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
Albemarle Corporation
(Name of Registrant as Specified in its Charter)
(Name of Person(s) Filing Proxy Statement, if other than 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)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
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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>
<PAGE>
ALBEMARLE CORPORATION
330 SOUTH FOURTH STREET
P.O. BOX 1335
RICHMOND, VIRGINIA 23210
[logo]
Annual Meeting of Shareholders
March 20, 1998
To the Shareholders:
We enclose our annual report describing Albemarle's operations during the
past year. We hope you read this report, which summarizes major corporate
developments during the year.
We cordially invite you to attend the annual meeting of shareholders to be
held in the restored gun foundry building of the Tredegar Iron Works, 500
Tredegar Street, in Richmond, Virginia, on Wednesday, April 22, 1998, at 11:00
A.M., Eastern Daylight Time. A formal notice of the meeting, together with a
proxy statement and proxy form, is enclosed with this letter. The notice points
out that you will be asked to elect a Board of Directors, approve the Albemarle
Corporation 1998 Incentive Plan and approve the designation of auditors for the
coming year.
Please read the notice and proxy statement carefully, complete the proxy
form and mail it promptly.
Sincerely yours,
FLOYD D. GOTTWALD, JR.
Chairman of the Board
Chief Executive Officer
<PAGE>
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
NOTICE IS HEREBY GIVEN that the Annual Meeting of the holders of shares of
Common Stock, $.01 par value ("Albemarle Common Stock"), of Albemarle
Corporation (the "Corporation") will be held in the restored gun foundry
building of the Tredegar Iron Works, 500 Tredegar Street, Richmond, Virginia,
on Wednesday, April 22, 1998, at 11:00 A.M., Eastern Daylight Time, for the
following purposes:
1. To elect a Board of Directors to serve for the ensuing year;
2. To approve the Albemarle Corporation 1998 Incentive Plan;
3. To approve the designation by the Board of Directors of Coopers &
Lybrand L.L.P. as auditors for the fiscal year ending December 31, 1998;
and
4. To transact such other business as may properly come before the meeting.
Holders of shares of Albemarle Common Stock of record at the close of
business on March 2, 1998, will be entitled to vote at the meeting.
You are requested to fill in, sign, date and return the enclosed proxy
promptly, regardless of whether you expect to attend the meeting. A
postage-paid return envelope is enclosed for your convenience.
If you are present at the meeting, you may vote in person even if you
already have sent in your proxy.
By Order of the Board of
Directors
E. WHITEHEAD ELMORE,
Secretary
March 20, 1998
<PAGE>
PROXY STATEMENT
for
ANNUAL MEETING OF SHAREHOLDERS
ALBEMARLE CORPORATION
To be held April 22, 1998
Approximate date of mailing -- March 20, 1998
Proxies in the form enclosed are solicited by the Board of Directors for
the Annual Meeting of Shareholders to be held on Wednesday, April 22, 1998. Any
person giving a proxy may revoke it at any time before it is voted by
delivering another proxy, or written notice of revocation, to the Secretary of
the Corporation. A proxy, if executed and not revoked, will be voted, and, if
it contains any specific instructions, will be voted in accordance with such
instructions.
On March 2, 1998, the date for determining shareholders entitled to vote
at the meeting, there were outstanding 53,628,551 shares of Albemarle Common
Stock. Each share of Albemarle Common Stock is entitled to one vote.
The election of each nominee for director requires the affirmative vote of
the holders of a plurality of the shares of Albemarle Common Stock voted in the
election of directors. Votes that are withheld and shares held in street name
that are not voted in the election of directors will not be included in
determining the number of votes cast. Unless otherwise specified in the
accompanying form of proxy, it is intended that votes will be cast for the
election of all of the nominees as directors.
The cost of the solicitation of proxies will be borne by the Corporation.
In addition to the use of the mails, proxies may be solicited personally or by
telephone by regular employees of the Corporation. Corporate Investor
Communications, Inc. has been engaged to assist in the solicitation of proxies
from brokers, nominees, fiduciaries and other custodians. The Corporation will
pay that firm $7,000 for its services and reimburse its out-of-pocket expenses.
The Corporation's street address is 330 South Fourth Street, Richmond,
Virginia 23219.
ELECTION OF DIRECTORS
Proxies will be voted for the election as directors for the ensuing year
of the persons named below (or if for any reason unavailable, of such
substitutes as the Board of Directors may designate). Each of the nominees
presently is serving as a director. The Board of Directors has no reason to
believe that any of the nominees will be unavailable.
Craig R. Andersson; age 60; director since 1996; part-time consultant, having
served as Vice Chairman of Aristech Chemical Corporation (a commodity and
specialty chemicals and plastics business) from January 1, 1994, until
April 30, 1995, and President and Chief Operating Officer of Aristech
Chemical Corporation prior thereto. Other directorship: RMI Titanium
Company.
Dirk Betlem; age 59; director since 1996; President and Chief Operating Officer
of the Corporation since August 15, 1996, having served as Senior Vice
President-International from April 24, 1996, to August 15, 1996, Vice
President-International from March 1, 1994, to April 24, 1996, and Vice
President-International
1
<PAGE>
of Ethyl Corporation from June 1, 1993, to March 1, 1994, and as Vice
President-Imaging Systems of E. I. du Pont de Nemours and Company from
June 1991 to November 1992.
Floyd D. Gottwald, Jr.; age 75; director since 1994; Chairman of the Board and
Executive Committee and Chief Executive Officer of the Corporation since
March 1, 1994; Vice Chairman of the Board of Ethyl Corporation from March
1, 1994, until February 29, 1996, having served as Chairman of the Board
and the Executive Committee of Ethyl Corporation from April 1992 until
March 1, 1994, and as Chairman of the Board and Executive Committee and
Chief Executive Officer of Ethyl Corporation prior thereto. Other
directorship: Tredegar Industries, Inc.
John D. Gottwald; age 43; director since 1994; President and Chief Executive
Officer of Tredegar Industries, Inc. (manufacturer of plastics and metal
products). Other directorship: Tredegar Industries, Inc.
Andre B. Lacy; age 58; director since 1994; Chairman of the Board, Chief
Executive Officer and President of LDI Management, Inc., Managing General
Partner, LDI, Ltd. (industrial and investment limited partnership). Other
directorships: Herff Jones, Inc., IPALCO Enterprises, Inc., The National
Bank of Indianapolis, Patterson Dental Co., Tredegar Industries, Inc. and
FinishMaster, Inc.
Seymour S. Preston III; age 64; director since 1996; Chairman of the Board and
Chief Executive Officer of AAC Engineered Systems, Inc. (manufacturer of
centrifugal, deburring and finishing machinery) since 1994, having served
as President and Chief Executive Officer of Elf Atochem North America,
Inc. (chemicals and plastics business) prior thereto. Other directorship:
CoreStates Bank, N.A.
Emmett J. Rice; age 78; director since 1994; retired member of the Board of
Governors of the Federal Reserve System. Other directorships: Tredegar
Industries, Inc. and Jardine-Fleming China Region Fund, Inc.
Charles E. Stewart; age 62; director since September 1, 1997; Partner of BTC
Partners Inc. (investment and acquisitions consultants) since June 1997,
having served as President and Chief Executive Officer of OCI Enterprises
Inc. and OCI Chemical Corp. from October 1995 to December 1996, and as
Executive Vice President of Occidental Chemical Corporation and Vice
President of Occidental Petroleum Corporation from September 1986 to June
1995.
Charles B. Walker; age 59; director since 1994; Vice Chairman of the Board and
Chief Financial Officer of the Corporation (and Treasurer of the
Corporation until March 1, 1996) since March 1, 1994, having served as
Executive Vice President, Chief Financial Officer and Treasurer of Ethyl
Corporation prior to March 1, 1994. Mr. Walker continued to serve as Vice
Chairman of the Board and Chief Financial Officer of Ethyl Corporation
from March 1, 1994, to September 30, 1997, and as Vice Chairman of the
Board of Ethyl Corporation from October 1, 1997, to January 31, 1998.
Other directorships: Ethyl Corporation and Nations Fund Trust/Nations
Fund, Inc.
Anne Marie Whittemore; age 52; director since 1996; Partner of McGuire, Woods,
Battle & Boothe, L.L.P. (law firm). Other directorships: Owens & Minor,
Inc., USF&G Corporation, Fort James Corporation and T. Rowe Price
Associates, Inc.
In 1997, each director attended at least 75% of the aggregate of (i) the
total number of meetings of all committees of the Board on which the
director then served and (ii) the total number of meetings of the Board of
Directors held during 1997 while he or she was a member of the Board of
Directors. Six meetings of the Corporation's Board of Directors were held
during 1997.
2
<PAGE>
The Corporation's executive committee currently consists of Messrs. Floyd
D. Gottwald, Jr., Walker and Betlem. The executive committee acts not only as
the executive committee of the Board of Directors but also as the Corporation's
principal management committee. During 1997, the executive committee met on
five occasions as the executive committee of the Board of Directors and on
twelve occasions as the principal management committee.
Messrs. Lacy, Rice and Mrs. Whittemore currently serve on the
Corporation's audit committee. During 1997, the audit committee met twice. The
audit committee reviews the Corporation's internal audit and financial
reporting functions and the scope and results of the audit performed by the
Corporation's independent accountants and matters relating thereto and reports
thereon to the Board of Directors. The audit committee also reviews audit fees
and recommends to the Board of Directors the engagement of the independent
accountants of the Corporation.
The nominating committee currently consists of Messrs. Floyd D. Gottwald,
Jr., Lacy and Rice. During 1997, the nominating committee met once. The
nominating committee recommends candidates for election as directors and in
some cases the election of officers. The Corporation's bylaws provide that a
shareholder of the Corporation entitled to vote for the election of directors
may nominate persons for election to the Board by mailing written notice to the
Secretary of the Corporation not later than (i) with respect to an election to
be held at an annual meeting of shareholders, 60 days prior to such meeting,
and (ii) with respect to an election to be held at a special meeting of
shareholders for the election of directors, the close of business on the
seventh day following the date on which notice of such meeting is first given
to shareholders. Such shareholder's notice shall include (i) the name and
address of the shareholder and of each person to be nominated, (ii) a
representation that the shareholder is a holder of record of stock of the
Corporation entitled to vote at such meeting and intends to appear in person or
by proxy at the meeting to nominate each person specified, (iii) a description
of all understandings between the shareholder and each nominee and any other
person (naming such person) pursuant to which the nomination is to be made by
the shareholder, (iv) such other information regarding each nominee as would be
required to be included in a proxy statement filed pursuant to the proxy rules
of the Securities and Exchange Commission had the nominee been nominated by the
Board of Directors and (v) the consent of each nominee to serve as a director
of the Corporation if so elected.
