1.0% of the Company's outstanding Common Stock (an "Eligible
Director") upon approval of the Plan by shareholders. Directors
elected in the future will be granted options to acquire 10,000 shares
upon the date of his or her initial election to the Board.
Additionally, each Eligible Director serving on the Board on the day
after the annual shareholders' meeting, including the 1998 Annual Meeting,
who has served on the Board for at least six months prior to such
annual shareholders' meeting will be granted an option to acquire
2,000 shares on such date, beginning in 1998. The option price per
share will be equal to the Fair Market Value of the Common Stock on the
trading day next preceding the date the option is granted. The term
"Fair Market Value" means the closing price of the Common Stock as reported
by The Nasdaq Stock Market, the New York Stock Exchange or by any other
national securities market on which the Common Stock is traded or,
if not so listed or traded, then the Board of Directors will determine
Fair Market Value in good faith. No option will be exercisable after
the expiration of ten years from the date of grant.
Payment of the exercise price for the shares will be made in cash
or by delivery of unrestricted shares of Common Stock at the Fair
Market Value on the date of exercise, or a combination thereof. The
Company will have the right, if applicable, to require the holder of
an option to satisfy any federal, state or local withholding tax
liability prior to delivery of stock certificates by remitting to the
Company cash or authorizing the withholding of shares (based on the
Fair Market Value thereof) sufficient to satisfy such tax.
No option will vest or may be exercised to any extent until the
holder has served as a director of the Company continuously for
at least three months from the date of grant. Except as described in
the next two paragraphs, an option may not be exercised by the holder
unless he or she is then, and continuously after the grant has been, a
director of the Company.
An option will be transferable or assignable only (i) by will,
(ii) by law of descent and distribution, (iii) pursuant to a qualified
domestic relations order as defined by the Code, Title I of the
Employee Retirement Income Security Act, or the rules thereunder, (iv)
to the spouse, children or grandchildren of the original Holder of the
Option ("Immediate Family Members"), (v) to a trust or trusts for the
exclusive benefit of such Immediate Family Members, or (vi) to a
partnership in which such Immediate Family Members are the only
partners. Following such transfer, any such Options shall continue to
be subject to the same terms and conditions as were applicable
immediately prior to such transfer.
In the event that a holder ceases to serve as a director of the
Company for any reason other than his or her death, disability, (as
defined in the plan), or termination for Cause, such holder will have
the right to exercise an unexpired option at any time within six months
after his or her termination of service to the extent his or her
right to exercise the option has vested and has not previously been
exercised at the date of termination. "Cause" means habitual drug
use or drunkenness, embezzlement of Company funds, conduct which is
injurious to the Company, or conviction of a felony, all as determined
in good faith by the Board of Directors. In the event of termination
of service of the holder by reason of disability, the holder may
exercise an unexpired option at any time within twelve months after
the date of such termination. If the holder of an option dies while he
or she is serving as a director of the Company, his or her unexpired
option may be exercised (to the extent that the holder would have been
entitled to do so at the date of his or her death) by a legatee or
legatees of the holder under his or her last will, or by his or her
personal representatives or distributee, at any time within twelve months
following his or her death. In the event of termination of service of
the holder for Cause, any and all options of the holder will
automatically expire upon such termination. In any case, however, the
exercise period of one or more options may be extended by a vote of a
majority of the directors whose options are not being extended;
provided that in no event may an option be exercised more than ten
years after the date of grant.
The number of shares of Common Stock covered by each outstanding
option will be proportionately adjusted (i) for any increase or
decrease in the number of issued shares of Common Stock resulting from
a subdivision or combination of shares or the payment of a stock
dividend or any other increase or decrease in the number of such
shares effected without receipt of consideration by the Company, or
(ii) for any spin-off or spin-out of assets to the Company's
stockholders or any other significant distribution of assets by the
Company to its stockholders without receipt of consideration by the
Company. Any such adjustment to an outstanding option will be made
without changing the total price applicable to the unexercised portion
of the option, but with a corresponding adjustment in the price and
number of shares covered by the option. If the Company is the
surviving corporation in any merger or consolidation, each outstanding
option will pertain to the securities to which a holder of the number
of shares of Common Stock subject to the option would have been
entitled to receive in such merger or consolidation. A dissolution or
liquidation of the Company or a merger or consolidation in which the
Company is not the surviving parent corporation will cause each
outstanding option to terminate, except for options as to which
another entity assumes or substitutes another option in a transaction
to which Section 424(a) of the Code is applicable; provided, that as
to any options which are to so terminate, each holder will have the
right immediately prior to such dissolution, liquidation, merger or
consolidation, to exercise his or her option in whole or in part,
including with respect to shares as to which the right to exercise had
not yet vested and without regard to any provisions of the Plan
deferring exercise.
