<PAGE>
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 THE COMMISSION ONLY
(AS PERMITTED BY RULE 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
McWhorter Technologies Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transactions applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE>
MCWHORTER TECHNOLOGIES, INC.
400 EAST COTTAGE PLACE
CARPENTERSVILLE, ILLINOIS 60110
January 8, 1997
Dear Stockholder:
Our directors and officers join me in extending a cordial invitation to
attend the Annual Meeting of Stockholders to be held at 11:00 a.m. CST, on
Wednesday, February 19, 1997 at McWhorter Technologies Corporate Headquarters,
400 East Cottage Place, Carpentersville, Illinois 60110.
Time will be set aside for discussion of each item of business described in
the accompanying Notice of Annual Meeting and Proxy Statement. A current
report on the business operations of the Company will be presented at the
meeting and stockholders will have an opportunity to ask questions.
Whether or not you plan to attend the meeting, we urge you to sign, date and
return the enclosed proxy so as many shares as possible may be represented at
the meeting. The vote of every stockholder is important and your cooperation
in returning your executed proxy promptly will be appreciated.
Sincerely,
John R. Stevenson
Chairman &
Chief Executive Officer
<PAGE>
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
FEBRUARY 19, 1997
The Annual Meeting of Stockholders of McWHORTER TECHNOLOGIES, INC. (the
"Company") will be held at the corporate headquarters of the Company, 400 E.
Cottage Place, Carpentersville, Illinois 60110, on Wednesday, February 19,
1997, at 11:00 a.m. CST, for the following purposes:
(1) To elect directors;
(2) To consider and vote upon the appointment of Ernst & Young LLP as
independent auditors, for the Company's fiscal year ended October 31,
1997; and
(3) To transact such other business as may properly come before the
Annual Meeting or any adjournment or postponement thereof.
Holders of common stock, par value $0.01 per share (the "Common Stock"), of
record at the close of business on December 31, 1996 are the only stockholders
entitled to receive a notice of and to vote at the Annual Meeting of
Stockholders.
By order of the Board of Directors,
Jeffrey M. Nodland
Secretary
Dated: January 8, 1997
WHETHER OR NOT YOU EXPECT TO ATTEND THE ANNUAL MEETING, PLEASE COMPLETE,
SIGN, DATE, AND MAIL YOUR PROXY IN THE ENCLOSED ENVELOPE, WHICH REQUIRES NO
POSTAGE IF MAILED WITHIN THE UNITED STATES. IF YOU ARE PRESENT AT THE ANNUAL
MEETING, YOU MAY, IF YOU WISH, WITHDRAW YOUR PROXY AND VOTE YOUR SHARES
PERSONALLY.
<PAGE>
MCWHORTER TECHNOLOGIES, INC.
400 EAST COTTAGE PLACE
LOGO
CARPENTERSVILLE, ILLINOIS 60110
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
FEBRUARY 19, 1997
This Proxy Statement is furnished in connection with the solicitation by the
Board of Directors of the Company of proxies in the accompanying form for use
at the Annual Meeting of Stockholders to be held for the purpose of
considering and acting upon the matters specified in the foregoing Notice of
Annual Meeting. The mailing date of the proxy materials is on or about January
8, 1997.
The Common Stock is the only voting stock of the Company outstanding. At the
close of business on December 31, 1996, 10,465,940 shares of Common Stock were
outstanding and 9,171,454 shares of Common Stock were eligible to vote at the
Annual Meeting (pursuant to the Agreement Containing Consent Order by and
among The Valspar Corporation ("Valspar"), McWhorter, Inc. and the Federal
Trade Commission dated September 30, 1993, 1,298,162 shares of Common Stock
are restricted from being voted). Each stockholder of record is entitled to
one vote for each share of Common Stock held on all matters to come before the
Annual Meeting.
A proxy in the accompanying form which is properly signed, dated, returned,
and not revoked will be voted in accordance with the directions noted therein.
If no direction is indicated, it will be voted for the election of the
nominees named herein as directors, for ratification of the appointment of
Ernst & Young LLP as independent auditors and on all other matters presented
for a vote in accordance with the judgment of the person acting under the
proxies. The Board of Directors does not intend to bring any matter before the
Annual Meeting except as specifically indicated in the foregoing Notice of
Annual Meeting, nor does the Board of Directors know of any matters which
anyone else proposes to present for action at the Annual Meeting.
A proxy may be revoked by a holder of Common Stock at any time prior to its
use by the Company by voting in person at the Annual Meeting, by executing a
later proxy, or by submitting a written notice of revocation to the Secretary
of the Company at the Company's office or at the Annual Meeting.
Election of each director requires the affirmative vote of the holders of a
plurality of the shares of Common Stock present in person or represented by
proxy and entitled to vote at the Annual Meeting. Ratification of the
appointment of the independent auditors requires the affirmative vote of the
holders of a majority of the shares of Common Stock present in person or by
proxy and entitled to vote at the Annual Meeting. An automated system
administered by the Company's transfer agent is used to tabulate votes.
Abstentions, directions to withhold authority, and broker nonvotes are counted
as shares of Common Stock present in the determination of whether the shares
of Common Stock represented at the Annual Meeting constitute a quorum.
Abstentions are not counted in tabulations of the votes cast on proposals
presented to holders of Common Stock and neither abstentions nor broker
nonvotes are counted for purposes of determining whether a proposal has been
approved.
The cost of soliciting proxies has been, or will be, paid by the Company. In
addition to the solicitation of proxies by mail, directors, officers, and
employees of the Company may solicit proxies personally, by telephone,
<PAGE>
facsimile, letter, or other form of communication at no additional
compensation to them. The Company will reimburse brokerage firms and others
for their expenses in forwarding proxy materials to beneficial owners of
Common Stock.
The Company's Annual Report to Stockholders for the fiscal year ended
October 31, 1996, including financial statements, is enclosed with this Proxy
Statement. However, the Annual Report to Stockholders does not constitute a
part of this Proxy Statement.