Messrs. Andersson, Preston, Rice and Mrs. Whittemore currently serve as
the Corporation's executive compensation committee. During 1997, the executive
compensation committee met on six occasions. This committee approves the
salaries of management-level employees. It also approves all bonus awards,
certain consultant agreements and initial salaries of new management level
personnel and grants options and restricted stock ("Restricted Stock") under
the Corporation's 1994 Omnibus Stock Incentive Plan (the "1994 Plan") and will
perform the same function under the Albemarle Corporation 1998 Incentive Plan,
subject to the approval of the Corporation's shareholders.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
William M. Gottwald, MD, a Vice President of the Corporation, and John D.
Gottwald, a director of the Corporation, are sons of Floyd D. Gottwald, Jr. The
members of the family of Floyd D. Gottwald, Jr. may be deemed to be control
persons of the Corporation. Mr. Stewart, a director of the Corporation, entered
into a one-year mutually renewable consulting contract with the Corporation
beginning September 1, 1997, for $150,000 per year.
3
<PAGE>
SECTION 16(a)
BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Based solely on its review of the forms required by Section 16(a) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), that have
been received by the Corporation, the Corporation believes that there has been
compliance with all filing requirements applicable to its officers, directors
and beneficial owners of greater than 10% of the Albemarle Common Stock, except
that John D. Gottwald was late in reporting shares acquired pursuant to the
Non-Employee Directors' Stock Acquisition Plan.
STOCK OWNERSHIP
The following table lists any person (including any "group" as that term
is used in Section 13(d)(3) of the Exchange Act) who, to the knowledge of the
Corporation, was the beneficial owner as of December 31, 1997, of more than 5%
of the outstanding voting shares of the Corporation.
<TABLE>
<CAPTION>
Name and Address of Number of
Title of Class Beneficial Owners Shares Percent of Class
- - ---------------- -------------------------------------- ------------------------- -----------------
<S> <C>
Common Stock Floyd D. Gottwald, Jr. and 18,847,803(b)(c) 34.94%
Bruce C. Gottwald (a)
330 South Fourth Street
P.O. Box 2189
Richmond, Virginia 23218
J. P. Morgan & Co., Incorporated (d) 6,936,144 12.87%
60 Wall Street
New York, New York 10260
</TABLE>
- - ----------
(a) Floyd D. Gottwald, Jr. and Bruce C. Gottwald, who are brothers, may be
deemed to be a "group" for purposes of Section 13(d)(3) of the Exchange
Act, although there is no arrangement between them with respect to the
acquisition, retention, disposition or voting of Albemarle Common Stock.
(b) As of December 31, 1997, Floyd D. Gottwald, Jr. and Bruce C. Gottwald had
sole voting and investment power over all of the shares disclosed except
14,605,371 shares held by their wives, adult sons and in certain trust
relationships as to which they disclaim beneficial ownership. This amount
includes an aggregate of 2,235,966 shares of Albemarle Common Stock
beneficially owned by the adult sons of Floyd D. Gottwald, Jr. and an
aggregate of 2,301,115 shares of Albemarle Common Stock beneficially owned
by the adult sons of Bruce C. Gottwald. Floyd D. Gottwald, Jr., Bruce C.
Gottwald and their adult sons have no agreement with respect to the
acquisition, retention, disposition or voting of Albemarle Common Stock.
(c) This amount includes any shares owned of record by the Trustee of the
Corporation's savings plan for the benefit of Floyd D. Gottwald, Jr. and
William M. Gottwald, MD. This amount does not include shares held by the
Trustee of such plan for the benefit of other employees. Shares held under
the Corporation's savings plan are voted by the Trustee in accordance with
instructions solicited from employees participating in the plan. If a
participating employee does not give the Trustee voting instructions, his
shares generally are voted by the Trustee in accordance with the Board of
Directors' recommendations to the shareholders. Because Floyd D. Gottwald,
Jr. is a director and the Chief Executive Officer of the Corporation, he
and the members
4
<PAGE>
of his family may be deemed to be control persons of the Corporation and to
have the capacity to control any such recommendation of the Board of
Directors.
(d) The information contained herein with respect to J.P. Morgan & Co.,
Incorporated is based on a Schedule 13G filed by such entity with the
Securities and Exchange Commission. Such filing further stated that the
acquisition of such shares was in the ordinary course of business and not
in connection with or as a participant in any transaction having the
purpose or effect of changing or influencing the control of the
Corporation.
On March 3, 1998, Bruce C. Gottwald and a partnership in which he is
general partner sold on the New York Stock Exchange a block of 500,000 shares
of Albemarle Common Stock. The Corporation purchased the block at a price of
$25.00 per share, which also was the price for the immediately preceding sale
of Albemarle Common Stock on the New York Stock Exchange. The transaction was
effected in accordance with the price, volume and other restrictions of Rule
10b-18 under the Exchange Act and pursuant to the Corporation's stock
repurchase program.
5
<PAGE>
The following table sets forth as of January 31, 1998, the beneficial
ownership of Albemarle Common Stock by all directors of the Corporation, the
Chief Executive Officer and the four next most highly compensated executive
officers and all directors and executive officers of the Corporation as a
group. Unless otherwise indicated, each person listed below has sole voting and
investment power over all shares beneficially owned by him or her.
<TABLE>
<CAPTION>
Number of Shares Number of Shares Total
Name of Beneficial Owner with Sole Voting with Shared Voting Number Percent
or Number of Persons in Group and Investment Power(1) and Investment Power of Shares of Class(2)
- - ----------------------------------- ----------------------- ---------------------- ----------- -----------
<S> <C>
Craig R. Andersson 203 8,000 8,203
Thomas G. Avant 10,873 -- 10,873
Dirk Betlem 149,182 6,500 155,682
E. Whitehead Elmore 265,880 -- 265,880
Floyd D. Gottwald, Jr. 818,841 5,985,026(3) 6,803,867 12.63%
John D. Gottwald 111,651 1,659,021(4) 1,770,672 3.29%
Andre B. Lacy 15,906(5) 462,500 478,406
Seymour S. Preston III 4,503 -- 4,503
Emmett J. Rice 1,288 -- 1,288
Charles E. Stewart 1,500 -- 1,500
Charles B. Walker 207,469 -- 207,469
Anne Marie Whittemore 705 11,390 12,095
Directors and executive
officers as a group (12 persons) 1,588,001 8,132,437 9,720,438 17.91%
</TABLE>
- - ----------
(1) The amounts in this column include shares of Albemarle Common Stock with
respect to which certain persons have the right to acquire beneficial
ownership within 60 days of January 31, 1998, pursuant to the 1994 Plan: Mr.
Betlem: 142,800 shares; Mr. Elmore: 96,500 shares; Mr. Walker: 156,940
shares; and directors and executive officers as a group: 396,240 shares.
(2) Except as indicated, each person owns less than 1% of Albemarle Common
Stock.
(3) Mr. F. D. Gottwald, Jr. disclaims beneficial ownership of all 5,985,026 of
such shares.
(4) Mr. John D. Gottwald disclaims beneficial ownership of all 1,659,021 of such
shares. This amount includes 1,593,050 shares of Albemarle Common Stock that
Mr. John D. Gottwald may be deemed to own beneficially. Such shares
constitute his interest as beneficiary of a trust of which he is a
co-trustee.
(5) Mr. Lacy disclaims beneficial ownership of 14,741 of such shares.
6
<PAGE>
COMPENSATION OF EXECUTIVE OFFICERS AND DIRECTORS
The following table presents information relating to total compensation of
the Chief Executive Officer and the four next most highly compensated executive
officers of the Corporation for the period from January 1, 1997, through
December 31, 1997.
<TABLE>
<CAPTION>
Annual Compensation Long-Term Compensation
------------------------------------- -------------------------------------------
Other Annual Restricted All Other
Name and Principal Position Year Salary Bonus Compensation Stock Awards Options/SARs Compensation
- - ---------------------------- ------ ----------- ---------- -------------- -------------- -------------- -------------
<S> <C>
Floyd D. Gottwald, Jr. 1997 $ 503,750 $ 0 -- -- 0 $ 0
Chairman of the Board 1996 665,000 0 -- -- 0 4,356(1)
and Executive Committee, 1995 528,500 305,000 -- -- 0 26,425
Chief Executive Officer
Dirk Betlem 1997 $504,324(2) $268,000 388,263(3) -- 0 $ 32,026(4)
President and Chief 1996 437,090 181,500 -- -- 143,000 12,658
Operating Officer 1995 317,372 95,000 -- -- 0 4,746
Charles B. Walker 1997 $ 299,000(5) $233,000 -- -- 0 $ 14,950(8)
Vice Chairman of the 1996 239,200 122,500 488,128(6,7) 554,880(6) 0 11,960
Board and Chief 1995 231,533 245,000 -- -- 0 11,577
Financial Officer
E. Whitehead Elmore 1997 $218,400(5) $100,000 -- -- 0 $ 11,185(9)
Senior Vice President 1996 218,400 50,000 224,064(6,7) 227,440(6) 0 10,990
Secretary and General 1995 211,400 100,000 -- -- 0 10,260
Counsel
Thomas G. Avant 1997 $ 226,000 $ 63,000 -- -- 0 $ 10,829(10)
Senior Vice President 1996 220,500 59,000 -- -- 0 11,025
1995 212,000 62,000 -- -- 0 10,600
</TABLE>
- - ----------
(1) Mr. Gottwald participated in the savings plan and the excess benefit plan of
Ethyl Corporation ("Ethyl") through February 29, 1996. The amounts reflect
the amounts reimbursed to Ethyl by the Corporation for the Corporation's
allocable portion of his benefits under Ethyl's excess benefit plan and
savings plan.
(2) Until May 15, 1997, Mr. Betlem was compensated in Belgian francs. Each
amount listed here for 1996 and 1995 in U.S. dollars is based on the
exchange rate at December 31, 1996, and each amount listed for 1997 prior to
May 15, 1997, in U.S. dollars is based on the exchange rate at May 15, 1997.
(3) Includes payments for expatriate expenses and allowances ($78,125), tax
subsidies ($197,566) and a housing and relocation allowance ($38,717).
(4) Includes contributions to the Albemarle S.A. Savings Plan ($14,302, $12,658
and $4,746) for 1997, 1996 and 1995, respectively, and contributions to the
Corporation's savings plan ($8,000) and accruals in the Corporation's excess
benefit plan ($9,724) for 1997. Each amount listed here for 1996 and 1995 in
U.S. dollars is based on the exchange rate at December 31, 1996, and each
amount listed for 1997 prior to May 15, 1997, in U.S. dollars is based on
the exchange rate at May 15, 1997.
(5) Charles B. Walker and E. Whitehead Elmore also served as officers of Ethyl
during 1997 and were compensated separately by Ethyl for such services.