Section 8 of the Directors' Plan contains provisions relating to
indemnification of members of the Board of Directors with respect to
matters relating to such Plan or any option granted thereunder.
Subject to the next paragraph, the Directors' Plan shall remain
in effect until all options granted under the Plan have been exercised
or expire.
The Board may from time to time suspend, discontinue or abandon
the Plan or revise or amend it in any respect whatsoever, except that
(a) without the approval of shareholders of the Company, no revision
or amendment shall change the selection or eligibility of directors to
receive options under the Plan, (b) without approval of shareholders
of the Company, the number of shares subject to the Plan and the
number of shares covered by option awards shall not be increased, and
the price at which options may be granted shall not be decreased,
except as provided in the Plan, and (c) an outstanding option shall
not be amended in any respect without the consent of the holder.
Federal Income Tax Consequences
The options granted under the Directors' Plan are not incentive
stock options and do not qualify for the special tax treatment
accorded to incentive stock options under Section 422 of the Code.
Although a director does not recognize income at the time of the grant
of the option, he or she recognizes ordinary income upon the exercise
of a stock option (even if he or she has previously transferred the
option in the manner described on page 9 above) in an amount equal to
the excess of the fair market value of the stock on the date of
exercise of the option over the amount of cash paid for the stock.
The optionee's basis in the shares acquired upon exercise will be the
fair market value of the stock upon exercise. Provided the optionee
holds the shares as a capital asset at the time of sale or other
disposition of the shares, the gain or loss, if any, recognized on the
sale or other disposition will be capital gain or loss. The amount of
the gain or loss will be the difference between the amount realized on
the disposition of the shares and the optionee's basis in the shares.
As a result of the optionee's exercise of a nonqualified stock
option, the Company will be entitled to deduct as compensation an
amount equal to the amount included in the optionee's gross income.
The excess of the fair market value of the stock on the date of
exercise of a nonqualified stock option over the exercise price is not
a tax preference item. If the optionee exercises an option and
surrenders stock already owned by him or her ("Old Shares"), the
following rules apply:
1. To the extent that the number of shares acquired upon exercise ("New
Shares") exceeds the number of Old Shares exchanged, the optionee will
recognize ordinary income on the receipt of such additional shares in
an amount equal to the fair market value of such additional shares
less any cash paid for them, and the Company will be entitled to a
deduction in an amount equal to such income. The basis of such
additional shares will be equal to the fair market value of such
shares on the date of exercise, and the holding period for such
additional shares will commence on the date the option is exercised.
2. To the extent that the number of New Shares acquired does not exceed
the number of Old Shares exchanged, no gain or loss will be recognized
on such exchange, and the basis of the New Shares received will be
equal to the basis of the Old Shares surrendered, and the holding
period of the New Shares received will include the holding period of
the Old Shares surrendered.
The foregoing is a summary of the Federal income tax consequences
to the participants in the Directors' Plan and to the Company,
based upon current income tax laws, regulations and rulings.
Plan Benefits
If the Directors' Plan is approved, the seven non-employee
directors will each receive an initial award in 1998 of an option to
purchase 10,000 shares of Common Stock as set forth below:
Shares of Common Stock
Name Underlying Options
---------------------- ----------------------
Nina V. Fedoroff 10,000
David M. Kipnis 10,000
Andrew E. Newman 10,000
William C. O'Neil, Jr. 10,000
Jerome W. Sandweiss 10,000
D. Dean Spatz 10,000
Thomas N. Urban 10,000
All nonemployee directors as 70,000
a group (7 individuals)
As described above, subject to the terms and conditions of the
Directors' Plan, additional awards of options to purchase 2,000 shares
to each Eligible Director will be made on the day after each annual
shareholders' meeting, beginning in 1998.
The Board of Directors recommends a vote FOR approval of the Directors' Plan.