ELECTION OF DIRECTORS
(PROPOSAL 1)
The Company's Board of Directors consists of seven members, all of whom are
to be elected at the Annual Meeting. The persons named below have been
designated by the Board of Directors as nominees for election as directors for
terms expiring at the Annual Meeting of Stockholders in 1998. All nominees are
currently serving as directors. Unless otherwise instructed, properly executed
proxies that are returned in a timely manner will be voted for election of the
seven nominees. If any of the nominees is unable or unwilling to stand for
election, it is intended that shares of Common Stock represented by proxy will
be voted for a substitute nominee determined by the holders of the proxies, in
their direction, or the Board of Directors may make an appropriate reduction
in the number of directors to be elected. The Board of Directors is not aware
that any of the nominees is unable or unwilling to stand for election.
The following material contains information concerning the nominees,
including their recent employments, position with the Company, other
directorships, and business experience:
MICHELLE L. COLLINS, age 36, is a Principal of the investment banking firm
of William Blair & Company, L.L.C., Chicago, Illinois. In her capacity in the
Corporate Finance Department, she provides financial advisory services
primarily consisting of equity offering and merger and acquisition
transactions to corporate clients. Ms. Collins joined the firm in 1986.
Previously, she was employed by Chase Manhattan Bank N.A. beginning in 1982.
Ms. Collins is a director of CDW Computer Centers, Inc. and has been a
director of the Company since February 1994.
EDWARD GILES, age 61, is Chairman of The Vertical Group, Inc., New York, New
York, the successor to the venture capital activities of F. Eberstadt & Co.,
Inc. He has held this position since 1988. He was also Vice Chairman of Peter
B. Cannell & Co., Inc. for two years beginning in 1989. Previously, he was
President of F. Eberstadt & Co., Inc. beginning in 1979 and Vice Chairman of
Eberstadt Fleming beginning in 1985. He is director of Ventana Medical Systems
and Metabolix, Inc. and an advisory director of Sit Kim International
Investments. Mr. Giles has been a director of the Company since May 1994.
D. GEORGE HARRIS, age 63, is Chairman and Chief Executive Officer of Harris
Chemical Group, Inc. ("HCG"), New York, New York, a holding company for a
group of inorganic chemicals and extractive minerals companies. He has held
this position with HCG or its predecessor companies since 1988. He is also
Chairman of HCG's European affiliates: Matthes & Weber GmbH (Germany); Societa
Chimica Larderello (Italy); Salt Union Ltd. (England); and Chairman and Chief
Executive Officer of Harris Specialty Chemicals, Inc. ("HSC"), founded in
1994. Mr. Harris is also a founder and Chairman of D. George Harris &
Associates, the industrial management and buyout company formed in 1987 which
led the acquisitions for the foundation of HCG and HSC, and serves as a
trustee of the Tax-Free Fund for Utah. Prior to the HCG and HSC activities,
Mr. Harris was a Senior Advisor at Robert Fleming & Co., PLC for two years.
Before that he was President of SCM Chemicals and, subsequently, SCM
Corporation, and, before joining SCM, he was President of Rhone-Poulenc,
2
<PAGE>
Inc., the U.S. subsidiary of France's largest chemical company. Mr. Harris has
been a director of the Company since February 1994 and was Chairman of the
Board of Directors of the Company from February 1994 through December 31,
1996.
JOHN G. JOHNSON, JR., age 56, is President and Chief Executive Officer of
Safety-Kleen Corporation, Elgin, Illinois, a recycler of hazardous and non-
hazardous waste fluids. He has held the position of Chief Executive Officer
since January 1995 and the position of President and Director since January
1993. Prior to joining Safety-Kleen he was employed by ARCO beginning in 1958.
From 1988 until December 1992 he served as President of ARCO Chemical
Americas, a division of ARCO Chemical and served as Director of ARCO Chemical.
Mr. Johnson has been a director of the Company since May 1995.
JEFFREY M. NODLAND, age 41, is President, Chief Operating Officer and
Secretary of the Company. He has held the position since January 1, 1997, the
position of Chief Operating Officer since May 1995 and the position of
Secretary since February 1994. Mr. Nodland was the Executive Vice President of
the Company from May 1995 to December 1996 and the Senior Vice President and
Chief Financial Officer from February 1994 to May 1995. Previously he held the
position of President of McWhorter, Inc. beginning in June 1991, and Vice
President, Maintenance & Marine Coatings of Valspar beginning in October 1989.
Mr. Nodland has been a director of the Company since November 1993.
JOHN R. STEVENSON, age 54, is Chairman and Chief Executive Officer of the
Company. He has held the position of Chairman since January 1, 1997 and the
position of Chief Executive Officer since 1994. Mr. Stevenson was President of
the Company from February 1994 to December 1996. Prior to being named in
February, 1994 to this position Mr. Stevenson was Vice President, Special
Products Group and Administration of Valspar beginning in August 1992.
Previously he held the position of Vice President, Administration of Valspar
beginning in February 1991 and Vice President, Corporate Services of Valspar
beginning in February 1985. Mr. Stevenson has been a director of the Company
since November 1993.
HEINN F. TOMFOHRDE, III, age 63, is retired. Prior to his retirement he held
the position of President, Chief Operating Officer, and Director of
International Specialty Products, Inc. and its predecessor company GAF
Chemicals Corp. from 1987 through 1991. Previously, he held the position of
President and Chief Operating Officer of Union Carbide's Consumer and
Industrial Products and Services Group beginning in 1985. Mr. Tomfohrde is a
director of the Harris Chemical Group Inc. and Sybron Chemicals, Inc. Mr.
Tomfohrde has been a director of the Company since February 1994.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE IN FAVOR OF THE
ELECTION OF EACH OF THE NOMINEES FOR DIRECTOR.