7
<PAGE>
(6) On March 1, 1996, the Corporation sold its olefins business to Amoco
Chemical Company for approximately $500 million, with a gain on the sale of
$158.2 million ($94.4 million after income taxes). On the recommendation of
the Chairman and Chief Executive Officer, the executive compensation
committee concluded that Messrs. Walker and Elmore had made special
contributions in effecting the successful disposition of the olefins
business and, accordingly, were entitled to special Restricted Stock awards
under the 1994 Plan. The executive compensation committee also concluded
that the amount of the awards should be net of taxes and should be included
in the calculations of amounts payable under excess benefit plans covering
these officers. Restricted shares are forfeitable if the award recipient's
employment is terminated except by reason of death, disability or a change
of control. One half of the shares became non-forfeitable on the first
anniversary of the date of the award and the balance will become
non-forfeitable on the second anniversary of the date of the award. As of
December 31, 1997, Mr. Walker held a total of 11,560 shares of Restricted
Stock with an aggregate value of $275,995 and Mr. Elmore held a total of
5,780 shares of Restricted Stock with an aggregate value of $137,998.
Dividends are paid on the shares of Restricted Stock.
(7) Reflects tax reimbursement in connection with the Restricted Stock award
discussed in Note 6.
(8) Mr. Walker participated in the savings plan and the excess benefit plan of
Ethyl during 1997. The amounts reflect the amounts reimbursed to Ethyl by
the Corporation for the Corporation's allocable portion of these benefits.
(9) Includes contributions to the Corporation's savings plan ($8,000, $7,500 and
$7,500) and accruals in the Corporation's excess benefit plan ($3,185,
$3,490 and $2,760) for 1997, 1996 and 1995, respectively.
(10) Includes contributions to the Corporation's savings plan ($8,000, $7,500
and $7,500) and accruals in the Corporation's excess benefit plan ($2,829,
$3,525 and $3,100) for 1997, 1996 and 1995, respectively.
8
<PAGE>
OPTION/SAR GRANTS IN LAST FISCAL YEAR
There were no option or stock appreciation right ("SAR") grants to the
Chief Executive Officer or the four next most highly compensated executive
officers of the Corporation during the last fiscal year.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION/SAR VALUES
The following table presents information concerning stock options and SAR
exercises by the Chief Executive Officer and the four next most highly
compensated executive officers of the Corporation and fiscal year end
option/SAR values.
<TABLE>
<CAPTION>
Value of Unexercised
Number of Unexercised In-The-Money
Shares Options/SARs at FY-End (#) Options/SARs at FY-End ($)(4)
Acquired On Value ------------------------------- ------------------------------
Name Exercise (#) Realized ($) Exercisable Unexercisable Exercisable Unexercisable
- - ------------------------ -------------- ------------- ------------- --------------- ------------- --------------
<S> <C>
Floyd D. Gottwald, Jr. 6,999 $ 67,383 0 0 $ 0 $ 0
Dirk Betlem -- -- 142,800(1) 57,200(2) 1,170,450 371,800
Charles B. Walker -- -- 156,940(3) 0 1,684,711 0
E. Whitehead Elmore 7,378 110,910 96,500(3) 0 1,048,414 0
Thomas G. Avant 121,764 1,474,282 0 0 0 0
</TABLE>
- - ----------
(1) 57,000 of these options relate to Albemarle Common Stock and include a
tandem SAR; 85,800 of these options relate to Albemarle Common Stock and do
not include a tandem SAR.
(2) Each of these options relates to Albemarle Common Stock and does not include
a tandem SAR.
(3) Each of these options relates to Albemarle Common Stock and includes a
tandem SAR.
(4) These values are based on $23.875, the closing price of Albemarle Common
Stock on the New York Stock Exchange on December 31, 1997.
9
<PAGE>
RETIREMENT BENEFITS
The following table illustrates under the Corporation's pension plan for
salaried employees the estimated benefits upon retirement at age 65, determined
as of December 31, 1997, to persons with specified earnings and years of
pension benefit service. To the extent benefits payable at retirement exceed
amounts that may be payable under applicable provisions of the Internal Revenue
Code of 1986, as amended (the "Code"), they will be paid under the
Corporation's excess benefit or supplemental retirement plans, as applicable.
This table includes the amounts that would be payable under such plans.
Pension Plan Table*
<TABLE>
<CAPTION>
Years of Pension Benefit Service and Estimated Annual Benefits
--------------------------------------------------------------------------------------------
Final Average Earnings 10 15 20 25 30 35 40 50
- - ----------------------- ---------- ---------- ---------- ----------- ----------- ----------- ----------- -----------
<S> <C>
$ 300,000 $ 43,828 $ 65,742 $87,656 $109,570 $131,484 $153,397 $175,311 $219,139
350,000 51,328 76,992 102,656 128,320 153,984 179,647 205,311 256,639
400,000 58,828 88,242 117,656 147,070 176,484 205,897 235,311 294,139
450,000 66,328 99,492 132,656 165,820 198,984 232,147 265,311 331,639
500,000 73,828 110,742 147,656 184,570 221,484 258,397 295,311 389,139
550,000 81,328 121,992 162,656 203,320 243,984 284,647 325,311 406,639
600,000 88,828 133,242 177,656 222,070 266,484 310,897 355,311 444,139
650,000 96,328 144,492 192,656 240,820 288,984 337,147 385,311 481,639
700,000 103,828 155,742 207,656 259,570 311,484 363,397 415,311 519,139
750,000 111,328 166,992 222,656 278,320 333,984 389,647 445,311 556,639
800,000 118,828 178,242 237,656 297,070 356,484 415,897 475,311 594,139
850,000 126,328 189,492 252,656 315,820 378,984 442,147 505,311 631,639
900,000 133,828 200,742 267,656 334,570 401,484 468,397 535,311 669,139
950,000 141,328 211,992 282,656 353,320 423,984 494,647 565,311 706,639
1,000,000 148,828 223,242 297,656 372,070 446,484 520,897 595,311 744,139
</TABLE>
* Assumes attainment of age 65 in 1997 and Social Security Covered
Compensation of $29,304.
The benefit formula under the pension plans is based on the participant's
final-average earnings, which are defined as the average of the highest three
consecutive calendar years' earnings (base pay plus 50% of incentive bonuses
paid in any fiscal year) during the ten consecutive calendar years immediately
preceding the date of determination. The years of pension benefit service for
certain of the executive officers named in the above compensation table as of
December 31, 1997, are: Thomas G. Avant, 27; E. Whitehead Elmore, 28; and Dirk
Betlem, .75. Benefits under the pension plans are computed on the basis of a
life annuity with 60 months guaranteed payments. The benefits listed in the
above compensation table are not subject to deduction for Social Security or
other offset payments. Pension benefits payable to Messrs. Gottwald and Walker
are paid from the pension plan of Ethyl.
Mr. Betlem also is entitled to a benefit from the Albemarle S.A. Pension
Plan (Belgium) for his service with Albemarle S.A. through April 30, 1997,
which provides for a lump sum payment at age 65 equal to years of service times
the sum of 4% of final average pay up to covered compensation plus 17.5% of the
excess of final average pay over covered compensation. This amount is
multiplied by 1.20 for married individuals. Mr. Betlem's accrued benefit as of
December 31, 1997, determined as an annual benefit payable at age 65, is
$13,258. Such amount is determined in Belgian francs. The amount shown in U.S.
dollars is based on the exchange rate at December 31, 1997.
10
<PAGE>
EXCESS BENEFIT PLANS
The Corporation maintains excess benefit plans in the form of
non-qualified pension plans (the "Excess Plans") that provide eligible
individuals the difference between the benefits they actually accrue under the
qualified employee pension and savings plans of the Corporation and the
benefits they would have accrued under such plans, but for the maximum benefit
and annual addition limitations and the limitation on compensation that may be
recognized thereunder, under the Code. Certain key employees may be granted
additional pension service benefits equal to 4% of the employee's average pay
over his last three years multiplied by the number of years of service to the
Corporation (including service with Ethyl) up to 15 years, net of certain other
benefits received from the Corporation, previous employers, including Ethyl,
and Social Security. These benefits have been granted to Mr. Walker. All
benefits under the Excess Plans vest upon a Change in Control of the
Corporation, as defined in the Excess Plans.
Pursuant to the Corporation's agreement with Ethyl in connection with the
1994 spin-off of the Corporation, in lieu of receiving benefits under the
Corporation's non-qualified pension plan, Mr. Walker remained in Ethyl's
non-qualified pension plan until his retirement from Ethyl on February 1, 1998,
and the Corporation reimbursed Ethyl for the costs under that plan attributable
to his service and pay with the Corporation.
COMPENSATION OF DIRECTORS
Outside directors are paid (i) $1,000 for attendance at each Board meeting
and (ii) $600 for attendance at each meeting of a committee of the Board of
which he or she was a member. In addition, each such director is paid a
quarterly fee of $5,000. Employee members of the Board of Directors are not
paid separately for service on the Board or its committees.
Any director retiring from the Board after age 60 with at least five
years' service on the Board and who is not employed by the Corporation will
receive $12,000 per year for life, payable in quarterly installments. The
service requirement for this benefit may be waived in certain circumstances.
Any director retiring under other circumstances will receive $12,000 per year,
payable in quarterly installments, commencing no earlier than age 60, for a
period not to exceed his years of service on the Board. The payment period
limitation on this benefit may be waived in certain circumstances. Such
retirement payments to former directors may not commence and may be
discontinued under certain circumstances.
On each July 1, the Corporation awards to each non-employee director that
number of whole shares of Albemarle Common Stock when multiplied by the closing
price of Albemarle Common Stock on the immediately preceding business day, as
reported in The Wall Street Journal, as shall as nearly as possible equal but
not exceed $2,000. The shares of Albemarle Common Stock awarded under the
Non-Employee Directors' Stock Acquisition Plan are nonforfeitable and the
recipient directors immediately and fully vest in Albemarle Common Stock issued
under the plan. Subject only to such limitations on transfer as may be
specified by applicable securities laws, directors may sell the shares received
under the Non-Employee Directors' Stock Acquisition Plan at any time. The
Non-Employee Directors' Stock Acquisition Plan provides that no awards may be
made after July 1, 2004.
Non-employee directors may defer, in ten percent increments, all or part
of their retainer fee and meeting fees into either a deferred cash account or a
deferred stock account, or a percentage of the fees into each of the accounts,
both of which are unfunded and maintained for record-keeping purposes only.
Distributions under the Deferred Compensation Plan, paid in a single sum or in
up to ten annual installments, cannot begin within two
11
<PAGE>
years of the beginning of the deferral year. The maximum aggregate number of
shares of Albemarle Common Stock that may be issued under the Deferred
Compensation Plan is 100,000 shares.
THE EXECUTIVE COMPENSATION COMMITTEE REPORT
The Executive Compensation Committee (the "Committee") of the Board of
Directors is pleased to present its annual report on executive compensation.
This report describes the objectives of the Corporation's executive
compensation program, the various components of the program, and explains the
basis on which 1997 compensation determinations were made by the Committee with
respect to the executive officers of the Corporation.
During 1997, the Committee initiated a comprehensive examination of the
Corporation's executive compensation policies using the services of an
independent consulting firm. The philosophy and new incentive programs
resulting from the study are outlined below.