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 1997 for the years ended
December 31, 1997, 1996 and 1995:
<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>
Larry S. Blazevich 1997 $271,250 $ -- -- $ -- $6,300
Vice President, 1996 180,000 (4) -- 30,000 -- 677
Information Services 1995 -- -- -- -- --
Carl T. Cori 1997 755,000 201,196 -- 306,875 6,300
Chairman & CEO 1996 690,000 134,655 -- 205,383 6,000
1995 660,000 196,033 -- 299,000 2,000
Peter A. Gleich 1997 300,000 40,239 -- 61,375 6,300
Vice President & CFO 1996 295,000 33,109 -- 50,500 6,000
1995 285,000 46,877 -- 71,500 2,000
David R. Harvey 1997 525,000 100,598 -- 153,438 6,300
President & COO 1996 480,000 66,219 -- 101,000 6,000
1995 450,000 85,231 -- 130,000 2,000
Thomas M. Tallarico 1997 260,000 20,120 -- 30,688 6,300
Vice President & 1996 255,000 -- -- -- 6,000
Secretary 1995 250,000 -- -- -- 2,000
<FN>
(1) The value of shares issued under the Incentive Stock Bonus Plan
in 1997, 1996 and 1995 relates to performance in 1991, 1990 and 1989,
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. Blazevich, Gleich and Tallarico hold 63,450, 36,950, 0, 6,500
and 5,200 Bonus Units, respectively, as of December 31, 1997. Shares
of common stock issuable upon vesting of such Bonus Units have a value
of $2,522,138, $1,468,763, $0, $258,375, and $206,700, 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 1997, 1996 and 1995.
(4) Represents annual salary rate. Salary paid in 1996 from the
date of employment in April 1996 was $127,500.
</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 18 of this Proxy Statement for information
concerning the plan.
The LTIP payouts to each of the named executive officers as presented
in the Summary Compensation Table for the years ended December 31,
1997, 1996 and 1995, relate to performance in the years ended December
31, 1991, 1990 and 1989, respectively. Additionally, LTIP payouts to
the Company's other executive officers and senior management group
were $153,438, $35,350 and $81,250 for shares and $100,598, $23,176 and
$53,270 in cash for 1997, 1996 and 1995, respectively.
The following table presents the Bonus Units awarded to each of the
named executive officers in 1997 for performance in 1996.
Long-Term Incentive Plan Awards in 1997
---------------------------------------
Number of Performance or Estimated Future
Bonus Units Other Period Until Payouts of
Name Awarded Maturation or Payout (1) Bonus Units (1)
- --------------------------------------------------------------------------------
Larry S. Blazevich -- -- --
Carl T. Cori 12,000 5 Years 12,000
Peter A. Gleich 1,000 5 Years 1,000
David R. Harvey 7,500 5 Years 7,500
Thomas M. Tallarico 1,000 5 Years 1,000
- -------------------------------------------------------------------------------
(1) The Bonus Units become payable to each of the named executive
officers in January 2002 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 18.
Additionally, 13,100 Bonus Units were awarded to other executive
officers and 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, 1997 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, 1997. In 1997,
options to acquire 20,000 shares were granted to other executive
officers at an exercise price of $30.75, options to acquire 180,000
shares were granted to nine members of the Company's senior
management group at exercise prices ranging from $32.38 to $36.00 and
options to acquire 970,000 shares were granted to 486 members of the
management group at exercise prices ranging from $29.00 to $37.13 per
share.
The following table presents stock options exercised by the named
executive officers during the year ended December 31, 1997:
Options Exercised in 1997
-------------------------
Shares Acquired Value
Name On Exercise Realized (1)
- ------------------ ---------------- ------------
Larry S. Blazevich -- --
Carl T. Cori -- --
Peter A. Gleich -- --
David R. Harvey -- --
Thomas M. Tallarico 10,000 $115,000
- --------------------------------------------------------------------------------
(1) Calculated as the aggregate market value per share of the
Company's common stock on the exercise date net of the aggregate
exercise price 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, 1997, as if all such in-the-money options were
vested and exercisable as of December 31, 1997:
<TABLE>
<CAPTION>
Option Values at December 31, 1997
----------------------------------
Number of Shares
Underlying Unexercised Value of Unexercised
Options Held In-the-Money Options (1)
---------------------------- -------------------------------
Name Exercisable Unexercisable Exercisable Unexercisable
- ------------------ ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Larry S. Blazevich 12,000 18,000 $ 162,750 $244,125
Carl T. Cori -- -- -- --
Peter A. Gleich 70,000 16,000 1,152,917 295,333
David R. Harvey -- -- -- --
Thomas M. Tallarico 44,000 8,000 731,500 173,000
<FN>
(1) Calculated as the aggregate closing market price per share of
the Company's common stock on December 31, 1997, 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 named executive officers, with a retirement benefit
based upon a formula. 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, 1997 levels, Drs. Cori and
Harvey, and Messrs. Blazevich, Gleich, and Tallarico would receive
upon retirement an annual pension benefit in the form of a single life
annuity of $101,370, $66,494, $18,017, $109,977 and $42,417,
respectively.