CERTAIN INFORMATION CONCERNING MEETINGS AND COMMITTEES OF THE BOARD OF
DIRECTORS
The three standing committees of the Board of Directors are the Audit
Committee, the Compensation Committee, and the Environmental Committee. The
Board of Directors held four meetings during the fiscal year ended October 31,
1996 ("fiscal 1996").
Audit Committee. The members of the Audit Committee are Messrs. Giles
(Chairman), Harris, Johnson, and Tomfohrde, and Ms. Collins. The Audit
Committee held three meetings during fiscal 1996. The Committee reviews the
accounting and auditing principles and procedures of the Company with a view
to providing for the safeguard of the Company's assets and the reliability of
its financial records; recommends to the Board of
3
<PAGE>
Directors the engagement of the Company's independent auditors; reviews with
the independent auditors the plans and results of the auditing engagement; and
considers the independence of the Company's auditors.
Compensation Committee. The members of the Compensation Committee are
Messrs. Giles, Harris, Johnson, and Tomfohrde (Chairman), and Ms. Collins. The
Compensation Committee held four meetings during fiscal 1996. The Committee
establishes salaries, incentives, and other forms of compensation for
executive officers and other key employees of the Company; administers the
various incentive compensation and benefit plans of the Company; and
recommends policies related to such incentive compensation and benefit plans.
Environmental Committee. The members of the Environmental Committee are
Messrs. Giles, Harris, Johnson (Chairman), and Tomfohrde, and Ms. Collins. The
Environmental Committee held one meeting during fiscal 1996. The Committee
reviews the environmental principles and procedures of the Company with a view
to achieving and maintaining compliance with all applicable environmental laws
and regulations; implementing programs and procedures that address issues
related to the environment; and integrating environmental planning with the
Company's business operations.
The Company does not have a nominating committee.
DIRECTOR COMPENSATION
Employee directors do not receive additional compensation for serving on the
Board of Directors. Non-employee directors receive an annual retainer of
$15,000 payable, at the director's option, either entirely in deferred stock
or 50% in deferred stock and 50% in cash. The Chairman of the Board of
Directors, if a non-employee, receives an additional $35,000 annual retainer
payable, either entirely in deferred stock or, at his option, 50% in deferred
stock and 50% in cash. A nonemployee director is entitled to receive shares of
Common Stock represented by the deferred stock awards when such director
ceases to be a member of the Board of Directors. Each nonemployee director
also receives a fee of $1,000 in cash for each Board of Directors or committee
meeting attended, provided that the committee meetings are not held on the
same day as a Board of Directors meeting. Upon his or her initial election to
the Board of Directors, each non-employee director (except for Mr. Harris in
his previous role as Chairman of the Board of Directors) received an initial
non-qualified option to purchase 10,000 shares of Common Stock at a price
equal to the market value of such shares at the date of grant. Mr. Harris in
his previous role received an initial non-qualified option to purchase 35,000
shares of Common Stock at an exercise price equal to the market value of such
shares at the date of grant. The exercise price for such options for Messrs.
Harris, Giles, and Tomfohrde and Ms. Collins is $16.2125 per share and for Mr.
Johnson is $15.00 per share.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following information presents the beneficial ownership of shares of
Common Stock as of December 1, 1996 (unless otherwise stated) by (i) each
stockholder known by the Company to be the owner of more than five percent of
the outstanding shares of Common Stock, (ii) each director, (iii) each
executive officer named in the Summary Compensation Table, and (iv) all
directors and executive officers as a group. Except as noted below, the shares
of Common Stock indicated in the following table are held with sole power over
both investment and voting.
This table also sets forth the number of McWhorter Stock Equivalents
credited to the individual's deferred compensation account. This account
reflects the election of the individual to defer restricted stock and stock
4
<PAGE>
option gains, and Company ESOP restoration contributions. The value of an
individuals' account in stock equivalents is directly related to the price of
McWhorter stock and subject to any volatility in that price. These stock
equivalents do not carry any voting rights.
<TABLE>
<CAPTION>
TOTAL
NUMBER OF
SHARES SHARES AND
BENEFICIALLY PERCENT MWT STOCK MWT STOCK
NAME OF BENEFICIAL OWNER OWNED OF CLASS EQUIVALENTS EQUIVALENTS
- ------------------------ ------------ -------- ----------- -----------
<S> <C> <C> <C> <C>
Norwest Corporation............ 2,020,006(1) 19.1% 0 2,020,006
6th and Marquette
Minneapolis, MN 55479
C. Angus Wurtele............... 1,298,162(2) 12.3% 0 1,298,162
1101 Third Street South
Minneapolis, MN 55415
The Capital Group Companies, 706,000(3) 6.7% 0 706,000
Inc. .........................
333 South Hope Street
Los Angeles, CA 90071
John R. Stevenson.............. 103,758(4) 1.0% 1,572 105,330
Jeffrey M. Nodland............. 71,478(5) * 748 72,226
D. George Harris............... 43,138(6) * 0 43,138
Michelle L. Collins............ 11,796(7) * 0 11,796
Edward M. Giles................ 11,796(7) * 0 11,796
John G. Johnson, Jr............ 11,528(8) * 0 11,528
Heinn F. Tomfohrde, III........ 13,796(7) * 0 13,796
Kevin W. Brolsma............... 27,663(9) * 175 27,838
Patrick T. Heffernan........... 35,638(10) * 306 35,944
Douglas B. Rahrig.............. 27,008(11) * 224 27,232
All directors and executive
officers as a group (11
persons)...................... 358,826 3.4%
</TABLE>
- --------
* Less than 1.0%
(1) Reported as of November 30, 1996. As of such date Norwest Bank Minnesota,
National Association, a wholly-owned subsidiary of Norwest Corporation
reported sole voting power over 581,267 shares, shared voting power over
1,369,349 shares, sole investment power over 168,916 shares, and shared
investment power over 1,826,840 shares. Norwest Corporation and Norwest
Bank Minnesota, National Association disclaim beneficial ownership of all
such shares.