Overall Objectives of Executive Compensation Programs
The Committee's guiding philosophy is to establish executive compensation
policies that are linked to the sustained creation of shareholder value. The
following objectives serve as the guiding principles for all compensation
decisions:
o Provide a competitive total compensation opportunity that will enable the
Corporation to attract, retain and motivate highly qualified executives.
o Align compensation opportunities with shareholder interests by making the
executive compensation program highly sensitive to the Corporation's
performance, which is defined in terms of long-term profitability and
creating shareholder value.
o Provide a strong emphasis on equity-based compensation and equity
ownership, creating a direct link between shareholder and management
interests.
Compensation Program Components
The Committee believes that the total compensation opportunity available
to executives should consist of base salary, annual incentives and long term
incentives with each component geared to the median of the market for all
positions in the aggregate. Individuals may be compensated above or below the
median of the marketplace based on considerations of individual performance and
experience. The Committee considers all elements of the program when setting
compensation levels.
The Committee utilizes compensation surveys to aid in the determination of
competitive levels of executive pay. The surveys include companies that are
larger and smaller than the Corporation. Some surveys are limited to companies
in the chemical business, including, but not limited to, some of the companies
included in the Chemical Composite shown in the Performance Graph. The
Committee also utilizes executive compensation information compiled from the
proxy statements of other chemical companies. References to the "market" in
this report refer to these survey and proxy data.
Base Salaries
Base salaries are determined in accordance with the responsibilities of
each executive, median market data for the position and the performance of each
executive. The Committee considers each of these factors but does not assign a
specific value to each factor. Furthermore, a subjective element is
acknowledged in evaluating each executive's overall span of responsibility and
control.
12
<PAGE>
Salaries for some executive officers for 1998 are being maintained at
current levels to reflect the increased emphasis on compensation that is tied
to the long-term performance of the Corporation. Total compensation for
executive officers is believed to be generally in line with the median of the
market as described above.
Annual Incentives
The purpose of the annual incentive plan is to provide a means for
recognizing individual contribution to corporate and business unit results. The
Committee, in its discretion, may award incentives annually to the named
executives and other management-level employees.
Annual incentive awards are reviewed by the Committee in conjunction with
senior management. Awards are based on an evaluation of the performance, level
of responsibility and leadership of the individual executive in relation to
overall corporate results. In 1997, annual incentives were based on the
attainment of corporate financial results including net income growth and
return on capital employed. The Committee also used discretion in adjusting
awards for all individuals, based on input from senior management. Overall
award levels for 1997 were substantially higher than 1996, reflecting improved
financial performance.
For 1998, the Committee has approved a new annual incentive program. Key
features of the new annual program include the following:
o A primary emphasis on sustained operating earnings growth and return on
gross assets.
o A significant emphasis on the achievement of key strategic objectives
related to future profitable growth, market leadership and safety.
o A more formulaic and objective approach to award calculation.
o A means for recognizing individual achievement and contribution for
participants (other than the executives named in the compensation table).
Stock Options and Restricted Stock
The Committee believes strongly that equity-based awards are an integral
part of total compensation for executives and certain key managers with
significant responsibility for the long-term results of the Corporation. Stock
options and Restricted Stock awards provide an effective means of delivering
incentive compensation and also foster stock ownership on the part of
management. The Committee has authorization under the 1994 Plan to grant stock
options, SARs and Restricted Stock. No grants under the 1994 Plan were made in
1997.
The Committee is seeking shareholder approval of the Albemarle Corporation
1998 Incentive Plan (hereinafter sometimes referred to as the "1998 Plan"). If
the shareholders approve the new plan (described beginning on page 15), no new
grants are expected to be made thereafter under the 1994 Plan.
Key features of the 1998 Plan include:
o The ability to grant stock options, SARs, Performance Shares and Incentive
Awards, all of which may be made subject to the attainment of performance
goals established by the Committee.
o The enumeration of the business criteria on which an executive's
performance goals are to be based.
o The maximum share grants or awards (or, in the case of Incentive Awards,
the maximum compensation) that can be paid to an executive.
13
<PAGE>
Executive Stock Ownership Guidelines
To further align the interests of executives with the Corporation's
shareholders, the Committee has established stock ownership guidelines that are
designed to encourage the accumulation and retention of a significant portion
of Albemarle Common Stock by the Corporation's executive officers. The
guidelines call for each executive officer to hold a minimum multiple of base
salary in shares of Albemarle Common Stock by the end of the year 2002.
Participation in the 1998 Plan beyond 2002 will be contingent upon satisfying
the guidelines. The established guidelines are as follows:
o CEO 4x salary
o Other named executives 3x salary
o Other management
level employees 1x to 2x (depending upon position level) salary
Discussion of 1997 Compensation for the Chief Executive Officer
During the first half of 1997, Mr. Floyd D. Gottwald, Jr., the Chief
Executive Officer of the Corporation, requested that his base salary be reduced
to $450,000, which represents a material reduction from a base salary of
$650,000 at the end of 1996. The reduction was made at Mr. Gottwald's request
to better align his salary with the Committee's pay positioning strategy. As
was the case for 1996, Mr. Gottwald asked not to be considered for a bonus for
1997, placing a greater emphasis on creating shareholder value to which he is
committed. Consequently, his annual compensation for 1997 was significantly
less than for 1996. The Committee recognizes that, as a major shareholder, the
Chief Executive Officer's focus is on maximizing long-term value for the
Corporation's shareholders.
Deductibility of Compensation
The Committee has carefully considered Section 162(m) of the Code. The
Committee believes it is in the best interests of the Corporation and its
shareholders to comply with the requirements of Section 162(m), but the
Committee intends to preserve the flexibility to reward executives consistent
with the Corporation's pay philosophy for each compensation element. The
Committee intends that grants of options, awards of Performance Shares,
Restricted Stock and other incentive awards under the 1998 Plan comply with the
requirements of Section 162(m).
THE EXECUTIVE COMPENSATION COMMITTEE
Craig R. Andersson, Chairman
Seymour S. Preston III
Emmett J. Rice
Anne Marie Whittemore
February 25, 1998
14
<PAGE>
APPROVAL OF THE ALBEMARLE CORPORATION 1998 INCENTIVE PLAN
The Board proposes that the shareholders approve the Albemarle Corporation
1998 Incentive Plan, adopted by the Board on February 25, 1998, subject to the
approval of the Corporation's shareholders. The 1998 Plan permits the grant of
options to purchase shares of Albemarle Common Stock from the Corporation,
SARs, Restricted Stock, Performance Shares and Incentive Awards.
The Corporation has provided stock-based compensation opportunities for
its executives and key employees through the 1994 Plan. If the shareholders
approve the 1998 Plan, the Committee has indicated that it does not intend
thereafter to approve additional grants or awards under the 1994 Plan.
The Board believes that an increased percentage of an executive's
compensation should be based on the attainment of pre-established performance
goals and objectives. The 1998 Plan is intended to further that result.
The Board believes that the 1998 Plan will benefit the Corporation by (i)
assisting it in recruiting and retaining employees with ability and initiative;
(ii) providing greater incentive for employees of the Corporation; and (iii)
enabling such employees to participate in the future success of the Corporation
and to associate their interests with those of the Corporation and its
shareholders and, in turn, to create additional shareholder value.
The approval of the 1998 Plan requires the affirmative vote of the holders
of a majority of the shares of Albemarle Common Stock cast on the 1998 Plan,
provided that the total vote cast on the 1998 Plan represents over 50% of the
outstanding Albemarle Common Stock. Abstentions and shares held in street name
that are not voted FOR the 1998 Plan will not be counted as votes cast on the
1998 Plan.
The more significant features of the 1998 Plan are described below. This
summary is subject, in all respects, to the terms of the 1998 Plan.
Administration
The Committee will administer the 1998 Plan. The Committee will have the
authority to select the individuals who will participate in the 1998 Plan
("Participants") and to grant options, SARs, Restricted Stock, Performance
Shares and Incentive Awards upon such terms (not inconsistent with the terms of
the 1998 Plan) as the Committee considers appropriate. In addition, the
Committee will have complete authority to interpret all provisions of the 1998
Plan, to prescribe the form of agreements evidencing awards under the 1998
Plan, to adopt, amend and rescind rules and regulations pertaining to the
administration of the 1998 Plan and to make all other determinations necessary
or advisable for the administration of the 1998 Plan.
The Committee may delegate its authority to administer the 1998 Plan to an
officer of the Corporation. The Committee, however, may not delegate its
authority with respect to individuals who are subject to Section 16 of the
Exchange Act. As used in this summary, the term "Administrator" means the
Committee and any delegate, as appropriate.
Eligibility
Any employee of the Corporation or an affiliate or a person who provides
services to the Corporation or an affiliate is eligible to participate in the
1998 Plan if the Administrator, in its sole discretion, determines that such
person has contributed significantly or can be expected to contribute
significantly to the profits or growth of the Corporation or its affiliates.
The Corporation is not able to estimate the number of individuals that the
Administrator will select to participate in the 1998 Plan or the type or size
of awards that the Administrator will approve.
15
<PAGE>
Awards
Options. Options granted under the 1998 Plan may be incentive stock
options ("ISOs") or nonqualified stock options. An option entitles the
Participant to purchase shares of Albemarle Common Stock from the Corporation
at the option price. The option price will be fixed by the Administrator at the
time the option is granted, but the price cannot be less than the shares' fair
market value on the date of grant in the case of an ISO (or in the case of a
10% shareholder, 110% of the shares' fair market value). The option price may
be paid in cash, a cash equivalent acceptable to the Administrator, with shares
of Albemarle Common Stock, or a combination thereof.
Options may be exercised in whole or in part at such times and subject to
such conditions as may be prescribed by the Administrator. The maximum period
in which an option may be exercised will be fixed by the Administrator at the
time the option is granted but, in the case of an ISO, cannot exceed ten years
(five years for ISOs granted to 10% shareholders). No employee may be granted
ISOs (under the 1998 Plan or any other plan of the Corporation) that are first
exercisable in a calendar year for Albemarle Common Stock having an aggregate
fair market value (determined as of the date the option is granted) exceeding
$100,000.
SARs. An SAR may be granted with a related option (a "Corresponding SAR")
or without a related option. SARs generally entitle the Participant to receive
with respect to each share of Albemarle Common Stock encompassed by the
exercise of the SAR, an amount determined by the Administrator and set forth in
an agreement. In the absence of such a determination, the SAR holder will
receive, with respect to each share of Albemarle Common Stock encompassed by
the exercise of the SAR, the excess of the fair market value of a share of
Albemarle Common Stock on the date of exercise over the initial value of the
SAR. The initial value of the SAR is the fair market value of a share of
Albemarle Common Stock on the date of grant in the case of an SAR granted
without a related option, or the option price per share of the related option
in the case of a Corresponding SAR. To exercise a Corresponding SAR, the
Participant must surrender unexercised that portion of the option to which the
Corresponding SAR relates and vice versa.
SARs may be exercised at such times and subject to such conditions as may
be prescribed by the Administrator. The maximum period in which an SAR may be
exercised will be fixed by the Administrator at the time the SAR is granted,
except that no Corresponding SAR that is related to an ISO shall have a term of
more than ten years from the date such related option was granted (five years
for a Corresponding SAR related to an ISO granted to a 10% shareholder). The
amount payable upon the exercise of an SAR may, in the Administrator's
discretion, be settled in cash, Albemarle Common Stock, or a combination of
cash and Albemarle Common Stock.