Employment and Other Agreements
The Company has Employment Agreements ("Agreements") with Drs. Cori
and Harvey and Messrs. Blazevich, Gleich 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 6, 1998, and the employment of the named
executive officers of the Company had been terminated, Drs. Cori and
Harvey and Messrs. Blazevich, Gleich, and Tallarico would have
collectively received $4,493,500.
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 6, 1998, and the employment of the
named executive officers of the Company had been terminated, Drs. Cori
and Harvey and Messrs. Blazevich and Tallarico would have collectively
received 76,400 shares of the Company's common stock and $2,022,000.
Mr. Gleich received cash in lieu of stock and the related cash for
taxes in January 1998, as described in the next paragraph.
At the end of 1997, Mr. Gleich elected to retire from the Company not
later than June 30, 1998, with compensation continuing through June
30, 1998. In consideration of Mr. Gleich's years of service and
contribution to the Company, the Company agreed (i) to pay Mr. Gleich
the amount of $750,000 less any required deductions, payable in three
installments through June 30, 1998; (ii) to pay Mr. Gleich $268,228,
representing payment for incentive stock bonus units as of a specified
date including appropriate tax considerations; (iii) to allow Mr.
Gleich to be fully vested in and exercise any stock options within 90
days from the effective date of his retirement in accordance with the
Company's Share Option Plans; (iv) to permit Mr. Gleich, if eligible
for an award in 1997 in accordance with the Company's Incentive Stock
Plan, to receive a cash payout in lieu of any stock award, increased
as appropriate for tax considerations, and (v) to provide certain
medical and other benefits to Mr. Gleich.
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 and the agreement
with Mr. Gleich.
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)
Sales Earnings Per Share-Diluted
($ in millions) (dollars)
----------------- --------------------------
1993 $ 739.4 $1.07*
1994 851.2 1.09
1995 959.8 1.30
1996 1,034.6 1.45
1997 1,127.1 1.62
Average Compound Growth Rate:
Sales 11.5%
EPS 11.0%
* 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.
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 13 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. No options were granted to the named executive
officers in 1997. See Stock Options on page 13 of this Proxy Statement
for additional information concerning this plan.
1997 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 1997, sales for the Company increased 8.9% to $1,127.1 million, net
income grew by 12.3% to $166.1 million and net income per share
(diluted) increased 11.7% to $1.62. In setting Dr. Cori's salary for
1997, the Committee recognized Dr. Cori's leadership in the growth of
sales and earnings by increasing his 1997 salary 9.4%. Dr. Cori's
Incentive Stock Bonus Plan award in 1997, for the Company's
performance in 1996, was 12,000 Bonus Units. Sales and net income for
1996 increased by 7.8% and 12.3%, respectively. Dr. Cori's salary for
1996 increased 4.5% over 1995. Dr. Cori's Incentive Stock Bonus Plan
award in 1996, for the Company's performance in 1995, was 10,225 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 1997
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, 1997, 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, 1992, 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>
1992 1993 1994 1995 1996 1997
------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
Sigma-Aldrich Corporation 100.00 83.99 58.25 88.12 111.93 143.65
Standard & Poors 500 100.00 110.09 111.85 153.80 189.56 252.82
Value Line Chemical Specialty 100.00 115.74 121.11 155.90 186.82 231.62
</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 1997 Group includes the
following companies: Airgas Inc., Avery Dennison Corp., BetzDearborn
Laboratories Inc., Calgon Carbon 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., Lubrizol Corp., Material
Sciences Corp., Morton International Inc., Nalco Chemical Co., NCH
Corp., Park Electrochem, Penford Corp., Praxair Inc., Quaker Chemical
Corp., Rohm & Haas Co., RPM Inc., A. Schulman Inc., Sherwin Williams
Co., Trizec Hahn Corp., Valspar Corp., WD-40 Co., Wellman Inc., and
Witco Corp.