(2) Based on Form 5 dated as of December 1996. As of such date Mr. Wurtele
reported sole voting and investment power over 927,217 shares and shared
voting and investment power as follows: 25,425 shares owned by Mr.
Wurtele's spouse and; 345,520 shares held for Mr. Wurtele's benefit as
co-trustee; Pursuant to the Agreement Containing Consent Order by and
among Valspar, McWhorter, Inc. and the Federal Trade Commission dated
September 30, 1993, all such shares are restricted from being voted.
(3) Based on Schedule 13G dated as of December 31, 1995.
(4) Includes options currently exercisable or exercisable within 60 days for
29,104 shares. As of October 31, 1996, includes 1,982 shares held through
the McWhorter Technologies, Inc. Employee Stock Ownership Plan (the
"ESOP").
5
<PAGE>
(5) Includes options currently exercisable or exercisable within 60 days for
16,614 shares. As of October 31, 1996, includes 1,974 shares held though
the ESOP.
(6) Includes options currently exercisable for 35,000 shares and 5,985 shares
of deferred stock.
(7) Includes options currently exercisable for 10,000 shares and 1,796 shares
of deferred stock.
(8) Includes options currently exercisable for 10,000 shares and 828 shares
of deferred stock.
(9) Includes options currently exercisable or exercisable within 60 days for
9,450 shares. As of October 31, 1996, includes 1,929 shares held through
the ESOP; and 450 shares held through the McWhorter Technologies, Inc.
Employee 401(k) Savings Plan (the "401(k) Plan").
(10) Includes options currently exercisable or exercisable within 60 days for
11,025 shares. As of October 31, 1996, includes 1,933 shares held through
the ESOP.
(11) Includes options currently exercisable or exercisable within 60 days for
9,648 shares. As of October 31, 1996, includes 138 shares held through
the 401(k) Plan and 1,157 shares held through the ESOP.
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth the cash compensation paid to the Company's
Chief Executive Officer and its other four most highly paid executive officers
(the "named executives") in the fiscal years ended October 31, 1994 ("fiscal
1994"), October 31, 1995 ("fiscal 1995") and October 31, 1996 ("fiscal 1996")
for services rendered in all capacities to the Company:
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG-TERM COMPENSATION
---------------------------- ------------------------
AWARDS
------------------------
RESTRICTED STOCK ALL OTHER
NAME & PRINCIPAL STOCK UNDERLYING COMPENSATION
POSITION(1) YEAR SALARY ($)(2) BONUS ($) AWARDS($)(3) OPTIONS (#) ($)(4)
- ---------------- ---- ------------- --------- ------------ ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
John R. Stevenson 1996 $344,998 $182,849 $ 13,562 11,570 $60,060
President & Chief 1995 $291,668 $ 31,733 $471,589 11,290 $11,000
Executive Officer 1994 $250,000 $ 67,386 $ 97,630 66,773 $20,141
Jeffrey M. Nodland
Executive Vice
President 1996 $235,638 $104,387 $ 5,021 7,934 $38,544
& Chief Operating 1995 $195,829 $ 19,172 $309,964 10,484 $11,000
Officer 1994 $175,000 $ 47,968 $ 70,833 37,774 $18,154
Patrick T. Heffernan 1996 $182,489 $ 63,141 $ 2,692 1,157 $27,059
Senior Vice President, 1995 $175,000 $ 12,460 $269,367 0 $11,000
Coatings Resin 1994 $175,000 $ 47,968 $ 0 26,985 $17,439
Douglas B. Rahrig 1996 $161,499 $ 62,338 $ 741 1,983 $24,842
Vice President, 1995 $150,000 $ 17,730 $224,998 0 $11,000
Technology 1994 $150,000 $ 31,353 $ 0 23,130 $ 0
Kevin W. Brolsma 1996 $156,417 $ 57,429 $ 741 992 $23,574
Vice President, 1995 $150,000 $ 10,680 $229,009 0 $11,000
Powder 1994 $150,000 $ 40,830 $ 0 23,130 $16,704
</TABLE>
- --------
(1) Effective January 1, 1997 Mr. Stevenson assumed the title of Chairman and
Chief Executive Officer and Mr. Nodland assumed the title of President and
Chief Operating Officer.
(2) The amounts set forth for fiscal 1994 represent annualized salaries. The
named executives received salaries from the Company for fiscal 1994
beginning on the date of the spin-off from Valspar, April 29, 1994.
6
<PAGE>
(3) For fiscal 1996, Restricted Stock Awards represent excess ERISA benefits
for fiscal 1995.
For fiscal 1995, named executives held the following number of shares of
restricted stock awards representing excess ERISA benefits for fiscal 1994
and performance based awards which will vest if at all as certain
performance measurements are met. The vesting is contingent on the
Company's achieving certain returns on capital and return on equity goals.
These performance based awards of restricted shares will be forfeited to
the extent the vesting criteria have not been met.
The awards were granted as follows:
<TABLE>
<CAPTION>
EXCESS ERISA BENEFITS PERFORMANCE BASED
FISCAL 1994 ($)/(# OF SHARES) AWARDS ($)/(# OF SHARES)
----------------------------- ------------------------
<S> <C> <C>
John Stevenson.... $21,593/1,448 $449,996/29,032
Jeff Nodland...... $ 9,961/ 668 $300,003/19,355
Patrick Heffernan. $ 6,874/ 461 $262,493/16,935
Kevin Brolsma..... $ 4,011/ 269 $224,998/14,516
Douglas Rahrig.... $ 0/0 $224,998/14,516
</TABLE>
(4) Represents contributions or allocations by the Company to defined
contribution or savings plans (tax-qualified and supplemental) on behalf
of the named executives.
OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth information regarding individual grants of
stock options made during fiscal 1996 to the named executives:
<TABLE>
<CAPTION>
POTENTIAL
REALIZABLE
VALUE AT
ASSUMED ANNUAL
RATES OF STOCK
PRICE
APPRECIATION
FOR OPTION
INDIVIDUAL GRANTS TERM(2)
- ---------------------------------------------------------------------- ---------------
NUMBER OF PERCENT OF
SECURITIES TOTAL OPTIONS EXERCISE
UNDERLYING GRANTED TO OR BASE
OPTIONS EMPLOYEES IN PRICE PER EXPIRATION
NAME GRANTED(1) FISCAL 1996 SHARE DATE 5%(2) 10%(2)
- ---- ---------- ------------- --------- ---------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
John R. Stevenson....... 11,570 20.8% 15.125 12/13/05 $15,328 $31,263
Jeffrey M. Nodland...... 7,934 14.3% 15.125 12/13/05 $10,511 $21,438
Patrick T. Heffernan.... 1,157 2.1% 15.125 12/13/05 $ 1,533 $ 3,126
Kevin W. Brolsma........ 992 1.8% 15.125 12/13/05 $ 1,314 $ 2,680
Douglas B. Rahrig....... 1,983 3.6% 15.125 12/13/05 $ 2,627 $ 5,358
</TABLE>
- --------
(1) Indicates options granted on December 13, 1995 that become exercisable in
20% annual increments beginning one year from the date of grant.
(2) The dollar amounts under these columns are the result of calculations at
the 5% and 10% rates set by the Securities and Exchange Commission and
therefore are not intended to forecast possible future appreciation, if
any, in the market value of the Common Stock.
7
<PAGE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES
The following table sets forth information with respect to the named
executives concerning the exercise of options during fiscal 1996 and
unexercised options held as of October 31, 1996.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED IN-
OPTIONS AT THE-MONEY OPTIONS AT
OCTOBER 31, 1996 (#) OCTOBER 31, 1996 ($)*
------------------------- -------------------------
SHARES
ACQUIRED ON VALUE
NAME EXERCISE REALIZED ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ----------- ------------ ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
John R. Stevenson 5,442 35,218 26,790 57,401 $90,138 $209,105
Jeffrey M. Nodland...... 5,442 35,218 15,028 35,722 $57,337 $130,909
Patrick T. Heffernan.... 0 0 10,794 17,348 $32,787 $ 53,952
Kevin W. Brolsma........ 0 0 9,252 14,870 $28,103 $ 46,247
Douglas B. Rahrig....... 0 0 9,252 15,861 $28,103 $ 50,335
</TABLE>
- --------
*The value of the unexercisable in-the-money options is based on the
difference between the exercise price of the options and the fair market
value of the Common Stock on October 31, 1996.
COMPENSATION COMMITTEE INTERLOCKS WITH INSIDER PARTICIPATION
During fiscal 1996, Messrs. Giles, Harris, Johnson, Tomfohrde and Ms.
Collins served as members of the Compensation Committee of the Board of
Directors, none of whom has ever served as an officer or employee of the
Company.
BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors is comprised of the
five independent nonemployee directors named below. The Committee is
responsible for establishing salaries, incentives, and other forms of
compensation for the Company's executive officers and other key employees,
administering the various incentive compensation and benefit plans of the
Company, and recommending policies related to such incentive compensation and
benefit plans. The Committee has adopted the following as the purpose of the
Company's executive compensation program: (1) retain and attract quality
executives critical to the success of the Company; (2) direct executive
attention to performance measures that are important to stockholders, such as
growth in earnings per share, earnings quality, stock price appreciation, and
full compliance with legal and ethical standards; (3) reward executives for
progress in achieving longer term strategic goals; and (4) promote stock
ownership to ensure that the interests of the executives and stockholders are
closely aligned. The Company's incentive plans are designed to condition a
significant amount of an executive's compensation on the performance of the
Company. The compensation plans are also designed to encourage executive stock
ownership. In its administration of the various compensation programs, the
Committee focuses on these goals of tying compensation to performance and
encouraging executive stock ownership. The compensation program for executive
officers consists of two annual components, base salary and cash bonus, and
three long-term components, grants of stock options, grants of stock
equivalents and awards of restricted stock.
Section 162(m) of the Internal Revenue Code, enacted in 1993, generally
limits to $1,000,000 the tax deductibility of compensation paid by a public
company to its chief executive and four other most highly
8
<PAGE>
compensated executive officers. Certain performance based compensation is not
subject to the limitation and certain regulations have been proposed under
Section 162(m). Because the Committee believes the nonperformance based
compensation of each of the executive officers will be below the Section 62(a)
tax deductibility amount for the foreseeable future, the Committee has not yet
taken any specific action or adopted any policy in this regard.
Base Salary. During fiscal 1995, the Committee adopted a policy that the
base salaries for executives should be set at slightly above the average of a
selected peer group of companies, consisting of, if possible, at least seven
coatings intermediates and specialty chemicals companies those salaries should
be adjusted over time based upon both the performance of the executives and
the performance of the Company relative to the performance of the peer group.
Based on this analysis, during fiscal 1996 the Committee approved an increase
in the base salaries of Messrs. Stevenson, Nodland, Brolsma, Heffernan, and
Rahrig.
Bonus Programs. One element of the annual compensation plan for executive
officers is the opportunity to earn a substantial cash bonus. These bonuses
are based upon the accomplishment of certain pre-established goals and
criteria. An available bonus amount, expressed as a percentage of base salary,
is established in advance. This places a substantial portion of an executive's
annual compensation at risk. The available bonus amount as a percentage of
salary for the executive officers in fiscal 1996 was 80% (90% for the Chief
Operating Officer and 100% for the Chief Executive Officer). The evaluation
criteria are to be reviewed, evaluated, and appropriately modified on an
annual basis. For fiscal 1996 those criteria were as follows: sales, gross
margin, earnings per share and a discretionary component as determined by the
Compensation Committee. If the maximum available bonus would have been earned
in fiscal 1996 under the pre-established criteria, the committee's policy
provided that the Committee, in its sole discretion and on an individual
basis, would consider bonuses for truly extraordinary performance in an amount
not to exceed an additional 50% of base salary. Pursuant to the bonus program,
the executive officers on average received bonuses equal to 41.6% of their
base salaries.