Restricted Stock. The 1998 Plan also permits the grant of Restricted
Stock. An award of Restricted Stock will be forfeitable or otherwise restricted
until conditions established at the time of the award are satisfied. These
conditions may include, for example, a requirement that the Participant
complete a specified period of service or the attainment of certain performance
objectives. Any restrictions imposed on an award of Restricted Stock will be
prescribed by the Administrator.
Incentive Awards. The 1998 Plan also allows the Administrator to make
Incentive Awards to Participants on such terms and conditions as the
Administrator prescribes. To the extent that any Incentive Awards are granted,
they may, in the Administrator's discretion, be settled in cash, Albemarle
Common Stock, or a combination of cash and Albemarle Common Stock.
16
<PAGE>
Performance Shares. The 1998 Plan also provides for the award of
Performance Shares. A Performance Share award entitles a Participant to receive
a payment equal to the fair market value of a specified number of shares of
Albemarle Common Stock. The Administrator will prescribe the conditions that
must be satisfied before an award of Performance Shares is earned. These
conditions may include, for example, a requirement that the Participant
complete a specified period of service or the attainment of certain performance
objectives. To the extent that Performance Shares are earned, the obligation
may be settled in cash, by the grant of Restricted Stock, or by a combination
of the two.
Transferability
In general, options, SARs, Restricted Stock and Performance Shares will be
nontransferable except by will or the laws of descent and distribution. If
provided in the agreement governing the grant, options that are not ISOs and
SARs (other than a Corresponding SAR that is related to an ISO) may be
transferred by the Participant to his spouse, children or grandchildren, to a
trust or trusts for the benefit of such family members or to a partnership in
which such family members are the only partners, on such terms as permitted
under Rule 16b-3 promulgated by the Securities and Exchange Commission under
the Exchange Act.
Performance Objectives
The Committee may prescribe that (i) an option or SAR is exercisable; (ii)
an award of Restricted Stock is vested or transferable or both; (iii) that
Performance Shares are earned; or (iv) that payment under an Incentive Award is
earned only upon the attainment of certain performance objectives. Such
performance objectives may be based on one or more of the Corporation's, its
affiliates' or a business unit's (i) gross, operating or net earnings before or
after taxes, (ii) return on equity, (iii) return on capital, (iv) return on
sales, (v) return on assets or net assets, (vi) earnings per share, (vii) cash
flow per share, (viii) book value per share, (ix) earnings growth, (x) sales
growth, (xi) volume growth, (xii) cash flow (as defined by the Committee),
(xiii) fair market value of Albemarle Common Stock, (xiv) share price or total
shareholder return, (xv) market share, (xvi) economic value added, (xvii)
market value added, (xviii) productivity, (xix) level of expenses, (xx)
quality, (xxi) safety, (xxii) customer satisfaction, (xxiii) product
development or improvement, (xxiv) peer group comparisons of any of the
aforementioned objectives or (xxv) such other performance objectives, if any,
as may be approved by the Committee.
Change in Control
The 1998 Plan provides that outstanding options and SARs will become
exercisable, outstanding awards of Restricted Stock will become transferable
and nonforfeitable, and each Performance Share will be earned and converted
into Restricted Stock following a change in control in accordance with the
terms of the applicable agreement.
Share Authorization
The maximum aggregate number of shares of Albemarle Common Stock that may
be issued under the 1998 Plan is 3,000,000. The maximum aggregate number of
shares that may be issued pursuant to the exercise of options under the 1998
Plan may not exceed 2,000,000 shares. These limitations will be adjusted as the
Committee determines is appropriate in the event of a change in the number of
outstanding shares of Albemarle Common Stock by reason of a stock dividend,
stock split, combination, reclassification, recapitalization or other similar
event. The terms of outstanding awards and the limitations on individual grants
also will be adjusted as the Committee determines is appropriate to reflect
such changes.
17
<PAGE>
Individual Limitations
No individual may be granted or awarded in any calendar year options,
Corresponding SARs and SARs granted independently of options covering more than
200,000 shares of Albemarle Common Stock in the aggregate. In addition, no
individual in any calendar year may be awarded, in the aggregate, Restricted
Stock, Performance Shares or Incentive Awards covering more than 100,000 shares
of Albemarle Common Stock. No Participant may receive an annual Incentive Award
for an amount in excess of $1.0 million.
Amendment and Termination
No option, SAR, Restricted Stock award, Performance Share award or
Incentive Award may be granted under the 1998 Plan after February 24, 2008. The
Board may, without further action by shareholders, terminate or suspend the
1998 Plan in whole or in part. The Board also may amend the 1998 Plan, except
that no amendment that increases the number of shares of Albemarle Common Stock
that may be issued under the 1998 Plan or changes the class of individuals who
may be selected to participate in the 1998 Plan will become effective until it
is approved by shareholders.
Federal Income Tax Consequences
The Corporation has been advised by counsel regarding the federal income
tax consequences of the 1998 Plan. No income is recognized by a Participant at
the time an option is granted. If the option is an ISO, no income will be
recognized upon the Participant's exercise of the option. Income is recognized
by a Participant when he disposes of shares acquired under an ISO. The exercise
of a nonqualified stock option generally is a taxable event that requires the
Participant to recognize, as ordinary income, the difference between the
shares' fair market value and the option price.
Income is recognized on account of the award of Restricted Stock when the
shares first become transferable or are no longer subject to a substantial risk
of forfeiture unless the Participant makes an election to recognize income
currently under Section 83(b) of the Code. At that time the Participant
recognizes income equal to the fair market value of the Albemarle Common Stock.
A Participant will recognize ordinary income equal to any cash that is
paid and the fair market value of Albemarle Common Stock (on the date that the
shares are first transferable and not subject to a substantial risk of
forfeiture) that is received in settlement of an award of Performance Shares or
in settlement of an Incentive Award.
The Corporation generally will be entitled to claim a federal income tax
deduction on account of the exercise of a nonqualified stock option or SAR or
upon the taxability to the recipient of Restricted Stock, the settlement of a
Performance Share award, or the making of an Incentive Award. The amount of the
deduction is equal to the ordinary income recognized by the Participant. The
employer will not be entitled to a federal income tax deduction on account of
the grant or the exercise of an ISO. The employer may claim a federal income
tax deduction on account of certain dispositions of ISO stock.
THE BOARD RECOMMENDS THAT THE SHAREHOLDERS VOTE "FOR" THE ALBEMARLE CORPORATION
1998 INCENTIVE PLAN.
18
<PAGE>
Performance Graph
Cumulative Total Shareholder Return*
Performance From March 1, 1994, through December 31, 1997
Albemarle Chemical
Corporation S&P 500 Composite
----------- ---------- -----------
March 1994 100 100 100
December 1994 106 101 103
December 1995 150 139 135
December 1996 142 171 167
December 1997 190 228 203
*Assumes $100 invested on first day of March 1994.
Dividends are reinvested quarterly.
DESIGNATION OF AUDITORS
The Board of Directors has designated Coopers & Lybrand L.L.P., certified
public accountants, as the Corporation's independent auditors for fiscal year
1998, subject to shareholder approval. A representative of Coopers & Lybrand
L.L.P. is expected to be present at the annual meeting with an opportunity to
make a statement and to be available to respond to appropriate questions.
Coopers & Lybrand L.L.P.'s principal function is to audit the consolidated
financial statements of the Corporation and its subsidiaries and, in connection
with that audit, to review certain related filings with the Securities and
Exchange Commission and to conduct limited reviews of the financial statements
included in the Corporation's quarterly reports.
19
<PAGE>
PROPOSALS FOR 1998 ANNUAL MEETING
Under the regulations of the Securities and Exchange Commission, any
shareholder desiring to make a proposal to be acted upon at the 1999 annual
meeting of shareholders must present such proposal to the Corporation at its
principal office in Richmond, Virginia, not later than November 20, 1998, in
order for the proposal to be considered for inclusion in the Corporation's
proxy statement. The Corporation anticipates holding the 1999 annual meeting on
April 28, 1999.
The Corporation's bylaws provide that, in addition to any other applicable
requirements, for business to be properly brought before the annual meeting by
a shareholder, the shareholder must give timely notice in writing to the
Secretary of the Corporation not later than 60 days prior to the meeting. As to
each matter, the notice should contain (i) a brief description of the matter
and the reasons for addressing it at the annual meeting, (ii) the name, record
address of and number of shares beneficially owned by the shareholder proposing
such business and (iii) any material interest of the shareholder in such
business.
OTHER MATTERS
The Board of Directors is not aware of any matters to be presented for
action at the meeting other than as set forth herein. However, if any other
matters properly come before the meeting, or any adjournment thereof, the
person or persons voting the proxies will vote them in accordance with their
best judgment.
By Order of the Board of Directors
E. WHITEHEAD ELMORE, Secretary
20
<PAGE>
ALBEMARLE CORPORATION
1998 INCENTIVE PLAN
ARTICLE I
DEFINITIONS
1.01. Administrator means the Committee and any delegate of the Committee that
is appointed in accordance with Article III.
1.02. Affiliate means any "subsidiary" or "parent" corporation (within the
meaning of Code section 424) of the Company.
1.03. Agreement means a written agreement (including any amendment or
supplement thereto) between the Company and a Participant specifying the terms
and conditions of an award of Restricted Stock, Performance Share award, or an
Option or SAR, an Incentive Award or a combination thereof, granted to such
Participant.
1.04. Board means the Board of Directors of the Company.
1.05. Change in Control has the same meaning as is given that defined term in
the Albemarle Corporation Supplemental Benefits Trust.
1.06. Code means the Internal Revenue Code of 1986, and any amendments thereto.
1.07. Committee means the Executive Compensation Committee of the Board.
1.08. Common Stock means the Common Stock of the Company.
1.09. Company means Albemarle Corporation.
1.10. Control Change Date has the same meaning as is given that defined term in
the Albemarle Corporation Supplemental Benefits Trust.
1.11. Corresponding SAR means an SAR that is granted in relation to a
particular Option and that can be exercised only upon the surrender to the
Company, unexercised, of that portion of the Option to which the SAR relates.
1.12. Fair Market Value means, on any given date, the closing price of a share
of Common Stock as reported on the New York Stock Exchange composite tape on
such date, or if the Common Stock was not traded on the New York Stock Exchange
on such day, then on the next preceding day that the Common Stock was traded on
such exchange, all as reported by such source as the Administrator may select.
1.13. Incentive Award means an award which, subject to such terms and
conditions as may be prescribed by the Administrator, entitles the Participant
to receive a payment in cash or Common Stock in an amount determined by the
Administrator.
1.14. Initial Value means, with respect to a Corresponding SAR, the option price
per share of the related Option, and with respect to an SAR granted
independently of an Option, the Fair Market Value of one share of Common Stock
on the date of grant.
1.15. Option means a stock option that entitles the holder to purchase from the
Company a stated number of shares of Common Stock at the price set forth in an
Agreement.