The 1997 Group added Park Electrochem, Penford Corp. and Trizec Hahn
Corp. and deleted Chemed Corp., Loctite Corp., Petrolite Corp., PPG
Industries Inc. and Raychem Corp. from the 1996 Group. With these
exceptions, which resulted solely from the independent action of Value
Line, the 1997 and 1996 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 Directors' 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 28, 1998.
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 27, 1998
SIGMA-ALDRICH CORPORATION Exhibit A.
DIRECTORS' NONQUALIFIED
SHARE OPTION PLAN OF 1998
1. The Purpose of the Plan. This Plan is intended to provide an
opportunity for individuals serving as non-employee directors of the
Company to acquire shares of the Company's Common Stock, providing an
equity interest in the Company and additional compensation based on
appreciation of the value of such stock. The Plan provides for the
grant of stock options which are not incentive stock options as
defined in Section 422 of the Code, as an incentive to service or
continued service to the Company in order to aid the Company in
obtaining and retaining directors of outstanding ability.
2. Definitions. For purposes of this Plan, the following terms
will be defined as indicated:
(a) "Board" means the Board of Directors of the Company.
(b) "Cause" means habitual drug use or drunkenness, embezzlement
of Company funds, conduct which is injurious to the Company,
or conviction of a felony, all as determined in good faith
by the Board.
(c) "Code" means the Internal Revenue Code of 1986, as amended.
(d) "Common Stock" means the $1 par value Common Stock of the
Company.
(e) "Company" means Sigma-Aldrich Corporation, a Delaware
corporation.
(f) "Disability" means that the individual has suffered physical
or mental incapacity of such nature as to prevent him or her
from engaging in or performing the principal duties of his
or her customary employment or occupation on a continuing or
sustained basis. All determinations as to the date and
extent of disability shall be made by the Board upon the
basis of such evidence as it deems necessary or desirable.
(g) "ERISA" means the Employee Retirement Income Security Act,
as amended from time to time, or any successor statute.
(h) "Fair Market Value" means the closing price of the Common
Stock, as reported by The NASDAQ Stock Market, the New York
Stock Exchange or by any other national securities market on
which the Common Stock is traded. In the event the Common
Stock is not listed on an exchange or traded in the over-the-
counter market, then the Board will determine Fair Market
Value, which determination will be made in good faith and
will be binding.
(i) "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
(j) "Holder" means the director receiving options pursuant to
this Plan or, subject to the provisions of paragraph 5 (f),
a transferee as provided in paragraph 5(f).
(k) "Option" means a non-qualified option granted pursuant to
the Plan.
(l) "Option Certificate" means a certificate evidencing the
terms of an Option.
(m) "Plan" means the Company's Directors' Nonqualified Share
Option Plan of 1998 described herein.
(n) "Rule 16b-3" means Rule 16b-3 as promulgated under the
Exchange Act, as the rule may be amended from time to time,
or any successor rule or other comparable regulatory
requirements.
(o) "Subsidiary" means any person or entity which is controlled
by the Company.
3. Shares Subject to the Plan. There will be reserved for issuance
upon the exercise of Options 400,000 shares of Common Stock, which may
either be authorized and unissued Common Stock or treasury shares. If
an Option expires or terminates for any reason without being exercised
in full, the shares subject thereto which have not been purchased will
again be available for purposes of the Plan. The total number of
shares reserved for issuance under the Plan under this Paragraph 3 and
the number of shares as to which Options may be granted under the Plan
pursuant to Paragraph 5(a) will be proportionately adjusted, to the
nearest whole share, in the event of any stock dividend, stock split,
share combination or similar recapitalization, involving the Common
Stock, any merger, consolidation, share exchange or reorganization, or
any spin-off, spin-out or other significant distribution of assets to
stockholders for which the Company receives no consideration. In the
event that there is an insufficient number of authorized shares of
Common Stock available to allow exercise of the Options on the date of
any grant hereunder, such Options will not be exercisable until there
are sufficient shares of Common Stock authorized for issuance.
4. Eligibility. Subject to the other terms of this Plan, Options
may be granted to directors of the Company who are not also employees
of the Company or its subsidiaries and who does not beneficially own
more than 1% of the Company's outstanding Common Stock ("Eligible
Director"), whether or not they receive other remuneration from the
Company or its subsidiaries as directors, as consultants, or in any
other capacity.