Stock Options and Restricted Stock. The Committee's policy is that the
primary component of long-term compensation for executive officers should be
stock options. The Committee believes that tying the compensation of the
executives to the price of the Common Stock is the most effective means of
aligning their interests with those of the Company's stockholders. The
Committee's policy is that executive officers should be granted stock options
at an exercise price equal to the market price at the time of grant and with a
total option value which is in the middle of the range of option values
granted to executive officers at comparable publicly-held coatings
intermediates and specialty chemicals companies. Based on this policy, the
Committee has granted options to purchase a number of shares with a market
price on the date of grant equal to 2 1/2 times the executive officer's base
salary (3 times in the case of the Chief Operating Officer and 3 1/2 times in
the case of the Chief Executive Officer). Additional options are granted to
reflect increases in base salary. The Committee has not adopted a specific
policy on when any other options might be granted. Nonetheless, options are
not granted on an annual basis and since the formation of the Company there
has been only one option grant (other than those to reflect salary increases)
to each executive officer.
The other long-term component of executive officer compensation is a
restricted stock award. When granted the shares vest, if at all, based on a
comparison of the Company's earnings per share in each year to a base year
(fiscal 1994). The vesting is also contingent on the Company's achieving
certain return on capital and return on equity goals. In fiscal 1995 the
Committee made restricted stock awards to the executive officers with respect
to a number of shares equal in value on the date of award to 1 1/2 times the
executive officer's base salary. These restricted shares are forfeited to the
extent the vesting criteria have not been met and additional awards are not
made to reflect increase in base salary. For fiscal 1995 and 1996 the vesting
criteria has not been met.
9
<PAGE>
The Committee has adopted a policy in fiscal 1994 of awarding shares of
Common Stock as restricted stock annually to those employees (including
executive officers) on whose behalf contributions by the Company to the
Company's Employee Stock Ownership Plan (the "ESOP") and Employee 401(k)
Savings Plan (the "401(k) Plan") are subject to the compensation limitation
set by Section 401(a)(17) of the Internal Revenue Code for qualified
retirement vehicles. The number of shares of Common Stock awarded as
restricted stock is calculated on the basis of the difference between the
employee's salary and such limitation amount (currently $150,000) multiplied
by the Company's contribution rate to the ESOP and the 401(k) Plan and divided
by the fair market value of the Common Stock. This policy was supplanted
effective October 1, 1996 by the terms of the Deferred Compensation Plan.
Deferred Compensation. In fiscal 1996, the McWhorter Technologies, Inc.
Deferred Compensation Plan (the "Plan") was adopted by the Compensation
Committee for a select group of management or highly compensated employees.
The Plan became effective October 1, 1996. The Plan provides an opportunity to
defer a portion of base annual salary, annual bonus, restricted stock and
stock option gains on a pre-tax basis. Under the Plan the Company credits the
employee with an amount equal to excess ERISA benefits and may make
discretionary contributions. During fiscal 1996, all of the named executives
participated in the Plan and the amounts credited by the Company under the
Plan to their accounts were equal to excess ERISA benefits. There were no
discretionary contributions made by the Company. To the extent that restricted
stock or stock option gains are deferred, they are required to be deferred in
the form of stock equivalents and cannot be distributed until the individual
retires or leaves the Company.
Chief Executive Officer Compensation. In establishing Mr. Stevenson's base
salary, the Committee considered information concerning the salaries of chief
executive officers of other companies in similar industries and of similar
size and complexity and attempted to set levels at or slightly above the
comparables. In establishing the multiple of 3 1/2 applied to Mr. Stevenson's
salary in determining the number of shares of Common Stock as to which he was
granted stock options and the multiple of 1 1/2 in determining the number of
shares of restricted stock, the Committee considered information concerning
the potential for a long term compensation that was provided by other
companies in similar industries and similar size and complexity. In
establishing Mr. Stevenson's compensation in fiscal 1996, the Committee also
considered the significant financial and strategic achievements of the Company
in fiscal 1996 and the considerable challenges which are inherent in the role
of the Chief Executive Officer of a public company in its formative years.
Respectfully submitted, Compensation Committee
Heinn F. Tomfohrde, III, Chairman
Michelle L. Collins
Edward M. Giles
D. George Harris
John G. Johnson, Jr.
10
<PAGE>
STOCK PERFORMANCE GRAPH
The graph below compares the Company's cumulative total shareholder return
from April 11, 1994 to October 31, 1996 with the cumulative total return of
(1) the Standard & Poor's 500 Stock Index ("S&P 500") and (2) Standard &
Poor's Speciality Chemical Group ("S&P Speciality Chemical"). The graph
assumes the investment of $100 in the Common Stock at April 11, 1994, the S&P
500 and the S&P Speciality Chemical at April 29, 1994 and the reinvestment of
all dividends. The comparisons in this graph are required by the Securities
and Exchange Commission and are not intended to forecast or be indicators of
possible future performance of the Common Stock.
COMPARISON OF TOTAL RETURN
AMONG THE COMPANY, THE S&P 500, AND THE S&P SPECIALITY CHEMICAL.
<TABLE>
<CAPTION>
4/11/94 10/31/94 10/31/95 10/31/96
------- -------- -------- --------
<S> <C> <C> <C> <C>
MCWHORTER TECH 100 131 105 135
S&P 500 100 106 134 167
S&P 500 CHEMICAL (SPECIAL) 100 95 114 128
</TABLE>
$100 invested on 4/11/94 in stock or on 3/31/94
in Index--Including reinvestment of dividends.