1.16. Participant means an employee of the Company or an Affiliate, including
an employee who is a member of the Board, or an individual who provides services
to the Company or an Affiliate who satisfies the requirements of Article IV and
is selected by the Administrator to receive a Restricted Stock award,
Performance Share award, an Option, an SAR, an Incentive Award or a combination
thereof.
1.17. Performance Shares means an award which, in accordance with and subject to
an Agreement, will entitle the Participant, or his estate or beneficiary in the
event of the Participant's death, to receive cash or an award of Restricted
Stock or a combination thereof.
1.18. Plan means the Albemarle Corporation 1998 Incentive Plan.
1.19. Restricted Stock means Common Stock awarded to a Participant under Article
IX. Shares of Common Stock shall cease to be Restricted Stock when, in
accordance with the terms of the applicable Agreement, they become transferable
and free of substantial risks of forfeiture.
1.20. SAR means a stock appreciation right that entitles the holder to receive,
with respect to each share of Common Stock encompassed by the exercise of such
SAR, the amount determined by the Administrator and specified in an Agreement.
In the absence of such a determination, the holder shall be entitled to receive,
with respect to each share of Common Stock encompassed by the exercise of such
SAR, the excess of the Fair Market Value on the date of exercise over the
Initial Value. References to "SARs" include both Corresponding SARs and SARs
granted independently of Options, unless the context requires otherwise.
1.21. Ten Percent Shareholder means any individual owning more than ten percent
(10%) of the total combined voting power of all classes of stock of the Company
or of an Affiliate. An individual shall be considered to own any voting stock
owned (directly or indirectly) by or for his brothers, sisters, spouse,
ancestors or lineal descendants and shall be considered to own proportionately
any voting stock owned (directly or indirectly) by or for a corporation,
partnership, estate or trust of which such individual is a shareholder, partner
or beneficiary.
ARTICLE II
PURPOSES
The Plan is intended to assist the Company in recruiting and
retaining individuals with ability and initiative who provide services to the
Company or an Affiliate by enabling such persons to participate in its future
success and to associate their interests with those of the Company and its
shareholders. The Plan is intended to permit the award of Performance Shares and
shares of Restricted Stock, the grant of SARs, the grant of both Options
qualifying under Code section 422 ("incentive stoc options") and Options not so
qualifying, and the grant of Incentive Awards. No Option that is intended to be
an incentive stock option shall be invalid for failure to qualify as an
incentive stock option. The proceeds received by the Company from the sale of
Common Stock pursuant to the Plan shall be used for general corporate purposes.
ARTICLE III
ADMINISTRATION
The Plan shall be administered by the Administrator. The
Administrator shall have authority to award Performance Shares and Restricted
Stock and to grant Options, SARs and Incentive Awards upon such terms (not
inconsistent with the provisions of the Plan) as the Administrator may consider
appropriate. Such terms may include conditions (in addition to those contained
in the Plan) on the exercisability of all or any part of an Option or SAR or on
the transferability or forfeitability of Restricted Stock, Performance Shares,
or an Incentive Award, including by way of example and not limitation,
requirements that the Participant complete a specified period of employment with
the Company or an Affiliate or that the Company achieve a specified level of
financial performance or financial return. Notwithstanding any such conditions,
the Administrator may, in its discretion, accelerate the time at which any
Option or SAR may be exercised, the time at which Restricted Stock may become
transferable or nonforfeitable, or the time at which Performance Shares or
Incentive Awards are earned. In addition, the Administrator shall have complete
authority to interpret all provisions of the Plan; to prescribe the form of
Agreements; to adopt, amend, and rescind rules and regulations pertaining to the
administration of the Plan; and to make all other determinations necessary or
advisable for the administration of the Plan. The express grant in the Plan of
any specific power to the Administrator shall not be construed as limiting any
power or authority of the Administrator. Any decision made, or action taken, by
the Administrator in connection with the administration of the Plan shall be
final and conclusive. Neither the Administrator nor any member of the Committee
shall be liable for any act done in good faith with respect to the Plan or any
Agreement, Option, SAR, Incentive Award, award of Performance Shares, or
Restricted Stock award. All expenses of administering the Plan shall be borne by
the Company.
The Committee, in its discretion, may delegate to one or more officers
of the Company or the Executive Committee of the Board, all or part of the
Committee's authority and duties with respect to grants and awards to
individuals who are not subject to the reporting and other provisions of Section
16 of the Securities Exchange Act of 1934, as in effect from time to time. The
Committee may revoke or amend the terms of a delegation at any time but such
action shall not invalidate any prior actions of the Committee's delegate or
delegates that were consistent with the terms of the Plan.
ARTICLE IV
ELIGIBILITY
4.01. General. Any employee of the Company or an Affiliate (including a
corporation that becomes an Affiliate after the adoption of the Plan) or a
person who provides services to the Company or an Affiliate (including a
corporation that becomes an Affiliate after the adoption of the Plan) is
eligible to participate in the Plan if the Administrator, in its sole
discretion, determines that such person has contributed significantly or can be
expected to contribute significantly to the profits or growth of the Company or
an Affiliate. Directors of the Company who are employees of the Company or an
Affiliate may be selected to participate in the Plan. A person who is a member
of the Committee may not be granted Options or SARs, or awarded Restricted
Stock, Performance Shares, or Incentive Awards under the Plan.
4.02. Grants. The Administrator will designate individuals to whom shares of
Restricted Stock or Performance Shares are to be awarded and to whom Incentive
Awards, Options and SARs are to be granted and will specify the number of shares
of Common Stock subject to each award or grant. An Option may be granted with or
without a related SAR. An SAR may be granted with or without a related Option.
Each award of Performance Shares, each Incentive Award, each Restricted Stock
award, and all grants of Options and SARs under the Plan shall be evidenced by
Agreements which shall be subject to the applicable provisions of the Plan and
to such other provisions as the Administrator may adopt. No Participant may be
granted incentive stock options or related SARs (under all incentive stock
option plans of the Company and its Affiliates) that are first exercisable in
any calendar year for stock having an aggregate Fair Market Value (determined as
of the date an Option is granted) that exceeds the limitation prescribed by Code
section 422(d). The preceding annual limitation shall not apply with respect to
Options that are not incentive stock options.
4.03. Limitation. No Participant may be granted Options and SARs that are not
related to Options in any calendar year for more than 200,000 shares of Common
Stock. For purposes of the preceding sentence, an Option and Corresponding SAR
are treated as a single award. In addition, no Participant may, in any calendar
year, be awarded, in the aggregate, Restricted Stock, Performance Shares, and/or
Incentive Awards covering more than 100,000 shares of Common Stock.
ARTICLE V
STOCK SUBJECT TO PLAN
Upon the award of shares of Restricted Stock the Company may issue
shares of Common Stock from its authorized but unissued Common Stock. Upon the
exercise of any Option or SAR, the Company may deliver to the Participant (or
the Participant's broker if the Participant so directs), shares of Common Stock
from its authorized but unissued Common Stock. The maximum aggregate number of
shares of Common Stock that may be issued pursuant to the exercise of Options
and SARs, the award of Restricted Stock, or in settlement of Incentive Awards
under the Plan is 3,000,000 shares. Subject to the limitations set forth in the
preceding sentence, the maximum aggregate number of shares that may be issued
pursuant to the exercise of Options is 2,000,000. The maximum aggregate number
of shares of Common Stock that may be issued under the Plan shall be subject to
adjustment as provided in Article XII. If an Option is terminated, in whole or
in part, for any reason other than its exercise or the exercise of Corresponding
SAR, the number of shares of Common Stock allocated to the Option or portion
thereof may be reallocated to other Options, SARs, Restricted Stock awards,
Incentive Awards, and awards of Performance Shares to be granted under the Plan.
If an SAR is terminated, in whole or in part, for any reason other than its
exercise or the exercise of a related Option, the number of shares of Common
Stock allocated to the SAR or portion thereof may be reallocated to other
Options, SARs, Restricted Stock awards, Incentive Awards, and awards of
Performance Shares to be granted under the Plan. If an award of Restricted Stock
is forfeited, in whole or in part, the number of shares of Common Stock
allocated to the award of Restricted Stock or portion thereof may be reallocated
to other Options, SARs, Restricted Stock awards, Incentive Awards, and awards of
Performance Shares to be granted under the Plan. If an award of Performance
Shares is forfeited, in whole or in part, without the issuance of an award of
Restricted Stock, the number of shares of Common Stock allocated to the award of
Performance Shares or portion thereof may be reallocated to other Options, SARs,
Restricted Stock awards, Incentive Awards, and awards of Performance Shares to
be granted under the Plan.
ARTICLE VI
OPTION PRICE
The price per share for Common Stock to be purchased on the
exercise of an Option shall be determined by the Administrator on the date of
grant; provided, however, that the price per share for Common Stock to be
purchased on the exercise of any Option that is an incentive stock option shall
not be less than the Fair Market Value on the date the Option is granted and
provided further that the price per share shall not be less than 110% of such
Fair Market Value in the case of an incentive stoc option granted to a
Participant who is a Ten Percent Shareholder on the date such incentive stock
option is granted.
ARTICLE VII
EXERCISE OF OPTIONS AND SARS
7.01. Maximum Option or SAR Period. The maximum period in which an Option or SAR
may be exercised shall be determined by the Administrator on the date of grant,
except that no Option that is an incentive stock option or its Corresponding SAR
shall be exercisable after the expiration of ten years from the date such Option
or Corresponding SAR was granted. In the case of an incentive stock option or
its Corresponding SAR that is granted to a participant who is a Ten Percent
Shareholder, such Option and Corresponding SAR shall not be exercisable after
the expiration of five years from the date of grant. The terms of any Option
that is an incentive stock option or Corresponding SAR may provide that it is
exercisable for a period less than such maximum period.
7.02. Nontransferability. Any Option or SAR granted under the Plan shall be
nontransferable except by will or by the laws of descent and distribution. In
the event of any such transfer, the Option and any Corresponding SAR that
relates to such Option must be transferred to the same person or persons. During
the lifetime of the Participant to whom the Option or SAR is granted, the Option
or SAR may be exercised only by the Participant. No right or interest of a
Participant in any Option or SAR shall be liable for, or subject to, any lien,
obligation, or liability of such Participant.
7.03. Transferable Options and SARs. Section 7.02 to the contrary
notwithstanding, if the Agreement provides, an Option that is not an incentive
stock option or an SAR, other than a Corresponding SAR that is related to an
incentive stock option, may be transferred by a Participant to the Participant's
children, grandchildren, spouse, one or more trusts for the benefit of such
family members or a partnership in which such family members are the only
partners, on such terms and conditions as may be permitted under Securities
Exchange Commission Rule 16b-3 as in effect from time to time. The holder of an
Option or SAR transferred pursuant to this section shall be bound by the same
terms and conditions that governed the Option or SAR during the period that it
was held by the Participant; provided, however, that such transferee may not
transfer the Option or SAR except by will or the laws of descent and
distribution. An Option or its Corresponding SAR may only be transferred if the
awards are transferred to the same person or persons or entity or entities.