5. Terms and Conditions of Options. All Options will be granted as
provided below and will be subject to the following terms and
conditions:
(a) Grant of Options. An Option to acquire 10,000 shares of
Common Stock will be granted to each eligible director of
the Company at the time the Plan is approved by
shareholders. Directors elected in the future will be
granted options to acquire 10,000 shares upon the date of
his or her initial election to the Board. Additionally,
each Eligible Director serving on the Board on the day after
any annual shareholder meeting including the meeting at
which this plan is approved, who has served on the Board for
at least six (6) months prior to such annual shareholders'
meeting will be granted an Option to acquire 2,000 shares on
such date. Options shall be evidenced by an Option
Certificate signed by the Company in such form and with such
terms and conditions as the Board shall designate. Such
certificates shall include by reference the terms of the
Plan as a condition under which the option is issued and
received.
(b) Option Price. The Option price per share will be equal to
the Fair Market Value of the Common Stock on the trading day
next preceding the date the Option is granted.
(c) Option Term. No Option will be exercisable after the
expiration of ten (10) years from the date the Option is
granted.
(d) Payment and Withholding. Payment for all shares purchased
pursuant to exercise of an Option will be made (i) in cash,
(ii) by delivery of unrestricted shares of Common Stock at
Fair Market Value on the date of exercise, or (iii) a
combination of (i) and (ii). The payment will be made at
the time the Option or any part thereof is exercised, and no
shares will be issued until full payment therefor has been
made. Payment in currency or by check, bank draft,
cashier's check, postal money order or wire transfer will be
considered payment in cash. In addition to the Option
price, the Company will have the right, if applicable, to
require the holder of an Option to satisfy any federal,
state or local withholding tax liability prior to the
delivery of any certificate or certificates for shares
issuable upon exercise of the Option by remitting to the
Company an amount in cash sufficient to satisfy same or by
authorizing the Company to withhold from the number of
shares delivered that number of shares whose Fair Market
Value equals (as closely as possible in whole shares) the
amount of such tax.
(e) Conditions to Exercise of an Option. No Option will vest or
may be exercised to any extent until the Holder will have
served as a director of the Company continuously for at
least three (3) months from the date of grant. Except as
provided in subparagraphs (f) and (g) below, an Option may
not be exercised by the Holder unless he or she is then, and
continuously after the grant of the Option has been, a
director of the Company. No Option may be exercised by a
Holder with respect to fractional shares. If the optionee's
service as a Director is terminated for Cause, any
unexercised portion of any Option granted to the optionee
will also terminate with such termination.
(f) Transferability of Options. An Option will be transferable
or assignable only (i) by will, (ii) by the laws of descent
and distribution, (iii) pursuant to a qualified domestic
relations order as defined by the Code, Title I of ERISA or
the rules thereunder, (iv) to the spouse, children or
grandchildren of the original Holder of the Option
("Immediate Family Members"), (v) to a trust or trusts for
the exclusive benefit of such Immediate Family Members, or
(vi) to a partnership in which such Immediate Family Members
are the only partners. Following such transfer, any such
Options shall continue to be subject to the same terms and
conditions as were applicable immediately prior to such
transfer; provided that the director service requirement
contained in subparagraph (e) hereof, the events of death,
disability or termination or removal contained in subparagraph
(g) hereof and, if applicable, the tax withholding obligations
contained in subparagraph (d) hereof, shall continue to be
applied with respect to the original Holder, following which
the Options shall be exercisable by the transferee only to
the extent, and for the periods, specified therein.
(g) Termination of Service as Director or Death. In the event
that a Holder ceases to serve as a director of the Company
for any reason other than his or her death, disability or
termination for Cause, such Holder will have the right to
exercise an unexpired Option at any time within six (6)
months after his or her termination of service to the extent
his or her right to exercise the Option has vested and has
not previously been exercised at the date of termination.