Fiscal year ending October 31.
11
<PAGE>
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
(PROPOSAL 2)
Ernst & Young LLP has served as the Company's independent auditor since the
formation of the Company. The Board of Directors has selected Ernst & Young LLP
to serve as the independent auditors of the Company for the 1997 fiscal year.
This selection will be submitted for ratification by the stockholder at the
Annual Meeting. Representatives of Ernst & Young LLP are expected to be present
at the Annual Meeting. They will have the opportunity to make a statement if
they desire to do so and are expected to be available to respond to appropriate
questions. In the absence of instructions to the contrary, shares of Common
Stock represented by properly executed proxies will be voted in favor of the
ratification of Ernst & Young LLP to serve as independent auditors.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE IN FAVOR OF THE
RATIFICATION OF THE APPOINTMENT OF INDEPENDENT AUDITORS.
STOCKHOLDER PROPOSALS
In accordance with rules promulgated by the Securities and Exchange
Commission, any stockholder who wishes to submit a proposal for inclusion in
the proxy material to be distributed by the Company in connection with the 1997
Annual Meeting of Stockholders must do so no later than September 11, 1997. Any
such proposal should be submitted in writing to the Secretary of the Company at
its principal executive offices.
By Order of the Board of Directors,
Jeffrey M. Nodland
Secretary
12
<PAGE>
Confidential Voting Instructions
To: First Trust, St. Paul, Minnesota, Trustee of the McWhorter Technologies,
Inc. Employee Stock Ownership Plan (ESOP) and McWhorter Technologies, Inc.
Employee 401(k) Savings Plan
THESE INSTRUCTIONS ARE BEING SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
McWHORTER TECHNOLOGIES, INC.
I acknowledge receipt of a copy of the Annual Report of McWhorter
Technologies, Inc. for fiscal year 1996 and a Notice of Annual Meeting and Proxy
Statement relating to the Annual Meeting of Stockholders to be held on February
19, 1997.
You are hereby instructed, with respect to the shares of McWhorter
Technologies, Inc. allocated to my account in the ESOP and/or 401(k) Plan, to
vote as indicated on the reverse side of this card and to confer discretionary
authority to vote upon other business that may properly come before the meeting.
THESE VOTING INSTRUCTIONS MUST BE RECEIVED BY THE TRUSTEE BY 5:00 p.m. EST ON
FEBRUARY 17, 1997. SHARES FOR WHICH THE PARTICIPANTS DO NOT GIVE TIMELY VOTING
INSTRUCTIONS WILL BE VOTED BY THE TRUSTEE AS INSTRUCTED BY THE ADMINISTRATION
COMMITTEE, OR, IF NO INSTRUCTIONS ARE RECEIVED, AS THE TRUSTEE DETERMINES.
PLEASE MARK, DATE, SIGN AND RETURN THIS PROXY CARD PROMPTLY, USING THE ENCLOSED
ENVELOPE. NO POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES OF AMERICA.
Has your address changed? Do you have any comments?
- ------------------------------ ----------------------------
- ------------------------------ ----------------------------
- ------------------------------ ----------------------------
<PAGE>
[X]PLEASE MARK VOTES AS IN THIS EXAMPLE
--------------------------------
McWHORTER
TECHNOLOGIES, INC.
--------------------------------
RECORD DATE SHARES:
--------------------------
Please be sure to sign and date this Proxy. Date
- --------------------------------------------------------------------------------
_____Stockholder sign here______________________Co-owner sign here______________
1. Election of Directors.
With- For All
Michelle L. Collins, Edward M. Giles, For hold Except
D. George Harris, John G. Johnson, Jr., [_] [_] [_]
Jeffrey M. Nodland, John R. Stevenson,
and Heinn F. Tornfohrde III
NOTE: If you do not wish your shares voted "FOR" a particular nominee,
mark the "FOR ALL EXCEPT" box and strike a line through that nominee's
name. Your shares shall be voted for the remaining nominees.
2. Ratify the appointment of Ernst & Young LLP as For Against Abstain
independent auditors for the [_] [_] [_]
Company for the 1997 fiscal year.
3. In their discretion, the proxies are authorized to For Against Abstain
vote upon any other business that may properly [_] [_] [_]
come before the meeting.
Mark box at right if an address change or comment has been noted on the reverse
side of this card. [_]
DETACH CARD DETACH CARD
McWhorter Technologies, Inc.
Dear Shareholder,
Please take note of the important information enclosed with this Proxy Ballot.
There are a number of issues related to the management and operation of your
Corporation that require your immediate attention and approval. Those are
discussed in detail in the enclosed proxy materials.
Your vote counts, and you are strongly encouraged to exercise your right to vote
your shares.
Please mark the boxes on this proxy card to indicate how your shares will be
voted. Then sign the card, detach it and return your proxy vote in the enclosed
postage paid envelope.
Thank you in advance for your prompt consideration of these matters.
Sincerely,
McWhorter Technologies, Inc.
<PAGE>
Confidential Voting Instructions
To: Norwest Bank Minnesota, NA, Trustee of The Valspar Corporation Stock
Ownership Trust and the Valspar Corporation Profit Sharing Trust.
THESE INSTRUCTIONS ARE BEING SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
McWHORTER TECHNOLOGIES, INC.
I acknowledge receipt of a copy of the Annual Report of McWhorter
Technologies, Inc. for fiscal year 1996 and a Notice of Annual Meeting and Proxy
Statement relating to the Annual Meeting of Stockholders to be held on February
19, 1997.
You are hereby instructed, with respect to the shares of McWhorter
Technologies, Inc. allocated to my account in The Valspar Corporation Stock
Ownership Trust and The Valspar Corporation Profit Sharing Trust, to vote as
indicated on the reverse side of this card and to confer discretionary authority
to vote upon other business that may properly come before the meeting.