7.04. Employee Status. For purposes of determining the applicability of Code
section 422 (relating to incentive stock options), or in the event that the
terms of any Option or SAR provide that it may be exercised only during
employment or continued service or within a specified period of time after
termination of employment or service, the Administrator may decide to what
extent leaves of absence for governmental or military service, illness,
temporary disability, or other reasons shall not be deemed interruptions of
continuous employment or service.
7.05. Change in Control. Section 7.01 to the contrary notwithstanding, upon a
Control Change Date each Option or SAR then outstanding shall be fully
exercisable thereafter in accordance with the terms of the applicable Agreement.
7.06. Performance Objectives. The Committee may prescribe that an Option or SAR
is exercisable only to the extent that certain performance objectives are
attained. Such performance objectives may be based on one or more of the
Company's, an Affiliate's or a business unit's (i) gross, operating or net
earnings before or after taxes, (ii) return on equity, (iii) return on capital,
(iv) return on sales, (v) return on assets or net assets, (vi) earnings per
share, (vii) cash flow per share, (viii) book value per share, (ix) earnings
growth, (x) sales growth, (xi) volume growth, (xii) cash flow (as defined by the
Committee), (xiii) Fair Market Value, (xiv) share price or total shareholder
return, (xv) market share, (xvi) economic value added, (xvii) market value
added, (xviii) productivity, (xix) level of expenses, (xx) quality, (xxi)
safety, (xxii) customer satisfaction, (xxiii) product development or
improvement, (xxiv) peer group comparisons of any of the aforementioned
objectives or (xxv) such other performance objectives, if any, as may be
determined by the Committee. If the Committee, on the date of the award,
prescribes that an Option or SAR shall become exercisable only upon the
attainment of performance objectives stated with respect to one or more of the
foregoing criteria, the Option or SAR shall become exercisable only to the
extent the Committee certifies that such objectives have been achieved.
ARTICLE VIII
METHOD OF EXERCISE
8.01. Exercise. Subject to the provisions of Articles VII and XIII, an Option or
SAR may be exercised in whole at any time or in part from time to time at such
times and in compliance with such requirements as the Administrator shall
determine; provided, however, that a Corresponding SAR that is related to an
incentive stock option may be exercised only to the extent that the related
Option is exercisable and when the Fair Market Value exceeds the option price of
the related Option. An Option or SAR granted under the Plan may be exercised
with respect to any number of whole shares less than the full number for which
the Option or SAR could be exercised. A partial exercise of an Option or SAR
shall not affect the right to exercise the Option or SAR from time to time in
accordance with the Plan and the applicable Agreement with respect to the
remaining shares subject to the Option or related to the SAR. The exercise of
either an Option or a Corresponding SAR shall result in the termination of the
other to the extent of the number of shares with respect to which the Option or
Corresponding SAR is exercised.
8.02. Payment. Unless otherwise provided by the Agreement, payment of the Option
price shall be made in cash or a cash equivalent acceptable to the
Administrator. Subject to rules established by the Committee, payment of all or
part of the Option price may be made with shares of Common Stock of the Company.
If Common Stock is used to pay all or part of the Option price, the sum of the
cash and cash equivalent and the Fair Market Value of the shares (determined as
of the day preceding the date of exercise) must not be less than the Option
Price of shares for which the Option is being exercised.
8.03. Determination of Payment of Cash and/or Common Stock Upon Exercise of SAR.
At the Administrator's discretion, the amount payable as a result of the
exercise of an SAR may be settled in cash, Common Stock, or a combination of
cash and Common Stock. No fractional share shall be deliverable upon the
exercise of an SAR but a cash payment will be made in lieu thereof.
8.04. Shareholder Rights. No Participant shall have any rights as a stockholder
with respect to shares subject to his Option or SAR until the date of exercise
of such Option or SAR.
ARTICLE IX
RESTRICTED STOCK
9.01. Award. In accordance with the provisions of Article IV and subject
to the limitations set forth in Article V, the Administrator will designate each
individual to whom an award of Restricted Stock is to be made and will specify
the number of shares of Common Stock covered by the award.
9.02. Vesting. The Administrator, on the date of the award, must prescribe that
a Participant's rights in the Restricted Stock shall be forfeitable or otherwise
restricted for a period of time or until satisfaction of such conditions as are
set forth in the Agreement. By way of example and not of limitation, the
restrictions may postpone transferability of the shares or may provide that the
shares will be forfeited if the Participant separates from the service of the
Company and its Affiliates before the expiration of a stated term or if the
Company, the Company and its Affiliates or the Participant fails to achieve
stated objectives.
9.03. Performance Objectives. In accordance with Section 9.02, the Committee may
prescribe that awards of Restricted Stock will become vested or transferable or
both based on objectives stated with respect to one or more of the Company's, an
Affiliate's or a business unit's (i) gross, operating or net earnings before or
after taxes, (ii) return on equity, (iii) return on capital, (iv) return on
sales, (v) return on assets or net assets, (vi) earnings per share, (vii) cash
flow per share, (viii) bo value per share, (ix) earnings growth, (x) sales
growth, (xi) volume growth, (xii) cash flow (as defined by the Committee),
(xiii) Fair Market Value, (xiv) share price or total shareholder return, (xv)
market share, (xvi) economic value added, (xvii) market value added, (xviii)
productivity, (xix) level of expenses, (xx) quality, (xxi) safety, (xxii)
customer satisfaction, (xxiii) product development or improvement, (xxiv) peer
group comparisons of any of the aforementioned objectives or (xxv) such other
performance objectives, if any, as may be determined by the Committee. If the
Committee, on the date of the award, prescribes that a Restricted Stock award
shall become nonforfeitable and transferrable only upon the attainment of
performance objectives stated with respect to one or more of the foregoing
criteria, the shares subject to such Restricted Stock award shall become
nonforfeitable and transferrable only to the extent the Committee certifies that
such objectives have been achieved.
9.04. Change in Control. Sections 9.02 and 9.03 to the contrary
notwithstanding, upon a Control Change Date each Restricted Stock award then
outstanding will become transferable and nonforfeitable in accordance with the
terms of the applicable Agreement.
9.05. Shareholder Rights. If, and as provided in the Agreement, prior to their
forfeiture, a Participant will have all rights of a shareholder with respect to
Restricted Stock, including the right to receive dividends and vote the shares;
provided, however, that (i) a Participant may not sell, transfer, pledge,
exchange, hypothecate, or otherwise dispose of Restricted Stock, (ii) the
Company shall retain custody of the certificates evidencing shares of Restricted
Stock, and (iii) the Participant will deliver to the Company a stock power or
powers, endorsed in blank, with respect to each award of Restricted Stock. The
limitations set forth in the preceding sentence shall not apply after the shares
cease to be Restricted Stock.
ARTICLE X
INCENTIVE AWARDS
10.01. Awards. The Administrator shall designate Participants to whom Incentive
Awards are made for annual incentive payments. All Incentive Awards shall be
finally determined exclusively by the Administrator under the procedures
established by the Administrator; provided, however, that in any calendar year
no Participant may receive an Incentive Award for an amount in excess of $1.0
million.
10.02. Terms and Conditions. The Administrator, at the time an Incentive Award
is made, shall specify the terms and conditions which govern the award. Such
terms and conditions may include, by way of example and not of limitation,
requirements that the Participant complete a specified period of employment with
the Company or an Affiliate or that the Company, Affiliate, or the Participant
attain stated objectives or goals as a prerequisite to payment under an
Incentive Award. Such performance objectives or goals may be based on one or
more of the Company's, an Affiliate's or a business unit's (i) gross, operating
or net earnings before or after taxes, (ii) return on equity, (iii) return on
capital, (iv) return on sales, (v) return on assets or net assets, (vi) earnings
per share, (vii) cash flow per share, (viii) book value per share, (ix) earnings
growth, (x) sales growth, (xi) volume growth, (xii) cash flow (as defined by the
Committee), (xiii) Fair Market Value, (xiv) share price or total shareholder
return, (xv) market share, (xvi) economic value added, (xvii) market value
added, (xviii) productivity, (xix) level of expenses, (xx) quality, (xxi)
safety, (xxii) customer satisfaction, (xxiii) product development or
improvement, (xxiv) peer group comparisons of any of the aforementioned
objectives or (xxv) such other performance objectives, if any, as may be
determined by the Committee. If the Committee, on the date of the award,
prescribes that the Incentive Award shall be earned only upon the attainment of
performance objectives stated with respect to one or more of the foregoing
criteria, such Incentive Award shall be earned only to the extent that the
Committee certifies that such objectives have been achieved. The Administrator,
at the time an Incentive Award is made, shall also specify when amounts shall be
payable under the Incentive Award and whether amounts shall be payable in the
event of the Participant's death, disability, or retirement.
Except with respect to those Participants who are covered employees (as
determined under Code section 162(m)(3)) and notwithstanding any other provision
of the Plan, the Administrator, in its discretion may adjust the terms,
conditions or other requirements applicable to Incentive Awards and may increase
or decrease the amounts otherwise payable under an Incentive Award, to reflect
unusual or extraordinary transactions or events. The Administrator may make
such adjustments with respect to on or more Participants, with respect to all
Participants as to Incentive Awards made during a particular year, or with
respect to all outstanding Incentive Awards.
10.03. Determination of Payment of Cash and/or Common Stock In Settlement of An
Incentive Award. At the Administrator's discretion, an Incentive Award may be
settled in cash, Common Stock, or a combination of cash and Common Stock. No
fractional share shall be deliverable in settlement of an Incentive Award but a
cash payment will be made in lieu thereof.
ARTICLE XI
PERFORMANCE SHARE AWARDS
11.01. Award. In accordance with the provisions of Article IV and subject
to the limitations set forth in section 4.03, the Administrator will designate
individuals to whom an award of Performance Shares is granted and will specify
the number of shares of Common Stock covered by the award.
11.02. Earning the Award. The Administrator, on the date of the grant of an
award, may prescribe that the Performance Shares, or portion thereof, will be
earned, and the Participant will be entitled to receive Common Stock pursuant to
a Stock Award only upon the satisfaction of certain requirements or the
attainment of certain objectives. By way of example and not of limitation, the
restrictions may provide that Performance Shares shall be earned only upon the
Participant's completion of a specified period of employment with the Company or
an Affiliate or upon the attainment of stated performance objectives or goals.
Such performance objectives or goals may be based on one or more of the
Company's, an Affiliate's or a business unit's (i) gross, operating or net
earnings before or after taxes, (ii) return on equity, (iii) return on capital,
(iv) return on sales, (v) return on assets or net assets, (vi) earnings per
share, (vii) cash flow per share, (viii) book value per share, (ix) earnings
growth, (x) sales growth, (xi) volume growth, (xii) cash flow (as defined by the
Committee), (xiii) Fair Market Value, (xiv) share price or total shareholder
return, (xv) market share, (xvi) economic value added, (xvii) market value
added, (xviii) productivity, (xix) level of expenses, (xx) quality, (xxi)
safety, (xxii) customer satisfaction, (xxiii) product development or
improvement, (xxiv) peer group comparisons of any of the aforementioned
objectives or (xxv) such other performance objectives, if any, as may be
determined by the Committee. If the Committee, on the date of the award,
prescribes that Performance Shares shall be earned only upon the attainment of
performance objectives stated with respect to one or more of the foregoing
criteria, such Performance Shares shall be earned only to the extent the
Committee certifies that such objectives have been achieved.