In the event of termination of service of the Holder by
reason of disability, the Holder may exercise his or her
Option at any time within twelve (12) months after the date
of such termination. If the Holder of an unexpired Option
dies while he or she is serving as a director of the
Company, his or her unexpired Option may be exercised (to
the extent that the Holder would have been entitled to do so
at the date of his or her death) by a legatee or legatees of
the Holder under his or her last will, or by his or her
personal representatives or distributee, at any time within
twelve (12) months following his or her death. In the event
of termination of service of the Holder for Cause, any and
all Options of the Holder shall automatically expire upon
such termination. In all of the cases cited above, the
exercise period of one or more Options may be extended by a
vote of a majority of the Directors whose Options are not
being extended; provided, however, that notwithstanding
anything in this subparagraph (g), no Option may be
exercised more than ten (10) years after the date on which
such Option was granted. For purposes of this subparagraph
(g), service as a director will not be deemed terminated so
long as the Holder is a director of the Company or another
entity which has assumed this Option in a transaction to
which Section 424(a) of the Code is applicable.
(h) Changes in Capitalization; Merger; Liquidation. The number
of shares of Common Stock covered by each outstanding Option
will be proportionately adjusted, to the nearest whole share
(i) for any increase or decrease in the number of issued
shares of Common Stock resulting from a subdivision or
combination of shares or the payment of a stock dividend
(but only on the Common Stock) or any other increase or
decrease in the number of such shares effected without
receipt of consideration by the Company, or (ii) for any
spin-off or spin-out of assets to the Company's stockholders
or any other significant distribution of assets by the
Company to its stockholders without receipt of consideration
by the Company. Any such adjustment to an outstanding
Option will be made without changing the total price
applicable to the unexercised portion of the Option, but
with a corresponding adjustment in the price and numbers of
shares for each share covered by the Option. If the Company
is the surviving corporation in any merger or consolidation
or statutory share exchange, each outstanding Option will
pertain to and apply to the securities to which a Holder of
the number of shares of Common Stock subject to the Option
would have been entitled to receive in such merger or
consolidation or statutory share exchange. A dissolution or
liquidation of the Company or a merger or consolidation or
statutory share exchange in which the Company is not the
surviving parent corporation will cause each outstanding
Option to terminate, except for Options as to which another
entity assumes or substitutes another option in a
transaction to which Section 424(a) of the Code is
applicable; provided, however, that, as to any Options which
are to so terminate, each Holder will have the right
immediately prior to such dissolution, liquidation, merger
or consolidation or statutory share exchange, to exercise
his or her Option in whole or in part, including with
respect to shares as to which the right to exercise had not
yet vested and without regard to any provisions deferring
exercise contained herein. Except as expressly provided in
this subparagraph (h), the Holder of an Option will have no
rights by reason of any subdivision or combination of shares
of stock of any class, or the payment of any stock dividend
or any other increase or decrease in the number of shares of
stock of any class, or by reason of any spin-off, spin-out
or comparable distribution of assets to the Company's
stockholders, or by reason of any dissolution, liquidation,
merger or consolidation or statutory share exchange or
distribution to the Company's stockholders of assets or
securities of another entity; and, except as expressly
provided in this subparagraph (h), any issue by the Company
of shares of stock of any class, or securities convertible
into shares of stock of any class, will not affect, and no
adjustment by reason thereof will be made with respect to,
the number or price of shares of Common Stock subject to the
Option. The existence of the Plan and the Options granted
pursuant to the Plan will not affect in any way the right or
power of the Company to make or authorize any adjustment,
reclassification, reorganization or other change in its
capital or business structure, any merger or consolidation
of the Company, any issue of debt or equity securities
having preferences or priorities as to the Common Stock or
the rights thereof, the dissolution or liquidation of the
Company, any sale or transfer of all or any part of the
Company's business or assets, or any other corporate act or
proceeding.
(i) Each Option will be subject to the requirement that if at
any time the Board determines that the listing, registration
or qualification of the shares subject to the Options upon
any securities exchange or under any state or federal
securities or other law or regulation, or the consent or
approval of any governmental regulatory body, is necessary
or desirable as a condition to or in connection with the
granting of the Option or the issue or purchase of Common
Stock thereunder, the Option may not be exercised, in whole
or in part, unless such listing, registration,
qualification, consent or approval will have been effected
or obtained free of any conditions not acceptable to the
Board. The Holder of the Option will supply the Company
with such certificates, representations, opinions of counsel
and information as the Company may request, including,
without limitation, an investment letter certifying that all
shares being purchased under an Option are being acquired
for investment and not for the purpose of resale or
distribution, and will otherwise cooperate with the Company
in obtaining such listing, registration, qualification,
consent or approval.
(j) Notwithstanding any other plan provision, no Option granted
pursuant to the Plan will terminate when a director is on
military, maternity, sick leave or other bonafide leave of
absence so long as his service as a director is continuing
pursuant to statute or contract.