PLEASE MARK, DATE, SIGN AND RETURN THIS PROXY CARD PROMPTLY, USING THE ENCLOSED
ENVELOPE. NO POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES OF AMERICA.
THESE VOTING INSTRUCTIONS MUST BE RECEIVED BY THE TRUSTEE BY 5:00 p.m. EST ON
FEBRUARY 17, 1997. SHARES FOR WHICH THE PARTICIPANTS DO NOT GIVE TIMELY VOTING
INSTRUCTIONS WILL BE VOTED BY THE TRUSTEE AS INSTRUCTED BY THE ADMINISTRATION
COMMITTEE, OR, IF NO INSTRUCTIONS ARE RECEIVED, AS THE TRUSTEE DETERMINES.
HAS YOUR ADDRESS CHANGED? DO YOU HAVE ANY COMMENTS?
- ------------------------------ ----------------------------
- ------------------------------ ----------------------------
- ------------------------------ ----------------------------
<PAGE>
[X]PLEASE MARK VOTES AS IN THIS EXAMPLE
--------------------------------
McWHORTER
TECHNOLOGIES, INC.
--------------------------------
RECORD DATE SHARES:
--------------------------
Please be sure to sign and date this Proxy. Date
- --------------------------------------------------------------------------------
_____Stockholder sign here______________________Co-owner sign here______________
1. Election of Directors.
With- For All
Michelle L. Collins, Edward M. Giles, For hold Except
D. George Harris, John G. Johnson, Jr., [_] [_] [_]
Jeffrey M. Nodland, John R. Stevenson,
and Heinn F. Tornfohrde III
NOTE: If you do not wish your shares voted "FOR" a particular nominee,
mark the "FOR ALL EXCEPT" box and strike a line through that nominee's
name. Your shares shall be voted for the remaining nominees.
2. Ratify the appointment of Ernst & Young LLP as For Against Abstain
independent auditors for the [_] [_] [_]
Company for the 1997 fiscal year.
3. In their discretion, the proxies are authorized to For Against Abstain
vote upon any other business that may properly [_] [_] [_]
come before the meeting.
Mark box at right if an address change or comment has been noted on the reverse
side of this card. [_]
DETACH CARD DETACH CARD
McWhorter Technologies, Inc.
Dear Shareholder,
Please take note of the important information enclosed with this Proxy Ballot.
There are a number of issues related to the management and operation of your
Corporation that require your immediate attention and approval. Those are
discussed in detail in the enclosed proxy materials.
Your vote counts, and you are strongly encouraged to exercise your right to
vote your shares.
Please mark the boxes on this proxy card to indicate how your shares will be
voted. Then sign the card, detach it and return your proxy vote in the enclosed
postage paid envelope.
Thank you in advance for your prompt consideration of these matters.
Sincerely,
McWhorter Technologies, Inc.
<PAGE>
McWhorter Technologies, Inc.
400 East Cottage Place
Carpentersville, IL 60110
Solicited by the Board of Directors
for the Annual Meeting of Shareholders on February 19, 1997
The undersigned hereby appoints as Proxies, John R. Stevenson and Jeffrey M.
Nodland, each with the power to appoint his substitute and hereby authorizes
them to represent and to vote, as designated on the reverse side, all shares of
capital stock of McWhorter Technologies, Inc. (the "Company") held of record by
the undersigned on December 31, 1996 at the Annual Meeting of Shareholders to be
held on February 19, 1997 and any adjournments thereof.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED AS DIRECTED. IF NO DIRECTION IS
GIVEN WITH RESPECT TO A PARTICULAR PROPOSAL, THIS PROXY WILL BE VOTED FOR SUCH
PROPOSAL.
PLEASE MARK, DATE, SIGN AND RETURN THIS PROXY CARD PROMPTLY, USING THE ENCLOSED
ENVELOPE. NO POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES OF AMERICA.
Your vote must be received prior to the Annual Meeting of Shareholders, February
19, 1997,
Has your address changed? Do you have any comments?
- ----------------------------- ----------------------------
- ----------------------------- ----------------------------
- ----------------------------- ----------------------------
<PAGE>
[X]PLEASE MARK VOTES AS IN THIS EXAMPLE
--------------------------------
McWHORTER
TECHNOLOGIES, INC.
--------------------------------
RECORD DATE SHARES:
--------------------------
Please be sure to sign and date this Proxy. Date
- --------------------------------------------------------------------------------
_____Stockholder sign here______________________Co-owner sign here______________
1. Election of Directors.
With- For All
Michelle L. Collins, Edward M. Giles, For hold Except
D. George Harris, John G. Johnson, Jr., [_] [_] [_]
Jeffrey M. Nodland, John R. Stevenson,
and Heinn F. Tornfohrde III
NOTE: If you do not wish your shares voted "FOR" a particular nominee,
mark the "FOR ALL EXCEPT" box and strike a line through that nominee's
name. Your shares shall be voted for the remaining nominees.
2. Ratify the appointment of Ernst & Young LLP as For Against Abstain
independent auditors for the [_] [_] [_]
Company for the 1997 fiscal year.
3. In their discretion, the proxies are authorized to For Against Abstain
vote upon any other business that may properly [_] [_] [_]
come before the meeting.
Mark box at right if an address change or comment has been noted on the reverse
side of this card. [_]
DETACH CARD DETACH CARD
McWhorter Technologies, Inc.
Dear Shareholder,
Please take note of the important information enclosed with this Proxy Ballot.
There are a number of issues related to the management and operation of your
Corporation that require your immediate attention and approval. Those are
discussed in detail in the enclosed proxy materials.
Your vote counts, and you are strongly encouraged to exercise your right to
vote your shares.
Please mark the boxes on this proxy card to indicate how your shares will be
voted. Then sign the card, detach it and return your proxy vote in the enclosed
postage paid envelope.
Thank you in advance for your prompt consideration of these matters.
Sincerely,
McWhorter Technologies, Inc.