11.03. Change in Control. Section 11.02 to the contrary notwithstanding, in
accordance with the terms of the applicable Agreement, each Performance Share
shall be earned and converted into an award of Restricted Stock as of a Control
Change Date and such awards of Restricted Stock will become transferable and
nonforfeitable thereafter in accordance with the terms of the applicable
Agreement.
11.04. Shareholder Rights. No Participant shall, as a result of receiving an
award of Performance Shares, have any rights as a shareholder until and to the
extent that the award of Performance Shares is earned and an award of Restricted
Stock is made. If the Agreement so provides, a Participant may receive a cash
payment equal to the dividends that are payable with respect to the number of
shares of Common Stock covered by the award between the date the Performance
Shares are awarded and the date an award of Restricted Stock is made. A
Participant may not sell, transfer, pledge, exchange, hypothecate, or otherwise
dispose of a Performance Share award or the right to receive Common Stock
thereunder other than by will or the laws of descent and distribution. After an
award of Performance Shares is earned and an award of Restricted Stock is made,
a Participant will have all the rights of a shareholder as described in Plan
section 9.05.
ARTICLE XII
ADJUSTMENT UPON CHANGE IN COMMON
The maximum number of shares as to which Restricted Stock may be
awarded, as to which Options and SARs may be granted, and which may be issued in
settlement of Incentive Awards or Performance Shares under the Plan shall be
proportionately adjusted, and the terms of outstanding Restricted Stock awards,
Performance Share awards, Incentive Awards, Options, and SARs shall be adjusted,
as the Committee shall determine to be equitably required in the event that (a)
the Company (i) effects one or more stock dividends, stock split-ups,
subdivisions or consolidations of shares or (ii) engages in a transaction to
which Code section 424 applies or (b) there occurs any other event that, in the
judgment of the Committee, necessitates such action. Any determination made
under this Article XII by the Committee shall be final and conclusive.
The issuance by the Company of shares of stock of any class, or
securities convertible into shares of stock of any class, for cash or property,
or for labor or services, either upon direct sale or upon the exercise of rights
or warrants to subscribe therefor, or upon conversion of shares or obligations
of the Company convertible into such shares or other securities, shall not
affect, and no adjustment by reason thereof shall be made with respect to,
outstanding awards of Restricted Stock, Performance Shares, Incentive Awards,
Options or SARs.
The Committee may grant Performance Shares, shares of Restricted
Stock, Incentive Awards, Options, and SARs in substitution for performance
shares, stock awards, stock options, stock appreciation rights, or similar
awards held by an individual who is or becomes an employee of the Company or an
Affiliate in connection with a transaction described in this Article XII.
Notwithstanding any provision of the Plan (other than the limitations of Article
V), the terms of such substituted Performance Share awards, Restricted Stock
awards, Incentive Awards and Option or SAR grants shall be as the Committee, in
its discretion, determines is appropriate.
ARTICLE XIII
COMPLIANCE WITH LAW AND
APPROVAL OF REGULATORY BODIES
No Option or SAR shall be exercisable, no Common Stock shall be
issued, no certificates for shares of Common Stock shall be delivered, and no
payment shall be made under the Plan except in compliance with all applicable
federal and state laws and regulations (including, without limitation,
withholding tax requirements), any stock listing agreement to which the Company
is a party, and the rules of all domestic stock exchanges on which the Company's
shares may be listed. The Company shall have the right to rely on an opinion of
its counsel as to such compliance. Any share certificate issued to evidence
Common Stock for which shares of Restricted Stock are awarded or for which an
Option or SAR is exercised may bear such legends and statements as the
Administrator may deem advisable to assure compliance with federal and state
laws and regulations. No Option or SAR shall be exercisable, no Restricted Stock
shall be awarded, no Common Stock shall be issued, no certificate for shares
shall be delivered, and no payment shall be made under the Plan until the
Company has obtained such consent or approval as the Administrator may deem
advisable from regulatory bodies having jurisdiction over such matters.
ARTICLE XIV
GENERAL PROVISIONS
14.001 Effect on Employment. Neither the adoption of the Plan, its
operation, nor any documents describing or referring to the Plan (or any part
thereof) shall confer upon any individual any right to continue in the employ or
service of the Company or an Affiliate or in any way affect any right and power
of the Company or an Affiliate to terminate the employment or service of any
individual at any time with or without assigning a reason therefor.
14.02. Unfunded Plan. The Plan, insofar as it provides for grants, shall be
unfunded, and the Company shall not be required to segregate any assets that may
at any time be represented by grants under the Plan. Any liability of the
Company to any person with respect to any grant under the Plan shall be based
solely upon any contractual obligations that may be created pursuant to the
Plan. No such obligation of the Company shall be deemed to be secured by any
pledge of, or other encumbrance on, any property of the Company. 14.03.
Disposition of Stock. A Participant shall notify the Administrator of any sale
or other disposition of Common Stock acquired pursuant to an Option that was an
incentive stock option if such sale or disposition occurs (i) within two years
of the grant of an Option or (ii) within one year of the issuance of the Common
Stock to the Participant. Such notice shall be in writing and directed to the
Secretary of the Company.
14.03. Disposition of Stock. A Participant shall notify the Administrator of
any sale or other disposition of Common Stock acquired pursuant to an Option
that was an incentive stock option if such sale or disposition occurs (i)
within two years of the grant of an Option or (ii) within one year of the
issuance of the Common Stock to the Participant. Such notice shall be in
writing and directed to the Secretary of the Company.
14.04. Rules of Construction. Headings are given to the articles and
sections of the Plan solely as a convenience to facilitate reference. The
reference to any statute, regulation, or other provision of law shall be
construed to refer to any amendment to or successor of such provision of law.
14.05. Withholding Taxes. Each Participant shall be responsible for satisfying
any income and employment tax withholding obligations attributable to
participation in the Plan. Unless otherwise provided by the Agreement, any such
withholding tax obligations may be satisfied in cash (including from any cash
payable in settlement of an SAR, Performance Share award, or Incentive Award) or
a cash equivalent acceptable to the Committee. Any withholding tax obligations
may also be satisfied by surrendering shares of Common Stock to the Company, by
withholding or reducing the number of shares of Common Stock otherwise issuable
to the Participant upon the exercise of an Option or SAR, the vesting of an
award of Restricted Stock, or by any other method as may be approved by the
Committee. If shares of Common Stock are used to pay all or part of such
withholding tax obligation, the Fair Market Value of the shares surrendered,
withheld or reduced shall be determined as of the day preceding the date the
Option or SAR is exercised, or the Restricted Stock vests, as applicable.
14.06. Certain Reduction of Restrictive Payments. Any benefit, payment,
accelerated vesting or other right under the Plan may constitute a "parachute
payment" (as defined in Code section 280G(b)(2)(A), but without regard to Code
section 280G(b)(2)(A)(ii)), with respect to a Participant and the Participant
may incur a liability under Code section 4999. In accordance with the terms of
an Agreement, the Company may reduce or adjust any such parachute payments.
ARTICLE XV
AMENDMENT
The Board may amend the Plan from time to time or terminate it;
provided, however, that no amendment may become effective until shareholder
approval is obtained if (i) the amendment increases the aggregate number of
shares of Common Stock that may be issued under the Plan or (ii) the amendment
changes the class of individuals eligible to become Participants. No amendment
shall, without a Participant's consent, adversely affect any rights of such
Participant under any outstanding Restricted Stock award, Performance Share
award, Incentive Award or under any Option or SAR outstanding at the time such
amendment is made.
ARTICLE XVI
DURATION OF PLAN
No Performance Shares or shares of Restricted Stock may be awarded
and no Option, SAR, or Incentive Award may be granted or made under the Plan
more than ten years after the earlier of the date that the Plan is adopted by
the Board or the date that the Plan is approved by shareholders as provided in
Article XVII. Awards of Restricted Stock, Performance Shares, Incentive Awards,
and Options and SARs granted before that date shall remain valid in accordance
with their terms.
ARTICLE XVII
EFFECTIVE DATE OF PLAN
Shares of Restricted Stock and Performance Shares may be awarded
and Options, SARs, and Incentive Awards may be granted or made under the Plan
upon its adoption by the Board, provided that no Restricted Stock award,
Performance Share award, Incentive Award, Option or SAR will be effective unless
the Plan is approved by a majority of the votes cast by the Company's
shareholders, voting either in person or by proxy, at a duly held shareholders'
meeting provided that the total vote cast for or against adoption of the Plan
represents over 50% of the outstanding Common Stock.
<PAGE>
NOTICE
and
PROXY STATEMENT
for
ANNUAL MEETING
of
SHAREHOLDERS
APRIL 22, 1998
[logo]
ALBEMARLE CORPORATION
330 SOUTH FOURTH STREET
P.O. BOX 1335
RICHMOND, VIRGINIA 23210
<PAGE>
ALBEMARLE CORPORATION
Richmond, Virginia
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 22, 1998
The undersigned hereby appoints Floyd D. Gottwald, Jr., and Emmett J. Rice, or
either of them, with full power of substitution in each, proxies to vote all
shares of the undersigned in Albemarle Corporation, at the annual meeting of
shareholders to be held April 22, 1998, and at any and all adjournments thereof:
1. ELECTION OF DIRECTORS
[ ] FOR ALL [ ] WITHHOLD ALL [ ] FOR ALL EXCEPT
Craig R. Andersson, Dirk Betlem, Floyd D. Gottwald, Jr., John D. Gottwald,
Andre B. Lacy, Seymour S. Preston III, Emmett J. Rice, Charles E. Stewart,
Charles B. Walker and Anne Marie Whittemore.
INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY SUCH NOMINEE(S),
WRITE THE NAME(S) OF THE NOMINEE(S) IN THE SPACE PROVIDED BELOW.
- - ------------------------------------------------------------------------------
2. The proposal to approve the Albemarle Corporation 1998 Incentive Plan.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. The proposal to approve the appointment of Coopers & Lybrand L.L.P. as
the auditors for the Corporation for 1998.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. In their discretion, the Proxies are authorized to vote upon such other
business and matters incident to the conduct of the meeting as may
properly come before the meeting.
This Proxy is solicited on behalf of the Board of Directors. This Proxy when
properly executed will be voted in the manner directed herein by the undersigned
shareholder. If no direction is made, this Proxy will be voted FOR all nominees
and FOR Proposals 2 and 3.
Dated _____________________, 1998
--------------------------------------
Please sign name exactly as it appears
on the stock certificate. Only one of
several joint owners or co-owners need
sign. Fiduciaries should give full title.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