6. Rule 16b-3 Compliance. In taking any action or interpretation
under the Plan with respect to a person who files reports under
Section 16 of the Exchange Act, the Company will use its best efforts
to ensure that such action or interpretation is taken in compliance
with Rule 16b-3.
7. No Rights as Stockholder. A Holder of an Option will have no
rights as a stockholder with respect to any Common Stock covered by
his or her Option until the date of issuance of a stock certificate to
him or her by the Company following exercise, in whole or in part, of
the Option.
8. Indemnification of Board Members. In addition to other rights
of indemnification as they may have as members of the Board, each
member of the Board will be indemnified by the Company against all
costs and expenses reasonably incurred by him or her in connection
with any action, suit or proceeding to which he or she may be party by
reason of any action taken or failure to act under or in connection
with the Plan, or any Option granted thereunder, and against all
amounts paid by him or her in settlement thereof (provided the
settlement is approved by legal counsel selected by the Company) or
paid by him or her in satisfaction of a judgement in any such action,
suit or proceeding, except a judgment based upon a finding of a breach
of the duty of loyalty or acts or omissions either not in good faith
or which involve intentional misconduct or a knowing violation of law.
Upon the institution of any such action, suit or proceeding, each
Board member affected will notify the Company in writing of the same,
giving the Company an opportunity, at its own expense, to defend the
same before the member undertakes to defend it on his or her own
behalf.
9. Administration. The Plan shall be administered by the Board of
Directors, with full power and authority to establish such rules and
regulations as it may deem appropriate for the proper administration
and operation of the Plan, and to make such determinations under, and
such interpretations of, and to take such steps in connection with,
the Plan and the Options granted hereunder as it may deem necessary or
advisable.
10. Term of Plan. Subject to Paragraph 11, the Plan shall remain
in effect until all Options granted under the Plan have been exercised
or expire.
11. Amendment of Plan. The Board may from time to time suspend,
discontinue or abandon the Plan or revise or amend it in any respect
whatsoever, except that (a) without the approval of stockholders of
the Company, no revision or amendment shall change the selection or
eligibility of directors to receive Options under the Plan, (b)
without approval of stockholders of the Company, the number of shares
subject to the Plan and the number of shares covered by Option awards
shall not be increased, and the price at which Options may be granted
shall not be decreased, except as provided in the Plan, and 8(c) an
outstanding Option shall not be amended in any respect without the
consent of the Holder.
- --------------------------------------------------------------------------------
By signing on the reverse, the shareholder(s) hereby appoint(s) 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, as
their representatives at the Annual Meeting of Shareholders of SIGMA-ALDRICH
CORPORATION to be held at NationsBank, 800 Market Street, St. Louis, Missouri
63101 on May 5, 1998, at 11:00 A.M., Central Daylight Time (including all
adjournments thereof), and there to vote all shares of stock which the
shareholder is entitled to vote, with all powers which the shareholder would
possess if personally present.
You are encouraged to specify your
choices by marking the appropriate (change of address)
boxes on the reverse side. Shares
represented by this proxy when -----------------------------------
properly executed will be voted as
directed or, if directions are not -----------------------------------
indicated, will be voted in accordance
with the Board of Directors, -----------------------------------
recommendations. The Proxies cannot (If you have written in the above
vote your shares unless you sign and space, please mark the corresponding
return this card. box on the reverse side of this card.
(Continued from other side)
The Board of Directors recommends a vote FOR the following:
(1)ELECTION OF DIRECTORS:
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
[ ] For All
[ ] Withheld All
[ ] For All Except ________________________________________________
(Except nominee written above)
(2)Approval of the Company's Directors' non-qualified share option plan of 1998
[ ] For
[ ] Against
[ ] Abstain
(3)Upon such other business as may properly come before the meeting and any
adjournments thereof.
[ ] For
[ ] Against
[ ] Abstain
Change of address (see other side) [ ]
The undersigned hereby acknowledges receipt of the Notice of Annual Meeting and
accompanying Proxy Statement, each dated March 27, 1998, 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 FOR item 2, unless as otherwise
directed, and in the discretion of the proxies on whatever other business may
properly come before the meeting.
Dated this_______ day of ________, 1998
Signature(s)___________________________
---------------------------------------
If stock is owned in joint names all
owners must sign. If signing for estates,
trusts or corporations, please indicate
title or capacity.
